Future of the Post Office

Lord Stoneham of Droxford Excerpts

Monday 18th November 2024 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the Minister for the Statement. Like my honourable friend Andrew Griffith in the other place, I am pleased that the Government are building on the work of my right honourable friend Kevin Hollinrake to hasten the payments to the victims of the Horizon IT scandal. I am grateful to the Minister for this important update. Will she commit to regular updates going forward?

We learned with regret last week that the Post Office feels that it has no choice but to make radical decisions, announced by the chairman in the transformation plan, to reduce costs. We are told that this potentially threatens 115 branches and 1,000 jobs. This news prompts a variety of questions to the Minister. First, the Statement makes it clear that the Government expect the Post Office to consult postmasters, trade unions and other stakeholders. How disappointing that the communities that rely on these services have not been specifically mentioned. Surely the Minister agrees that the Post Office’s customers are an important group that should be consulted. Can the Minister therefore reassure the House that where closures are threatened, local communities are fully involved in the consultation process? Can she also assure the House that this will not herald another front in the Government’s current assault on rural communities, as epitomised by the family farm tax, and that the Government will review the family farm tax and other measures that affect rural communities to see how we can better support them?

In announcing these plans, the chairman of the Post Office said that the changes to national insurance in the Budget have made business more difficult for post offices. Can the Minister tell the House whether an impact assessment on the changes announced in the Budget for the Post Office was prepared and, if not, why not?

Business rates and national insurance contributions are going up. The threshold for paying them is going down, and obligations around the minimum wage are going up. It is impossible to conceive that, taken individually, these measures have not had some impact on all small businesses, but collectively they are devastating. As I do not believe that the Government would have been irresponsible enough to make these changes without assessing their likely impact, can the Minister commit to publishing all impact assessments?

The Post Office chairman made clear that his plans are subject to government funding. Can the Minister make a commitment that such funding will be forthcoming? Business rightly hates uncertainty.

Finally, it is welcome that the chairman has committed to increasing the number of banking hubs to 500 by 2030. We welcome that but, as my honourable friend in the other place noted, the devil is in the detail. I will repeat his question: has the Minister engaged with colleagues in the Treasury to discuss the impact of last week’s news on the banking framework negotiations, which are essential to underwrite this rollout of hubs?

[Lord Stoneham of Droxford (LD)]

My Lords, I welcome the noble Lord, Lord Sharpe, to his new Front-Bench role. The Post Office organisation is another problem area left by the previous Government. The Horizon compensation payments are still moving too slowly; there is confusion over the new IT systems in the Post Office; and the Post Office has been suffering from a lack of leadership for an organisation dealing with severe competitive pressures. Now we face, in recognition of high overhead costs, the announcement of the possible closure of 115 Crown post offices, with further damage to our high streets.

I have two initial questions. First, are the Government looking at simplifying the Horizon compensation process and speeding up decision-making? Secondly, is the expectation that many of the Crown post offices will be replaced by sub-post offices and franchise operations? On high streets and in rural areas, long-term sustainability of the post office network is vital to many communities, not least for those who cannot currently use digital alternatives to the post office services for cash, banking and financial services. Liberal Democrats have put forward proposals for the mutualisation of the Post Office. This would also give sub-postmasters more independence and control. It is welcome that the Government have announced broader reforms for the organisation and will publish a Green Paper next year. Can the Minister assure the House that this will include consideration of how mutualisation could ensure that the Post Office is fit for the future?

Will the Government also take this opportunity seriously to consider how to strengthen the role that post offices play in our communities so that they can offer more local services, from community banking to government services?

During many of the Horizon debates, when the Government were on the Opposition Benches, speakers often reminded us that then Ministers were the owners of the Post Office. The Secretary of State has levers to pull, so the fundamental question is how the Government choose to use this leverage now. Can the Minister confirm that the Government will use this ownership to ensure that, whatever happens, local communities will continue to have long-term access to Post Office offerings—all the services, including DVLA and passport services, that currently are on offer?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, I also welcome the noble Lord, Lord Sharpe, to his new role. I look forward to working with him on the many issues that we will no doubt discuss. I am pleased to have this opportunity to keep the House updated on the future of the Post Office, but before I start it is worth reiterating the point made in the Statement:

“the Government inherited a Post Office that is simply not fit for purpose, following”,

frankly,

“disinterest from the previous Government, a toxic culture in head office and years of under-investment”.—[Official Report, Commons, 13/11/24; col. 806.]

