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Crown and Post Office Closures

Volume 461: debated on Tuesday 12 June 2007

I thank the Speaker for granting us this short debate. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) will speak, too, and he will pick up any points that I do not cover because, as I have said, it is a short debate. My right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) cannot be here, and as a member of the Government he would not be able to speak in the debate, but nevertheless he supports our endeavours to try to sort out the post office situation in Coventry.

There are two issues as far as we are concerned. The first is the relocation of the sorting office—on that point, I note that the hon. Member for Northampton, South (Mr. Binley) is in the Chamber. The second is the relocation, as it were, of the Hertford Street Crown post office. I cannot understand how the Post Office will squeeze the staff from that building into the WH Smith building, which is not far. The Post Office’s justification was that it was not far away and they could move at their will. That has job implications.

Let me jump now to the relocation of the sorting office. There are 500 jobs at stake, and as someone put it to me a few days ago, that is the equivalent of losing some £10 million a year to Coventry’s economy. To a lot of people, that might not seem a lot of money, but to a lot of people it is, particularly when we talk about jobs. When the Post Office talks about consultation, it means, “We have already taken the decision and we are going to tell you about it.” My understanding of consultation was always that people made a proposal, listened to the counter-proposals and then made their minds up. It seems that the Post Office went into the consultation with its mind made up.

One could argue that the change could lead to a further deterioration of the service in Coventry against a background of continual change in the Post Office over the years. The staff have offered a lot of co-operation. We know that from time to time in negotiations we get entrenched situations, but it is incumbent on everyone to try to resolve them. The only way in which that can be done is if the company listens to its employees and the public, rather than saying, “This is what we are going to do; the matter is ended.”

There is another factor. We were told some weeks ago that Coventry city council had about six sites that it could propose for the relocated sorting office. However, no one has told us yet where the sites are, so we do not know what is happening. I have always believed that if a site can be identified, the situation would be part of the way towards being resolved. When the proposals came about, the Post Office had no idea where it would relocate if it went to Northampton. Subsequently, we have heard stories that a site might have been identified in Northampton, but the Post Office has certainly not told us where that site might be. Coventry city council could be helpful if it could identify a site. That has been going on for many months.

The public in Coventry are concerned by the level of service, and different groups are getting up a series of petitions. I do not know the exact figures, but I am told that they run into the thousands. That campaign will continue. Although various structural changes have been made to the Post Office through legislation made in Parliament that was initiated in Europe, and although we accept that the Post Office is up against stiff competition—no one is trying to deny that—how it makes the changes is what matters. It has been suggested that when the legislation was debated, Members of Parliament were voting for closures. The legislation said nothing about closures. Royal Mail Group has decided to take them on and to go ahead with them.

Other rumours are flying around that there will be further closures in Coventry, and so far we have not been able to substantiate them. No one is coming clean. We hear such stories, but we are not able to bottom out, as it were. There are some major issues not only for Coventry but for Royal Mail up and down the country. Rather than carrying out a so-called consultation, there should have been a bit of negotiation to try to sort the problems out.

It has been suggested for a long time that the Royal Mail wants to get out of Bishop street. We know that the Bishop street site is a prime site in Coventry and there have been all sorts of suggestions about its use. Nevertheless, Coventry has gone through a large number of changes over the past 20 years—I am sure that my hon. Friend the Member for Coventry, North-West can elaborate further on that—and the service has deteriorated over the years. All sorts of changes have happened, and we do not know what the outcome will be even if people go along with the relocation to WH Smith. As I understand it, the lease will last for possibly seven years, but what will happen at the end of those seven years?

The company might well say that there will be no redundancies, but if it starts to relocate people again that will prompt the question whether they will want to travel. If Royal Mail wants to be efficient, everyone knows that transport is one of the biggest costs. I noticed that Royal Mail backed away from the two small sub-sorting offices that it had initially suggested, but we have heard no more about that. The situation is muddied. My hon. Friends and I are concerned about redundancy, and whether it will be compulsory or voluntary; the deteriorating level of service; and the lack of suggestions for a site from Coventry city council—if a site was suggested, that would give us something on which to work. We are also concerned about the fact that Royal Mail has not come clean about the Northampton situation, and I am sure that the hon. Member for Northampton, South is as concerned as we are.

