Millhouse Green Post Office

Jo Swinson Excerpts

Monday 19th January 2015 Commons Chamber

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

I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this debate on the future of Millhouse Green post office and the proposals for the changes we are seeing within our post office network. The hon. Lady asked whether I am familiar with her constituency. It was certainly helpful to have the geography set out. I am not sure that I have an exact picture of the roads in my mind, but when I lived in east Yorkshire I greatly enjoyed walking in the Peak district, and I know some of the country roads between Sheffield and Manchester. I recall being most familiar with what was called “the snake pass”, which I think was a slightly different place. I can picture the beauty of the area about which the hon. Lady talks. She has set out her concerns clearly, and I hope to be able to provide her with some reassurance about continuity of service for her constituents who rely on the post office network.

Let me spend a short time setting out some of the changes we are making in the Post Office and indeed the reasons and the thinking behind what we are doing. We are investing nearly £2 billion in the post office network, particularly to modernise that network of at least 11,500 branches. That maintains a scenario whereby 99% of the UK population live within three miles of a post office outlet. We are incredibly committed to the post office network and we are looking even to see whether it can be expanded. In October 2014, for example, we saw a pilot of the Post Office’s home shopping returns service in approximately 150 new postal access points across the UK, which means that the network is growing for the first time in more than 50 years.

We all know how important post offices are to our constituencies. We need to ensure that they can be modernised and put on a sound, sustainable financial footing. Of course, post offices are changing. The way in which people interact with mail services poses challenges, but it also presents opportunities. The parcels business, for example, has expanded as a result of the increase in online shopping. It is vital for post offices to be transformed for the 21st century, which is the reason for our network transformation programme.

Since 2010 more than 4,650 sub-postmasters have signed contracts to modernise their branches, and more than 3,500 have reopened following Government investment. The demand is clear. The revamped branches are more welcoming and accessible, and they are also open for longer, which is important. Since 2010 there have been more than 100,000 additional opening hours per week, which is equivalent to more than 2,000 additional post offices offering traditional hours. That is particularly helpful. Moreover, the modernised branches consistently receive customer satisfaction ratings of more than 95%. I understand that three branches that have received Government investment have opened in the hon. Lady’s constituency. No doubt her constituents are benefiting from those—and, of course, sub-postmasters can also benefit.

Let me explain our programme of change. There is a “main” model, and there is a “local” model. The main model will often be stand-alone, while the local model will be attached to an existing retailer, which will commonly be a convenience store or newsagent, although about 100 branches will be attached to pubs. That arrangement will enable the cost base to be shared. The “fortress” position that exists in a traditional post office will no longer be necessary. There will be a post office point alongside a typical retail space, with the same member of staff providing both services, which will make things easier and will also help to create the longer opening hours.

We recognise that in many communities a post office is the “last shop in the village”, which cannot operate as a “main” or “local” model, and we accept that such branches should not be made to change. I think that the definitions and criteria may be causing difficulty. If there are no alternative retail outlets within half a mile of a post office, it will be possible to designate it as a community branch. The current status is not changing, but, as part of our transformation programme, each branch has been assessed according to such criteria. We have protected 3,400 “last shop in the village” branches by designating them community post offices. They will benefit from new investment in the same way as the “mains” and “locals”. We are providing a £20 million community branch fund, which will secure their future and enable them to invest in renovations.

We also recognise that if we are to put post offices on to a stronger financial footing, enabling a branch to operate as one of the new models such as a “main” or a “local”, either on the existing premises or in premises nearby, will benefit customers, communities and the taxpayer. We are trying to work closely with branches in communities where such an arrangement is possible in order to identify the best long-term future.

The position of Millhouse Green is obviously of great concern to the hon. Lady. The Post Office has been engaging with the sub-postmistress on the issue of network transformation since last September. I understand that she is keen to retire at some stage and wishes to sell the retail and post office business together, but does not wish to receive investment to convert to a local model. I also understand that she has applied to have the branch classified as a community branch, but that has been rejected because—as the hon. Lady explained—there is a suitable alternative retailer 130 metres from the branch.

Three solutions are being considered. The current process being followed is to sell the branch as a “post office local.” If successful, this will result in the sub-postmistress receiving the sale value of her business plus a payment from Post Office Ltd equal to the last 12 months of remuneration earned. The incoming operator would receive investment from POL to convert the branch.

[Angela Smith]

I have spoken to the sub-postmistress about selling the business, and I do know that she will look to retire very soon. The point is that there is very little interest. She has already looked at this and talked to a potential buyer. There is very little to no interest in buying the business, particularly if the core tier payment disappears. That is the key point in this debate. The core tier payment disappears on the basis that there is an alternative provider, but the key point again is that the alternative provider is not interested, and the risk is to the community, not particularly to the sub-postmistress in the long term, who will, of course, retire.

[Jo Swinson]

I recognise that point, and I want to reassure the hon. Lady about the potential scenario if that were to unfold, but my understanding is that at this point the Post Office, with the agreement of the sub-postmistress, is advertising the branch on its website as a commercial transfer opportunity, and that runs for three months. They are looking to find a buyer who would be able to operate it as a local post office. That advertisement runs until February, and it is important to follow that process and to try, on an official basis, to see if someone can be found to take it on, because if that is possible, that is the best potential outcome for the community and the sub-postmistress and the long-term future of the service.

The second option would be for the branch to convert to a “post office local”. If that were to happen, the sub-postmistress would receive financial support during that phase of transition, but I recognise she may not be keen to do that. Alternatively, the branch could move to the nearby retailer that has been mentioned, who would then host a local post office branch. In that scenario, the existing sub-postmistress would receive a leaver’s payment equal to 26 months remuneration and the new sub-postmaster would receive investment to set up their branch.

I recognise that some of these options might not be the sub-postmistress’s preferred course of action, but the Post Office is committed to working alongside her to ensure that service provision can be maintained.

One possible scenario is that the current search for a buyer is not successful. If so, the Post Office confirms it would review the situation and discuss what alternative options would be available. There is a commitment to continuing the service, of course, which could mean the sub-postmistress continuing on her current contract for at least a period of 12 months, when the situation could be reviewed again. The community would not then be left without a post office because there is that commitment to make sure there is continuity of service.

The business is currently being marketed for sale, so the Post Office has not approached other retail providers in the area or looked at alternative plans, as that would be inappropriate at this time. The Post Office would, of course, engage in that, however, if the sale route did not prove fruitful.

I reiterate that commitment, because although we want to get the Post Office on to a secure and sustainable footing, and therefore, where possible, not having the additional subsidy that we want to reserve for those branches with no other option and that therefore have to continue with the core tier payment, none the less we are determined to make sure communities retain their services. That is a clear commitment from the Post Office as part of the network transformation, which is in stark contrast with what happened under the last Government, when there were two closure programmes and 5,000 branches were lost as a result. We want to learn the lessons from those programmes and make sure community services are able to remain.

I know that Post Office Ltd has offered to meet the hon. Lady to discuss this issue further and I hope she will be happy to take up that offer, and in February we will be able to see what interest there has been in buying the post office. The Post Office will continue to work closely with the sub-postmistress and the hon. Lady to make sure that the future provision of post office services for the community in Millhouse Green is secure and sustainable for the long term.

Question put and agreed to.