Crown Post Offices: Franchising

Albert Owen Excerpts

Thursday 10th January 2019 Westminster Hall

[Lisa Nandy]

I could not agree more, and I know that my hon. Friend is a tremendous champion of that workforce in his Bury constituency. That point goes to the heart of how a publicly owned service should set the standard for how we treat our workers and our customers. I absolutely agree with him.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate my hon. Friend on securing the debate, and I wish her, the Chair and all Members a happy new year. She made the important point about ownership of the Crown network. We are the owners but, in addition, the Government are the sole shareholder, so by proxy the Government are closing down our public services. We need the opportunity to have not just a debate, but the information before anything happens.

[Lisa Nandy]

I absolutely agree with my hon. Friend. On that basis, I was quite horrified at what happened last month when I went to my Crown post office to talk to the staff. I went with a representative of the Communication Workers Union, who had notified management in advance, but an area manager was then sent all the way to Wigan to block me at the door. We were chucked out of the building, but for some time I stood outside in the street in the freezing cold to talk to staff about their concerns and fears. A number of counter staff who had initially been keen to talk emailed me later to explain that they had been put under significant pressure not to come outside.

Why is a publicly owned business trying to intimidate and silence its own staff? It was particularly telling that the area manager said that she had been sent by the press office. This is an organisation apparently more concerned about appearances than about the rights of its own workforce.

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[Lisa Nandy]

My hon. Friend is absolutely right. The Minister will hear “suspended”, “halted”, “paused” and “moratorium” over and over during this debate. It is not just about bank closures, the threat to the post office and the fact that WHSmith is in trouble. Many towns that face the loss of their Crown post office have had closures of major department stores such as Marks & Spencer, House of Fraser and Debenhams. Like the Crown post office, those are destination stores—they attract people into our town centres who then stay and shop elsewhere. There is a very real prospect that our town centres will begin to fall like dominoes. A perfect storm is hitting our high streets.

My Crown post office in Wigan has stood on its site in the centre of our town for 134 years. It has weathered a global financial crash and two world wars, yet apparently it cannot survive three years of Tory Government. One of our major concerns is about the lack of proposals for the building, which is owned by the Post Office. It is a striking building right in the centre of town. Will the Minister tell us what is envisaged for those buildings? Will we see derelict and abandoned buildings blighting our already struggling high streets?

[Albert Owen]

My hon. Friend makes an important point. The Government are trying to regenerate town centres, yet they are closing down buildings. In a town in my constituency, the building has been empty for some years and is a blight on the landscape.

[Lisa Nandy]

My hon. Friend is absolutely right; that is a story I hear over and over from colleagues around the country. Behind those losses is a loss of spending power in our towns. Over several decades, good jobs have been lost and replaced by minimum-wage, insecure work. Young people have left and there has been a significant loss in the working-age population. The jobs that remain do not pay enough to sustain our local services. We have felt the anger from those areas in recent years, so why do the Government allow this process to continue?

WHSmith employs its staff on part-time contracts at the minimum wage, whereas post office counter staff typically earn £21,000 a year. It matters for the viability of our town centres that people are paid properly, and for the health of our nation that people are treated properly. In my view, this failed economic model was one of the direct causes of the heavy leave vote in constituencies such as mine. It has caused justifiable anger in our towns, so why is that failed economic model being employed?

Surely, if Government mean what they say about listening to those who have been left behind and about trying to reinvigorate our high streets, they must abandon this plan right now and seek an alternative. All the plan means, as the Communication Workers Union puts it, is that post offices are on

“a path of managed decline”.

For the 800 or so staff facing transfer or redundancy, I suspect that this will be the final straw. The vast majority of staff who faced franchising were not subject to the Transfer of Undertakings (Protection of Employment) Regulations 2006 in either of the last two rounds of transfer. Workers in Wigan tell me that it has been a tragedy to watch services run down over several years. Some of them have worked for the Post Office for decades, but this is the final straw.

The Post Office faces pressure from the loss of traditional services such as letters and from falling Government revenue, but it is by no means without assets. Last year it announced profits of £35 million. That should have been the catalyst to retain experienced and well-paid staff and expand into new areas—in France, La Banque Postale, established a decade ago, made a profit of €1 billion in 2016—but instead, it has cut staff and branches and awarded the chief executive a 7% pay rise. Behind the latest wave of closures is a story of greed, exploitation and carelessness with the social fabric and economic heart of our communities.

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[Rachael Maskell]

My hon. Friend has made a powerful point. This has to make business sense and, where it does not, it should not proceed. I also highlight the fact that custom will be lost from retailers in the city who bank and place deposits within the post office. They do not feel safe having to walk through and then queue in a retail outlet. They have already said that they will be transferring their business away from the post office. That has to be taken on board. This does not make business sense or economic sense, nor does it make sense for our high streets or my city.

[Albert Owen]

As my hon. Friend knows, I know the branch she refers to very well from my student days and I use it at Christmas when I visit my daughter. It has excellent services, including an exchange bureau, which can compete with the best. Those kinds of services, which are working in purpose-built buildings, need to be maintained and enhanced. She is making an excellent case, but she makes it for the rest of the country, as well.

[Rachael Maskell]

It is so important that we do not sell off our family silver, which is exactly what this process will achieve, certainly with regard to my city.

Finally, I want to raise the issue of the war memorial placed in our post office, where 16 fallen men from the first world war and ten from the second world war are honoured. It is unknown today what will happen to that war memorial. I reflect on the words of Harold Wood, who today is 95. In 1942, he defended our city as part of the Home Guard. He said:

“The Luftwaffe couldn’t destroy it. It would be sad to see the Post Office do it.”

