Backbench Business

Kelvin Hopkins Excerpts

Thursday 17th November 2016 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

I beg to move,

That this House has considered the future of the Post Office.

It is a pleasure to serve under your chairmanship, Mr Wilson. I am pleased to secure this important debate on the crisis in the Post Office. First, I must declare an interest: my constituency Labour party has a formal agreement with the Communication Workers Union, which provides financial support, and I am a member of the union.

The Post Office is inflicting severe cuts. Its cost-cutting measures are affecting both its employees and the public it serves. Some 59 post offices are being closed or franchised, and the Post Office’s defined-benefit pension scheme is being terminated. That has all come about as a direct consequence of the separation of the Post Office from Royal Mail when Royal Mail was privatised. Cuts to Post Office funding followed, and the Government failed to deliver on their 2010 promise to turn it into a

“genuine Front Office for Government”

and to grow its financial services.

This is a matter of serious concern. Trends in the Post Office’s traditional work and the lack of a proper strategy for growing new revenue mean it will not have a secure long-term future, or possibly a long-term future at all. It cannot survive simply by imposing cuts and going through further cost-cutting regimes. The Government must stop the cuts—particularly the proposed closures and franchising—and bring together stakeholders, including the Post Office itself, trade unions, and industry and customer representatives to develop a meaningful and convincing plan for the future.

[Mary Creagh (Wakefield) (Lab)]

My hon. Friend is making an excellent speech. WHSmith is now operating more than 100 post office branches. Does he agree that the franchising operation means that the Post Office is losing experienced staff, providing poorer service and offering a smaller range of services? For example, the closure of the Crown post office in my constituency means that the biometric enrolment service is no longer offered.

[Kelvin Hopkins]

I thank my hon. Friend for her intervention. In fact, later in my speech I am going to say more or less what she just said. I thank her for reinforcing that point.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I congratulate the hon. Gentleman on securing this really important debate. Does he agree that, as a result of its decoupling from Royal Mail in 2013, the Post Office has lacked an overall strategy? It should now be rethinking its whole enterprise, which should be one of growth, rather than one of contraction.

[Kelvin Hopkins]

I agree with the hon. Gentleman. What is happening is the opposite of that, so I want the Government to put their weight behind the Post Office to enlarge, expand and improve it.

[Albert Owen (Ynys Môn) (Lab)]

I concur with everything the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) said. Many communities across the country—particularly rural communities—are suffering bank closures and financial seclusion in addition to the closure of Crown offices, which are the backbone of the Post Office. We need expansion, and we need it now.

[Kelvin Hopkins]

I agree. It is vital that rural communities, in particular, have public services, sometimes on a smaller scale, to ensure that people living in more dispersed communities have proper access to those services.

[Anna Turley (Redcar) (Lab/Co-op)]

My hon. Friend is being extremely generous in giving way so early in his speech. I want to follow up the point that my hon. Friend the Member for Ynys Môn (Albert Owen) made about financial services. The post office in France set up La Banque Postale, which has made £1 billion of profit, and the CWU is campaigning for our Post Office to emulate it. It should look at expanding into financial services as a means of increasing value.

[Kelvin Hopkins]

My hon. Friend, too, has anticipated something I am going to say in my speech. That just reinforces what I am going to say, so I am pleased about that.

The Government, bending to pressure and concerns from inside and outside Parliament, have just launched a consultation document, but it must lead to genuine action. It must not simply be a token exercise that does not change thinking in the Government and the Post Office. We need effective action to promote a long-term and successful future for the Post Office.

The Post Office’s current funding package runs out in March 2018 and must be replaced by an effective strategy and support for the future. The negotiations between the Government and the Post Office must not be simply a ritual seeking in reality just to manage decline. For customers, the most significant measures taken this year are the two announced tranches of Crown office closures and franchises, which followed an earlier programme affecting 50 Crown post offices in 2014-15.

My hon. Friend the Member for Wakefield (Mary Creagh) mentioned franchising. Independent research carried out in the past five years found that franchises left to WHSmith in 2007 and 2008 perform poorly—worse than Crown post offices in queue times, service times, customer service and advice, disabled access and the number of counter positions. That brings to mind the failure by railway franchises to measure up to the five-year record of success when the east coast main line was returned temporarily to the public sector. Franchises have also seen losses of experienced staff, fewer specialised staff and less space.

[Mr David Winnick (Walsall North) (Lab)]

The Post Office made an attempt to close Willenhall Crown post office in my constituency, but there was a successful campaign against the closure and it decided after a while to drop its plans. It is now going to start all over again. The closure will have a most adverse effect on the local community, in which the Post Office has so far shown absolutely no interest. It is obviously tremendously disappointing. I am very pleased indeed that my hon. Friend has initiated this debate.

