Post Office Network

Richard Thomson Excerpts

Tuesday 10th March 2020 Westminster Hall

[Richard Thomson (Gordon) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) on securing the debate and on her earnest plea that post offices matter. They absolutely do. In each and every contribution to the debate, we have heard about many of the different ways in which post offices matter to our various communities and sections of them. My hon. Friend made a clear call for the sub-postmasters’ contract to be reviewed, and she pointed out that we need creative thinking about how the business model develops. It is a call with which I heartily concur.

I very much enjoyed the contribution from the hon. Member for Brentford and Isleworth (Ruth Cadbury), who spoke eloquently about the difficulty of maintaining the visibility of the service, about some of the problems with security and about the locations of people who are willing to take on the service, which are not always the locations where, in an ideal world, we would wish the service to be transacted. She made those points very well.

The hon. Member for Strangford (Jim Shannon) spoke eloquently about the issues in his constituency, but he got right to the nub of it when he spoke of the post office as a core part of village and rural life. He hit the nail firmly on the head. My hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) spoke of the importance of a good and effective public transport network in ensuring continued access to the network, and he said that the service is beyond the diktats of market forces. Again, I heartily concur.

Let us look at some of the positive aspects of our post offices. A survey conducted in 2017 showed that 81% of respondents described the post office as important to them; 49% described it as very or extremely important and 97% described it as trustworthy—an unprecedented high figure. That shows the tremendous standing of the institution of the post office, which is not something that has been created in a marketer’s sketchbook. It is a reputation that has been built up over generations of much-valued service to individuals and communities, with a high-quality service at its very heart. The post office is at the heart of both urban and rural communities, and it has provided a universal service and common experience that we have come to value, wherever we are from.

We all understand that changes in the ways that people wish to access the services offered at post offices are inevitable. There is always a temptation to try to take everyone down the route of digital by default, regardless of whether we have the technological capability and sufficiency of broadband access, or the willingness or personal ability, to do that. We have to recognise that digital is not the default for many people, nor will it ever be. It should not be the default for accessing post office services, and we must not overlook the vital role that post offices provide not just to individuals, but to local businesses.

My hon. Friend the Member for Motherwell and Wishaw referred to economics 101 and the importance of the circular flow of cash. That is of particular importance as many banks retreat from our communities and, in many cases, the availability of ATMs in our communities is dramatically reduced. That retreat affects not only rural communities, but urban communities. Lack of access to cash is particularly felt in some of the less affluent urban communities, where the post office’s presence as a provider of cash is vital.

In addition to ensuring the flow of cash, enabling it to be spent locally is important. Many post offices are located within retail businesses in the area, and they also provide direct support to other businesses on the high street. More than 2 million small businesses, or 62%, use the post office at least once a month. In rural areas, 36% of rural businesses use the post office at least once a week to receive deliveries, send products, pay bills and, with the banks retreating from the high street, to deposit cash, as the post office increasingly—willingly or otherwise—takes on the role of cash handler of last resort in many locations.

The network could certainly fulfil that task, but we have to proceed with caution. We must recognise that many post offices simply do not have the physical security to handle large amounts of cash, and that many sub-postmasters are perhaps unwilling to take on a task that carries an increased risk of crime. Although my SNP colleagues and I would very much like to stem the banks’ retreat from the high street, it is important that if and when they do retreat, they are held financially to their responsibility to support the transition and ensure that the post office network is suitably equipped to take on that role, should that be what we want to happen.

[Owen Thompson]

On the point about the need for banks to have long-term contact with the post offices that step in where a bank has abandoned the community, does my hon. Friend agree that the postmasters in those post offices will have to pick up the pieces if that long-term connection does not happen? Months or even years down the line, when customers find themselves in a situation and the banks are long gone, the postmasters will have to pick up the pieces.

[Richard Thomson]

My hon. Friend makes an excellent point. When a service of that kind is withdrawn, the transition is rarely seamless, as I have seen in my constituency where banks have withdrawn and even post offices have reluctantly had to close. There is always a hiatus and an interruption in service, and it is difficult to quantify the degradation in that function that people experience as behaviour changes.

It is not difficult to map out a socially useful and sustainable future for the Post Office. Each of us has spoken at length about the socially useful role that it serves. The challenge is to make that role sustainable for those who provide and operate those services. It should not come as any surprise that as the level of direct financial support to post offices has declined in recent years, there has been a similar decline in the number of post office businesses.

The foundation of a sustainable post office business has to lie in making the everyday transactions sustainable and worthwhile for postmasters to carry out. That aspect of the business is potentially profitable; in 2016, it made a £35 million trading profit. Post offices must continue to be the access point—or the front counter, as has been said—to Government and other public services for people for whom digital is not and will never be the default option.

Postmasters should be properly compensated for the role that we expect them to perform. My hon. Friend the Member for Motherwell and Wishaw made the excellent point that a review of the current contract is absolutely essential. I very much look forward to hearing what the Minister has to say about that.

Although we need at least to maintain the network subsidy payment at its current level, we should also allow a new business model to develop. As I said, the Post Office has a trusted reputation, which it has used to leverage, grow and expand the business into areas such as telecoms and financial services. It should be allowed to expand its retail offering.

We have spoken about the Post Office’s importance as a distributor, collector and mover of cash; it should be able to develop the Post Office Money side of the business. We have heard about the constraints put on the Post Office card account and about the access that the Post Office allows to business banking for eight banks and to personal banking for twenty banks. The Post Office must be allowed to develop and build revenue from its own offerings in current accounts, business accounts, credit cards, saving products and domestic and international cash transfers. That will make the business sustainable.

The Post Office is a much-valued institution and service, but it runs increasingly on goodwill, which is not enough. I look forward to hearing the Minister set out her vision of the future of the service and how it can be made sustainable, not just in goodwill, but in the finances behind it.