Post Office Services

Debate between Jenny Willott and Mike Weir

Thursday 16th January 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

Thank you, Madam Deputy Speaker. Having not been allowed to speak in this Chamber for two years as a Government Whip, it is a little surreal to be at the Dispatch Box.

I congratulate the hon. Member for Glasgow North West (John Robertson) on securing this debate on an important subject. Despite the lack of Members present, the issue comes up regularly, and on most occasions a significant number of Members want to discuss the critical role that post offices play in all our local communities. The post office is much more than just a commercial entity. As the hon. Gentleman has said, it is important to hundreds of thousands of small businesses, which rely on it every day, as well as to the millions of customers who use the network for a range of services. I agree with the hon. Gentleman that post offices are particularly crucial to elderly residents, those on low incomes and the disabled, who make particularly good use of them in our communities.

In November 2010, we announced a funding package of the historic amount of £1.34 billion to guarantee the size of the network until 2015 and to end the closure programmes run by the hon. Gentleman’s Government, which led to the closure of 7,000 branches under the previous Administration. In November 2013, we announced our continued support of the network with a further £640 million to secure and continue its modernisation until 2018. That makes clear the Government’s commitment to the post office and its future success. Contrary to what the hon. Gentleman has said, that recent investment is a vote of confidence in the post office network and it is helping to move it to a more sustainable and secure long-term future.

[Mr Weir]

I understand what the Minister is saying and I think we all appreciate the money going into the transformation programme, but many small sub-postmasters in my constituency are concerned because they feel that they are being pressurised by the Post Office to give up their businesses, take extra redundancy or move to a local model that they feel is unsustainable. That does not seem to be a sensible way to pressurise people who have run post offices successfully for many years.

[Jenny Willott]

I cannot comment on the operational procedures of the Post Office, which is a separate entity, but the Government are very clear that we want to maintain 11,500 branches in the post office network across the country. That means ensuring that we maintain a branch in all communities that currently have branches, and the level of knowledge and expertise that exist among many sub-postmasters, who are extremely well embedded in their communities and extremely well known and trusted by members of their local community. That is one of the elements that make the post office so important in many of our communities, especially in rural or more deprived areas, where many people depend heavily on the local sub-postmaster and the post office branch.

[Mr Weir]

I do not want to labour the point, but experienced postmasters are being encouraged to give up and businesses are going to a local shop, on the post office local model, that generally offers fewer services than existing post offices. I appreciate that the Minister has said that the Post Office is independent, but Government money—taxpayers’ money—is being used to achieve the changes.

[Jenny Willott]

We are trying to ensure that the post office network is sustainable into the future. We cannot subsidise at historical levels. The previous Government’s way to tackle the problem was just to close post office branches, with significant losses. There were many losses in my constituency, as I am sure there were in those of other hon. Members in the Chamber.

This Government have taken a different decision, which is to look at different models to ensure that we can maintain post office services in all communities across the country. Services delivered in particular communities may have to change to ensure that they are viable, but it is incredibly important that we have post office outreach in communities across the country, and that we do not see any repetition of the previous Labour Government’s closure programme.

--- Later in debate ---

[Jenny Willott]

I have met the National Federation of SubPostmasters. I represent Cardiff Central, and I have spoken to my local sub-postmasters. I appreciate that this is clearly a period of change that will be very unnerving for many sub-postmasters, particularly for those who have to change how they operate their business, but a significant amount of investment is available for those who want to carry on and to sign contracts to change to a new form of business. They are getting a lot of support from the Government. Others might want to leave the network or to retire, including those who have run businesses for a long time, and there is support for them as well, but it is important to recognise that many sub-postmasters are happy to alter their properties and to change to the new model.

Customers are getting significant benefits from the new models. Across the network, there are an additional 34,000 opening hours a week, which is equivalent to 700 more traditional post offices. The programme of investment will see the modernisation and protection of all branches by 2018, ensuring that every community and customer that relies on access to a post office today will continue to have access to post office services in the future.

The Government have ensured that all sub-postmasters can benefit from the investment. For the first time, a dedicated fund has been set up for post office branches that are important to the communities they serve, but where one of the new models would not be viable. That is an issue in large, remote rural areas, such as those in Scotland, where the post office is often the last shop in the village, as it were. The community fund to ensure that those post offices are kept open is a real departure. It will protect those branches well into the future and ensure that people have access to post office services. That is particularly important in areas where the post office provides an important service to more vulnerable consumers.

[Mr Weir]

I thank the Minister for giving way yet again; I do not want to push my luck too far. I remember taking this matter up with the hon. Member for East Dunbartonshire (Jo Swinson) when she announced the fund. The fund is for doing work on the post office to make it better, but that is not the difficulty in many of these very small post offices. The difficulty is that the postmaster’s income is simply insufficient. Postmasters want to keep going, but there is nothing in the fund to give them an uplift in their income to help the post office survive. The fund is for physical changes to the post office, which is not the issue at most of the post offices we are discussing.

[Jenny Willott]

I will come on to talk about income and the services that we are supporting in post offices to ensure that they are viable.

The hon. Member for Glasgow North West spoke about Crown post offices. As he mentioned, the funding package that was set out in 2010 required the Post Office to eliminate its substantial losses. In 2012-13, £37 million of losses were incurred by the 373 branches that made up the Crown segment of the network. It is a key part of the Post Office’s strategy to make the network sustainable in the long term. The Government support the business in delivering that strategy. The current losses of the Crown network contribute a third of the losses incurred by the network as a whole. That is clearly unsustainable. No business, including the Post Office, can maintain a situation in which its high street branches cost substantially more to run than they bring in.

As part of its strategy to eliminate the unsustainable losses, the Post Office identified about 70 branches where there is no prospect of eliminating the losses at a local level under the current structure. In those locations, it is seeking a suitable retail partner to take on the operation of the branch under a franchise arrangement. The Post Office has made it clear that under each franchise proposal, the full range of current post office services, including the more complex transactions such as passport applications and identity services, will continue to be available in close proximity to the existing Crown branch. In the event that a suitable retail partner cannot be found, Post Office Ltd has given a commitment that a post office service will be retained in the area. I hope that what I have said reassures the hon. Gentleman that communities will not lose these vital local services.