Post Office Network

Patricia Gibson Excerpts

Thursday 25th April 2019 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am delighted to speak in this debate and I thank my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) for securing it. We all understand the value and importance of having post offices in our communities. More than 2 million small businesses—62%—use them at least once a month. In rural areas, they are vital; 36% of rural businesses use post offices weekly. One in four of all businesses are registered in rural areas and contribute well over £200 billion to our economy. Citizens Advice has been clear that eight in 10 small businesses in remote rural areas will lose money if local post offices close.

We all remember around 2008 when post offices were gradually being run down under the Labour Government of the day and when the services our local post offices could provide were wrested away from them, paving the way for mass closures. Long before I was elected in 2015, in 2008, I remember going round the doors in my constituency asking people to sign a petition to save their local post offices. I and other party activists did that in Skelmorlie, Glengarnock and Kilwinning. Naively, we thought we could make a difference. It turned out the Post Office’s so-called consultations were not much more than a sham. To make it worse, our then local Labour MP voted on five separate occasions under the Blair Government to close post offices across the UK and then immediately afterwards put out press releases to the local papers lamenting the closure of our local post offices. Sometimes it is not hard to see why people become cynical about politics.

Some post offices are now being closed by stealth. By that, I mean that postmasters are either retiring or shutting up shop because it has become so difficult to make a living out of the business, important though that business is for our communities. Postmasters in my constituency tell me that they were earning minimum wage. We know from recent announcements that as of October 2019—although I do not know why it is taking so long—our sub-postmasters will receive better remuneration from the Post Office for the key services that they provide for the public. The question is whether that improved payment is enough for the long-term sustainability of the service, and we will have to reserve judgment on that.

Postmasters tell us that they hand count thousands of pounds daily. That money is accepted, checked, double-checked, bagged, remmed out and sent away, for much less money than the banks charge their customers. The gap is large, which means that either banks or the post office are making a lot of money on the back of postmasters. That does not seem fair to me.

Our postmasters are taking on a greater role in our communities as banks abandon our towns. Post offices are an important amenity in our communities and offer a lifeline on everything from pensions to benefits and, increasingly, day-to-day banking services. In so many towns, our post offices are the last place where face-to-face services are still available.

We all understand how important it is that banks properly remunerate postmasters for the services they provide to major banks, which turn over huge profits, and I am pleased that there will be a near-threefold increase on current rates. However, some postmasters in my constituency say this simply does not go far enough, which causes me a lot of concern. Indeed, we are all keen to see if the details of this offer are sufficient to protect our postmasters and, importantly, the network’s sustainability as a whole. I have been lobbying the Government and the Post Office chief executive about this for two years, so I am delighted that we have at last made some progress, but the devil will be in the detail.

I have spoken out about the threat to our post office network in four different debates since I was first elected in 2015—we seem to have them once a year. It is an issue that I campaigned on with Scottish National party activists in my community long before I was elected, and I will continue to do so until our postmasters get the fair deal that they deserve. Our post offices are too important to be left to flounder at the mercy of banks that are apparently too big to fail, and of successive UK Governments who have consistently failed to recognise the importance of post offices to our communities.

[Jim Shannon]

I want to put on record what a very good campaign the Scottish National party and others have run on behalf of the banks that are closing, and the importance of post offices in filling that gap. Over time, their campaign has outlined and highlighted the issue of banks closing at a fast rate, which means that the importance of post offices is increasing. It is so important.

[Patricia Gibson]

I thank the hon. Gentleman for that observation and very much welcome it.

[Carol Monaghan]

My hon. Friend talks about the importance of post offices to our communities. In fact, we talk about them as a public service. Does she share my concerns about hearing talk of profit or loss? Public services cost money and must be invested in. We should not consider profit when we are talking about a vital community lifeline.

[Patricia Gibson]

When we talk about profits in relation to public services, there is always the danger that we understand the value of a pound, but not the value of something that cannot be measured in pounds, shillings and pence.

The failure to recognise the value of post offices to our communities can be seen in the fact that 74 Crown post offices have been franchised in WHSmith stores. There are reports that franchising is being done without proper consultation with existing post offices, which means that the competition risks further destabilising the network. There must be strategic consideration of franchising. In addition, it is deeply concerning that the Post Office appears to have admitted that there is no contingency plan in the event of the collapse of WHSmith, which has continued to decline over the past 14 years. There is no contingency plan should WHSmith collapse. What does that say about the strategic planning to protect our post offices? I suggest it says rather a lot.

