Post Office

Ian Murray Excerpts

Wednesday 27th November 2013 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

I thank the Minister for her statement and for advance sight of it. Let me start by paying tribute to our sub-postmasters up and down the country. They are integral to all our local communities across our constituencies, and are indeed the social fabric of this country. However, the job of a sub-postmaster has become much more difficult in recent years. Research from the National Federation of SubPostmasters shows that incomes have fallen and many sub-postmasters work very hard, over very long hours, for very little return. That situation has not been assisted by the Government, who in 2010 announced plans to use post offices as the “front office for government”. The Government have failed to deliver on their pledge. No new major government services have been awarded to post offices since May 2010. The Minister says that the Post Office has won all that it has bid for, but these were contracts that it already had, and, according to the National Federation of SubPostmasters, many services do not make the Post Office any money at all.

The situation resulted in the NFSP removing its support for the Postal Services Act 2011, because the Government promised £466 million of government work but the Post Office is currently gaining only £130 million from government business—that is 7% less than last year. That failure has resulted in the post office network being under more pressure than ever before. In addition to that is the abject failure of the network transformation programme to do what the Government planned. Consumer Futures wrote to the Business, Innovation and Skills Committee last month saying that of the 6,000 branches that were predicted by the Government to convert to the new model, only 1,100 have done so. That shows that the programme is not working, which is why a degree of compulsion has been introduced, with additional funding to deliver it.

The Minister dresses up this statement as good news, but today’s announcement of an additional £200 million on top of the £440 million already trailed beyond 2015 means that we can firmly say that this is a vote of no confidence in what the Government are doing to the post office network. In effect, the Government are increasing the compensation for people to leave and providing more money to convert. Of that, £23 million alone is for completing a retail survey to determine who should be converted or removed from the network on a compulsory basis. If the Government had delivered on their front office for government work that they promised back in 2010, the £640 million would not be required. It is a payment for abject failure and for yet another broken Government promise.

The National Federation of SubPostmasters voted to approve the package yesterday, because most operators feel that the traditional post office model under this Government is not working. Sub-postmasters know that they face a degree of compulsion, but they will take the package as they are struggling on their incomes. The fact that members of the National Federation of SubPostmasters voted so wholeheartedly to support this package shows that they want out. It is the epitome of taking the money and running. Crucially, the money will be used to subsidise exit from the network rather than to go into the network to make it sustainable in the long term.

I welcome the last shop in the village and community post office funding and support the fact that there will be no compulsion in that area. The £20 million will assist in modernisation and help these critical community assets. Rural communities in particular need their post office services to survive.

By the end of the process, the Government will have spent £2 billion on network transformation, and there is a concern that we still do not have a model that is sufficiently attractive to current or future operators. If the model were attractive, it would not require additional funding, as the current programme would not be failing. Given that the National Federation of SubPostmasters has called the privatisation of Royal Mail a “reckless gamble” for the post office network, is it not the case that although the Minister is throwing as many sub-postmasters as she can into lifeboats, those lifeboats could already be sinking as retailers will not take on the local model? The Government are content not just with selling off the Royal Mail for a song but with hastening the demise of yet another cherished national institution.

In answer to a question from the hon. Member for Argyll and Bute (Mr Reid) a few weeks ago, the Prime Minister said that

“we have committed that no post office will close in this Parliament.”—[Official Report, 23 October 2013; Vol. 569, c. 296.]

If that is the case, post offices in which owners are paid to leave with no alternative in place are closing by stealth, showing that the Prime Minister’s claim is indeed hollow and shallow.

Let me ask the Minister a series of questions. First, will the current criteria be used for compulsion, or will it be updated? Secondly, will the new announcement require new state aid applications to the European Union? Thirdly, if a sub-postmaster stays and converts to a new model, they will have their salary subsidised until 2015, but what happens beyond that? Despite the fact that more than 1,000 sub-postmasters have said that they wish to leave the network voluntarily, only 94 retailers have been found to replace them in the past two years. What happens to the post office if other retailers are not prepared to take it on after a postmaster leaves the network on a compulsory basis?

As shareholders get a significant financial benefit from a privatised Royal Mail, the taxpayer picks up a new £650 million plan B for post office network transformation. It is clear that the Government have created chaos in our postal services, and that the era of Postman Pat and Mrs Goggins is well and truly over.

[Jo Swinson]

I thank the hon. Member for Edinburgh South (Ian Murray) for his contribution. I agreed with some parts of it. Of course we all join him in paying tribute to the sub-postmasters who do such a fantastic job in all our constituencies up and down the country. I also agree that it has been a very difficult environment for sub-postmasters. However, small businesses and retailers have also found the past few years difficult. We could go over the argument that takes place in this House on a regular basis about where blame for that lies, but suffice it to say that we have seen a challenging set of economic times, and that has had an impact on the post offices, as it has on other businesses in the high street. However, the Post Office is a key partner of the front office for government, and it has won all the contracts that have come forward. Potential streams of income are coming down the track in the form of assisted digital services and identity verification. A whole range of different models are being explored, including those with local government. Indeed, a number of contracts have been won with various local government services, and there is probably more that can be done there, too. However, it is about not only the front office for government or mail, but having a diverse range of income streams for the post office. Financial services is one on which we have focused. For example, the roll out of the current account, which was piloted earlier this year in East Anglia, will be welcomed by many sub-postmasters, as it will provide regular transactions and regular footfall into post offices to give them the customer input they need to run thriving businesses.

I do not recognise the hon. Gentleman’s comments on network transformation. We are talking about a process in which more than 2,000 post offices are already signed up to convert to network transformation. I am sure that Members will report that customers have been positive about it, and the customer satisfaction statistics speak for themselves. Indeed, retailers in some of the new models, with the brighter and more modern environments, have experienced a 10% uplift in sales. This is about building a sustainable future. The hon. Gentleman tries to talk down the network transformation, but we should be talking it up.

I make no apologies for providing welcome funding to sub-postmasters for participating in important surveys, which will also help to gather valuable management data across the network. We are dealing with a diverse and dispersed network of nearly 12,000 branches across the country. It is important to have that management data for the Post Office to work out how best to plan the network for the future. Ensuring that sub-postmasters are properly remunerated for undertaking those surveys is particularly helpful.

The hon. Gentleman asked a few questions about whether new state aid applications will be required. The answer is yes, but as the package runs from 2015, there is plenty of time to ensure that we get through that necessary process. On the payments that sub-postmasters will receive, he is right that there will be an enhanced package up until 2015 because we recognise that in making a change and a transition, new customer bases and income streams will have to be built up. It is important that sub-postmasters are helped and encouraged to do that.

The hon. Gentleman was wrong to say that we were subsidising the exit of sub-postmasters and leaving communities stranded without post offices. That would be taking a leaf out of the previous Government’s book. Under this plan and under this Government, that cannot happen. There cannot be a subsidised exit if there is not already alternative provision in that community. Importantly, communities have to be happy with the changes that are being made, and provision has to continue. In those circumstances, if some sub-postmasters want to leave the network and retire or perhaps take on a new challenge, we will compensate them for doing so, as long as the service continues. That is the key difference between what the hon. Gentleman’s party did in government and what this coalition Government are doing. Labour closed 7,000 post offices. That was its answer to these particular challenges. We are creating a sustainable future for the post office network at a stable level. That is the difference between what they would have done and what we are doing.