Post Office Network

Geoffrey Clifton-Brown Excerpts

Tuesday 2nd November 2010 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Caton, and I thank you and Mr Speaker for giving the House the opportunity to debate this important subject. Although it may not be quite as lively as the previous debate, it nevertheless affects constituents throughout the United Kingdom. I therefore hope that many Members will be able to take part. I welcome the Minister to his seat. He is extremely welcome, and I am sure that he will consider my proposals with great sympathy.

This subject was more broadly debated in the main Chamber during the Second Reading of the Postal Services Bill last Wednesday. I start by offering my overwhelming support for the proposals put forward by the Government in their effort to protect the future of Royal Mail and the post office network. Unlike the previous Administration, which for more than 13 years chose to manage its decline, the Government have taken decisive action within their first few months.

The Secretary of State noted on Second Reading:

“The previous Government’s closure programme shut 5,000 post offices.”—[Official Report, 27 October 2010; Vol. 517, c. 352.]

Once and for all, the Bill reverses the decline of Royal Mail by tackling the £8 billion pension deficit; in terms of today’s debate, it provides a new vision for the future of the Post Office and guarantees the universal service obligation to the 28 million addresses in the UK. It is an assurance that the days of wholesale closure are over. I wholly support the Business Secretary.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I welcome the fact that the hon. Gentleman has managed to secure this debate. He is precise in what he said about the previous Government, but would he care to tell the House how many post office closures took place in the five years prior to Labour taking power in 1997?

[Geoffrey Clifton-Brown]

If the hon. Gentleman looks at the figures, he will find that there were more closures during the 13 years of Labour Government than under the previous Conservative Government. He should be careful when considering the figures.

[Tony Baldry (Banbury) (Con)]

One problem is that the Post Office has to be so heavily subsidised that it classifies as state aid, and there are difficulties with the state aid rules. If we start to lever more private finance into Royal Mail and the Post Office, those difficulties will, I hope, not pertain. That will give the Post Office greater freedom to run post offices wherever it wants.

[Geoffrey Clifton-Brown]

I am grateful to my hon. Friend and constituency neighbour for that intervention. The Minister will need to use all his ingenuity to make the European rules flexible. My hon. Friend and I have taken part in many Post Office debates, and we urged the previous Government and then Post Office managers to allow greater flexibility in running post offices and to allow more private finance to allow a greater range of services—in short, to run post offices a little more as if Tesco were running them given its branch network.

[Albert Owen (Ynys Môn) (Lab)]

I did not support my Government’s change in the closure programme, but the hon. Gentleman is right to point out that many post offices closed under both Conservative and Labour Governments. He is a reasonable man and will acknowledge that one reason for the speedy run-down of business in many post offices was the internet and new technology. Does he accept that we now have the opportunity to upgrade the post office network so that it can provide 21st-century services, something that was denied it during the previous two decades?

[Geoffrey Clifton-Brown]

That is precisely the reason for today’s debate. We need a little innovative thinking and a forward-looking vision for the Post Office to ensure that the maximum amount of the network remains profitable and open to serve the communities in which post offices are placed. That is what I hope to hear from the Minister. I shall now make some progress.

The most important thing that the Secretary of State said last Wednesday was that

“the Post Office plays an essential social and economic role in our communities.”—[Official Report, 27 October 2010; Vol. 517, c. 351.]

All Members know that only too well. Probably the first person to hear about a problem in the community is the postmaster or postmistress. This is precisely why I fought so vehemently against the announced closure of 12 post offices in my constituency in 2008. The closure of the local post office can have a huge effect on the community, but none more so than those in rural parts of the country, which often have no public transport and have already witnessed a decline in such services as pubs, schools, local shops and other amenities.

[Mr Mark Williams (Ceredigion) (LD)]

I agree with the hon. Gentleman about the effect of closures on rural areas. He talks of reducing hours, but does he share my alarm that Post Office management seems to be retiring sub-postmasters in order to reduce the opening hours in rural areas of the sort that he and I represent? That is a worrying trend.

[Geoffrey Clifton-Brown]

Yes. That was part of the dogma used to support the 5,000 post office closures that took place under the previous Government. We need to tailor post office services to meet the demand of the local population. That might mean more flexible hours, but not necessarily a reduction.

