Post Office Network

Amanda Solloway Excerpts

Tuesday 10th March 2020 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)]

It is a great pleasure to serve under your chairmanship, Mr Gray.

I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this important debate on the Post Office. I was taking notes all the way through and sincerely hope that I manage to address many of the questions that have been asked. The Minister with responsibility for small business, my hon. Friend the Member for Sutton and Cheam (Paul Scully)—he is the fifth of the Ministers the hon. Lady referred to—would have been present but could not be here today. I assure the House that I will pass the messages on to him.

It is encouraging to see the shared passion we have for this vital asset—the post office network is, absolutely, a national treasure. I was delighted to hear the hon. Member for Brentford and Isleworth (Ruth Cadbury) talk about new premises, and to hear the wise words of all Members—including the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), who described the post office network as a “national gem”. I thank the hon. Member for Strangford (Jim Shannon) for his kind words. He is always incredibly kind to me, and what he said was lovely. It was great to hear his wise words. It was interesting to hear from the hon. Member for Gordon (Richard Thomson), who had positive things to say about the Post Office, and the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), who talked about the flexibility we have.

I assure the House that the Government fully understand that the Post Office is an organisation like no other. Post offices up and down the country contribute enormously to the life and soul of the community, providing a convenient access to vital services and infrastructure that our constituents and businesses need to prosper. Since 2010, therefore, successive Governments have invested more than £2 billion to safeguard and modernise the post office network, to ensure that it is sustainable for the future.

I will address some of the specific questions asked by the hon. Member for Motherwell and Wishaw. Since 2010, the Post Office has turned a corner, but colleagues should not take my word for that. In 2016, it became profitable for the first time in recent history, culminating in a pre-subsidy profit of £60 million in 2018-19. Winning new business has contributed to the improvement of the Post Office’s official financial performance and, consequently, the Government funding required to sustain the uncommercial parts of the network has drastically decreased. The network transformation programme that took place from 2012 to 2018 enabled the modernisation of more than 7,000 branches, adding more than 200,000 opening hours per week and establishing the Post Office as the largest network trading on a Sunday.

A new chief executive officer was appointed in September 2019. He is committed to resetting the Post Office’s national relationship with postmasters. One of the questions that the hon. Lady asked was about that relationship, and we will continue to ensure that it thrives.

In addition, rather than branches closing, the overall number of post offices grew by 91 in 2018-19, and 653 branches have opened as part of the new network locations programme, supporting our high streets and providing customers with a better and more accessible service while making the network more resilient. Furthermore, the Post Office’s agreement with high street banks enables personal and business banking in all branches, providing vital access to cash and banking services for consumers, businesses and local economies while bank branch closures continue apace.

Post Office Ltd has taken further steps to incentivise prospective postmasters to take on a post office. That includes an increase to postmaster remuneration of 10%, year on year, in 2020-21. That is one of the questions you were asking—

[James Gray (in the Chair)]

She!

[Amanda Solloway]

Apologies—that is one of the questions she was asking.

The hon. Lady asked about BEIS and Government oversight of the Post Office. BEIS has challenged the Post Office and, in fact, the new CEO and the chair personally to strengthen their relationship with postmasters and to take on board the lessons learned from the recent litigation. They have provided assurances that they will do so. BEIS has established, and chairs, a quarterly group with the National Federation of SubPostmasters and the Post Office.

The hon. Lady asked about Post Office card accounts. The POCA contract is a commercial matter for the Department for Work and Pensions and Post Office Ltd. It is no secret that the contract for the Post Office card account will come to an end on 30 November 2021, but the DWP is in the process of developing a replacement. The predecessor Minister with responsibility for small business, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), wrote to her ministerial colleagues in the DWP in full support of a full and open tender process to ensure the delivery of the best possible service to citizens and value for money.

I turn to franchising. There is a widespread misunderstanding that franchising is a closure programme, leading to redundancies and the deterioration of services for consumers, but that is not the case. I appreciate that the proposed changes to the delivery of post office services can cause concern in the communities affected, and that some constituents have a strong emotional attachment to directly managed branches and their staff. However, the franchising model has endured to this day, and the vast majority—more than 11,300 post offices—are successfully run on a franchise or agency basis with large and small retailers as part of a thriving business.

