Post Offices (North Yorkshire)

Kevin Hollinrake Excerpts

Tuesday 6th November 2018 Westminster Hall

[Andrew Jones]

That was indeed a very disappointing part of the Post Office’s response at what was otherwise a very good APPG meeting. I want the consultation to be much more wide-ranging. I want it to consider the views of the people of Harrogate; I am sure the hon. Lady wants the same for the people of York, and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) wants the same for his constituents. The issue affects locations right across north Yorkshire.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate my hon. Friend on securing this important debate. Post office services are always critical, but particularly now. Banks in villages and towns such as Kirkbymoorside and Filey in my constituency are closing, handing over responsibility for banking services to post offices and walking away, yet there is no long-term guarantee of how long those post offices will exist. Does he agree that it is critical that we continue to invest in our post offices so that people have physical access to banking services and to the many other services that post offices provide?

[Andrew Jones]

My hon. Friend makes a valuable point; I totally agree. From a business perspective, I have no doubt that in some parts of our country, post offices are the last opportunity for local banking. They play a critical role, and the need for their preservation has to be a consideration not just for the Post Office but for the Government when they consider how the financial services structure of our country can thrive in the future.

I learned from the correspondence that I received this afternoon that the consultation will start tomorrow; I do wonder whether I would have received the information with quite the same urgency if the debate had not been scheduled for today. I am sure that there will be a big response to the consultation. My campaign to collect local opinions on the proposal has already had hundreds of responses. A summary of the views submitted is that, overwhelmingly, people value their post office and want a secure future for it without loss of service. Consultations on other branches across the country that have moved have been very shallow, so I hope this consultation will be better, instead of being just a paper exercise. I will make sure that all the responses that I have received will be fed into the considerations.

I am not blind to commercial pressures on the high street. I recognise that the internet is changing business models and that the Post Office, like all companies, must evolve—that is a given. The Post Office is to be commended for returning to profit last year for the first time in 16 years. I can see why it may wish to leave the Cambridge Road location, because it is a very large building—the team showed me round some years ago—and much of it is unused. Leaving space empty is bad business, but has the Post Office considered a new smaller stand-alone location more tailored to its future needs, in which it could continue to offer good access and a complete transfer of services without any erosion? I fully recognise that unnecessary overheads make business unsustainable, but a search could easily reveal a location that would make the post office fit for the future.

I ask the Minister to raise in her discussions with Post Office management a few points for consideration about the relocation programme across North Yorkshire and particularly in Harrogate. Are the consultations genuine and proper or are they a paper exercise? Do they address matters of principle or smaller, peripheral matters? Will she review with Post Office management the process for reletting sub-post offices and the speed at which they do it?

We need a new sub-postmaster at Cold Bath Road post office, which has closed. It is a popular branch: when it was earmarked for closure by the Labour Government in 2008-9, we held a protest march, which is quite unusual for Harrogate, that attracted significant attention. We marched from the Cold Bath Road post office to the Crown post office, and we changed the Government’s mind. The post office stayed open and became a valuable part of our local business network and our thriving community. We want it to open again, but it needs a sub-postmaster to run it. The process needs to be speedy, so I ask the Minister to consider the process and speed of reletting sub-post offices. That issue has been highlighted by hon. Members who are not present for our debate because they do not represent North Yorkshire, but who recognise the same issue in their constituency.

At a time at which the Government are taking action to support high streets and make them viable, through significant Budget measures such as the future high streets fund and the changes to business rates, it feels as if the Post Office is taking steps in the opposite direction. People and businesses need post office services, from parcels to banking, and from passports to savings, but a business does not thrive by making it harder for its customers to find and use it. It should do the opposite. Instead of thinking about a retreat to fewer services, we should think about growth towards more.

Those are the points that I will raise with the Post Office, because I want to see all post offices thrive in Harrogate and beyond. I ask the Minister to raise them in her discussions with the Post Office, because the issue affects many parts of our United Kingdom. Post offices are a valuable part of local communities right across the UK.

