Post Office Services: Isolated Communities

Gerald Jones Excerpts

Thursday 8th February 2024 Commons Chamber

[Andrew Western]

The hon. Gentleman is absolutely correct and, in fairness, there is a Government grant to support the subsidisation of post office services in isolated and rural communities. There is, however, a question of whether that grant is sufficient or, indeed, whether it is reaching the right places.

For the people of Partington, their nearest post office is now several miles away, and the lengthy round trip for those without transport is prohibitively expensive for many local residents. People in Partington are now in the 1% of post office customers whose nearest branch is more than 3 miles away.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

It is clear that the Post Office’s treatment of isolated communities is increasingly poor, and two post offices in my constituency, in Treharris and Deri, have closed, with Pantyscallog in Merthyr Tydfil closing temporarily next week. Without a full consultation, we know that closures are usually permanent. Does my hon. Friend agree that, in terms of access for geographically isolated communities in which transport is poor and in which people have mobility issues or are elderly, not having a post office within 3 miles is placing services out of reach?

[Andrew Western]

I absolutely agree with my hon. Friend.

Partington’s nearest recommended post office site, as advised by the Post Office, is 3.9 miles away. Although that is a significant distance in and of itself, the post office is within a local Co-op store. Residents are unable to access the full range of services at that location, and to do so they have to travel even further into Urmston town centre. Having these services in local communities is incredibly important, and my hon. Friend is right to highlight that, once they are gone, they often do not return.

Like my hon. Friend’s constituency, there is not only one recent example of a post office closure in my constituency. The Woodsend Road post office has also been closed since last summer, and the loss of two local post office branches within a few months—like my hon. Friend’s example of three closures in his constituency—gives an insight into the scale of the challenge nationally. We know that many branches, particularly those in isolated communities, are struggling.

As well as losing access to vital banking and postal services, people in Partington and Woodsend Road have lost something else—an important community hub. I know the Minister recognises that the value of post offices goes beyond the provision of mere services; they can contribute to tackling loneliness, they can prevent older or more vulnerable people from becoming digitally excluded, and close and trusting relationships are built between staff and customers. Indeed, research from the Post Office shows that three in four people who use branch services list face-to-face interaction as their main reason for choosing to do so.

In preparation for this debate, I reached out to residents in Partington and around Woodsend Road asking them to contact my office to share the impact that the closure of their post office has had on them. I am grateful to everyone who did, and I will share a snapshot of their experiences.

One resident, aged 77, told my team that conversations with post office staff were the only human interaction he had. If losing this was not bad enough, the gentleman in question had to start relying on Partington’s one ATM to access cash. He was recently mugged just after using the machine, because criminals know that vulnerable people have no other place to go in Partington to withdraw cash. He is now understandably scared to use the ATM again, and he instead has to rely on a friend to drive him to the closest post office, several miles away.

Another resident, aged 89, described the loss of the post office as “devastating” to her independence. She explained how in the past she used to walk to her local branch, but now her family must travel from Oldham, in the north of Greater Manchester, to drive her all the way to the Sale post office for her to access the services she needs. Her family’s journey will take upwards of two and a half hours to complete, on a good day. Another constituent is now spending £20 a week on taxis to go to her nearest post office, following the closure of her local branch on Woodsend Road.

This is unacceptable, not least because often those most affected are pensioners and are therefore necessarily on fixed incomes. I have written to the Post Office about both branch closures in my constituency on multiple occasions to try to find a resolution. At both branches, the Post Office could have been better prepared in terms of recruiting a new postmaster to run the branch and providing some sort of alternative provision in the short term. The postmistress in Partington gave the Post Office three years’ notice of her impending retirement, yet we find ourselves in this unacceptable situation. I am still awaiting news on whether a mobile or drop and collect service could be put in place as a temporary measure to provide residents with access to post office services while a longer-term solution is sought. I had to request that, as, seemingly, it had not been proactively considered by the Post Office.

I understand from the Post Office that recruiting new postmasters can be challenging. That reflects a wider challenge nationally about the viability of branches in isolated communities and the remuneration of the people running them. That brings me on to the issue of the support that post offices need. Like any other retailer, post office branches are facing the challenge of declining footfall, as more and more people go online for services. That makes the host shops from which post offices often operate less commercially viable. We should also reflect on the provision of Government services through post offices, which have declined by more than 75% since 2010 and today make up only 4% of their overall revenue. In March 2024, the Government are set to withdraw their Driver and Vehicle Licensing Agency services from post offices.

