Post Office Closures

Gill Furniss Excerpts

Tuesday 25th April 2017 Westminster Hall

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

It is a pleasure to serve under your chairpersonship, Sir Edward. I congratulate the hon. Member for East Worthing and Shoreham (Tim Loughton) on securing this debate. I pay tribute to the Communication Workers Union, which helped us highlight these issues to the public and MPs.

The Post Office is a trusted national brand with a long history. It is instantly recognisable to people across the United Kingdom. It forms part of the everyday fabric of life, offering a wide range of products and services, but it also provides an anchor for communities, decent jobs and, importantly, access to services in rural or urban deprived areas. Instead of making the Post Office fit for purpose for the 21st century, the Government have let that well-loved and trusted institution fall by the wayside and contributed to its managed decline. The Government are intent on privatising our public services. They used to say that they would support a robust Post Office, which former Prime Minister David Cameron promised would be the front office for Government, but they have totally failed on that promise by overseeing a steadfast strategy of cuts to the service that have caused thousands of job losses as well as a decline in the services provided.

The Labour party has made it clear that it would halt further privatisation of the Post Office and instead invest the £80 million of public money that goes into it to ensure the long-term sustainability of branches and services. We will ensure that services are retained and promoted, click and collect facilities are expanded, and banking and financial services, which we know are vital to financially excluded people, are provided.

There were 62 closures and franchising programmes and 500 job losses from the Post Office’s cash handling section in 2016, and more than 2,000 jobs have been lost in total since 2016. On 10 January 2017, it was announced that a further 37 Crown post offices would go under the same franchising scheme, meaning that 300 experienced post office staff and some 127 financial specialist roles will be cut across the network.

Crown post offices typically are directly owned and run by the Post Office. They have directly employed staff and they are often located on prominent high streets. Although there are only 286 Crown branches, they bring in a significant amount—between 10% and 20%—of the Post Office’s overall revenue. Privatising Crown post offices and transferring them into shops such as WH Smith hugely compromises the services provided, causing overall consumer satisfaction to fall, longer waiting and servicing times and poorer access for disabled customers. There are 10% fewer counters per branch in WH Smith branches than in Crown post offices, and 17% fewer foreign currency and business banking positions. At least 30 postmasters have retail businesses in a Bargain Booze franchise.

Not all franchises have worse provision than before, but the overall trend is saddening. Recent independent research for the Government showed that the Post Office continues to deliver more than £4 billion in social value each year to people and businesses throughout the UK.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

My hon. Friend highlights research that proves that the service deteriorates when post offices move into WH Smith branches. When we add the fact that 40% of closures are in the most deprived urban communities, we can see that the most disadvantaged people in this country are in dire straits when it comes to having access to a good post office.

[Gill Furniss]

I completely agree. It is saddening that people in deprived areas get further and further away from accessing the financial services that are necessary to them.

The privatisation of Royal Mail was, quite simply, the transfer of large sums of public money to the already well-off. Since that privatisation, the Government have promised a transformative vision for the Post Office as

“a genuine Front Office for Government”,

and a significant expansion in its banking services, but neither of those promises have borne fruit. Post Office revenues from Government services have fallen by some 40%, and its income from financial services has risen by only 2%—it has not even kept up with inflation. The Government talk about cost-cutting measures, but £3.3 million was spent on refurbishing branches that were then franchised in 2016, at an average cost of £100,000 per branch.

I was pleased that the Government initiated a consultation about the Post Office last December. At that time, the CWU delivered 75,000 postcards signed by members of the public calling for the Post Office—the “People’s Post”—to be saved. Only weeks later, before a consultation response had even been produced, the Post Office announced 37 more Crown post office closures. In fact, nearly five months later, we still await the Government’s response.

The Government’s track record shows that they have been happy to cut public funding at any cost. They have shied away from communicating with the people affected. The Government’s response to the consultation that closed on 21 December has been delayed. Will the Minister tell us when she planned to publish that response? Why have financial services been cut instead of a promoted? Why have we not looked at the example of a Banque Postale in France, which has successfully provided income for the Government and, crucially, financial services for those who need them most? What contingency plans are there for franchises that are coming up for renewal and new franchises? The Association of Convenience Stores has major problems with its members who, due to the hike in business rates, may no longer wish to provide franchise services.

--- Later in debate ---

[Margot James]

I will not give way. I accept that not all Crown post offices lose money; but the majority of those that have been franchised did.

My hon. Friend the Member for Bexhill and Battle (Huw Merriman) put the case very well for the investment made by taxpayers and the Post Office in the service in his constituency; I join him in congratulating Mr Sanjiv Patel on taking the risk, as many others around the country have done. They have then found that it was good not only for their business but for the consumer. The Post Office is doing more for customers and doing it more efficiently for the taxpayer, and it is ensuring that post office services remain on our high streets throughout the country.

Franchising or hosting some Crown branches is part of the Post Office’s long-term plan to ensure that the network is sustainable. It is not about closing services; it is about moving a branch to a lower-cost model, often in a better location for customers, and securing and improving delivery of services. The change from a Crown to a franchise or host branch has been undertaken previously in many locations and is a proven success in terms of sustaining services, as post offices share staff and property costs with a successful retailer. We have heard examples of that this morning. As I was saying, Crown branches have moved from a £46 million annual loss in 2012 to a break-even position today. That is no mean feat. There are still loss-making Crown branches, which is why I do not think we can stand in the way of the Post Office as it makes its service more efficient and sustainable and more accessible to a wider number of people.

[Gill Furniss]

The Chamber is packed. What the Minister believes to be the facts, as she has given them to us, do not ring true with the concerns and experiences that even Conservative Members have described. It seems bizarre that when so many of us tell her there are problems she says the Government should not stand in the Post Office’s way; it does not seem the correct response. It seems to me that we have the responsibility; the Government must provide a proper service for all communities. Clearly, the figures that many eloquent Members have given today are at odds with the Minister’s view.

[Margot James]

I have talked so far mostly about financial issues. It is undisputed that the Crowns were losing £46 million and are now breaking even. There are still some loss-making ones to deal with. I appreciate that changes of the kind we are considering are not easy, especially when they involve staff who have worked in a place for many years. I know that the hon. Lady has had a briefing from the Communication Workers Union, and I have had meetings with it on several occasions; I sympathise with its position. However, it is essential that the business should continue to manage its costs to ensure that it can meet the challenges faced by high streets, let alone the Post Office, now and in the future, as the way we shop and get access to services continues to change.

Several hon. Members made points about Government services, and I agree that in 2010 the Government had hopes that the Post Office could take over many more such services; but the rapidity with which some of them migrated to the internet meant that that hope did not bear enough fruit. The staff in Crown branches that are being franchised have the opportunity to transfer to the franchisee in line with the TUPE process; or they can choose to leave the business. The Post Office offers a generous settlement agreement, which reflects the hard work, commitment and dedication that many employees have shown over the years. However, I reiterate the point that a more efficient Post Office is able to support and supplement thousands of small businesses, as my hon. Friend the Member for South East Cornwall (Mrs Murray) noted; she spoke with great authority about the needs of people in her largely rural constituency. The Government take those needs seriously and have honoured a commitment to maintain a service, even where it is not viable on a financial basis, to people living in the rural parts of her constituency.