In conclusion, Royal Mail has to come clean and to have meaningful negotiations about the future. It must be prepared to consider alternatives. We have met the trade unions on a number of occasions, and the first time I met them was before last Christmas—it might well have been around November. They know that changes have to be made, and want to be able to propose their alternatives. They were prepared to have serious discussions. After we met the unions, we eventually met Royal Mail and it became apparent that it would not listen to any alternatives. It is understandable why, from time to time, Royal Mail has problems with industrial relations. When I was involved in the trade union movement and with negotiations, if a manager sat round a table and told me, “This is what you are going to have,” he would have a problem, and he could well understand the men’s attitudes.

The men and women are concerned about the future, as are their families. I hope that the Minister will try to answer our questions, but more importantly, my hon. Friends and I would like to take a small delegation to meet him and to have a proper discussion about some of the issues that concern the people of Coventry and the employees of Royal Mail.

I thank the Speaker for granting us the debate, and congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing it. It is timely and important, and from the point of view of MPs in the area, we are pleased to see the hon. Member for Northampton, South (Mr. Binley) here. I gather that he would like to say a few words, too, so I shall make space for that. It is important that we hear all the arguments in the round.

The situation with the post office and the unions is not the happiest. Sadly perhaps—rightly or wrongly, I do not know—the unions have strong views. The idea of shares and involvement in the ownership of the business by the work force did not come through, which the management saw as a setback. The Post Office does not seem to be able to get into a good consultative position with the unions, and there are difficulties and a general feeling of impending problems with the whole business at a national, background level. At a more immediate level in Coventry, there are the two points that my hon. Friend raised—the Bishop street closure and the move to Northampton, about which we have grave reservations.

I shall give way in a second, but I will also allow time for the hon. Gentleman to speak.

We have seen nothing on the logistics, effectiveness and cost savings of the move to Northampton, and we remain doubtful about whether it will come off.

I thank the hon. Gentleman for giving way. I really am most appreciative, and I thank you, too, Miss Begg. I wish to add to the hon. Gentleman’s point about uncertainty, because there is concern about the matter in Northampton. We do not know what is happening, and there has been uncertainty about post offices in Northampton for some considerable time, since the burning down of our major post office and sorting office. I ask the Minister, and the hon. Gentleman, whether they believe that jobs will be coming to Northampton and whether they believe that any assessment has been done of the labour market in Northampton. I know as an employer that finding labour is very difficult there and in surrounding areas.

I am grateful for that intervention, and the hon. Gentleman makes a good point. The labour market might be very tight in Northampton, but in Coventry we are losing 500 more jobs. I mentioned our doubts about Bishop street and the Northampton move, but in the light of what he said about the labour market I add that we view with dismay the possibility of the loss of 500 jobs and further closures. Jaguar jobs have gone, and we now have more uncertainty about Jaguar after the announcement put out in rushed circumstances last night by Ford. We had the Massey’s problem a couple of years ago, which is still working its way through, and there was the complete closure of Peugeot.

Coventry has done brilliantly, with the work force, management and the council working together, to overcome those difficulties, but we cannot keep on being hit. We are saying, “Give us a break.” I hope that the Royal Mail management will consider the matter in the round and take a balanced, calm look at it rather than try to rush through too much too quickly. That would make it come unstuck both in its relationship with the unions and the conduct of negotiations or consultations—whichever they are—and in its figures and the savings that it hopes to make.

We are specifically considering Post Office Ltd’s announcement of the franchising of 70 branch offices to WH Smith, as my hon. Friend the Minister knows. I am pleased to see him here today. As my hon. Friend said, he might not be able to give us answers today, but it would be good if we could bring a small group to him to follow up with a meeting on the points made and those that we cannot make in a short Adjournment debate.