We also need to look at the relationship between banks and post offices. With high street banks, including those in Partington, closing en masse in recent years, post offices have increasingly had to step in to provide banking services in communities. The 5,500 bank closures since 2015 have saved those banks about £2.5 billion to £3 billion a year. There is a strong case, which the Minister has articulated previously, for some of that money to be redirected to support the post office network. I would be grateful if he could update us as to whether any progress has been made in talking to the banks about their potentially providing some revenue to support post office services. One of my local post offices, in Stretford, hosts pop-up banks regularly and that town centre also is to lose one of its banks in the near future.

Last but by no means least, we face the big issue that the cost of sustaining the loss-making post office network is significantly greater than the £50 million in annual network subsidy that the Post Office receives from the Government, as I highlighted earlier in my response to the hon. Member for Strangford (Jim Shannon). As the Post Office itself has said, the pressures on branches in isolated communities have increased, but the subsidy the Government have in place to support them has not reflected that. I understand that it has declined over the past decade, from £210 million in 2012 to £50 million per year in recent years. Will the Minister assure me that the £50 million subsidy and/or other forms of financial support is available to provide post office services in places such as Partington, which, although not rural, are certainly isolated? I understand that if the money has been reduced, there is less to go around, but it would be reassuring to know that somewhere such as that would be eligible. The previous postmistress was not accessing this grant in order to run her post office, but the difficulties in attracting a new postmaster to run the service suggest that it may be something that should be considered in the future. I would be incredibly grateful for the Minister’s support in working with the Post Office to try to establish that, and in looking at any ways in which we can restore post office services on Woodsend Road and, in particular, in Partington.

To conclude, I hope I have highlighted the importance of post offices to isolated communities, particularly those such as Partington, as well as those mentioned by my hon. Friend the Member for Merthyr Tydfil and Rhymney and the hon. Member for Strangford. When residents lose these services, the impact can be devastating as they often support incredibly vulnerable customers. I again thank everybody affected by the post office closures in Partington and Woodsend Road who took the time to contact me and share their stories. I am pleased the Minister has had the chance to hear them today. I hope they help him to push for the changes needed to support our post office network moving forward and ensure those services are retained in isolated communities.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I congratulate the hon. Member for Stretford and Urmston (Andrew Western) on securing this important debate on a subject close to my heart, as the representative of the rural seat of Thirsk and Malton.

We all know how highly our communities value post offices, and our constituents have deep concern whenever they are closed, even temporarily. They value them because of the services they provide but also, as the hon. Gentleman puts it, because they are the provider of trusted relationships—I could not agree more. The post office network is still significant, with over 11,500 branches across the country. Recent research by the London School of Economics highlighted that the network makes a valuable contribution to the economic health of our high streets, generating £3.1 billion of additional spending every year. It is understandable that the hon. Gentleman wants to debate the issue, given that his constituency has seen changes in its provision of post offices in recent months and years.

The Post Office has the commercial freedom to deliver the branch network within the parameters set for it by Government. Those parameters include minimum access criteria and minimum services to be provided at branches across the country. For example, 99% of the population must live within three miles of their nearest branch and 95% of the total urban population must live within one mile of their nearest outlet, which relates to the hon. Gentleman’s constituency because it is in an urban area. Despite all the challenges faced by retailers in recent years, it is pleasing that the Post Office meets and exceeds those criteria at a national level. In fact, more post offices have opened this year than have closed and the network is as large today as it has been for five years, with around 11,700 branches open.

As the hon. Gentleman will know, 12 branches are operating in in Stretford and Urmston, serving around 13,000 customers each week. The post office network in the area supports around 60 full-time equivalent jobs and has an economic contribution to his constituency of over £6 million each year, as well as driving an additional wider high street spend of £5 million a year.

I am aware of the hon. Gentleman’s concerns about the situation in Partington, where I understand the post office branch closed last year when the postmistress retired after an incredible 35 years serving her community. From my own constituency experience, I fully appreciate the impact a branch closure can have on a community. It can be disruptive, particularly for communities without nearby alternatives, but that fluctuation is part of the modern, dynamic, franchise-led business that the Post Office primarily is. The network is made up of small businesses and, just like any other franchise-based business, the Post Office cannot control a franchise’s decisions about their future. As postmasters move on, branches close and new ones open, as the hon. Gentleman has experienced at first hand, with the opening of Stretford post office in its new permanent location late last year.

