Willenhall Crown Post Office

Michael Fallon Excerpts

Wednesday 26th March 2014 Commons Chamber

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Let me begin by saying that the hon. Member for Walsall North (Mr Winnick) has certainly discharged his responsibility to his constituents by raising Post Office Ltd’s proposals to seek a franchise partner to operate Willenhall Crown post office. He has set out very clearly his concerns, and the concerns of his constituents, on the proposed changes, and I fully appreciate those concerns. As Members of Parliament, we all recognise that post offices are a vital part of the local community, and I understand the real issues and worries that some constituents may feel when changes to our post offices are proposed.

Such concern is not surprising given that there were two major closure programmes between 2003 and 2008, when six branches in his constituency were permanently closed. Five branches in my constituency were also permanently closed. I hope the hon. Gentleman recognises that this Government are taking a different approach. There is no programme of post office closures under this Government and there will be no such programme. We recognise the important social role that post offices play in our communities. Since 2010, we have committed nearly £2 billion to maintaining the post office network at a minimum of 11,500 branches. We are providing for the modernisation of up to 8,300 branches by 2018, bringing improvements such as longer opening hours for the Post Office’s millions of customers. We are also protecting 3,400 community branches and providing an investment fund to deliver improvements to those branches.

The post office network is made up of nearly 12,000 branches, the vast majority of which are owned and operated by private businesses and individuals more commonly known as sub-postmasters. Just 3% of the network—approximately 370 branches—is directly operated by Post Office Ltd. That is the so-called “Crown” network that the hon. Gentleman has spoken about. This small segment of the much wider post office network has historically incurred heavy losses, which amounted to some £37 million in the last full financial year. They account for nearly a third of the losses incurred by the whole network. That is not sustainable, and those losses cannot continue. They are a drain on the company, but, more important, they are a drain on the taxpayer. No business, including the Post Office, can continue to allow some of its high street branches to cost substantially more to run than they bring in. That, I am sorry to say, includes the branch at Willenhall, which I understand costs £1.44 for every £1 of income that it generates.

In return for the historic financial commitment that the Government are providing for the Post Office, we require the company to eliminate Crown losses by 2015. That is good commercial practice, and it is also fair to the taxpayer. The Post Office has a plan to end the losses, which includes working with retail franchise partners in 70 locations to provide continued access to post office services where the Post Office cannot do so viably itself.

As for the franchising proposals, it is important to be clear that Willlenhall is a loss-making branch. Following a process of careful consideration and modelling, the Post Office does not believe that it can operate the branch profitably or sustainably. However, it does believe that another retailer in the community can do so. It has therefore advertised the opportunity to local businesses and retailers, and has received expressions of interest from a number of parties. It is assessing those responses to ensure that the most appropriate partner is chosen to provide access to services, but until we know more details, we cannot take a proper view of how the franchising proposals will affect residents of Willenhall. However, I can reassure the hon. Gentleman and his constituents that this is not a branch closure. Customers will continue to enjoy access to post office services at a new branch close to the existing one.

[Mr Winnick]

The Minister says that it is not a closure, but it is a closure, to the extent that the existing building will close. There is no doubt about that, and indeed the Minister has not said otherwise. What he is saying is that the post office facilities will be transferred to a retail outlet, and I have not challenged that.

While I am on my feet, may I ask the Minister a simple question? Are the views of the local community on the role that the Crown post office in Willenhall plays and has played for so many years being taken into account?

[Michael Fallon]

As the hon. Gentleman himself mentioned, a consultation will take place, and the views of local residents will be important. I think he will concede that the post office is not in an ideal condition, in terms of the state of the building. It could also be argued that it is not in an ideal location. The key, surely, is to ensure that customers can continue to access post office services at a new branch that is close to the existing one. What we do know is that the full range of services that are currently offered will continue to be available at the new branch.

I assure the hon. Gentleman that before any changes are made, there will be that six-week local public consultation, under the terms of the code of practice agreed between the Post Office and the organisation Consumer Futures. The consultation will focus—perhaps this answers the hon. Gentleman’s question more directly—on the specific and detailed proposal to relocate the service. That will include issues such as the accessibility of the branch, the layout of the store, and the parking that would be provided. Anyone can express an opinion, and all responses will be considered carefully by the Post Office before a final decision is reached.