That is the legacy we are now grappling with.

I would like to keep the House updated on the need very urgently to ensure that all postmasters who have been victims of the Horizon scandal get full and fair redress. Anyone who has heard some of the individual stories will know how difficult it has been for affected postmasters. It is important that the Government deliver on this commitment to speed up the delivery of redress. This issue is occupying us, and we are determined to resolve it.

Noble Lords will know that the number of cases settled with full and fair compensation has nearly doubled in the past four months since the Government came to power, compared with the four months prior to that. We have also taken steps to make it easier for postmasters who were victims in this scandal to get full and fair redress quickly, not least by fixing some payments for those applying under the Horizon shortfall scheme and for those applying under the Horizon convictions redress scheme, which was launched in July. Nevertheless, we need to do more, and I assure noble Lords that we have our foot on the accelerator.

The noble Lord, Lord Sharpe, asked about the Budget. Clearly, we had to make tough choices in the Budget to fix the foundations of our economy and restore economic stability. We make no apology for that. The alternative to taking action was more economic instability, more austerity and more decline. There are mitigations in place to protect small businesses. These include an increase in and expansion of the employment allowance to simplify and reform employer national insurance contributions. There is also a permanent reduction of 40% of business rates relief for eligible retail properties.

On who was consulted and whether the Government engaged with the Post Office on its strategic review, Ministers have of course been kept informed and have met with Nigel Railton, the new chair. His announcement clearly sets a useful ambition for the future of the Post Office, but these changes depend on funding, which will be discussed through the spending review. The noble Lord, Lord Sharpe, asked who will be consulted. As we have made clear, it will be all stakeholders. That will include any of the communities that might be affected, but no decision has been made on any of those potential closures. We very much hope that alternative activities can be found for all those post offices so that they can remain in business, but the noble Lord will know the difficulties in all that because they are currently making a considerable loss. Nevertheless, we will consult.

The Government have a manifesto commitment to look for ways to strengthen the Post Office network, in consultation with sub-postmasters, trade unions and customers. The Post Office is required by government to maintain a network of 11,500 branches; the Post Office has confirmed that its transformation plan will not impact that commitment.

On the long-term future of the Post Office, the Government are clear that there is more that can be done and we will be considering what customers, communities and postmasters would like to see from a modern Post Office network. The noble Lord rightly said that there is a future; we see a good future for post offices, not only increasingly as banking hubs, potentially, but in providing a means for people to access all the public services the noble Lord mentioned. So there is a good, strong future if we can get the Post Office’s finances on an even keel.

The Post Office’s directly managed branches, which are the loss-making element, need to be addressed. The Post Office is in dialogue with the unions and postmaster representation bodies about future options for those branches. As I say, no decision has been taken by the Post Office on any specific locations and, whatever the outcome, the Post Office will continue to deliver a network of at least 11,500 branches, as required by the Government.

The need for rural provision is a point well understood by the Government. We recognise the important role that post offices play in their communities, and it is clear that branches in some rural areas often play a particular role as community hubs. Mr Railton’s announcement is not about changing the access criteria that the Government set for the Post Office, which would ensure a network of branches across the country, including in rural areas.

Finally, the noble Lord raised the issue of mutualisation. The Government have made it clear in our manifesto that we will look for ways to strengthen the Post Office network in consultation with sub-postmasters, trade unions and customers. Our department is working on this at an early stage, and a wide number of options are being explored, including long-term structural options such as mutualisation.

I stress again to noble Lords that we see a positive future for the Post Office network. This is not a question of managed decline; it is a positive vision for the future. We just need to get the nuts and bolts right at this stage.