Post Office Network

James Gray Excerpts

Tuesday 10th March 2020 Westminster Hall

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to hear your Glasgow accent in the Chair, Mr Gray.

[James Gray (in the Chair)]

I have lost most of it.

[Gavin Newlands]

I thank my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) for securing the debate, and I commend her for all the work she is doing on this important issue. As she mentioned, the SNP pushed hard for the banking industry to provide a fair price for banking transactions over post office counters, because the rate was simply unsustainable. I am glad that a substantial increase was agreed; it is only right, given that in many places the banks are completely reliant on the Post Office to deliver their services. I am delighted that that has been resolved.

One thing that unites Members of different parties—I say that despite the lack of Tory Back Benchers present—is the future of our post offices in our constituencies and local communities. My constituency has 14 post offices and each is vital to its communities, from Ferguslie Park to Bishopton, Gallowhill to Houston, and Linwood to Bridge of Weir—I thought that I, too, would go on a tour of my constituency.

The post office in Bridge of Weir is an example of a community seeing the real value that a post office provides to the village and working hard to secure it. It was closed in 2011 but, through the hard work of the local community, The Bridge charity was set up to take over the former library and repurpose it as the village’s post office and community centre, with a peppercorn rent from the council. From day one, however, the charity faced an uphill struggle. Its income runs at barely half of that projected by the post office, knocking the projections that the trustees made completely out of kilter. It is a matter of some anger that the post office did not qualify for community status due to the proximity of other post offices in other villages, even though Bridge of Weir public transport links can be charitably described as patchy.

Any closure of the post office would result in substantial inconvenience for service users and the wider community, which has a significantly older than average demographic. The Bridge is able to keep the post office only through cross-subsidisation of counter trade by the associated retail unit, which provides a fairly narrow retail offer in order not to conflict with any other retail operations in the village. That cannot be sustainable without a real change to the criteria by which local community post offices qualify for additional support. It is simply preposterous that every other shop in the village would have to close and lie empty before this community asset becomes eligible for consideration for the Post Office funding streams.

In the last few months Post Office Ltd has provided a one-off grant to support The Bridge. If it recognises that need, ongoing support should certainly be offered to The Bridge. I have discussed this issue with the previous Minister; if she will allow, I hope to discuss it with the new Minister. I hope that she will take away what I and many other Members are saying, and that she speaks to the Post Office about amending the criteria to introduce more flexibility—we need a bit of common sense in designating the units of the network that need support.

Post offices such as that in Bridge of Weir, and in thousands of communities across the country, need real support and recognition from the UK Government that they are not just places to collect pensions and post birthday presents; they are the lifeblood of places that have had facilities taken away from them over the years. Sadly, we know that our postmasters have been poorly served by the Post Office and its management.

The Horizon IT fiasco is not just a damning indictment of the Post Office management and its inability to resolve problems competently; it is a devastating judgment on the “Upstairs, Downstairs” culture that seems to pervade the organisation. Dozens of victims have had their livelihood and liberty stripped from them at the behest of management, who denied for nearly two decades that there was any problem at all. We now know that there was a problem entirely of the Post Office’s making, which has cost a high price, and not just financially; the human victims will never get back the weeks and months they have wrongly spent behind bars, and families will never get their loved ones back.

My constituent was convicted of fraud and sentenced to 13 months. Her life was turned upside down. She lost her marriage and house as a result. No level of compensation is adequate for the damage that Horizon has done to her life. That episode demonstrates the fundamental cultural issues within the Post Office management that need to be addressed, and it highlights the lack of governmental oversight that led to that management culture.

For too long the Post Office has been treated like an old armchair: too useful to throw out, but unloved, battered and kept out of obligation rather than enthusiasm. I wish the Minister well in her new role, but that attitude has to change if we want a post office network that is fit for the remaining years of the 21st century. That attitude left some sub-postmasters living below minimum wage earnings due to the paltry sums paid to them to maintain a link in the post office network, and it has left the Bridge of Weir post office continually fighting for its future rather than receiving the support it deserves.

We need recognition from the Government that a post office is more than the sum of its parts. It is a vital cog in our society and communities that helps to bind us together, and it cannot be yet another piece of social cohesion that is left to be stripped away by the mantra of market forces.

--- Later in debate ---

[James Gray (in the Chair)]

She!

[Amanda Solloway]

Apologies—that is one of the questions she was asking.

The hon. Lady asked about BEIS and Government oversight of the Post Office. BEIS has challenged the Post Office and, in fact, the new CEO and the chair personally to strengthen their relationship with postmasters and to take on board the lessons learned from the recent litigation. They have provided assurances that they will do so. BEIS has established, and chairs, a quarterly group with the National Federation of SubPostmasters and the Post Office.