--- Later in debate ---

[Kelvin Hopkins]

My hon. Friend demonstrates the point: we need to put pressure on the Government and the Post Office at both a national level and in local campaigns if we are going to save the Post Office for our communities and its staff.

For employees, good jobs have been replaced by insecure employment. In 2014-15, only 10 out of 400 staff from former Crown offices were TUPE-ed over to new retailers. Public money was used to pay off long-term staff so the franchisees could employ more low-paid, less experienced staff with less job security—effectively, a taxpayer subsidy to the private franchises. All that amounts to a failed strategy for the Post Office.

[Mary Creagh]

On that point, if a member of staff is TUPE-ed over, they could end up managed by somebody on the minimum wage in a WHSmith, even if they are on a significantly higher salary. That creates difficulties and tensions in the workforce in the new environment.

[Kelvin Hopkins]

My hon. Friend makes a good point. The union and I support the idea of having proper pay for all staff so that sort of discrimination and inequality does not occur. All staff should be TUPE-ed over as they wish. They should not just be bought off with public money to enable WHSmith to make more profit.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I thank my hon. Friend for securing this important debate. This is a big issue in my constituency, in which Blackfriars Road and Walworth Road Crown post offices are set to be franchised. Does he think that the fact that the incomes and pensions of the current staff are being put at risk completely undermines the commitment that the Prime Minister made at the Conservative conference to a more responsible capitalism?

[Kelvin Hopkins]

I will come on to talk about the fact that the Post Office is abandoning its defined-benefit pension scheme. That should be resisted and opposed.

The Government said that they would keep the Post Office in public ownership when they privatised the profitable Royal Mail, but franchising to private retailers is not public ownership. The public interest has been put at risk while Royal Mail is paying out more than £220 million a year in dividends. The Post Office’s revenues are falling, the “Front Office for Government” plan never actually got off the ground and Government funding is reducing.

I have a number of suggestions for the way forward. First, discussions about the Post Office’s future must be subject to parliamentary scrutiny and approval. Secondly, the Post Office must commit to making no threats of compulsory redundancy. Thirdly, the Government must deliver on their pledge to make the Post Office a “Front Office for Government” and set up a UK Post Office bank. Fourthly, the Government should stop using public money to subsidise the outsourcing of Post Office services to retailers. Fifthly, the plan to close the defined-benefit pension scheme should be abandoned; the scheme has a surplus of £130 million at the moment. Sixthly, the Post Office must be required to use the remaining Crown post offices to drive the growth of the new services and to give a secure future for the whole post office network.

The Post Office must remain as a vital public service and a community resource for the long term, with secure jobs and good terms and conditions for all its employees. My own preference is that a future Labour Government should bring Royal Mail back into public ownership and create a comprehensive integrated postal industry using internal cross-subsidies where necessary and appropriate. I imagine that may be expecting too much of the present Tory Government, but it would undoubtedly be massively popular with the public and serve us all well for the long term.

--- Later in debate ---

[Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for bringing that to the attention of the House. I have not heard those rumours; I will simply respond with a line from later in my speech. If the Post Office were Tesco, it would be thinking not about closing profitable branches but about how to make those branches more profitable by providing a more attractive service for the customer. That is what I would like my hon. Friend the Minister to take away from this debate today. Let us see how we can make the Post Office work better for its customers.

What the Post Office needs is a proper business model for the future, which, above all, needs to consider how much of the business should be commercially profitable and which bits of it the Government, through the taxpayer, are prepared to subsidise. Although I do not agree with the hon. Member for Luton North that it should be wholly brought back into public ownership, there is no doubt, given the number of small suburban and rural branches, that it will inevitably need some form of public subsidy in future. That public subsidy should be clearly defined. The bits that can be profitable, such as the Crown post offices, should be made to operate as efficiently as possible.

[Kelvin Hopkins]

An internal cross-subsidy is appropriate where there is a public service component. When we had the Royal Mail and post offices effectively in one industry, cross-subsidy was possible. I think we should return to that principle of cross-subsidy.

[Geoffrey Clifton-Brown]

The hon. Gentleman and I are largely in agreement. I have clearly said that there will continue to be a need for an element of taxpayer-funded subsidy for areas that can never be profitable, such as some of the smaller rural and suburban branches, so there will inevitably be a mixture of the commercial, which needs to be exploited to the maximum, and an element of public subsidy.