Consultation was planned for August 2007, with a view to the whole operation being carried out by 1 May next year. It has been said, as I understand it, that the number of counter desks will be reduced from 13 to six—roughly halved—but that there will be no reduction in the quality and speed of the service. That just does not stack up. All of us who have followed the slimming down of the banks know that people cannot get served at the counters in banks any more. It will be the same at the post offices—successful post offices already have such difficulties. So how will it happen? The numbers that we are seeing for the move to Northampton and the franchising to WH Smith do not have the ring of conviction about them.

A couple of other things need to be highlighted. I gather—I am looking for advice and possibly reassurance—that the Post Office will not offer its professionally trained staff the opportunity to transfer to the franchised offices under the Transfer of Undertakings (Protection of Employment) Regulations 1981, with their current terms and conditions. If that is the case, I think it is a backward step. One thing that was successful in some of the privatisation that we managed to do was the fact that people could hold on to that right under TUPE in pretty much acceptable conditions. It did not always happen, but sometimes people managed to have that right. I would certainly have thought that they could in this case.

The other related point is that there is talk about the remuneration being £4 an hour less than is currently paid by the Post Office. If that is seriously proposed, I think we have a very rough road ahead of us. We must all sit down; there is particularly a role for MPs to play, as we must always use our good offices, and Ministers, unions, the Royal Mail and Post Office Ltd are all aware of the need to sit down together. We would certainly do that.

We are looking for reassurance about how these matters are being handled. We want a better feel for the numbers, and we want a better impression to be communicated that the normal procedures of negotiation and consultation with the trade unions are being followed. We get the impression that they are not, and that there is a tendency for those procedures to be ridden roughshod over. That is bound to stack up problems as we go down the road. The industry is a labour-intensive service industry and we are moving away from the manufacturing base that has been so eroded in Coventry. We have overcome the problems that that has created and are embarking on a whole new area that needs the most thoughtful and careful management approach possible.

I wish to know to what extent we can be reassured on those points and the other points raised, particularly by my hon. Friend the Member for Coventry, South. I hope that my hon. Friend the Minister, if he cannot answer our questions, will at the very least see us about them.

It is a pleasure to see you in the Chair, Miss Begg. I congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing the debate and on securing the support of my hon. Friend the Member for Coventry, North-West (Mr. Robinson), the hon. Member for Northampton, South (Mr. Binley) and my right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth), who cannot be with us.

I shall try to respond to the points that have been made. My hon. Friend the Member for Coventry, South, spelled out clearly the importance of postal services to his constituents and emphasised his concern about the future of the post office network. He also stressed the role of Crown post offices, particularly the Hertford street branch, which Post Office Ltd has announced will be transferred to the management of WH Smith. He mentioned plans announced by Royal Mail to review its operations across the Coventry and Northampton postcode areas, including the intended relocation of the Coventry mail centre. As I have said, I shall do what I can to respond to the points raised, but as requested I am happy to meet hon. Members outside the debate to discuss issues further.

The future of the post office network and Royal Mail is a subject of great relevance to all Members of the House, as has again been reflected by the issues raised today. My right hon. Friend the Secretary of State announced last month the Government’s decision, having considered the views put to us during the 12-week national consultation on the post office network. The Government have an unprecedented record of investment in the Post Office. We have provided some £2 billion since 1999 and will now be making a further investment of up to £1.7 billion, subject to European Community state aid clearance, to support the national post office network.

The Government are also backing Royal Mail with the funds that it needs to invest and modernise. We have made £3.5 billion available to it since 2001 to back strategic plans aimed at modernising the company and putting it on a sound financial footing. The Government’s strategy clearly demonstrates a continuing commitment to the Post Office and Royal Mail Group. We recognise the important social and economic role that post offices play, particularly in deprived urban neighbourhoods and in rural areas, and the need for continuing public funding to support them.