The post office is truly at the heart of the community, and I warmly welcome the steps that the Government are taking to keep it there and to diversify the services that it can offer. It was clear at the time of the closures two years ago that the Labour Government were insistent on pushing through their target of closing 5,000 post offices, irrespective of the viability of the individual branch. At times that meant that the will of the political masters was imposed against the better judgment of the Post Office, which knew that in certain circumstances, profitable branches were being closed. So badly thought out were some of the closures that a third of the last Prime Minister’s Cabinet actively campaigned against them.

I know that many Members will want to debate broader questions about the future of the post office network that they may believe were left unresolved after last Wednesday’s debate, but my comments are far more locally based. They centre on the prospects of a bright future for two branches that suffered during the 2008 cull. I quote the Business Secretary again. During last week’s debate he declared:

“I can today announce £1.34 billion of new funding for the Post Office over the spending review period.”

That is extremely welcome. He went on to state:

“The funding will be used to reform the current network, to change the underlying economics, and so reverse the years of decline and secure its long-term future.”—[Official Report, 27 October 2010; Vol. 517, c. 353.]

That is exactly the positive thinking that my hon. Friend the Minister and the coalition Government want to see.

That upbeat and optimistic statement will bring hope to many, including me. With that in mind, I present a ready-made solution to the Minister that I believe will fulfil all those goals. The best part about it is that it will barely cost a penny and will offer a high return. I hope that it will be music to the Minister’s ears, and will leave him singing like a postman. I come from Norfolk, Mr Caton, which has a song about singing postmen; but you will be glad to hear that I shall not sing it, even with a Norfolk accent, which I am perfectly capable of doing.

The two branches in question are in Stratton and the Beeches, both on the outskirts of the market town of Cirencester in my constituency. Both were closed in 2008, with no option for outreach. I vigorously campaigned against that decision because it was patently wrong. Although we are looking to the future this morning, I must go back to the past once more to highlight the ludicrous nature of those decisions.

I turn first to Stratton. There was a deep conviction in the community that the decision to close the branch was taken not on a financial basis, but simply because of its proximity to the Crown post office in Cirencester. The sub-postmaster, Mr John Lafford, reported that in January of that year the branch had a turnover of over £468,000, a point that I raised in this Chamber at the time. Such was the strength of Mr Lafford’s business case for that branch that he was willing to turn down a possible payment of £100,000 to keep the post office serving the community.

At the time of the closure, the branch also provided a far greater range of services than those that met purely postal needs. No other post office, including the Crown post office in Cirencester, had a lottery terminal, and Stratton was the only place where lottery cheques could be issued. That is the sort of innovative thinking and services that all post offices should be offering. By being placed in the local convenience store, the post office was truly at the heart of the community, as it is in so many towns and villages up and down the country.

The closure of the branch in the Beeches demonstrated a similar lack of forethought, given that there is a development in the vicinity that will see the building of approximately 650 new homes. That development would have provided even more trade for the current branch, if it had been kept open. However, it is when taken together that the closures become even more ridiculous, because of the collective number of people affected. Those two branches, being on the outskirts of Cirencester, took in trade from the outlying villages. When they closed, not only were 5,400 residents of Stratton and 12,000 people within a mile of the Beeches forced to use the one already unsuitable branch in Cirencester, so too were the residents of 19 villages covering 100 square miles.

The Cirencester branch was already blighted by long queues. It did not have suitable parking facilities, making it extremely difficult for people with large parcels to use the service. That is an important service for businesses, in particular in light of the growth of online marketplaces, of which there are many such businesses in Cirencester. It was also inaccessible to elderly and disabled people. The Post Office’s own figures show that over a fifth of those residents within a mile of the Stratton branch and nearly a third of those within a mile of the Beeches were retired. For many elderly people who wrote to me at the time, the concept of a walk to a bus stop—if it indeed existed—a bus ride, a walk to the post office, then a long queue before being served, in no way met the Post Office’s accessibility criteria.

Although it is true that the closure of the two branches was compliant with the accessibility criteria, it was no way in the spirit of them. It gives me no pleasure to report that my concerns, raised at the time, have been proved absolutely correct, particularly about the lack of suitability of the Cirencester Crown branch to cope with the influx of new customers. Indeed, research from Consumer Focus notes that since the 5,000 post office closures, average queue times have got significantly longer. The local impact is reflected in a letter from my constituent Valerie King, who wrote to me on 2 July this year with regard to the Cirencester Crown branch, where she noted:

“On many occasions I have been in a long queue, sometimes stretching outside....the elderly are particularly affected as there is nowhere for them to sit and the wait can be quite long. Invariably there are never more than three windows open which at busy times can be infuriating.”

