Rural Post Offices

Kelly Tolhurst Excerpts

Thursday 13th December 2018 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

I congratulate my hon. Friend the Member for St Ives (Derek Thomas) on securing this important debate. He has been a passionate advocate for post office services in his constituency. We have spoken at great length about the post office network and have another meeting booked in for the new year. As he outlined, he has also met Lord Gardiner to discuss this topic. One of the best things about my role is being responsible for postal services—I know how important the post office is to all our communities, not just rural areas, so this is an important part of my responsibilities. For centuries, post offices have been the centre of social life in our communities, towns and villages. That is especially true in rural areas, which is why our 2017 manifesto committed to safeguarding the post office network and supporting rural services.

Between 2010 and 2018, this Government provided nearly £2 billion to maintain and invest in a national network of at least 11,500 post offices. The Post Office currently meets and exceeds all the Government accessibility targets at national level. Government investment has enabled the modernisation of more than 7,500 branches, added more than 200,000 opening hours a week and established the Post Office as the largest network trading on Sunday.

The Post Office’s agreement with the high street banks has enabled personal and business banking in all branches, supporting consumers, businesses and local economies facing bank branch closures, particularly in rural areas. The Post Office’s financial performance has improved significantly and, consequently, the Government funding required to sustain the network has drastically decreased and is set to decrease even further in coming years.

I encourage the House to look objectively at those facts, which clearly show that the network is as stable today as it has been in decades. We must remember that the post office network declined by 38% under the last Labour Government, with more than 7,000 branch closures.

Serving rural communities is at the heart of the Post Office’s social purpose. There are more than 6,100 post offices in rural areas, with nearly all the population in such areas living within three miles of a branch. Last year, Citizens Advice found that seven out of 10 rural consumers buy essential items at post offices and that almost 3 million rural shoppers visit a post office on a weekly basis. That is 31%, compared with 21% of people living in cities. Illustrating how important the post office is to such areas is the fact that almost half of rural post offices have community status. The post office is the last shop in some villages.

Rural branches, whether main branches, local branches or traditional branches, can offer the same products and services as urban branches of the same category. The Post Office recognises the unique challenge of running a community branch and supports such postmasters differently from the rest of the network. They receive fixed remuneration, as well as variable remuneration to reflect their special situation.

In addition, the Post Office delivered almost £10 million of investment via the community fund between 2014 and 2018, which enabled community branches to invest in their associated retail business. The Post Office has now launched a smaller community branch development scheme, which will benefit an anticipated 700 branches. Let me be clear that this Government and Post Office Ltd will continue to support rural post offices.

My hon. Friend will be interested to hear that network modernisation has led to the creation of 450 additional opening hours in his constituency, delivering greater convenience to consumers. However, I am aware that there have been a number of service issues in St Ives, and it is fair to say those issues have not been sorted as quickly as the Post Office would have liked. I fully appreciate how frustrating it is for a local community when post office services are interrupted.

In rural areas such as the St Ives constituency, when the shop in which the post office is based closes, there may be few other commercial premises from which services can be offered to consumers. In such instances, the Post Office explores how an outreach service run by a nearby postmaster can ensure the continuity of services for the community, such as via a mobile van.

For example, in my hon. Friend’s constituency the St Keverne postmaster will be extending the mobile visit timetable to provide services at—excuse my pronunciations if they are not correct—Heamoor, Gulval, Carbis Bay, Leedstown, Praa Sands and Crowntown over the coming months. Outreach and mobile services are highly valued by the communities they serve, as they offer all the same services as a bricks-and-mortar branch.

[Derek Thomas]

I thank the Minister for listing those places—she was not far off. Does she accept that it was the work that we have been doing as a local community to put pressure on the Post Office, and to bring this issue to the Minister and other Ministers, that finally got the Post Office even to consider that mobile service, which at the moment is not in place? Some of those villages have not had post office services for more than a year.