My hon. Friend the Member for Coventry, South raised particular concerns about the plans for Crown post offices, and specifically the Hertford street branch. I understand that Post Office Ltd has announced that that branch is one of 70 around the country that will be transferred to the management of the retailer WH Smith. I further understand that the company is not yet in a position to announce further details of the move. Inevitably, therefore, there has been some uncertainty for customers and staff. I hope that further information will be available by the time of our meeting.

Post Office Ltd is working hard to create greater certainty about the future of the Crown office network. The fact that the company has already set out a clear position for the majority of the Crown post office network is to be welcomed as a significant step forward.

I understand that Post Office Ltd has written to my hon. Friend to explain the intention to transfer the office to WH Smith, and that my hon. Friend has met representatives of the company. Clearly, it will need to ensure that it provides him with confirmation of plans as soon as they become available.

The current uncertainty has arisen because the network of 450 Crown post offices is making heavy losses. Overall, it lost some £70 million last year alone. Clearly, that is not a sustainable position, and the Government fully support Post Office Ltd’s policy for reducing the losses, which includes maintaining a core network of Crown post offices while continuing to drive efficiencies and franchising branches if suitable opportunities arise.

We welcome the commercial deal between Post Office Ltd and WH Smith, which was announced on 19 April. That deal will secure the retention of a main post office service in each of the areas. Post Office Ltd has also stated that it will continue to run 373 Crown offices. We must make it clear that decisions on the location of individual post offices and whether they are managed by Post Office Ltd or a franchise partner is an operational decision for the company in which it is not appropriate for Ministers to interfere.

It is plainly wrong to say to customers that franchising a post office is a closure, or that it will lead to a reduction in the quality of service. Only 3 per cent. of post offices are Crown offices directly managed and staffed by Post Office Ltd employees. It is totally unreasonable to suggest that the equally hard-working sub-postmasters, sub-postmistresses and staff who work in 97 per cent. of the branches are providing an inferior service.

If the hon. Gentleman will forgive me, I will be happy to give way at the end, but first I must respond to the points that have been made so far.

Staff at franchised post offices are trained by Post Office Ltd in exactly the same way as directly managed staff. Franchisees are bound by stringent contractual requirements to ensure that service standards remain at the same high level after a transfer from the direct management of Post Office Ltd. As I said, franchising is not closure. Franchises and conversions do not reduce the number of post offices. Almost 14,000 post offices are already run by private businesses, whether individuals or franchise chains, including some 900 or so of the 1,400 large town-centre main post offices. The network has always relied on private business for the majority of its outlets. The offices set to be franchised represent a tiny fraction of the network as a whole.

I do not know whether I misled my hon. Friend, but it will take him only a moment to correct any misunderstanding. I do not think that my hon. Friend the Member for Coventry, North-West or I were suggesting in any way that employees and postmasters were delivering an inferior service. We were discussing the frequency of deliveries and so on.

I accept fully my hon. Friend’s wish to ensure that I am absolutely clear about what he said, but I was not referring to him in my comments.

My hon. Friend also asked about the Coventry mail centre. I fully appreciate the concerns about the proposed changes to Royal Mail’s operations across Coventry and Northampton, but they are an operational matter for which the company has direct responsibility. I believe that Royal Mail has set out its position in a letter sent to all local MPs and in meetings with them.

It is, of course, for Royal Mail to ensure that its network operations are as efficient as possible to enable it to compete in a liberalised postal services market. I understand that the proposed development will enable Royal Mail to make a £70 million investment in new buildings and technology, and in its employees. That will improve efficiency, give customers better value and provide employees with a more modern working environment. The investment involves the relocation of existing Coventry and Northampton mail centres to a new single site in Northamptonshire. I understand that sites are still under consideration and will be subject to feasibility studies. The investment also features the development of two new delivery offices to serve Coventry. If the plans proceed in their current format, it is expected that the new delivery offices will be ready for service in 2008 and that the mail centre will be operational in 2009.

