Crown Post Offices: Franchising

Kelly Tolhurst Excerpts

Thursday 10th January 2019 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate the hon. Member for Wigan (Lisa Nandy) on securing this important debate. Although I am one of only a few Tories in the room, I thank all hon. Members for their contributions. I recognise their passion as well as the importance that post offices represent to MPs.

As a constituency MP, I understand the valuable role of the post office for me and for my constituents. Post offices play a vital role at the heart of our communities and are an essential part of our villages, towns and cities, so the future direction of the Post Office is important not only to the Government, but to all our constituencies.

The festive season has just passed, when the dedication of Post Office staff across the country was shown. They come out in force to help our constituents and deliver the parcels and letters destined for our loved ones. I thank the Post Office and Royal Mail staff for the efforts they have put in over recent months. It is estimated that more than 60 million customers visited post office branches in the run-up to Christmas, and I want to mention one small rural post office in Herefordshire that opened its doors this year to host Christmas dinner for those who would otherwise have been alone. That highlights the social value of post offices, not only within our high streets, but beyond.

To repeat what I indicated in November’s debate on post office franchising, this Government value and recognise the economic and social importance of post offices to people, communities and businesses across the UK. That is why we made a commitment in our manifesto to safeguard the post office network and support the provision of rural services.

[Ian Murray]

On the manifesto commitment to protect post offices, is it still Conservative party policy to make the post office the front office of Government?

[Kelly Tolhurst]

What is definitely Government policy is to make sure that we have a network of post offices that offer a wide range of services to our constituents, and that that is sustainable into the future. Franchising is not a closure programme. It is a way to secure better sustainability for the future of our post offices, and it is a good thing that Post Office is working with high street retailers to recognise that.

The performance of the Post Office over the past decade shows that the network is at its most stable in a generation. Between 2010 and 2018 we provided nearly £2 billion to maintain and invest in the national network of at least 11,500 post offices.

[Jim McMahon]

I thank the Minister for her comprehensive response so far, but it would be good to get confirmation that this will move on, because we cannot keep having these debates every few months. Does she realise that the outreach service counts each and every stop that a mobile post office makes as a branch? A single vehicle travelling to a village for half a day each week or every two weeks would class each stop as a branch, which is where the figure of 11,500 branches comes from.

[Kelly Tolhurst]

I recognise some of the concerns about mobile branches that the hon. Gentleman raises. I can assure him that I am moving on to it, and obviously I have had the opportunity to listen to hon. Members this afternoon. I am sure hon. Members will agree that we do not want to go back to the days when we saw over 7,000 post offices shut, as was unfortunately the case under the previous Labour Government.

The post offices meet and exceed all the Government’s accessibility targets at the national level. Government investment in the network enabled the modernisation of more than 7,500 branches, adding more than 200,000 opening hours per week and establishing the Post Office as the largest Sunday trading network.

The Post Office’s agreement with high street banks enables personal and business banking in all branches, providing vital access to cash and banking services to consumers, businesses and local economies as bank branches continue to close. It is right to say that the agreement held with the Post Office and banks benefits our communities, which, as the Minister responsible I have made very clear to Post Office Ltd, to my colleagues in the Treasury and to the financial institutions that I have spoken to. The Post Office is providing a vital service to our constituents, and it should be remunerated for that—in doing so, hopefully that will ensure that our postmasters are also remunerated correctly for the service they provide to our constituents.

[Gill Furniss]

The Minister talks about banking services, and I would like to bring her back to a point made earlier. When post offices supply ATMs—clearly when banks close down, ATMs often just disappear from the high street or village—the rental is so much that they lose a significant amount of money. Does the Minister want to put that right in order to incentivise keeping ATMs in post offices so that they are available to all our communities?

[Kelly Tolhurst]

The hon. Lady is absolutely right to say the loss of banks and access to cash has been a concern for our constituents and high streets. To individual MPs who represent a constituency where they feel that their post office is in a position to add an ATM—it is not always possible—as the Government representative I will always feed in specific issues that relate to individual constituencies or branches where we can improve services. I put that offer out there. Give me the details and I will always follow it up.

[Gill Furniss]

The Minister has been given the details today—they will be in Hansard. Postmasters see that they are subsidising the ATM, which just seems wrong to me. I ask the Minister to go back and review that, and to look at finding some way that she can compensate sub-postmasters for that service.

[Kelly Tolhurst]

I have heard what the hon. Lady has said today, and I will go away and look it. Every post office operates differently throughout the country. There is not a standard rule for all branches, but I will continue to look at the issues that have been highlighted. I care as much about our post office network as any hon. Member does, and that is not just because I am the Minister in post.

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 upcoming years. It is the first time in 16 years that the Post Office has made a profit. There was a time back in the early 2000s when the Post Office had a deficit of more than £1 billion. Things have changed, and we are ensuring that we get value for money for the taxpayer while ensuring that we sustain the network.

[Marion Fellows]

The Minister is talking eloquently about the profits that the Post Office is making, but the people who run smaller post offices—the sub-postmasters —tell me that they cannot live on the new contract. When they have to hand back keys to local post offices, does she think it is right that the Post Office is making profit at the expense of these hard-working individuals?

[Kelly Tolhurst]

I understand why the hon. Lady has raised concerns about sub-postmasters, and she is absolutely right to do so. Whoever has my role in Government—whichever colour of Government—has a duty to defend the Post Office but also to hold it to account. Since being in post I have challenged the Post Office and will continue to do so. Yes, it is commercially independent and operates within terms. We represent the taxpayer, who is the shareholder and owner of the post offices. It is right that we hold the Post Office to account for decisions and that we exert influence where we can.