[Kelly Tolhurst]

I thank my hon. Friend for his point. He is right in what he says and I recognise that. I was going to come on to this later, but I will respond directly to his point now. The Government are the sole shareholder in the Post Office. It is right that we work with the Post Office, challenging it where necessary, and with constituency MPs and the community to make sure that we can deliver the right services for the community. As I always do when speaking about post offices at the Dispatch Box, let me say that we are committed to working with MPs and their communities, and we will continue to do so in order to maintain the branch network we have and to try to serve communities as best we can.

Outreach and mobile services are highly valued by the communities they serve, as they offer all the same services as bricks-and-mortar branches. They have been successful in taking key services such as everyday banking to customers, giving them vital access to cash in areas where there are no bank branches nearby. The Post Office directly contributes towards the costs of those outreach services, in conjunction with the postmaster running them, whose parent branch benefits from the transactional income accrued from the visits to outlying communities.

My hon. Friend raised important points about the specific challenge of running a post office in communities where seasonal trade and variation plays a significant role. I know that the Post Office listens to the community and the postmasters in St Ives by taking a more flexible approach to opening hours requirements across the year. That will allow branches to be more sustainable through the leaner, off-peak seasons, when their post office and associated shop has fewer customers. As he said, the issue was taken up by Lord Gardiner in his meeting with Paula Vennells, the Post Office’s chief executive officer, on 4 December. I understand that there will be a follow-up meeting with her in the constituency in the New Year to discuss this and other matters further. I am confident that this ongoing, frank and sustained engagement is the right way to proceed, so that the issues can be understood and a solution be provided for the benefit of postmasters, businesses and residents of St Ives.

Finally, I would like to take this opportunity to clarify some misconceptions about the Post Office’s franchising programme, particularly the assumption that franchising means closures and the downgrading of services. Those criticisms are misplaced. Post Office branches are not closing, but are being franchised, either on-site or by relocating to other high street locations. Franchising is nothing new; almost 98% of post offices across the UK are successfully operated by independent businesses and retail partners. Moving the directly managed Crown offices to retail partners has been instrumental in reducing losses in that part of the network.

My hon. Friend raised an important point on postmasters’ remuneration, especially for everyday banking services. As these services have developed and increased, I know the Post Office is looking at ways to better recognise the effort required of its postmasters for banking transactions. In fact, the Post Office has recently notified postmasters that their rates for banking deposits have been increased this year. I understand that the Post Office has now entered negotiations with banks on the next banking service agreement. The Post Office has reassured me that it will do all it can to ensure that postmasters are better remunerated for the vital services that they offer. I should add that the Post Office is picking up vital services in areas that banks have left. It is right that the Post Office does its best to make sure the banks accept the responsibilities involved and the work that post offices are doing on behalf of those communities and, we hope, properly remunerate them.

My hon. Friend also raised an important point about postmasters who cannot exit the business because of the absence of alternative operators to take over their branch. Although that is an operational matter, I assure him that the Post Office is taking it very seriously. As of November 2017, there were more than 450 branches of that type across the network. To help the remaining postmasters, the Post Office has extended the network transformation resignation timeframe to March 2020. That means that all parties can continue to work together to ensure that no communities are left without the invaluable post office services that they rely on. The postmasters affected will continue to receive both fixed and variable remuneration throughout that period. Where solutions are found, the postmasters concerned can leave while still qualifying for their leaver’s compensation.

My hon. Friend raised some particular issues relating to his constituents. I am not aware of some of the detail of those cases, but we are meeting in the new year, so I look forward to discussing those points and seeing how we can move forward.

I reassure my hon. Friend that all post offices across the network, including rural branches, are of the utmost importance to the Government. We recognise their value and importance, and we will continue to honour our manifesto commitments so that post offices can thrive and remain at the heart of our rural and urban communities. I thank my hon. Friend again for making his points, and for his hard work in support of access to post office services for his constituents. I assure him that I will continue to work with him and the Post Office to make sure that the constituents of St Ives receive the post office service that they deserve.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

I am sure the House would like to wish all postal workers the best for Christmas and the new year, and to thank them for getting the parliamentary mail through.

Question put and agreed to.