Already 17 former Crown branches have been reopened by the Post Office’s franchise partners. In these communities, customers are benefiting from continued access to the Post Office services they rely on, but in more modernised stores that deliver an improved customer environment and are fit for the 21st century. In all franchised branches customers are, importantly, also benefiting from longer opening hours, including in many cases on Sundays, too. That is important. It allows the Post Office to offer its customers the flexibility that they enjoy across the rest of the high street. Responding to its customer needs is the key to securing the long-term future of the network.

It is also the case that these franchised branches are now no longer a financial cost to the Post Office network. Franchising branches presents an excellent opportunity for a business in the locality, or a sub-postmaster, to take on and improve the branch. As with the many thousands of branches already operated by sub-postmasters, these franchised branches are being successfully operated by the Post Office’s business partners and sub-postmasters who are meeting the needs of their customers. They are also helping the Post Office become more sustainable and viable in the long term and reducing the need for taxpayer handouts.

[Mr Winnick]

I was not aware that the Minister was conversant with Willenhall, and he will no doubt respond on whether he will accept my invitation. He said that the post office is not in the most central place, but it is in the centre of Willenhall town. It is very near the market. I do not know of any location that could be more central in the town.

[Michael Fallon]

I am certainly going to pass the hon. Gentleman’s kind invitation on to the post office Minister, my hon. Friend the Member for Cardiff Central (Jenny Willott), and perhaps she can go and see for herself and establish beyond any doubt whether the location is optimal. Of course, I stand to be corrected by the hon. Gentleman, as he will know it far better than any of the Ministers, but it is my understanding that it is not on the main high street. All I have seen is a photograph of the location, but let me pass on his very kind invitation and we will see whether my hon. Friend is able to find time in her diary to take it up herself.

[Mr Speaker]

Order. May I just say to the Minister of State that we wish his hon. Friend the post office Minister an early recovery from her indisposition, but in the unfortunate event that it were to be lengthy, which we very much hope will not be the case, the Minister of State could always consider taking responsibility for the invitation and attending in her stead, and I am sure he would anticipate that with enthusiasm?

[Michael Fallon]

The House always benefits from your interventions, Mr Speaker, and thank you for your kind good wishes to my hon. Friend. I think the House has already guessed that my hon. Friend would normally have been answering this debate. I receive a number of kind invitations from all quarters of the House to visit, and I will certainly consider a visit to Walsall when I next draw up my regional visits programme.

The commitment I have outlined demonstrates that the Post Office has a plan that sustains and improves services. It is a plan that sees the introduction of new products and services. This is not a return to the closure programmes seen under the last Administration.

Alongside the plans to modernise and improve the Crown network, we are also delivering our network transformation programme, which is seeing the modernisation of up to 8,300 post offices by 2018. That includes Bloxwich post office in the hon. Gentleman’s constituency, which has converted to the new main model. The customers of that branch can now access Post Office services between 8.30 in the morning on their way to work and 7 o’clock in the evening on their way home. Across the UK, more than 3,000 sub-postmasters have signed up to convert, and nearly 2,000 branches, such as the one in Bloxwich, have already converted and are open and operating.

In 2010, we set out our commitments to the post office network in our policy statement, “Securing the Post Office network in the digital age”. I stand here three years later and tell the House that we are delivering on those commitments, and we will continue to deliver. We said then that there will be no programme of post office closures under this Government and there is not—and nor will there be. We said that we will provide £1.34 billion for the Post Office to modernise the network—we are providing that money and the Post Office is modernising. In November last year, we announced a further £640 million funding package to enable the programme to be extended to modernise and protect the whole network by 2018.

We said that we want to see the Post Office become a genuine front office for Government, and the company has so far won every contract it has bid for in the past three years, including the vital Driver and Vehicle Licensing Agency front office contract. We said that we will support the expansion of accessible and affordable personal financial services through the Post Office, and we are doing so. My hon. Friend the Member for East Dunbartonshire (Jo Swinson) was delighted to be one of the first people to open a Post Office current account last year when the company began a pilot in East Anglia. We also said that we will create the opportunity for a mutually owned Post Office. We have held a public consultation on that, and the company, alongside its stakeholders, is engaging the public to agree its public benefit purpose.

In summary, this Government’s track record on the Post Office speaks for itself. We remain committed to the network and we are continuing to invest in it to secure its future. The proposals of the Post Office to seek a franchise partner in Willenhall will ensure that the hon. Gentleman and his constituents will continue to benefit from continued and improved access to vital post office services.

[Mr Speaker]

Order. Before I put the Question on the Adjournment, the hon. Member for Devizes (Claire Perry) has a point of order relating to the Division at 3.23 pm, in respect of which she was a Teller.