The reality is that Royal Mail needs to modernise its operations in order to improve its efficiency. The company believes that the mail centre facilities in Coventry and Northampton are no longer appropriate for a modern postal administration. Furthermore, the buildings offer no potential for redevelopment and severely limit the scope for introducing vital new automation.

Of course, the company is carefully examining the effects of the changes on its wider operations. Quality of service is the company’s top priority, and this project is all about gaining efficiencies. The company is insistent that the quality of local service will be maintained and enhanced.

As part of its planning process, the company has placed an emphasis on reducing the environmental impacts of moving its operations and people to a new site. It proposes to devise travel plans for the new developments that will include initiatives to reduce the impact of people travelling to and from work; for example, the company is considering the scope for car-sharing and coach travel.

The company also points out that the existing Coventry mail centre, because of the era in which it was built, could never be as energy-efficient as a new one. The decommissioning of that building alone will reduce the environmental impact of the company’s operations, and the company has pointed out that experience elsewhere suggests that relocation to another site could actually reduce fleet activity in Coventry city—there would be fewer vehicle movements to and from the mail centre location. However, those details are still subject to analysis and development as part of the ongoing planning process.

I appreciate the concerns of the work force about change and the management of change. Royal Mail is also very conscious of their concerns. I understand that the company is keeping postal workers informed of progress. There will be changes for the employees, but the company is fully committed to supporting them as the plans progress. I understand that Royal Mail envisages that any required reduction in jobs as a result of the changes will be achieved mostly through natural turnover. There will be an opportunity for staff to transfer to other local units, and I understand that Royal Mail has told its employees that, with some flexibility, everyone who wants a role in the new structure will have one. Of course, until the final detailed plans are known, Royal Mail will not know how many people will be required at the new mail centre location. I believe that it anticipates a net reduction of approximately 200 jobs if the Northampton and Coventry operations are consolidated on one site as proposed.

I understand that Royal Mail recently advertised its preferred Northamptonshire location for the proposed new mail centre in the Official Journal of the European Union. All major public projects are required by law to be advertised in the journal to ensure that companies have equal opportunity to express an interest in the contracts.

Although we and many of our constituents say that we like our post office and that we value it highly, the reality is that, collectively, we just do not use it as we once did. It is an undeniable fact that many people now prefer to pay their bills by direct debit or to use one of the Post Office’s competitors, to do their banking via the internet or a cash-point machine, to renew their motor vehicle licences online, and to keep in touch using e-mails or text messages. The result is that in some places too many branches compete for the same customers. Some 4 million fewer people use post offices each week, compared with just two years ago. Therefore, it is not accurate to say that the restructuring and closure programme is the result of European Union legislation. It is the straightforward result of the £2 million a week losses that were being incurred on the Post Office Ltd side of the network—the losses were estimated to be some £4 million a week last year—as well as the £70 million that Royal Mail loses from its main offices.

In the financial year 2005-06, the post office network lost £2 million a week. For too long, it was deprived of much-needed investment. This Government have reversed that approach and have invested substantial sums in supporting the network—some £2 billion since 1999. We have supported Post Office Ltd in its efforts to develop its range of financial service products. For example, Government investment included £500 million for the Horizon project to bring computer systems into every post office throughout the UK.

I thank the Minister for making time for my intervention. I would like to bring him back to the point about franchising Crown offices. When a Crown office was franchised in my constituency, we were promised that services would not be affected. Recently, refurbishment of the building led to a temporary one-week closure of the post office that then turned out to be a much longer closure. The post office is still closed today. I do not believe that refurbishment would have led to a discontinued service had the office still been a Crown office. Crown offices are being franchised with the promise that there will be no effect on service, but the reality is that that does not happen.

I hear what the hon. Gentleman says. The experience for the vast majority of customers across the country who used the franchise operations that were piloted has been positive, notwithstanding the fact that, clearly, there has been a hiccup in his post office, which—