Crown Post Offices: Franchising

Jamie Stone Excerpts

Thursday 10th January 2019 Westminster Hall

[Lisa Nandy]

Many Members have similar anecdotes from their constituencies—I can see that the Minister is listening, and I am grateful to her for doing so. I have learned that access to post office counters in WHSmith is a huge issue for those with mobility impairments. Some, such as the one that my hon. Friend has just mentioned, have been located on the first floor in premises that do not have an adequate-sized lift. Yet over 1 million people have their social security paid into a post office card account.

The Minister is supposed to represent the interests of the public in discussions with Post Office Ltd and UK Government Investments. Will she tell us whether she has asked colleagues in the Department for Work and Pensions to carry out an equality impact assessment of the consequences of franchising on disabled claimants? I have seen no evidence of such discussions or of an equality impact assessment by the DWP. What discussions has she had with her DWP colleagues, and will an equality impact assessment be placed in the House of Commons Library as a matter of urgency, and certainly before any further action is taken?

Last year, as my hon. Friend the Member for Blackpool South (Gordon Marsden) alluded to, WHSmith was voted the “worst retailer” on the high street by Which? readers, and it has been in the bottom two for eight consecutive years—it turns out that there is a lot of competition for worst retailer on the high street, so that takes some doing. Why, therefore, are the Government handing our valued public service to the worst retailer on the high street?

Significant sums of our money are being spent on, in effect, privatising the Post Office, using the worst business model available, yet apparently we do not get a say. At a recent meeting of the all-party parliamentary group on post offices, which is chaired by my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss), the network and sales director told MPs that

“this is a commercial decision for us alone”.

Yesterday, I received formal notification of the consultation on the Crown post office in Wigan. The document that I was sent said:

“the change of management of the branch to one that is operated by a retail partner rather than by us directly is a commercial decision for Post Office Ltd and therefore we are not seeking feedback on this aspect of the change.”

That shows complete contempt for the public who own this service.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I congratulate the hon. Lady on securing this incredibly important debate. The Minister know about this, but in my hometown of Tain in the highlands, our post office has been moved into a wee narrow newsagent where there is no room to swing a cat. That means that when a pensioner wants to talk about his or her pension or any other aspect of PO services, there is no confidentiality whatever. On 22 March, that newsagent will shut. We do not know where the new post office will be. There is a feeling of helplessness among my constituents. People in my home town want to know what will happen. I take on board the hon. Lady’s point that we, the people, do not feel we are in control.

[Lisa Nandy]

The hon. Gentleman’s constituents clearly have a very strong voice here.

--- Later in debate ---

[Ian Murray (Edinburgh South) (Lab)]

I pay tribute to my hon. Friend the Member for Wigan (Lisa Nandy) for securing this debate. I will be brief because she has said everything that all of us in the Chamber would echo about the problems we have with this proposal.

I draw hon. Members’ attention to the Conservative manifesto back in 2010, which said that it would make the post office the front office of Government services. How hollow has that manifesto promise proved? In fact, we could be here all day picking holes in what the Conservative manifesto promised and what the Government have since delivered. To put that into context, we consistently have debates in this Chamber about the dilution of our post office services locally, whether Crown post offices, franchises or the postmasters and postmistresses who run our post offices, because it is not the front office of Government at all.

In 2011, £172 million of Government services went through our post offices. That fell to £168 million in 2012 and was down to £141 million by 2015. In 2017 it was down to £114 million and it dipped below the £100 million mark in the Post Office annual accounts in 2018, at £99 million. That is not the front office of Government; it is the Government withdrawing services from the very thing they are supposed to be protecting on behalf of our constituents.

We can add to that the history of the project. The Royal Mail and post offices were split off under the Postal Services Act 2011. The Royal Mail was subsequently privatised. The Government said they would look after the post office network, but we have seen that post office network withering on the vine since the Royal Mail and post offices were split up under that piece of legislation. Indeed, if we look at the share price of Royal Mail today—it is just over £2.50—we see that the Royal Mail may be in a bit of financial trouble. It is hardly a success for the taxpayers of this country or for the Royal Mail.