The hon. Member for Ynys Môn (Albert Owen) mentioned the issue of banks closing. I have two important branches closing in small rural towns: Lloyds in Fairford and HSBC in Moreton-in-Marsh. Many of the services that those banks currently provide, such as depositing cheques and drawing benefits, pensions and so on, will be provided in future by the post office. If the post office then closes in those communities, my constituents in those communities will be left with a severe disadvantage.

[Geoffrey Clifton-Brown]

I entirely agree with the hon. Gentleman. I need to make progress now or I shall be reprimanded by the Chair for taking too long. There is so much to discuss in this debate and I have a little section in my speech about some of the innovative services that have been mentioned.

People view post office premises as dingy and out-of-date places that they do not want to visit. Clearly, the Post Office as a commercial organisation needs to do something about that. Branches needs to be attractive places that the public want to visit. The franchise model is not the nirvana that everybody thinks it is. Pizza Express, for example—I say this to my hon. Friend the Minister—was at one point 100% franchised, but the offering was so variable that the franchises were brought back into central management and it is now a highly profitable enterprise. If the likes of Pizza Express take the view that they do not want franchisees and they want to manage it themselves, I am surprised that the Post Office is not going down that path.

[Kelvin Hopkins]

Will the hon. Gentleman give way?

[Geoffrey Clifton-Brown]

I will give way one more time to the hon. Gentleman.

[Kelvin Hopkins]

I thank the hon. Gentleman for giving way; I will try to be brief. In many parts of industry now, insourcing is the buzz word rather than outsourcing. There may be a strong case for that across public services as well as in the private sector.

[Geoffrey Clifton-Brown]

I think it comes back to the Post Office maximising the opportunities that it has got. I want to come on to that a little later in my speech, but the hon. Gentleman is right. The Post Office needs to consider very carefully how it operates in today’s world.

When the Post Office decoupled from the profitable Royal Mail business in 2012, little was done to create a coherent strategy for the future. Now, in 2016, with the change in retail banking behaviour and the closure of more than 1,700 branches across the UK in five years, small businesses need a post office bank even more. Currently, the Post Office provides access to business accounts for some of the bigger high street banks rather than its own service. However, this is limited, slower and inconsistent in terms of provisions across the network.

--- Later in debate ---

[Tom Tugendhat (Tonbridge and Malling) (Con)]

I pay tribute to the hon. Member for Luton North (Kelvin Hopkins), with whom, unusually, I found myself agreeing quite a lot. It is a pleasure to be here in the interests of the community I have the privilege to represent. Just over a month ago, the Post Office told me it was opening a short consultation on the proposed closure of a Crown post office in Tonbridge. That is a post office that many people rely on. I wrote to the Post Office on 14 October asking for details and the reasons for the closure. I wanted to know exactly which services it was to discontinue and which it was to carry on providing in a nearby stationer’s. After a month, they had not responded, and when I finally did get a response it did not answer the questions I had asked.

That was particularly disappointing because the Tonbridge Crown post office, like many around the country, as we have heard—indeed, as far afield as Northern Ireland and the Cotswolds—is essential to the community, just as post offices are across our land. They are, of course, the very beginning of our true national identity, when the Post Office really did tie the nation together, with the penny post, linking it through the train network and creating one truly United Kingdom.

For too many, that idea has gone. That is wrong, because the post office sits as an important part of our newly refurbished high street in Tonbridge. It is not just important for the elderly; it is particularly important for those with accessibility needs. My community is privileged to have a post office that is near to disabled parking bays and which has good accessibility, appropriate seating and wide enough aisles. It is therefore suitable for people with accessibility issues. In the proposal, such services would not be offered and the narrower corridors and seating would cause problems.

[Kelvin Hopkins]

I strongly agree with the hon. Gentleman. The survey I mentioned in my speech about WHSmith franchises said that they do not provide for people with disabilities in the same way as Crown post offices.

--- Later in debate ---

[Kelvin Hopkins]

I thank the Minister for giving way. I have very little time, but thank you for chairing the debate this afternoon, Mr Wilson. I also thank all the hon. Members who made such fine, compelling and passionate speeches this afternoon. We are all speaking with one voice. There is a serious threat to the Post Office and to its future, and it has to be rescued now by stopping the cuts. May I ask the Minister that we have a meeting to discuss these things in more depth, with the Front-Bench representatives from each of the Opposition parties and myself, to try to iron out some approach for the future? I have to say that I am rather disappointed with the Minister’s response, because she constantly talked about post offices as though they were businesses rather than public services and community assets. If they are to be made more commercially viable, the Government have got to make—