Our post office survived two world wars, so it would be a shame to close the doors, thereby ensuring that its profitability, service and access will be lost to my constituents.

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate. I congratulate the hon. Member for Wigan (Lisa Nandy) on bringing this debate to the House. The fact that so many people are here indicates our interest in the subject and the importance of post offices to every constituency. I am pleased to bring—as I often do in Westminster Hall—a Northern Ireland perspective to this debate. I will speak about some of the success stories that we have had recently in post offices and their strategy. I am pleased to see the Minister in her place. She looks very lonesome in that top corner, but from my discussions with her, I understand that she is very much interested in the views we are putting forward. I know her response will be positive and I look forward to hearing it.

I will also make some comments about the high street, because it is important to have a high street. I was just talking to the hon. Member for Ynys Môn (Albert Owen), and I said to him that if a shop goes vacant and stays vacant for a while, it almost becomes infectious. It is important to ensure that somebody comes in quickly; otherwise, it will lead to the problems we are seeing across the UK mainland.

I hail from a rural area that has seen the closure of every rural bank in the last five years. The Scottish National party has highlighted the issue of rural banks closing, which is something I have seen in my constituency in the last five years. Any change or alteration of the post office greatly concerns me. We have no banks at all in the Ards peninsula, where I live. Almost every bank that has pulled out—except Ulster bank, which has created a mobile banking service and has a customer adviser in the area once a week—has pointed to the post office and urged people to make the most of the ability to lodge money and lift money through the post office. I have to say that that strategy has been successful in the Ards peninsula for a number of reasons. First, the post offices are there—I will explain how we have been able to keep them over the years—and secondly, two credit unions have opened in Portaferry and Kircubbin, which give some banking opportunities and supplement other facilities.

The figures in the background information may be a wee bit deceptive—I say that gently and with sincerity to those who did it. Some 111 Crown post offices have closed and 1,008 agency post offices have closed. Attempts have been made to build that up by using the outreach service, which can help a bit, but does not take away from the main issue. The role of a post office is not just to do monetary things. Other hon. Members have said that post offices should be doing more where they can, and that is one of the things that I want to look at. What can they offer? Can I do my driving licence there? Can I do my passport there? Can I pay some bills there? Can I do other things? That is what we need to do. I am not sure that the outreach service makes that happen. Therefore, I suggest very gently that the outreach alternative is not really where we are. A well-run network of rural post offices is needed.

I am very aware of any changes to the services offered and I am supportive of colleagues who are losing branches to what has been described to me as privatisation by stealth. That is why I support this debate. I am here to register my support for the post offices and to support those hon. Members who are probably having more difficulties in their constituency than I have in mine because of some of the success we have had.

The briefing from the Communication Workers Union, which I am sure we all received, is clear:

“The Post Office Ltd uses public money to finance the closure and franchising programme.

Everything from compromise agreements to get rid of existing staff (£13 million in 2014-15 alone), to refurbishments on stores it then franchises (£4.6 million was spent on 39 branches), and installing post office counters in franchisees’ premises (the post office refuses to disclose this expenditure), are met by the public. Yet, in return, the public receive a reduced service.”

That is the concern we all share, as hon. Members have said. It continues:

“While Crown offices represent a small share of the overall network, they have historically brought in between 10-20% of the Post Office’s overall revenue”—

a significant amount that cannot be ignored—

“and so any further closures could jeopardise the future of the network.

There is no evidence of respite from the slash and burn approach either, as the Post Office Ltd announced in July that they want to attract new applicants to set up ‘New Network Locations’ in 450 postcode areas throughout the UK.”

That perhaps unsettles the present franchise and network of post offices, as well.

“This initiative will have a substantial and far-reaching implication on the future of every flagship Crown office and Crown office job, as well as impact on Postmasters in sub Post Offices across the network many of whom are already reporting they are struggling financially.”

The two independent reports to which some hon. Members referred—one by Consumer Focus from 2012 and another by Citizens Advice from 2016—concluded that the previous franchising of Crown offices to WHSmith resulted in longer queuing and service times, inferior customer service and advice, poorer disabled access and a reduced number of counter positions. Those facts tell the story. If a service is going to be provided, it should be a good service. If the service is run down and secondary, by its very nature, that leads to the further reduction of the Post Office.

Alongside that, the closure and franchise programme results in the loss of experienced staff, as hon. Members have said. The sub-post office managers in the peninsula that I represent have historically been second to none and we have been truly blessed, but part of that is that they have invested in their businesses. It is not the big firms such as WHSmith that have been offered the franchises, but the smaller shop groups. That has enabled post offices to be retained, because there is an investment, but there also has to be a wage for the sub-postmasters or sub-postmistresses to be able to continue running them.

Having post offices in shops and garages across the peninsula is one way that we have made it work. Someone signing on to work for another company and not as a postmaster or postmistress may not affect quality of the service, but it means the loss of what people see as a community asset. I think all hon. Members have referred to and understood the importance of the community asset that we have.

I have lived on the Ards peninsula for all but four years of my life. It is a close community that has grown, with many people coming to live and retire there. Over the years, the post office has been the cog at its core—a central point for meeting friends. It is also a central point for saying, “You know something? Mrs Jones hasn’t come in this week to collect her money or make a transaction.” The people at the post office know that and then, as they often do, they will call out to see if she is okay. There is a critical community aspect to the post office that cannot be ignored, which is neighbour looking out for neighbour, as we do in this House as representatives.

[Albert Owen]

The hon. Gentleman is absolutely right to talk about the social service as well as the postal service. There are also cash-handling services that post offices provide for small businesses. Wherever they transfer to, that service is not available.