Post Office Network

Hugh Gaffney Excerpts

Thursday 25th April 2019 Westminster Hall

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this debate. Before I became an MP, we stood together to fight for the Brandon Street post office in Motherwell. It was a very good Crown post office and well supported by the local community—even more so by the local shops, which got involved in collecting petitions. They did a very good job, but it was not good enough for the Post Office.

I want to make hon. Members aware of my entry in the Register of Members’ Financial Interests. I am currently on a five-year career break from Royal Mail, where I worked for 28 years before being elected to the House. I am a proud member of the Communication Workers Union, and I wish it all the best for its conference in Bournemouth next week. I welcome delegates in the Public Gallery, who are here to hear this debate.

Throughout my career as a postal worker, I have seen at first hand the clear benefits of having Royal Mail and the Post Office as a unified public service serving all communities across the UK. That is why I fought against the privatisation of Royal Mail for over 20 years. I resisted attempts by successive Governments to fragment and privatise postal services. However, the Tory-Lib Dem coalition was eventually successful in privatising Royal Mail in 2013. They sold off a vital public asset that serves the public good, and undervalued it in the process—it was the biggest post office robbery. There are competing estimates of the real cost of privatising Royal Mail; one suggests that it cost taxpayers around £1 billion.

I have said it before, and I will say it again: Royal Mail was not for sale. I am proud that the next Labour Government have committed to bringing Royal Mail back into public ownership. It is time that Royal Mail once again runs in the interests of the people, and is not used to maximise private profits. Despite the privatisation of Royal Mail, Post Office Ltd was kept in public ownership, but recent years have been marked by constant attacks on the post office network. The result has been a steady fall in the number of Crown post offices since 2013, and they now make up just 2% of the overall network. Some of those closures were justified by arguments about protecting other post offices from closure in the future. We accepted that, but we now face a new threat to our Crown post offices: franchising.

The Government are planning to sell 74 Crown post offices to WHSmith through the franchising process. Is WHSmith a suitable company to take on the responsibility for providing postal services? As we have already heard, it is a company that consumers voted the worst retailer on the British high street. Far from sustaining the post office network, franchising will further its decline. Does the Minister still consider WHSmith an appropriate franchise partner for the Post Office in the light of its seeking to derecognise the CWU, which supports the interests of all staff, including the postmasters? I hope she can provide an answer.

Staff will have to endure low pay and cuts to their terms and conditions, and consumers can look forward to lower service standards. However, I am encouraged by the public, who are fighting back against the threat posed by franchising. Some 92,000 people have signed a petition in support of the CWU’s Save Our Post Office campaign—Labour is on their side, and I thank them for signing the petition. We will end post office closures and stop this unnecessary franchising process in its tracks.

The Government have said that modernising the post office network is vital to ensure its sustainability, yet the modernisation programme has been a smokescreen for post office closures and staff redundancies, and is failing on its own terms. Post Office revenues are falling—revenue from Government, mail, retail and financial services all declined in 2017-18. The truth is that the post office network is struggling because of a loss of post offices and staff through the alleged modernisation. We have lost many skilled workers.

We cannot allow the post office network to decline further because communities across the UK rely on it. The Government’s own survey of the post office network in 2016 found that 95% of people use a local post office at least once per year. Almost 60% were unaware of any alternatives to post offices when it came to assessing standard postal services. If the Government continue to push the post office network into decline, the most vulnerable people and communities in our country will pay the price.

It is important to reflect on the fact that the post office network has changed in many respects. One of the most notable changes is the growing role of sub-postmasters, who now run 98% of the post office network, yet the Government expect them to run their post offices with ever-decreasing levels of funding. The Post Office’s 2017-18 annual report highlighted that there has been a 4.5% reduction in funding for sub-postmasters. I have been contacted by many sub-postmasters in my constituency who have felt the reduction in funding—one in particular. The sub-postmasters in Coatbridge, Chryston and Bellshill are angry.

I was recently contacted by a sub-postmaster who wanted to share his experience. His staffing costs are significantly higher than the remuneration that he receives from the Post Office Ltd. As we lose bank branches, residents increasingly rely on his post office to carry out their banking transactions. That is proving costly and time-consuming, yet no financial support from the Post Office Ltd is available to him to provide those banking services. On his behalf, I ask the Government to review commission rates and remuneration for sub-postmasters. I hope the Minister is listening and will take that forward.