The reasons for a temporary branch closure are generally outside the control of the Post Office. However, in such instances, the Post Office ensures services are maintained as quickly as it can. I understand from the Post Office that there is interest from a community group in taking on the Partington branch, with a further meeting scheduled next week, so I am hopeful that the branch can be reopened as soon as possible. I note the hon. Gentleman’s point about the provision of a mobile service, and I am happy to take that away and update him. It is not easy to secure, as I have experienced myself, but we will do whatever we can.

We are not blind to the realities of taking on and running a post office. Like any other retailer, post offices face pressures from continually evolving consumer behaviours, particularly as consumers shop online more, driving footfall away from our high street. When it comes to consumer habits and accessing Government services, it is not our place to dictate to people where they should access those services—I think that we often like to access those services online. None the less, we are keen to retain what services we can. The hon. Gentleman did point to the DVLA contract, which has been extended for another year. I think that everyone would like to see that contract extended on a longer-term basis, but negotiations will have to continue.

Changes in consumer behaviour are significantly driving down the number of letters being sent, which is also having an impact on post offices. Nevertheless, there are reasons to be optimistic. We were pleased to see the Post Office launch its Parcels Online business last year, whereby customers can select and pay for Evri and DPD products online before dropping parcels off at their nearest post office. The Post Office is now also rolling out a similar proposition across the physical network, which means that customers can compare different carriers to choose the option that best suits their needs. We see this as a significant opportunity to improve competitiveness and competition in the market, and I am keen that the Post Office expand that proposal further to include more carriers.

There is also a major opportunity, as the hon. Gentleman puts it, in banking services. All customers should have appropriate access to banking and cash services wherever they live. That is why we have legislated to protect access to cash to ensure that customers can continue to access everyday banking services at the post office. This development is important for the hon. Gentleman’s constituency as, for example, around 50% of bank branches in Stretford and Urmston have closed since 2015, so post offices are key in providing access to cash in the constituency, as they are across the country.

In December, £3.3 billion in cash was either deposited or withdrawn across the country. The post office network is therefore a crucial component of this country’s long-term provision of cash and banking services. And that is why I have been clear that the Post Office should be ambitious in its negotiations with the banks for the next iteration of the banking framework agreement, which already provides significant revenue into the post office network. We welcome that, but there are further opportunities. The hon. Gentleman may want to speak to the Economic Secretary to the Treasury about other services, such as banking hubs. As I said earlier, there are 30 hubs around the country already and 70 more in the pipeline, but our aspiration is to get 500, and it may be suitable to provide a hub in his constituency.

[Gerald Jones]

I thank the Minister for giving way. I fully accept that there are challenges. For example, many of the people working in our post offices have done so for many years and when they come to retirement, it really is a challenge to get people to take on those businesses. The communities that we have described this afternoon—geographically isolated communities and communities with public transport issues—tend have many older people who often use cash in their transactions. Banking hubs are great in larger towns perhaps, but things are much more difficult in smaller, isolated communities. What other options can be considered so that those communities do not become financial deserts?

[Kevin Hollinrake]

The hon. Gentleman raises an important point. Banking hubs are not a one-size-fits-all solution. There are other solutions, some of which are facilitated by the banking framework. Enhanced facilities in post offices is one such solution—for example, a separate line in the post office. Smart ATMs are part of the solution. OneBanx provides a mini-banking solution that can be provided in libraries, for example. Different financial organisations, such as some of the building societies, are rolling out such provisions, but we see banking services, and the remuneration that flows from them, as critical to ensuring that we have a sustainable network of post offices. I have always been clear in this House that if Members have particular local issues, I am happy to work with them and the Post Office to try to deliver solutions on a case-by-case basis.

Although there are opportunities, that does not mean we are out of the woods. Branch profitability is a top priority for postmasters, and I am keen to ensure that it can be enhanced wherever possible. I assure Members that we remain steadfast in our support for the network. We have provided significant financial support to sustain the nationwide network—over £2.5 billion in funding in the past decade alone—and we are providing a further £588 million for the Post Office between 2022 and 2025. The moneys include investment and, as the hon. Member for Stretford and Urmston referred to, an annual network subsidy of £50 million, which helps to safeguard services in the uncommercial parts of the network.

The Government have been clear that post offices should be a valuable social and economic asset for communities and businesses for years to come. We continue to work with the Post Office to ensure that the organisation and the network are fit for the future, and we always welcome views on the network, such as those expressed today. I thank the hon. Member for Stretford and Urmston for introducing this important debate, and the other hon. Members who contributed to it.

Question put and agreed to.