Skip to main content

Post Office Closures

Volume 470: debated on Thursday 17 January 2008

6. How many sub-post offices provisionally identified for closure will not now be closed following the post office consultation procedure. (179526)

Decisions on six area plan proposals have so far been announced by Post Office Ltd. As a result of information received during the local public consultations, it has to date decided not to proceed with 15 post office closure proposals. Also, a number of changes have been made to initial plans in the pre-consultation phase, which involves Postwatch, sub-postmasters and local authorities.

My constituents are awaiting with trepidation the results of the consultation exercise, which threatens seven of my sub-post offices—half the sub-post offices in my constituency. The Post Office claims that a lot of research went into this exercise, yet it turns out that Postwatch is in the dark and has used out-of-date deprivation figures and erroneous distance figures, and one sub-post office was even put in the wrong county. Given that a very small number of sub-post offices have so far been reprieved out of now more than 230 which have been targeted for closure, what assurances can the Minister give my constituents that this is a genuine listening and consultation exercise, and not another cynical, bulldozing and box-ticking exercise?

The hon. Gentleman has campaigned very vocally for the post offices in his constituency. He will be aware that there is a review process, which involves Postwatch, as to whether Post Office Ltd has not abided by the criteria it has set out. That operates at several levels, and his ultimate course of appeal is to Allan Leighton, chairman of Royal Mail Group, should Postwatch believe that the process has not been carried out properly in his constituency.

In addition to issues to do with out-of-date data, some of my constituents are concerned by rumours about the sums involved in redundancy and compensation payments to the people who own the businesses. Will my hon. Friend give an assurance that redundancy or compensation payments for loss of business will not be a factor in decisions on closing post offices, and that the consultation will not be prejudiced by such considerations?

The compensation arrangements in the current post office closure programme are based on those that applied in the urban reinvention programme of several years ago. The Government took the view that it was right to recognise the long-standing commitment made by sub-postmasters and mistresses in local communities, which is why provision has been made in the package of financial support to the Post Office over the next few years to compensate those who are leaving the network as a result of the programme.

Given that the Government tried to manipulate the timing of the consultation to avoid the local elections, does the Minister think that residents who are concerned about the future of their local post office should consider the forthcoming local and London elections as referendums on post office closures?

The Government abided by the Cabinet Office guidelines on these matters. I can only say to the hon. Lady that from my experience of recent months if anything is true about this programme it is certainly that it has not been carried out in secret.

May I tell the Minister that two post offices in my constituency, those at Rodmersham and East street, are closing? The process has been a complete sham. I raised this issue in a Westminster Hall debate, when I also mentioned franchising. It is possible to bid for and own a franchise of McDonald’s, Starbucks or Kentucky Fried Chicken; is it too late for us to put together local initiatives to bid for profitable post offices that the Post Office wants to close?

The issue of third-party involvement in taking over branches scheduled for closure has been raised in debates. I have encouraged Post Office Ltd to engage properly and seriously with local authorities or others who may be in a position to do so. I must also say to my hon. Friend that if such involvement is to happen, it is fair that Post Office Ltd is able to cover all its costs. Such costs include those relating directly to the branch, central infrastructure costs in support of that branch and what it calculates it can save by closing the branch and, in doing so, supporting a smaller network. One would also have to expect that if local authorities or others were in this position, the Post Office would ask them to commit to take over the branch for a reasonable amount of time—several years—rather than do this and be in the same position in a short time in the future.

Under the consultation process in my constituency, which ends on 31 January, 10 post offices are threatened with closure, which is some 33 per cent. of the total. Post Office Ltd indicated in a recent meeting with me that we could perhaps save one or two if we found some factual error in the consultation process, but I was told, “If you save one post office, we will have to close another one because the Government have required us to close a total of 2,500. Therefore, if one is saved, another has to be chopped.” Will the Minister take this opportunity to confirm to Post Office Ltd that the requirement is not to close 2,500 post offices, but to close up to 2,500 post offices? In other words, it is possible that some of my 10 post offices might yet be saved.

