Backbench Business

Gareth Thomas Excerpts

Thursday 17th November 2016 Westminster Hall

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am delighted to catch your eye, Mr Wilson, in this very important debate. I pay great tribute to the hon. Member for Luton North (Kelvin Hopkins), who secured the debate today. News of any organisation looking at the closure or franchising of 59 Crown post offices with a projected loss of 2,000 jobs should rightly be met with horror, as the hon. Gentleman described. This reduction in operations can only mean a worse service for customers, longer queues, fewer staff, worse disabled access and the loss of a crucial community asset. I am sure many hon. Members are here today because of a threatened closure in their own constituency and, sadly, I am no different. As the MP for one of the largest rural constituencies in the country, having easy access to the services that a post office provides is an utter necessity. Since 2000, the number of rural post offices has decreased by about 3,000. Likewise, the number of Crown post offices—the larger branches that have more services—has dropped by 1,200 in the past 25 years.

The largest town and principal economic and commercial hub in my constituency is Cirencester. Its branch is one of the 59 proposed closures. It operates from a leasehold property and offers a wide range of services, including access to pensions and benefits, tax payments, driving licence and passport renewals, lottery terminals and foreign exchange. The four counter positions and two self-service kiosks are often subject to long queues and high demand. For such a valuable service to continue to exist, we must look at ways for Crown post offices to diversify their services and grow their dwindling customer base. As I said in my speech on the Post Office’s future way back in 2010:

“The message that the Government need to give to the Post Office is not ‘closure, closure, closure’ but ‘opportunity, opportunity, opportunity”.—[Official Report, 2 November 2010; Vol. 517, c. 213WH.]

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I do not know whether the hon. Gentleman is aware, but there are rumours that a third round of franchise announcements and therefore closures of Crown post offices is due at any moment, with a potential loss of 190 jobs. Does he not think this debate might be an opportunity for the Minister to put some pressure on the Post Office to think again about that third round of potential franchises?

[Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for bringing that to the attention of the House. I have not heard those rumours; I will simply respond with a line from later in my speech. If the Post Office were Tesco, it would be thinking not about closing profitable branches but about how to make those branches more profitable by providing a more attractive service for the customer. That is what I would like my hon. Friend the Minister to take away from this debate today. Let us see how we can make the Post Office work better for its customers.

What the Post Office needs is a proper business model for the future, which, above all, needs to consider how much of the business should be commercially profitable and which bits of it the Government, through the taxpayer, are prepared to subsidise. Although I do not agree with the hon. Member for Luton North that it should be wholly brought back into public ownership, there is no doubt, given the number of small suburban and rural branches, that it will inevitably need some form of public subsidy in future. That public subsidy should be clearly defined. The bits that can be profitable, such as the Crown post offices, should be made to operate as efficiently as possible.

--- Later in debate ---

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

There are five questions that the Minister should answer. Before raising them, I join other Members in praising my hon. Friend the Member for Luton North (Kelvin Hopkins), and I echo his declaration of interest.

First, it would be helpful to hear from the Minister why she thinks Post Office income from financial services have grown so slowly? It was heralded as part of the great future for the Post Office by Vince Cable when he launched a document on its future back in November 2010. Secondly, why has Government business going through the Post Office been allowed to plummet? Ministers promised the reverse, again back in 2010.

It is not only the French who seem to be able to run postal services better than the current Government. The Italians have also made a huge success of getting a post office bank up and running. Similarly, New Zealand has a highly successful post office bank, which was established in the past 15 years. There are successful models involving financial services. What is striking about the debate is the cross-party concern about the crisis in the Post Office at the moment.

Thirdly—I ask this as a Co-operative Member as well as a Labour Member—whatever happened to the idea of the Post Office becoming a mutual, with a more involved workforce and local community involvement to help to plot a more co-operative future for the Post Office? The last ministerial mention of that vision from November 2010 that I can find was in November 2013. It would be helpful to know whether the Minister still adheres to that possibility. Fourthly, is the Post Office’s 2018-19 funding package, which I understand is being negotiated in Whitehall at the moment, going to lead to more closures and to more full-time employees being pushed out of the door, or is it going to be a genuine opportunity for serious investment in new services?

Fifthly, and lastly, as I understand it, the 10-year contract that the Post Office has with Royal Mail can be reviewed from January next year. It would be good to hear reassurance from the Minister that Royal Mail intends to stick absolutely to the terms of its contract with the Post Office going forward.