Since January 2020, the Post Office and Payzone network have become exclusive bill payment providers for British Gas, bringing more footfall for businesses and revenue for postmasters. Although it is important not to be complacent and to recognise the challenges ahead, I encourage Members to look closely and objectively at the facts, which show unequivocally that the network is more sustainable today than it was in 2010. All that has been achieved notwithstanding the challenging trading conditions in the Post Office’s core markets and the wider sector.

Delivering post office services as part of a wider retail offer is a proven model that brings benefits to the community, the local economy, postmasters, consumers and, ultimately, taxpayers. Let me reassure hon. Members that as part of its ongoing monitoring role, Citizens Advice will continue to track the impact of post office changes on consumers and customer satisfaction with franchised post offices. Citizens Advice also has a formal advisory role in reviewing changes to the Crown post offices across Great Britain that are relocated and franchised.

I note hon Members’ concerns about temporarily closed branches. Let me reassure the hon. Member for Motherwell and Wishaw that Post Office Ltd is committed to maintaining the branch network, and there is no programme of closures.

[Ruth Cadbury]

Could the Minister could explain, now or subsequently, how the Government wish to retain the network? Our experience is that it is not being maintained.

--- Later in debate ---

[Amanda Solloway]

If I do not answer the hon. Lady’s question subsequently, I will provide her with a written answer.

There are more than 6,100 post offices in rural areas, and almost 99% of the rural population live within three miles of one of those branches. Illustrating the importance of post offices in those areas is the fact that almost half of rural post offices have community status, which means that they are the last shop in their village. When the hon. Member for Motherwell and Wishaw referred to how she had been helped with a passport application, I was reminded that, many years ago, I was in exactly the same situation when I went to do my passport. The Post Office recognises the unique challenge of running a community branch, and it provides fixed as well as variable remuneration to reflect their special situation.

A question was asked about opening hours. The network transformation programme involved the announcement of more than 200,000 weekly opening hours and established the Post Office as the largest network trading on a Sunday. The Government fully understand the importance of access to cash, especially in the context of accelerated bank branch closures. That is why the industry-wide banking framework agreement between the Post Office and the high street banks is pivotal in ensuring convenient access to everyday banking services. The House will be glad to know that, as part of its review of postmaster remuneration, Post Office Ltd increased the fixed remuneration received by community status branches to ensure the long-term stability of the rural network.

On Horizon, which the hon. Member for Motherwell and Wishaw asked about, I echo what my colleague Paul Scully MP said to the House: although the Government are pleased that a resolution to the Horizon group litigation has been reached, we do not take for granted the strength of feeling about the negative impact that the Horizon court case has had on postmasters. The Government recognise that this has been a difficult period for postmasters, who are at the heart of communities across the UK. Although the financial settlement in December 2019 and the Post Office’s apology are significant steps in the right direction, there is still a lot that the Post Office needs to do to strengthen its relationship with postmasters and to regain public trust.

Let me reassure hon. Members that improvements at all levels of the organisation are well under way, reflecting the lessons learned from the past. Minister Scully has already spoken to the Post Office—

[James Gray (in the Chair)]

I think the Minister means to refers to the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam. The Minister should not mention the name of the Member of Parliament.

[Amanda Solloway]

I apologise. The Minister has already spoken to the Post Office’s newly appointed chief executive, and has been assured that a major overhaul of the Post Office’s engagement and relationships with postmasters is progressing.

The Government will continue to monitor and proactively challenge the Post Office leadership and will hold it to account on its progress. The Department for Business, Energy and Industrial Strategy is looking at what more needs to be done, and it will outline the next steps in due course.

Mention has been made of postmaster relationships and remuneration; in 2019, after a six-month review of postmaster pay, Post Office Ltd announced an additional pay increase of £37 million per annum. A question was asked about subsidy payments; beyond 2020, Government remain committed to ensuring the long-term sustainability of the network with Post Office Ltd.

To conclude, let me reassure Members that Government recognise the value and importance of postmasters and post offices to communities, people and businesses in rural and urban parts of the UK. We will continue to safeguard the post office network to ensure that post offices can thrive at the heart of communities across the country. I thank hon. Members again for their contributions to this excellent debate and for their hard work supporting access to post office services for our constituents.