Changing consumer behaviour has been a serious challenge for post office and small retailers, including many postmasters, which is why in the autumn Budget we made decisions on business rates to ensure that we helped not only some of our sub-postmasters, but small retail more generally.

There is widespread misunderstanding that franchising is a closure programme that will lead to redundancies and the deterioration of services for consumers, but that is not the case. I appreciate that proposed changes to the delivery of post office services can cause concern in some affected communities, but post office branches are not closing—they are being franchised either on site or by relocating them to other high street locations.

Franchising has been common practice since 1635, when King Charles I issued a proclamation allowing the public to use Royal Mail. The model has endured to this day, and the vast majority—11,300 of our 11,500 post offices—are run successfully as a franchise or on an agency basis with retailers, whether large or small. Delivering post office services as part of a wider retail offer is a proven model that brings benefits to the community.

The hon. Member for Wigan raised concerns about the post office in her constituency, which is included in the 40 that will be taken over by WHSmith. Subject to consultation, WHSmith will take over the running of Wigan’s central post office. Let me be clear that the community in Wigan like other communities across the UK is not losing its post office. It will be relocated to a nearby WHSmith branch, and the services will be more accessible for customers.

[Lisa Nandy]

I am grateful to the Minister for trying to address some of our concerns, but the community is not being consulted on whether the post office is moved into WHSmith. A consultation is explicitly ruled out in the documents that I have been sent. Although she says that this is technically not a closure, to our community it is. The post office has stood on that site for 134 years. Some of the staff have worked there for decades and offer the sort of service that will not be possible in WHSmith. When she has finished winding up—I appreciate that she needs time to respond to our concerns—will she consider meeting with a group of us to talk this through and consider what we can do to address some of those very strong concerns, which are not being heard at the moment?

[Kelly Tolhurst]

It is right that Post Office Ltd is holding consultations. I apologise; the hon. Lady said earlier that she had been chucked out of the store and that language of intimidation was used. That is quite an accusation to make, and I would recommend that, if that happens to any Member, they should make Ministers aware so we are able to—

[Lisa Nandy]

That is what I am trying to do.

[Kelly Tolhurst]

Absolutely, but that has not been done prior to today. We will take those things forward. I have met other Members about other issues in their constituencies.

It is right that the Post Office is commercially independent, because that enables us, as the major shareholder, to hold it to account at a ministerial level, and I am always happy to do that. I assure the hon. Lady that the proposed changes would add six hours a week to the Wigan branch’s opening times. She is correct—this goes back to an earlier point—that the ATM will not transfer over to the new site, so I understand her concerns about her constituents relating to that service, which would change in that situation.

[Jim McMahon]

Post offices are not the same from one street to the next; branches provide very different services. If these are not closures but relocations, is the Minister saying that the services provided by the post offices today will be entirely transferred across to WHSmith, and that there will be no loss of service?

[Kelly Tolhurst]

The programme of franchising is moving Crown postal services. Our objective is to ensure that, when the post offices are moved, they deliver better services and that constituents have better access to them. Part of the franchising programme is about ensuring we have a post office network for today, which suits the modern retail environment and consumers’ changing habits.

[Rachael Maskell]

Will the Minister follow up the question of my hon. Friend the Member for Wigan (Lisa Nandy) and meet a group of us? I am seriously concerned about the reduced access—not necessarily to the building but to the high street in front of the post office—and the impact on my high street and the local economy. Will she meet us to discuss those detailed issues?

[Kelly Tolhurst]

As I have said—I thought I was quite clear—I am always willing to meet Members who have issues relating to post offices in their constituencies. I said that earlier. I reiterate that I will listen, hold Post Office Ltd to account and take those things forward. That does not necessarily mean that I will agree with some hon. Members’ positions, and they will not always be achievable, but I will make Members’ cases on their behalf.

The UK visa and immigration biometric enrolment services for the Home Office were available to a mix of 99 directly managed and WHSmith branches nationwide. However, as was mentioned earlier, the Home Office recently awarded that contract to Sopra Steria, which now runs the service in new locations. On the Post Office being in a position to deliver services for our constituents, I will always ensure that we work together to strengthen the services and add value to the services that the Post Office will deliver for the Government.

WHSmith has been operating post offices since 2006 and has proven to be a reliable and dependable presence on the high street. There are some misplaced concerns about the Post Office’s contingency plan should WHSmith go into administration. The latest financial results show that the company’s high street businesses recorded their third-highest profit in more than 15 years despite the well-documented challenges on the UK high street. The Post Office is not complacent; it regularly meets with all franchisees to ensure they are delivering on the terms of their agreements. That is an ongoing process.

I am concerned that we are running out of time, Sir Graham, and I think the hon. Member for Wigan may want to wind up—or I can carry on. Post Office staff at franchise branches will have the opportunity to transfer to new franchises under TUPE employment protection, which means that they will benefit from the same terms. Alternatively, staff can leave with compensation, and there may be opportunities available elsewhere in the network. WHSmith’s post offices are currently performing well, and I have every confidence that the recent deal will help to secure Post Office services on a sustainable, profitable basis in communities across our country.

I hear the concerns about the consultation process, and I have said that I will take them forward with the Post Office. As the Minister, I will not call on Post Office Ltd to stop the franchising process, but I will work with it to ensure that it delivers its business in the best way possible and benefits our communities.

We need a sustainable network. It is not correct that the Post Office owns all the Crown branches—the buildings are not all freehold and some are leasehold. It is right that the taxpayer holds the Post Office to account and, as the Minister, I will do everything in my power to harness opportunities and to increase services in the post offices. There will be many opportunities and, as the high street changes—I am also the Minister with responsibility for the retail sector—I will continue to work with the Post Office to ensure that we are delivering for our communities and that we increase the services that post offices provide.