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

It is a pleasure to serve under your chairmanship for the first time, Sir David.

I congratulate my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) on securing this debate on post office services in North Yorkshire. He has been an energetic and passionate advocate of post office services in his constituency. Post offices play such a vital role at the heart of our local communities, so it is only right that we have opportunities to debate the Post Office and the services it provides locally. The Government recognise and value the economic and social importance of post offices, in particular to communities in North Yorkshire. That is why our manifesto made a commitment to safeguard the post office network and to support the provision of rural services.

I point out that I am the Minister with responsibility for post offices, so it is right for me not only to champion the Post Office but to listen to hon. Members’ concerns. I, also offer challenge directly to Post Office Ltd in our role as its Government owner. I will first look at some facts.

Between 2010 and 2018, the Government provided nearly £2 billion to maintain and invest in a national network of at least 11,500 post offices. Ninety per cent. of the UK population must be within one mile and 99% within three miles of their nearest branch. Government investment has enabled the modernisation of more than 7,000 branches, added more than 200,000 opening hours per week and established the Post Office as the largest network trading on a Sunday.

[Kevin Hollinrake]

Will the Minister give way?

[Kelly Tolhurst]

I will make some progress first.

Post office banking services enable 99% of personal and 95% of business banking in any one of 11,500 branches, supporting consumers, businesses and local economies in the face of accelerated bank closures. Financial performance has improved, as my hon. Friend the Member for Harrogate and Knaresborough outlined, from a loss of £120 million to a trading profit of £35 million in financial year 2017-18, thereby reducing Government funding from £415 million in 2013-14 to £50 million by 2020-21.

I encourage the House to look objectively at those facts. They clearly show that the network is at the most stable it has been in a generation. All that has been achieved notwithstanding increasingly challenging trading conditions in the Post Office’s core markets and in the wider retail sector. The Post Office offers a huge range of products and services to the UK public, while ensuring that those services remain at the heart of towns and villages throughout the country. In doing so, it offers great value for money for the taxpayer.

Finally, we recognise that changing consumer behaviour presents a significant challenge for small retailers, including the many postmasters up and down the country. In the Budget last week, therefore, we announced a one-third reduction in small retailers’ business rates bills for two years from April 2019. A retailer could save up to about £8,000 per property per year, which will benefit a range of retailers, including post offices.

[Kelly Tolhurst]

As I said before the debate, I am happy to look at York specifically in the future, asking any questions that the hon. Lady might have of Post Office Ltd directly.

I appreciate that the proposed changes to the delivery of post office services can cause much concern to the communities affected. Post office branches, however, are not closing but are being franchised, whether on site or to be relocated to high streets. Franchises typically provide the same range of post office services as those offered at Crown branches.

Working with a retail partner is a sensible response to the challenges faced by our high street retailers, with the benefit of shared overheads across the combined post office and retail business, including property and staff costs. Franchising is a part of the Post Office’s strategy to ensure that the network is secure, sustainable and successful in the long term. In fact, more than 90% of post offices throughout the UK are operated successfully by independent businesses and retail partners.

Moving the directly managed Crown offices to retail partners has helped to reduce the losses in part of the network from £46 million as recently as four years ago to break-even today. I must stress that franchising is not about closing branches, but about moving a branch to a lower-cost model while continuing to offer high-quality service, more convenient hours and better locations. I understand that my hon. Friend the Member for Harrogate and Knaresborough has questioned location, and we can look at that, but Citizens Advice found that franchised branches deliver the same or better standards of service to the customer.

Regarding the recent WHSmith announcement, the communities of Harrogate and Knaresborough, as well as other communities in North Yorkshire, are not losing their post offices, which will be relocated to WHSmith branches, making services more accessible to customers.