If sub-postmasters are not properly supported, I fear we will see the loss of more post offices in our communities. That is not just a threat; it is what we are being told. Public demand on the post office network is changing, particularly as a result of the loss of banking services in communities across the UK. Banks are closing, and post offices have to pick up the pieces. I welcome Labour’s commitment to establish post office banks, including 300 in Scotland.

I pay tribute to the work of the CWU, of which I am a proud member. I have stood alongside CWU reps and members in many disputes, fighting proposed post office closures and cuts to staff terms and conditions. I will continue to stand alongside them inside and outside this House. The fight to rebuild a publicly owned and unified postal network continues. It must be won for all communities across the UK.

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[Kelly Tolhurst]

I understand where the hon. Lady is coming from, but the reality is that 98% of the post office network is franchised. That is the fundamental business model within the Post Office and its distribution of services. The hon. Lady makes a presumption that WHSmith will fail, and its franchises will therefore be under threat. That does not take into account the potential future development of the Post Office and how we are challenging it. However, as I have outlined today, and in any conversation I have had with any colleague, when hon. Members highlight something to me, I will, as the responsible Minister, always raise that with the Post Office.

In my day-to-day role, I will always challenge the decisions and workings of the Post Office. However, while we are the Post Office’s shareholder, it is commercially run, so it is within its rights to manage operational delivery, but it is for me to challenge, oversee and raise questions where I believe work is needed to resolve matters.

[Hugh Gaffney]

I will keep it short and sweet: will the Minister ask WHSmith why it will not talk to the CWU, and ask it to talk to the CWU to represent members properly?

[Kelly Tolhurst]

I understand the hon. Gentleman’s concern about the CWU and perhaps the conversations with WHSmith, but the union’s relationship with an independent retailer such as WHSmith is a matter for it. It is not for me to direct an independent business. I know the hon. Gentleman and his passion for this subject well, so I am sure he will do all that he can, in his role and with his experience, to ensure that communication takes place.

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[Kelly Tolhurst]

As the hon. Gentleman knows, the Government have been working to make business rates more equitable for small businesses, and we are looking at the impact of that. Post offices will have benefited from that work. He mentions costs that he has been made aware of; if he lets me know that particular constituency issue, I am more than happy to take that forward. As I have outlined, under the Bank of Ireland agreement with the Post Office, postmasters are remunerated for, rather than being expected to pay for the privilege of, delivering that service for our communities.

On the question of cashpoints, as we are faced with bank closures, which is a problem that we all very much agree on—they have deserted our high streets—it is for the post offices to pick up the slack in some cases. That is why this Government, with the Post Office, have been negotiating strongly on the new banking framework—to get a better deal for the postmasters who are delivering services that we all rely on in our high streets and communities.

The question of accessibility in the franchise branches has been raised. Franchising means that a post office presence can be maintained in town and city centres in a way that not only makes financial sense, but ensures that services are more accessible to customers, for example through the provision of extended hours and Sunday opening. Post Office Ltd is wholeheartedly committed to ensuring that the needs of the community and its customers are met in any relocation. That is why the Post Office consultation encourages the community to share its views on all matters, including issues related to accessibility under the Disability Discrimination Act 1995.

Post Office Ltd and its franchise partners have stringent rules regarding access to post office branches, which meet all relevant legal requirements, to ensure that all customers, including those with disability or mobility issues, can access their branches. The Post Office also runs local consultations in order to engage local communities, so that they help to shape its plans. The Post Office does not seek a mandate for the franchising, but consults on practical aspects of a proposed relocation, such as service provision and accessibility.

[Hugh Gaffney]

The Minister mentions communication. Has she met the Communication Workers Union about post office closures? Will she arrange that?

[Kelly Tolhurst]

If I might correct the hon. Gentleman, they are not closures; they are franchises. I am concerned about the language used when we talk about the post office network. We are talking about a change in operation, not closures or a loss of service. I will happily meet the CWU on any issues it wants to raise. However, I have to be clear that these are not closures; they are franchises. I think that that sends a really strong message, because communities will think that they are losing all their post office services, when that is factually not the case.