[Roger Williams (Brecon and Radnorshire) (LD)]

The hon. Gentleman clearly sets out some of the problems that have arisen from closures. I was pleased that in my constituency we were able to get the reprieve of two post offices, one in Brecon and one in Llandrindod Wells. Some of the others have to make do with the services of a mobile facility. I do not know if it is the experience of the hon. Gentleman but, for us, it is a very second-rate service, compared with the previous service, or even when a post office is situated in a local shop, pub or other facility.

[Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for that intervention. I believe an outreach service can work very well, and I am going to go on to suggest a solution on those lines. It is variable; I have a lot of outreaches in my constituency, relating to the 12 post offices that were closed. Some work well, some not so well. It is up to all of us to try to see how we can rejig the services and the hours, working with the Post Office—I hope the Minister might be able to say something about that today—and, with a little bit more flexibility from the Post Office, to see how in the individual localities they can be made to work a little better.

The building of new houses in the Beeches has begun and, secondly, the Cirencester branch has been moved. Far from easing the problem, that has added to the car parking difficulty, forcing the parcel and other business into the hands of the courier operation and, as has already been said by the hon. Member for Ynys Môn (Albert Owen), into the internet business and so on as well.

I would like to offer my brief vision of the future to the Minister. I use “my” very loosely, as credit for this must go to Gary Kirkman, the postmaster of Bourton-on-the-Water and John Lafford, the former postmaster for Stratton, for framing the technical realities of the approach, to Councillors John Burgess and Peter Braidwood in Cirencester for their on-the-ground know-how, and to Lee Cox, the former postmaster of the Beeches. At the time of the closures, I suggested in my response to the consultation that at the very least an outreach service should be provided at Stratton and the Beeches, but that was not heeded. I have been monitoring the progress of outreach services elsewhere in the Cotswolds, as I have said. Although it is not always the full-time postal service that customers were previously used to, people work around the outreach hours, albeit sometimes reluctantly, and the postmasters are committed to an excellent service delivery.

It was in an approach to me by Gary Kirkman, the postmaster at Bourton-on-the-Water, who also provides outreach services in my constituency to the villages of Longborough, Guiting Power, Sherborne, Aldsworth, Temple Guiting and Stanway—so he has a track record of managing these outreach services—that I discovered that not only were his outreach services functioning well, but he has the capacity and will to take on more branches, such as the Beeches and Stratton. Discussions with the former postmasters John Lafford and Lee Cox in Stratton and the Beeches have proved that they continue to recognise the importance of the post office both to the community and to their businesses, and they both see a future for this proposal.

The Minister will no doubt be aware of my letter to Mr David Smith, the managing director of the Post Office, of which he received a copy, outlining these proposals. They bear repeating. It would be a hosted outreach branch with a location within Stratton and the Beeches, with the core post office in Bourton-on-the-Water acting as the service provider. Customers would be able to drop off parcels during these hours, and these would be taken to Bourton or Cirencester at the end of the day. I can report that since that letter was sent, I have received a letter dated 28 October from Mr Mark Wright, the network change development manager at the Post Office, stating:

“The post offices nationwide network is kept under constant review so that we continue to meet the changing needs of our customers whilst at the same time working to protect the financial stability of our network.”

That is beginning to show the sort of flexibility that I would expect from the Post Office. Mr Wright goes on to say that, as a consequence of my letter, he will be conducting a review of the proposals and has offered to meet me to discuss this further. Of course, I will take up that offer and use the opportunity to highlight the benefits of these proposals, and I will take the time I have left to remind the Minister of them.

The outreach services will provide a welcome alternative to the overworked, inaccessible Cirencester post office, without significantly affecting its profitability. Indeed, with the current difficulties of accessing this Crown branch people are choosing not to use it at all. As reported by Consumer Focus, Crown branches across the UK continue to lose approximately £60 million a year, almost one third of the Government’s subsidy of £180 million committed in 2011-12. Rather than taking business from the Cirencester branch, these proposals would provide scope for recovering business lost since the closure of the branches in Stratton and the Beeches. The really good news is that the proposal only has minimal variable costs which can be more than covered or reduced through alteration to the opening hours to match demand, and requires the purchase of very limited new equipment—limited to just a computer and a security box, I am informed. At a time when localism is high on the agenda, when carbon footprints and green issues are at the forefront of Government policy, this is a clear opportunity to return services to the locality where they are needed, thus saving unnecessary car journeys and reducing congestion in the town of Cirencester.