[Kevin Hollinrake]

The Minister makes a good point on the Government’s support for the post office network. The concern is where, because of the closure of banks, post offices end up being the only physical premises at which someone can bank. If the Government were to withdraw their support, those towns will have no banking service. Can we do more either to stop banks closing the last branch in a town, or to give longer-term support to post offices to ensure that that does not happen?

[Kelly Tolhurst]

My hon. Friend makes an important point about the role that post offices play in the banking sector. As he knows, the Post Office and the banks have an agreement about the enjoyment of post office facilities for use in offering services traditionally provided by high street banks. The Post Office is in negotiation with the banks to renew that agreement. As the Minister responsible, I have been clear about what I believe: the Post Office needs to benefit; customers need to benefit from a banking framework; and the banks need to accept their responsibility for the role now being played by post offices.

For example, those WHSmith changes will add four and a half hours to the opening time of the Harrogate branch in the constituency of my hon. Friend the Member for Harrogate and Knaresborough. Rest assured, however, that the existing branches will continue to serve the community until the changes are finalised by the Post Office.

My hon. Friend is right that the Coal Bath Road post office closed on 1 October. Post Office Ltd is committed to delivering a new partner or provider for that branch. There have been commercial issues with regard to provider and post office. Sometimes, unfortunately, contractual matters get in the way, but I absolutely accept that it is something we want to deliver.

With regard to the process, my hon. Friend is right that Post Office Ltd will carry out the consultation from tomorrow. Again, I request that anyone who can puts in a response to the Post Office, because it has to look at the consultation to ensure that it answers the questions and deals with the concerns expressed by the community. I will, however, raise the questions of process directly with the Post Office. He is right to challenge me as the Minister responsible to pass that challenge on to the Post Office.

The Post Office runs local consultations to engage local communities and to help shape its plans. That is in line with its code of practice on changes to the network. Citizens Advice reported that the process is increasingly effective, with improvements agreed or reassurances provided in most cases, demonstrating that the Post Office listens to the community. I know that the Post Office will continue to engage with local communities and to consider all options to ensure provision of sustainable post office services before its plans are finalised.

My hon. Friend wants the Post Office to consult on the concept of franchising before it consults on any new locations. However, these decisions must be commercial ones for the business to take within the parameters set by Government to ensure we protect our valued network. Post offices operate in a competitive environment and we should allow the business to assess how best to respond to the challenges it faces in order to meet our shared ambition of securing post offices for the future.

On the reduction of services that my hon. Friend thinks is taking place, he is correct that the biometric enrolment for UK Visas and Immigration, which is currently available at 99 branches, is not easily transferrable. He is absolutely right that that agreement is directly with the Home office, and it will obviously cause him concern.

I understand my hon. Friend’s concerns about first floor access for the disabled to the WH Smith and that post office, and about car parking. We need hon. Members to challenge the Post Office about those directly to ensure that it provides accessible centres within our communities.

Finally, the Government are completely committed to ensuring that we strengthen and support our post office network throughout the UK. To date we have done that effectively and kept branches open, of which I and the Government should be proud. We have seen a reduction, but we should celebrate what we have done.

We want our post offices to remain at the heart of our communities. We want them to provide services that are more accessible for our communities. They have always been at the heart of our communities and I hope they remain so. As the Minister responsible, I assure my hon. Friend that I will do my best to ensure that the Government—the owner of Post Office Ltd—duly represent our constituents regarding any issue he raises about the post office network. I am happy to have further conversations with my hon. Friend over the next few weeks as the consultation progresses. I will happily meet him and any other hon. Member any time to discuss the consultation and any changes.

I thank my hon. Friend for securing this debate. It has been an opportunity to challenge the new franchise system but also to celebrate what the post office system is doing and the value that post offices bring to our communities. Without them, we would be in a very different place. It is absolutely right that the Government continue to back the Post Office. I thank my hon. Friend for giving me the opportunity to mention the individuals who work within the post office network, who are integral to ensuring that those services are delivered day in, day out throughout the country.

Question put and agreed to.