Post Office Network

Gregg McClymont Excerpts

Tuesday 2nd November 2010 Westminster Hall

[Michael Connarty]

I recall the detail well, but to me it was an example of a centralised organisation not having in mind the interests of the peripheral parts of the organisation, particularly small businesses. That is why although I am a Co-op party member, I have serious concerns about a mutual taking over all of Post Office Ltd, because it will become another central organisation, with its own raison d'être that is not necessarily the same as that of people in sub-post offices. I have some serious concerns about how the detail of the proposal will work.

I see the Minister smiling. The other issue is that this is another Lib Dem promise. We know that their promises are worth absolutely nothing, particularly to those who voted for them. That is similarly the case with regards the question raised by the hon. Member for Angus (Mr Weir). To say that there will be no closure programme is the stupidest thing I have ever heard. It is like saying, “The world will stand still because we have done this in the Postal Services Bill.” The world will not stand still; changes will be required. Again, that was mentioned in a Lib Dem promise. It is easy to make promises, but unfortunately the hon. Member for Kingston and Surbiton (Mr Davey) is actually a Minister now; he is in government and he must back up such promises with facts. Is he saying that regardless of how far the income of every single sub-post office in every village or urban community declines, the Government will continue to pile in subsidy? As I said in the debate last week, my calculation is that it would take £270 million a year to guarantee that.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

We have heard many opinions so far and my hon. Friend is making a very important point, but there is a way to boil things down. Most countries have specific provisions in legislation to protect post office numbers but, as it stands, the Postal Services Bill does not.

[Michael Connarty]

My hon. Friend has made a factual statement and it will be recorded in Hansard. There is, in fact, a duty on the Post Office in Germany to provide post offices for towns and communities of a certain size; it has to do that as part of its duty. Under the Postal Services Act 2000, that should have been part of our duty. That legislation said that we could have freedom, but the freedom should have been constrained by discipline, which would have saved post offices in small communities. We should have looked at the business case in such communities and guaranteed that the subsidy would go in.

--- Later in debate ---

[Albert Owen (Ynys Môn) (Lab)]

I apologise for having to leave during the previous speaker’s contribution, Mr Caton—it was probably the excitement of the previous debate. I congratulate the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) on securing this important and timely debate, which follows the Government’s announcement last week.

I want to start by saying that I support the post office network, and I do so as a customer; I ensure that I pay all my bills across the counter at my local town post office. In doing so, I hope to set an example. As a Member, I ensure that all my office transactions are done in local post offices. As has been mentioned, it is wrong for Members to drive past post offices that are closing down and say, “Isn’t it a crying shame?”, before going to other outlets. We must lead by example in our communities if we are to keep our post offices.

The important business for post offices is not only from individuals, but from Government Departments and local government. The hon. Member for The Cotswolds rightly said that we need innovative business. One simple business transaction that local government could encourage council tax payers to undertake would be to pay their bills in local post offices. During the network change programme, I suggested that to my local council, because it was outraged that central Government were closing post offices. I challenged it simply to state on the notice that it sent to each household in my constituency that that service was available in post offices, but it refused to do so. Worse still, the chief executive said categorically that the council could save a lot of money by having people pay the bills electronically or in one-off payments.

I think that we are all in this together. We talk about the big society, and my Anglesey community has a big heart, but we do not need lectures on that from anyone. There needs to be interdependency and help from the public, private and third sectors, a point I will come to later. I opposed the network change programme’s closures because it was too rigid and came from the centre. I wish that the Conservative Opposition at the time had said that they would put money into that, but they did not commit themselves in the last Parliament to put in the subsidy, which is why I did not support the Conservative motion. I abstained, and people who know me know that I do not do that very often; if I think something is right I will vote for it, and if I think something is wrong I will vote against it. It was wrong of the Conservatives not to commit themselves to the subsidy, but the new Government have said that they will commit additional money to help the post office network, and I support that. It would be churlish not to do so. I think that that is important and must be sustained.