The UK Government seem to have a pattern of abdicating responsibility for this matter, insisting that it is a matter for the Post Office. That paved the way for the Government to insist latterly that they could do nothing about the banks, which we owned as taxpayers, fleeing our towns. There is a pattern emerging here. At the heart of this debate must be the recognition that the post office network has a vital role in the day-to-day lives of many of our constituents—older people generally, and often the most vulnerable in society. The SNP believes that the Post Office must be more than a commercial entity and must serve a distinct social purpose. The Government must commit to a programme that ensures there are no post office closures, and urgently renew their funding of the network to safeguard its future.

Post Office branches are hugely important to older people. The services offered are a lifeline. People pay bills, access their benefits and get advice. Older people and those on low incomes make greater use of cash and banking services and bill payment services, and vulnerable groups and remote rural residents use post offices for informal community services, such as support and information—they are touchstones of our communities.

It is not good enough for the Post Office to have been managed into decline in the way it has been. For too long our post offices have been undermined and undervalued, and our postmasters underpaid. As a result, some of our most valued post offices are being closed by stripping away their sustainability and then earmarking them for closure. Now, in a new era, we need them more than ever. The neglect and indifference have to stop. It is time to pay our postmasters properly and to stand up for them. It is time to stop the rot and see our postmasters for what they are: community champions who are often not missed until they are gone, struggling on to survive in a hostile business environment where making a living of any kind is increasingly challenging. That needs to be recognised and saluted.

The Minister said in a recent Adjournment debate that her Government support postmasters, and that this is evidenced by a pledge in their election manifesto. I hope she is listening and will discuss with her colleagues in Government what more she can do to show their support than just having a line in a manifesto. We need a positive and concrete set of actions.

--- Later in debate ---

[Kelly Tolhurst]

If the hon. Gentleman would allow me the courtesy of getting to the content of my speech, that would be really useful. I am still at the start. We made a commitment in our 2017 manifesto and are committed to safeguarding the network. The Post Office is publicly owned and it is a commercial business operating in competitive markets. The Government set the strategic direction for the Post Office to maintain a national network, accessible to all, and to do so in a more sustainable way for the taxpayer. We allow the company the commercial freedom to deliver that strategy as an independent business.

I must point out some of the language and words used in the debate, such as “managed decline” and “undermining the network”, and the idea that it is ideological of the Tories to run down post office branches. As the Minister responsible for post offices, I find that incorrect and inaccurate. I do not regard Government investment of £2 billion over eight years as a so-called managed decline or undermining of the network, and I do not regard the establishment of 450 new locations since 2017 as managed decline or an undermining of the network. As hon. Members have outlined, at the end of March there were 11,547 branches. That number is as stable as it has been in many decades, so I refute those claims.

[Patricia Gibson]

I hear the Minister’s objection to the term managed decline, and that is fine. We are allowed to disagree with each other in this Chamber; we have that privilege. However, there is no plan in place in the—I think not unlikely—event that WHSmith completely collapses. It has declined over 14 years. Would she care to take that up?

[Kelly Tolhurst]

I thank the hon. Lady for her comment, but I highlight that WHSmith has been successfully running post office franchises since 2006. We are now in 2019, and the reality is that, in any franchising service and any business, work is always going on behind the scenes in regard to the management of the network. There is a massive network of 11,500 outlets throughout the country. As the Minister responsible, I will, quite rightly, challenge the Post Office on any issues I am told about. I am committed to maintaining that network.

I have highlighted that so early in my speech because ever since I have had this role I have been clear at the Dispatch Box and in any debate that I will talk to any MP about issues they have in their constituency about post office branches. I will also talk to anyone about the Post Office and take those issues forward to challenge it. I will also defend the Post Office when required.

--- Later in debate ---

[Kelly Tolhurst]

I am always happy to look at the details and where we can improve services if that is possible. I must point out that the post office network is long established and well loved. We love the people who work in our post office network: the sub-postmasters and the workers—[Interruption.] Hon. Members might heckle, but we do. The Government definitely do, and rightly so.

I have outlined this afternoon my personal commitment to the post office network, as we did in our manifesto, to see where we can improve it and where we can all work together to secure the future sustainability of a strong network throughout the country. There are challenges ahead, just as there are within retail. They are not insurmountable, but the challenge for us is to work with all of our stakeholders to tackle those and secure the network for the future.

The facts clearly show that the Post Office has made substantial progress over the past decade. The inhibiting cultural legacy of being a lesser partner to Royal Mail, with high public sector costs, has almost disappeared. As a business, Post Office Ltd is increasingly profitable and takes action to consolidate and defend its position in the market. Between 2010 and 2018, we backed the Post Office with nearly £2 billion to maintain and invest in a national network that had 11,547 post offices at the end of March. That extensive network gives the Post Office a unique reach among service providers. The Post Office currently meets and exceeds all the Government’s accessibility targets at a national level.