Franchising is difficult not just because successful franchising operations end up in WHSmith. We have heard of the problems with that. I draw hon. Members’ attention to the Consumer Futures report done in 2012, away back at the start of this process, which said how disastrous franchising into retailers such as WHSmith would be. That has proved to be correct. The Government at that time, when I was the shadow postal services Minister, said that the Consumer Futures report was built on incorrect data, but it has since proved to be absolutely correct when we look at the practice of franchising Royal Mail services.

The Morningside Crown post office in my constituency was a profitable branch at the top of Morningside Road. I can tell hon. Members how popular it was in terms of footfall, because that is where we do our street stalls in south Edinburgh. On a Saturday morning, there is no better place to be than outside the post office, with a stream of people going in and out, looking to engage with their Member of Parliament on various issues. That Crown post office came up for franchising, and the interesting thing about its franchise potential was that no other shop in the local area wished to take the franchised post office. As my hon. Friend the Member for Wigan mentioned, when asked about its plan B if a franchisee does not come forward or if no franchisees satisfy the criteria for running a Crown post office, the Post Office does not have one; it has no idea.

I remember when we had a public meeting in Alloa with Gordon Banks, the former MP for Ochil and South Perthshire, when Crown post offices there were threatened with closure. Someone from the audience asked Post Office Ltd what would happen when either the franchisee failed or if no franchisee came forward, and the answer was that the Post Office itself would have to invest in the Crown post office. Perhaps we should invest in post offices before they are up for closure or franchising.

I have to pay tribute to Ibrahim Joulak, the sub-postmaster who runs the Bruntsfield post office in my constituency. He will take on the Crown post office by merging his small sub-postmaster’s post office and the Crown post office. However, franchised Crown post offices do not have all the services that we expect from the major Crown post offices, further diminishing our constituents’ use of the post office, which is a vicious circle for post offices that want to be self-sustaining.

Footfall is key if we want to revive our high streets. The best thing to drive footfall is services that people wish to use, and my constituency postbag certainly shows me that people wish to use local post offices. That drives the local café and the local newsagent, and people moving around our local communities drives the viability of public transport services. We need these linchpins in our local communities.

The most interesting and ironic thing I have seen on the franchising arrangements in my area is that four major high street banks have also closed their branches, and the letter they send to account holders says, “Don’t worry, you can use your local post office.” Well, they can do so only if their local post office exists. It is the very same problem with the free bus pass in many parts of Scotland. Of course pensioners can travel anywhere they like in Scotland with a concessionary travelcard, but they have to be able to get on a bus.

[Jamie Stone]

I acknowledge the hon. Gentleman’s commitment. As high street banks continue to close branches, could we not turn the whole argument on its head, keep Crown post offices open and offer the banks a one-stop shop in these wonderful old premises that have been there for hundreds of years, thereby giving an additional service to post office customers?

[Ian Murray]

That is a great intervention. I keep asking the chief executives of the Royal Bank of Scotland and other high street banks why they do not co-host with post offices, bringing together two business models that are struggling because of the way that we use modern communications and modern banking. The technology must be available. If I can do all my banking on my smartphone, surely the high street banks are able to co-locate with post offices and provide that for our constituents.

Finally, the reason why staff tend not to be TUPE-ed across when there is a franchisee partner is that franchisee partners simply do not want them because they do not want the cost. The reason they do not want the cost is that they want fewer staff. The reason they want fewer staff is that they think the service cannot possibly be efficient and effective unless there are fewer experienced staff, so staff tend to take the quite generous redundancy packages from the Post Office. That experience is then lost and there is a brain drain from the service, and again there is a vicious circle of the service becoming less efficient and less able to meet the needs of the local communities.

It is right for the Minister to come here again. I hope we are not having this same debate about franchising and the closure of post offices again next year and the year after and the year after that. The Minister is new in her role, but I hope she eventually grabs the nettle of the post office network, pauses the franchising process, looks at what the Post Office can do on its profitability and then invests those profits back into the current network, so that we can all have post offices in our communities that are sustainable for the future.