Echoing the comments of the hon. Member for Angus (Mr Weir), I am confused about the mutualisation programme. I support mutualisation. Indeed, I told the previous Secretary of State and the Minister responsible for the Post Office at the time that Royal Mail should be mutualised, because I believe that it is so special in the fabric of British society that it must be treated differently. It should be neither left to the laissez-faire approach and the free-for-all of the market, nor cushioned as it had been under previous management and Governments. I was told that mutualisation was the wrong model, but I do not think that Hooper looked at that model carefully enough. Welsh Water, for example, which operates in my constituency, is a not-for-profit organisation. It provides a universal, quality service in Wales, and all its profits are reinvested in the company for the benefit of the customers. That is the kind of model we need for Royal Mail. I hope that the Minister will give some details on the mutualisation for the post office network.

Ultimately, post offices are private businesses in the main. They are run by individuals who have invested their own hard cash, time and effort to provide a public service. They are private means. There are also the private subsidies from Government and, in the case of Wales and Scotland, a special diversification programme to help keep the businesses open, so there are three streams of investment to the post office business.

I wonder how the mutualisation will work and, if there is difficulty, how post offices will get help. There will be difficulty, because business is dropping as the pattern continues of people using mechanisation and electronic mail, which is taking over. There are big concerns, which I am sure the Minister will try to address, because it is important that people know now what will happen. I have friends who are postmen, sub-postmasters and in management, whom I work with, and they are all confused about that. We need clarity on that matter

[Gregg McClymont]

I want to add to something my hon. Friend has said. Our understanding from Post Office Ltd is that only about 4,000 of the 11,500 post offices now open are profitable. In addition to the public subsidy, Post Office Ltd cross-subsidises the loss-making post offices to the tune of £400 million. The Government subsidy is welcome, but we have to be clear that it really is an uphill task. Mutualisation will have to be tremendously successful to make up the shortfall for those 7,500 post offices.

[Albert Owen]

My hon. Friend is absolutely right, although it is not for me to answer on the Government’s proposals. I would like to see something developed along the lines of the people’s bank. I would like to see credit union activities in local communities, in which people will have a real say on what goes on.

--- Later in debate ---

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Thank you, Mr Hollobone. I shall speak even more briefly than that.

I spoke on Second Reading and have had conversations and briefings with the Minister. All politics is local, so it is understandable that we have heard a great deal today about local post office branches; in villages, in particular, they are a lifeline. However, I want to raise the broader picture and speak a little about how the Postal Services Bill is drafted.

I said in an intervention that statutory provision for post offices should be written into the Bill. At the moment, it is unclear what mutualisation actually means, but however well it proceeds we have a big problem, because 7,500 post offices do not make a profit. The two most successful mail services in the world are the German and Dutch services. In both those countries, provision for post office services is written into statute. I reiterate the point that however worthy the good intentions of the Government and Members on both sides of the House in respect of the Bill, unless we make provision in it for post office numbers, given the economics of Royal Mail and the Post Office, we are looking at significant closures down the line.

The hon. Member for Northampton South (Mr Binley) made a valid point about allowing managers to manage, but given the economics of the Royal Mail and post offices, even wonderful managers will have a difficult task protecting the 7,500 post offices that do not make a profit.

[Mr Binley]

Recognising that most of our small post offices are private businesses, is the hon. Gentleman willing to subsidise private businesses and, if so, to what extent?

[Gregg McClymont]

I am tempted to produce a line from the Leader of the Opposition: I understand that I ask the questions and the Government answer them. Does the hon. Gentleman agree that given the logic of the economics of the post office network and Royal Mail, it is difficult to see how to protect the 11,500 post offices we currently have unless we write into the Bill provision to protect them? That is the key point.

[Mr Binley]

There is an easy way to do that: help post offices with marketing, a proper retailing policy and a wider range of services to sell. It is all there to do, but it has not been done effectively.

[Gregg McClymont]

I admire the hon. Gentleman’s confidence and enthusiasm. We hear a great deal—understandably—from Government Members about the Labour Government closing 5,000 post offices, but that Government’s criteria meant that we have maintained 11,500 although only 4,000 are profitable. I say in all sincerity that unless we write into the Bill provision to protect the number of post offices we have now, we will see post office closures down the line, and that is something that everyone in the House would deprecate. I ask the Minister whether he will put that provision in the Bill.

My final point is about the universal service. I understand that the first universal service order that Ofcom will make as the regulator will not require parliamentary assent. When Ofcom makes its universal service order we will not be able to say that we do not accept it. That is important.