The hon. Gentleman is right to say that the figure is up to 2,500 post offices. I must tell him that Post Office Ltd also has to bear in mind the fact that the average amount it is saving from closing a branch that has been scheduled for closure is £18,000 per annum per branch, although the figure will vary depending on the individual circumstances of the branch. That is why replacements have been announced where decisions have been made not to proceed with closures. It is possible that Post Office Ltd might not take this approach in every instance, but there is a cost involved in making such a decision. That is why things have happened in the way that the hon. Gentleman set out.

It is nevertheless hard to understand why the consultation in Derbyshire produced no changes in the plans and included the continued closure of the profitable post office in Church Gresley. Its business will now be transferred to another post office, which has no adjacent parking and where people queue in the street at busy times. It does not seem that rational decision making is taking place.

I understand the points that my hon. Friend makes, but I would counsel caution on his description of post offices as “profitable”. In order to make such a judgment, one has to consider not only the payment to the agent in the branch, but the central infrastructure costs to the Post Office. Such costs include support for the IT system in the post office, for the cash handling and cash holding in the post office, for the provision of forms to access Government business and, possibly, for security. A number of factors must be taken into account, not all of which are included in the payment to the sub-postmaster, so I counsel caution in asserting that his local post office is profitable when all those factors are taken into account.

As the question put by the hon. Member for South Derbyshire (Mr. Todd) has perfectly illustrated this, it will probably come as no surprise to the Minister to learn that concerns about the adequacy of the consultation process and about the accessibility of sub-post offices and, indeed, Crown offices have been pre-eminent among the concerns expressed by hon. Members in response to the request by the Select Committee on Business, Enterprise and Regulatory Reform, which I chair, for information and feedback on the consultation and the closure process. The Minister will come before the Committee on 5 February to deal with this issue. The Committee might subsequently make urgent recommendations—we are only halfway through the process, so there is time to adjust it. Will he commit to respond rather more rapidly to my Committee about any such recommendations than Governments are obliged to do, to ensure that these concerns are properly addressed?

Of course we take the views of the Select Committee very seriously on this. It has published two reports, or two iterations, on the issue so far. If I may paraphrase their overall view, it is that this is a regrettable but necessary process to reduce the size of the network, as—I am sure—the Chairman of the Committee will confirm. I can assure him that any points made in future Select Committee examinations of the process will be taken seriously by me and by the Secretary of State.

My hon. Friend is fully aware that footfall plays a vital role in determining whether a post office is busy. The vast majority of that footfall arises from benefits and pensions. Keeping in mind the fact that the Post Office card account is to be replaced, will he say whether he has yet had, or is in a position to have, discussions with ministerial colleagues in the Department for Work and Pensions about the replacement for that account?

The current Post Office card account contract comes to an end in 2010. The Government have committed to a successor product to it, and legally that has to be put out to tender. A decision will be made later this year. I am sure that the Post Office will bid strongly for that, but the process has to be legal and proper. A decision will be announced later this year.

But does the Minister deny that the immediate closure announcement of many more sub-post offices has only been postponed until after the local government elections?

As I said earlier, the Government have abided by Cabinet Office guidelines on this. This programme is taking place over a 15-month period, roughly speaking, and the local election campaign will take three to four weeks. It will not have a massive impact on a programme lasting 15 months.

Does the Minister not yet understand why the public feel so disillusioned by this consultation process? The Government have halved the 12-week consultation period recommended by the Cabinet Office; they are using access criteria that result in post offices being closed because of their geography rather than their viability; they are making it difficult for local communities to find other ways to provide funding to keep post offices open; they are setting communities against communities; and people feel that the campaigns that they have mounted have been ignored. Is it not time that the Minister accepted that his process is flawed and is neither taking account of local views and concerns nor delivering the right post office network for the future?

I certainly understand the public concern about the closure of post offices which are valued organisations, but let us remember why it is happening. It is because the number of people using the post office has declined by 4 million a week in recent years. The network is losing several million pounds a week and the difficult decision was taken to reduce the size of the network and to support the remaining network with a subsidy of £150 million a year. I have to point out to the hon. Gentleman that the subsidy committed by his Government was zero.