I am aware that hon. Members have expressed concerns about this process. I have met many hon. Members to discuss issues that they have had with franchising in their constituency, and have raised those directly with Post Office Ltd. Citizens Advice reports that Post Office consultation is increasingly effective, with improvements agreed and reassurances provided in most cases. That demonstrates that the Post Office is listening to communities. Ultimately, decisions on franchising are commercial ones for the Post Office to take—within the parameters set by the Government to ensure that we protect our valued network.

On the partnership between WHSmith and Post Office Ltd, WHSmith sees post offices as a central hub in the community and takes the social responsibilities that come with that very seriously. As I have outlined, WHSmith has successfully operated post offices within its stores since 2006, and following the recent agreement, the number of post offices run in WHSmith stores will be greater than 200. This will support the long-term sustainability of post office branches and bring longer opening hours, so that customers are offered seven days of trading a week in convenient locations. Throughout this period, WH Smith has shown that it can successfully run post office branches across the country by delivering excellent standards of customer service, with trained staff promoting products and services in a modern retail environment.

Hon. Members have levied accusations about the fitness of WHSmith and its operation, but it is still very much a recognised brand on the high street, as is the Post Office. We need to accept that some consumers and customers are still very much lovers of the WHSmith brand. I have visited WHSmith branches in which there have been franchises, and the feedback from the community has been very good. I have seen at first hand how it can work. However, each store operates independently. Again, if there are issues with branches in any Member’s constituency, we will always raise those directly with the Post Office.

The Post Office card account is a commercial matter for the Department for Work and Pensions and Post Office Ltd. However, it is no secret that the contract for the Post Office card account comes to an end on 30 November 2021. For claimants who are unable to open a mainstream account ahead of that date, DWP will implement an alternative payment service that allows users to obtain cash payments, wherever their location, before the end of the contract.

It is worth pointing out that that 99% of a bank’s personal customers are able to withdraw cash, deposit cash and cheques and make balance enquiries at a post office counter. Post offices will therefore remain central to delivering cash to customers, including the elderly or the most vulnerable, regardless of the banking product that they chose or move to.

The hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) rightly said that it would not be appropriate for us to talk about the legal proceedings at this time. However, I assure her that as the Minister responsible, I will endeavour to take any action required. I am absolutely committed to doing whatever is in my power to make sure that the Post Office retains its standing, and that the relationships it maintains are the best that they can possibly be.

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[Hugh Gaffney]

The Minister says that standards will be maintained. Franchises do not maintain the same standard of services as Crown post offices. That is the point I am trying to make.

[Kelly Tolhurst]

I respect the hon. Gentleman’s position, but I disagree that moving to a franchise equals a loss of services and standards. I do not believe that, and I have not seen that, so I respectfully disagree. However, I absolutely take his point and understand his concerns.

Decisions on bank branch closures are a commercial matter for banks and are taken by the management team of each bank, without intervention from the Government. So that hon. Members can see exactly how well I understand the problem, I highlight that I represent Rochester and Strood, and Rochester no longer has a bank in what was the city. However, the Government recognise that branch closures can be disappointing for customers and believe that the impact on communities must be understood, considered and mitigated where possible. That is why we support the Post Office’s banking framework agreement, which enables 99% of the UK’s personal banking customers and 95% of the UK’s small and medium-sized enterprise banking customers to carry out day-to-day banking in the post office network.

I reassure the House that all post offices across the network are of the utmost importance to the Government. We recognise their value and importance to communities, residents, business and tourism in rural and urban parts of the UK. We also recognise and respect our sub-postmasters and the people who work within franchises, who work so hard, as was outlined throughout the debate; some postmasters will go the extra mile. We respect them, and we are determined to work with our partners to make sure that we maintain the Post Office as a viable business proposition for any postmaster to continue with. We will continue to honour our manifesto commitments, so that post offices thrive and remain at the heart of our rural and urban communities.

I again thank hon. Members for their contributions to the debate. I understand their frustrations, and I take their issues on board. In closing, I remind colleagues that, as I have said several times, I am always willing to talk to any MP regarding any constituency branch issue.