The hon. Lady asked about Post Office card accounts. The POCA contract is a commercial matter for the Department for Work and Pensions and Post Office Ltd. It is no secret that the contract for the Post Office card account will come to an end on 30 November 2021, but the DWP is in the process of developing a replacement. The predecessor Minister with responsibility for small business, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), wrote to her ministerial colleagues in the DWP in full support of a full and open tender process to ensure the delivery of the best possible service to citizens and value for money.

I turn to franchising. There is a widespread misunderstanding that franchising is a closure programme, leading to redundancies and the deterioration of services for consumers, but that is not the case. I appreciate that the proposed changes to the delivery of post office services can cause concern in the communities affected, and that some constituents have a strong emotional attachment to directly managed branches and their staff. However, the franchising model has endured to this day, and the vast majority—more than 11,300 post offices—are successfully run on a franchise or agency basis with large and small retailers as part of a thriving business.

Since January 2020, the Post Office and Payzone network have become exclusive bill payment providers for British Gas, bringing more footfall for businesses and revenue for postmasters. Although it is important not to be complacent and to recognise the challenges ahead, I encourage Members to look closely and objectively at the facts, which show unequivocally that the network is more sustainable today than it was in 2010. All that has been achieved notwithstanding the challenging trading conditions in the Post Office’s core markets and the wider sector.

Delivering post office services as part of a wider retail offer is a proven model that brings benefits to the community, the local economy, postmasters, consumers and, ultimately, taxpayers. Let me reassure hon. Members that as part of its ongoing monitoring role, Citizens Advice will continue to track the impact of post office changes on consumers and customer satisfaction with franchised post offices. Citizens Advice also has a formal advisory role in reviewing changes to the Crown post offices across Great Britain that are relocated and franchised.

I note hon Members’ concerns about temporarily closed branches. Let me reassure the hon. Member for Motherwell and Wishaw that Post Office Ltd is committed to maintaining the branch network, and there is no programme of closures.

--- Later in debate ---

[Amanda Solloway]

If I do not answer the hon. Lady’s question subsequently, I will provide her with a written answer.

There are more than 6,100 post offices in rural areas, and almost 99% of the rural population live within three miles of one of those branches. Illustrating the importance of post offices in those areas is the fact that almost half of rural post offices have community status, which means that they are the last shop in their village. When the hon. Member for Motherwell and Wishaw referred to how she had been helped with a passport application, I was reminded that, many years ago, I was in exactly the same situation when I went to do my passport. The Post Office recognises the unique challenge of running a community branch, and it provides fixed as well as variable remuneration to reflect their special situation.

A question was asked about opening hours. The network transformation programme involved the announcement of more than 200,000 weekly opening hours and established the Post Office as the largest network trading on a Sunday. The Government fully understand the importance of access to cash, especially in the context of accelerated bank branch closures. That is why the industry-wide banking framework agreement between the Post Office and the high street banks is pivotal in ensuring convenient access to everyday banking services. The House will be glad to know that, as part of its review of postmaster remuneration, Post Office Ltd increased the fixed remuneration received by community status branches to ensure the long-term stability of the rural network.

On Horizon, which the hon. Member for Motherwell and Wishaw asked about, I echo what my colleague Paul Scully MP said to the House: although the Government are pleased that a resolution to the Horizon group litigation has been reached, we do not take for granted the strength of feeling about the negative impact that the Horizon court case has had on postmasters. The Government recognise that this has been a difficult period for postmasters, who are at the heart of communities across the UK. Although the financial settlement in December 2019 and the Post Office’s apology are significant steps in the right direction, there is still a lot that the Post Office needs to do to strengthen its relationship with postmasters and to regain public trust.

Let me reassure hon. Members that improvements at all levels of the organisation are well under way, reflecting the lessons learned from the past. Minister Scully has already spoken to the Post Office—

[James Gray (in the Chair)]

I think the Minister means to refers to the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam. The Minister should not mention the name of the Member of Parliament.

[Amanda Solloway]

I apologise. The Minister has already spoken to the Post Office’s newly appointed chief executive, and has been assured that a major overhaul of the Post Office’s engagement and relationships with postmasters is progressing.

The Government will continue to monitor and proactively challenge the Post Office leadership and will hold it to account on its progress. The Department for Business, Energy and Industrial Strategy is looking at what more needs to be done, and it will outline the next steps in due course.

Mention has been made of postmaster relationships and remuneration; in 2019, after a six-month review of postmaster pay, Post Office Ltd announced an additional pay increase of £37 million per annum. A question was asked about subsidy payments; beyond 2020, Government remain committed to ensuring the long-term sustainability of the network with Post Office Ltd.

To conclude, let me reassure Members that Government recognise the value and importance of postmasters and post offices to communities, people and businesses in rural and urban parts of the UK. We will continue to safeguard the post office network to ensure that post offices can thrive at the heart of communities across the country. I thank hon. Members again for their contributions to this excellent debate and for their hard work supporting access to post office services for our constituents.