[Patricia Gibson]

I appreciate the amount of investment that the Minister is talking about; it is clearly a lot of money, although people might want a debate about whether it is enough. In spite of that investment, does the Minister understand the concerns raised today? In Scotland 22% of the entire post office network has closed over the past 15 years. Surely she, like me, laments that figure because of the scale of loss it represents.

[Kelly Tolhurst]

The hon. Lady is right to raise those concerns. She is also right that we are concerned about any particular closures that may happen, as is Post Office Ltd. That is why Post Office Ltd works hard—it always works hard—where there are unforeseen closures to make sure that those branches reopen. Since I have been in post there have been a number of examples where I and local MPs have worked with the post office network and local communities to make sure that new facilities are opened.

Where there have been closures, I would always encourage people to raise them with Ministers and to work with Post Office Ltd to make sure that we can sustain the network. The hon. Lady is right to have concerns, but she is wrong to say that the intention is not to renew those branches and not make sure that the network is stable in Scotland. There is a commitment and a desire to achieve that.

Government investment has also enabled the modernisation of over 7,500 branches, added more than 200,000 opening hours per week and established the Post Office as the largest network trading on Sundays. In terms of services provided, the Post Office’s agreement with the high street banks enables personal and business banking in all branches, ensuring that every community has appropriate access to cash and supporting consumers, businesses and local economies in the face of bank branch closures, particularly in rural and urban deprived areas. I encourage the House to look closely and objectively at these facts; they show unequivocally that the network is at its most stable and is much more sustainable today than in 2010.

We are not complacent. Post Office Ltd has to keep exploring new business opportunities to ensure a thriving national network for the benefit of communities, businesses and postmasters up and down the country. One of the most important and visible aspects of the Post Office strategy is its franchising programme. I accept that some communities have a strong emotional attachment to Crown post offices and naturally there will be concerns when proposals come forward to franchise their local branches, but our high streets are facing unprecedented challenges and the Post Office is not immune to them. Just like any other high street business, it needs to respond to these pressures and adapt to changing customer needs.

Franchising has reduced the taxpayer funding that the Post Office requires from Government, while maintaining—and, in some instances, improving—customer service levels. In fact, the report by Citizens Advice in 2017 indicated that franchised branches are performing in line with or better than traditional branches. I reassure hon. Members that, as part of its ongoing monitoring role, Citizens Advice will continue to track the impact of post office changes on consumers and on customer satisfaction in respect of post offices. Citizens Advice also has a formal advisory role in reviewing changes to Crown post offices across Great Britain that are relocated and franchised.

Serving rural communities is at the very heart of the Post Office’s social purpose. There are over 6,100 post offices in rural areas and virtually everyone living in such areas is within 3 miles of one of those branches. Last year, a study by Citizens Advice found that seven out of 10 rural consumers buy essential items at post offices and almost 3 million rural shoppers—that is, 31% of rural residents—visit a post office on a weekly basis, compared to 21% of people living in urban areas. The importance of post offices to rural areas is illustrated by the fact that almost half have community status. They are the last shops in the village, as hon. Members have outlined. Rural post office branches, whether main, local or traditional, can offer the same products and services as urban ones of the same category.

The Post Office recognises the unique challenge of running a community branch and supports those postmasters differently from those in the rest of the network. They receive fixed remuneration, as well as variable remuneration, to reflect their special situation. In addition, the Post Office delivered almost £10 million of investment via the Community Fund between 2014 and 2018. That enabled community branches to invest in their associated retail business. The Post Office has now launched a smaller community branch development scheme that will benefit an anticipated 700 branches. Let me be clear: this Government and the Post Office will continue to support rural post offices.

Some hon. Members raised concerns about the rates of remuneration paid to postmasters, especially for banking services; I, too, have been and continue to be concerned about that issue. While the contractual relationship between Post Office Ltd and postmasters is an operational responsibility for the company, I care deeply about the issue and I am determined to make sure that running a post office remains an attractive business proposition.

We offer post offices several ways of doing that, including the development of services for the future. My challenge to people thinking of taking on a franchise or a post office is to make sure that they deliver the services demanded by consumers and therefore enable post offices to continue to be relevant in today’s market, given the way consumers use services now compared to the past.

I have committed to meeting interested parties, including the Post Office Ltd and the National Federation of SubPostmasters, more regularly so we can ensure that particular issues, case studies and direct concerns are discussed and challenged on a more frequent basis, and we can all work together. Everybody in this room and all our stakeholders want to see the Post Office thrive and develop in the future. Some Members may regard me as having a different ideological view: there may be different ways of getting there, but the outcomes should remain the same.