Post Office revenues from Government services have fallen by almost 40% since 2010, as no new Government services are using the Post Office. Of those that still are, many Departments are promoting online alternatives. Again, it would be useful to hear from the Minister what discussions she has had with other Government Departments to encourage them to use the Post Office. I ask that question because the Post Office being the front office for the Government was the first part of the great vision that Vince Cable set out in November 2010. If revenues from Government services have declined by 40%, it raises some fairly alarming questions. There are rumours that Government insiders themselves accept that that option for the Post Office’s future has largely been a failure.

The second objective that Vince Cable set out was the expansion of financial services. The Post Office’s revenue from financial services has grown by just 2% over the past six years. Why does it still not offer a business account? In one of the district centres in north Harrow in my constituency, there is no bank, and there has not been for some time. The Post Office is the only financial services player still in existence there. The option of a business account would be hugely beneficial to small businesses in that one district alone.

I am told that the Post Office is trialling a current account. Indeed, we are apparently four and a half years into the trial; it was supposed to launch in 2014. Why has it taken so long before that product could possibly be launched? There is no dedicated children’s product either. I am aware of the junior individual savings account, but £500 has to be put into that account up front to get it up and running, and that money cannot be accessed until the child turns 18. Given that many people stick with the financial services provider that they start with, it would surely make good economic sense for the Minister to insist that the Post Office quickly gets its act together on a dedicated children’s product.

All of those problems suggest a business that is not taking seriously the ambition of substantial revenue growth from financial services, as Vince Cable once promised. The hon. Member for Yeovil (Marcus Fysh) rightly praised the contribution of postmasters and postmistresses—particularly those who are members of the Federation of Small Businesses. The FSB published a report in October called “Locked Out”, which said:

“Business banking services provided at some Post Office branches and franchises are too limited. Some services, such as cash and cheque clearing facilities, also appear to be processed more slowly than in bank branches. Other services, such as inter-account transfers and currency exchange, are not available. As the future of the network moves away from full-service post offices to franchises there is concern about the impact on small business access.”

It is not just the Communication Workers Union and staff that want change in terms of financial services; it is small business that have genuine concerns. I hope that the Minister will act.

--- Later in debate ---

[Margot James]

I am really sorry not to be able to give way again, but I have got to stop in two or three minutes’ time. I want to answer a couple of points made by the hon. Members for Sheffield, Brightside and Hillsborough (Gill Furniss) and for Harrow West (Mr Thomas).

Use of Government services at post offices is down by 40%, which is disappointing. I do not really foresee a huge improvement in that, because with so many Government services—for instance, on the motor vehicle front—so much is now done online that any operation in that sector would have experienced similar losses. I am much more hopeful about financial services. That sector has grown by 17% since 2012. It is steady, albeit slow, growth year on year. The Post Office has an arrangement with the Bank of Ireland and will be offering more services. Hon. Members have pointed out that bank branches around the country are closing at a swift rate, and that does create an opportunity for the Post Office. I will be lobbying, alongside Members, for the Post Office to embrace this opportunity even further, but I do think that it is doing a good job. I will sound a note of caution that unfortunately—well not unfortunately; it is just a development that we are all part of—more and more banking is now done online as well, but I do see some grounds for hope in that sector.

I want to talk a bit about WHSmith. A great many WHSmith branches are now either hosting or franchising post office services. Virtually all the services remain on offer to the public in convenient locations. I accept that some—a minority, I think, of 11 out of 61—post offices that operate in WHSmith branches are on the first floor. That does present issues for people with disabilities, but they are issues that the WHSmith branches have resolved in conjunction with local groups representing people with disabilities. They have managed to provide lifts and also, in case of lift breakdown, mobile tills so that people with disabilities can be welcomed into the branches.

[Mr Gareth Thomas]

What about the mutual option?

[Margot James]

On the mutualisation that the hon. Gentleman mentioned, yes, the Postal Services Act 2011 requires that the Post Office be maintained either in public hands—public ownership—or in a mutualised setting. At the moment, it continues in public ownership and we have no plans to change that. Indeed, for it to be mutualised the model would have to be based even greater financial sustainability than it is at the moment. Currently, the Post Office is making losses and we would not be able to mutualise it, but the plan is for it to become more and more financially sustainable over time.

The hon. Member for Luton North also made the point about Royal Mail, and various Members have called for Royal Mail and the Post Office to be reunited. I do not see that happening—Royal Mail is now an independent public company—but thanks to Government investment, the Post Office is now in a far stronger position for its impending negotiations with Royal Mail about its business arrangements. That is thanks to the huge investment that we have made in Royal Mail.