Finally, and perhaps most significantly, I believe the proposal, if seen through, would send a clear message that the post office network under this Government is not just about closure, but is about providing a service in the location and at times that people really want to use it. That in turn will help profitability, underlining the fact that outreaches could in part be the saviour of the post office network. The Secretary of State for Business, Innovation and Skills made clear last Wednesday:

“There will be no programme of closures under this Government.”—[Official Report, 27 October 2010; Vol. 517, c. 353.]

Although there may be no programme of closures, the Secretary of State and the Minister today will be aware that changes to the business environment still mean that sub-post offices are continually being closed due to non-profitability and retirement of postmasters. Although I have chosen to present the case for Stratton and the Beeches, I believe that this idea could be implemented nationwide, first, by seeing if outreach could be provided by a nearby branch when a full-time post office becomes unviable and closes. That would maintain postal services by replacing an unprofitable branch with a profitable outreach service, which in turn would strengthen the business case of the core provider.

Tackling the problem of branch closures while trying to maintain the number of post offices, through replacing a closed branch with a new business model of outreaches that would have a variable cost to meet demand, avoids the need to maintain the existing model, which has a high fixed-cost base and an uncertain viability in certain locations. Although an outreach is not a full-time post service, as I said to my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) when he intervened, it can provide all those services offered by a Crown post office, such as the purchase of bonds, foreign currency, insurance and so on, which sub-branches cannot always offer.

As the Government look to extend the range of services offered by post offices, each outreach provider could do the same. That may be of even greater importance as proposals for the Royal Mail are moved forward. With many postmasters deriving some of their income from running a sorting office for Royal Mail, if they were to lose that part of their business they would need to find a way to make up the difference. Taking on additional outreach is a simple and beneficial solution all round. I am confident that the proposals that I have for Stratton and the Beeches, by meeting demand, will be profitable for both the outreach provider and the Post Office. In addition, they would set a precedent nationwide if those conditions can be met.

Although I am sure that many right hon. and hon. Members will talk about the wider picture of the post office network today—an issue that the Minister will also want to address—I ask the Minister for his reassurance that he will use his political influence to work with the Post Office to see these innovative proposals through. Previous Ministers used their political influence incorrectly on the Post Office in 2008. He has the opportunity to use his ministerial responsibility to help to correct that wrong and to demonstrate this Government’s commitment to protecting and growing the post office network nationwide. The message that the Government need to give to the Post Office is not “closure, closure, closure” but “opportunity, opportunity, opportunity”.

--- Later in debate ---

[Mr Davey]

No, it would remain a private organisation, but it would have a share in the mutual organisation, which would give it contracts and so on. In no way would we take assets from individual private entrepreneurs who have set up post offices and run them for years. That would be wrong.

[Geoffrey Clifton-Brown]

In the little time that the Minister has left, will he concentrate on how the £1.34 billion investment will be put into the Post Office network to strengthen branches? Will he give us a flavour of how many branches he envisages the post office having? I have been through the bruising process of losing 12 post offices. Having heard from hon. Members around the Chamber this morning what a terrible problem there is when a post office closes, what is his vision for the future and the number of branches?

[Mr Davey]

I will disappoint my hon. Friend because to answer him would be getting ahead of the statement that we have to make. It will deal with how we want to spend the £1.34 billion and the detailed business case that Post Office Ltd developed. It was not done on the back of a fag packet, as the hon. Member for Linlithgow and East Falkirk (Michael Connarty) said. Given the amount of detail in the business plan for spending the £1.34 billion, it would have to be a very large fag packet. In the statement, we will also flesh out our vision for the future of the post office network.

I shall try to deal with some of the points made in the debate. The hon. Member for Linlithgow and East Falkirk was incredibly critical of the Government. He failed to point out that five post offices in his constituency closed during the previous Government’s closure programmes. If he had done that, we might have listened to him with a little more attention. He and the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) commented on the need to write into legislation the number of post offices there must be in Great Britain. I looked at the Postal Services Act 2000 and the previous Government’s 2009 Postal Services Bill, to see what their proposals were. Do you know what, Mr Hollobone? The previous Government made no such proposals at all. No sensible Government would tie down private business in knots of legislation, and we should remember that private businesses run 97% of post offices. Frankly, that sort of approach goes back to old socialist regulation and is not how to modernise the post office network and make it more commercially viable.