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Post Office Closures (Clapham)

Volume 473: debated on Thursday 13 March 2008

Motion made, and Question proposed, That this House do now adjourn.—[Liz Blackman.]

May I begin, Mr. Deputy Speaker, by asking you to convey my thanks to Mr. Speaker for having exercised in my favour that special discretion he has in the choice of Thursday evening Adjournment debates, and so secured this early debate? Although he has no choice but to be here, let me also express my thanks to my hon. Friend the Minister for his attendance at this debate. My hon. Friend, who is a decent man, has already responded to a large number of debates on post office restructuring and closure—I know that because I have read the reports of most of them—but I think I am right in saying that this is the first debate that has concerned just one post office and its future.

I make no apology for that, because I believe that Abbeville Road post office is a special case. I think that in proposing its closure, Post Office Ltd has made a bad mistake: it has simply got it wrong. I am not alone in that judgment. I have here a petition signed by well over 2,000 local residents who are passionately keen to keep their local post office. I shall be sending the petition, and a copy of my speech, to Ms Anita Turner of Post Office Ltd as my submission to the London area consultation, which closes on 2 April, and I urge as many signatories as of the petition as possible to write to Mrs Turner without delay if they have not already done so.

There is no doubt that the popularity and success of Abbeville Road post office are largely due to the character and commitment of its sub-postmaster and sub-postmistress, Shailesh and Smita Patel. Mr. and Mrs. Patel have run the post office in Abbeville road for 20 years, for the past 12 years at its present location, where they had the post office purpose-built in 1996. Over those 12 years, they have invested the very large sum of £200,000 to create a fully modernised post office. They are completely committed to the locality, and had hoped and expected to go on providing post office services for many more years to come. We can be entirely sure of one thing: the Patels are in this for the long term, which is more than can be guaranteed for the two alternative branches that are proposed to replace the Abbeville Road branch in the event of its closure. I shall say more about that later.

Mr. and Mrs. Patel run a modern, clean, efficient and attractive store combining a newsagent-cum-convenience store with the post office. They offer a wide range of post office services. They provide the usual range of Benefits Agency payments: pensions, income support, child benefit and incapacity benefit. They also issue the London Transport freedom pass, change currency to euros on demand, provide an online lottery and cash debit cards. Their Link machine has an exceptionally large weekly turnover—of which Post Office Ltd will be aware—in response partly to the cash transactions at the local farmers’ market and partly to the absence of a bank nearby. Indeed, local business people use the Post Office extensively for banking purposes. The store is easily accessible to wheelchairs and buggies via a ramp, and there is plenty of space inside.

I emphasise that those services are provided all day from 9 am until 5.30 pm five days a week and from 9 am until 1 pm on Saturdays, and that they are provided from three counters. I hope my hon. Friend will also note that there are no lunch breaks, no Wednesday afternoon closing, and three, not two, post office counters—contrary to the so-called facts set out in the branch access report which purports to justify the closure. If Post Office Ltd is trying to make a case for closure, it might at least get its facts right. That does not inspire confidence.

Like all good post offices, the Abbeville Road post office is a focal point for the community. We hear a great deal in debates such as this about the importance of the village post office in rural communities, but there should be absolutely no doubt about the vital community role of the urban post office in the often more impersonal and anonymous setting of the city. It is the universal view of local residents that Abbeville Road post office acts as the hub of the local community. As one resident has told me, it actually helps to give the locality a village feel. It is, of course, a lifeline of human contact for its many elderly customers. Mr. and Mrs. Patel even deliver groceries to the sick and infirm as part of their newspaper round.

I hope that my hon. Friend the Minister takes from my description an impression of Abbeville road post office as a successful and thriving business, because that is just what it is. It is a model of what a post office should be.

Mr. Patel tells me that Abbeville Road post office does 3,000 post office transactions a week, and he has shared with me the details of the income he receives from Post Office Ltd. I have no intention of disclosing that information, as I respect his privacy—after all, Mr. Patel is not a Member of Parliament. We have, however, learned from other debates about the broad level of turnover that is required to make a post office profitable, and I have no doubt whatever that Abbeville Road is a profitable post office; it is inconceivable that it could be otherwise. Moreover, Mr. Patel also tells me that his area manager has said to him for years that Abbeville Road is a commercial post office—in other words, a post office that makes a profit, or one of that 30 per cent. minority of profit-making, commercially viable post offices.

I find it extraordinary that Post Office Ltd should in its search for a sustainable future be willing to close down a profitable post office. I also find it extraordinary that Post Office Ltd should as part of its London area plan be willing to close down a post office doing 3,000 transactions a week while elsewhere in the country keeping open rural post offices doing 13 transactions a week. I find it extraordinary, too, that Post Office Ltd is willing to close down a profit-making post office simply in order to meet its so-called access criteria. I also believe that even in the strict terms of meeting those criteria—deciding which post offices should close if disruption for customers is to be minimised—Post Office Ltd has got it wrong. We should remember that we are dealing with the disruption that is likely to be experienced by Abbeville Road’s 2,000 to 3,000 weekly customers in the event of its closure.

In its branch access report, Post Office Ltd identifies two alternative branches as the receiving branches in the event of Abbeville Road’s closure: Clapham Park branch and Balham Hill branch. As I have said, there is a question mark over the future of both of those branches. Clapham Park branch will without the slightest element of doubt be demolished in due course as part of the huge and welcome regeneration of the Clapham Park estate. I have met its postmaster, Mr. Siva Balan, who tells me that that development is expected in four years’ time and that he will be offered premises in a new shopping mall—incidentally, at a greater distance from Abbeville Road—but that he cannot be certain of his decision, which will clearly depend on several factors, not least the future proposed rent. I do not wish in the least to detract from the contribution that Mr. Balan and his post office and store make to the Clapham Park community; on the contrary, I welcome it. However, the simple truth is that it is a receiving post office whose future cannot be relied on 100 per cent.

If that is a problem, the future of the other receiving branch—Balham Hill—appears to be far more precarious. In fact, it is currently on the market; it is up for sale. A short time ago it was closed. It had a makeover as a Costcutter, which I suspect has not succeeded in what is an extremely competitive retail environment. There is a large question mark over its future. I also very much doubt that Balham Hill has the capacity to take on more than double its current work load in the event of an Abbeville Road closure. I have visited the store. It is very small and quite cramped, there is very little space in which queues could form, it is unsuitable for wheelchairs and children’s buggies, and it has only one operational counter. Moreover, there are no public transport links between Abbeville road and Balham hill, and there is no parking either. I would be worried about the journey on foot for the elderly, the infirm and people with children, which takes them across the very busy junction of the A24 with the south circular where there are no pedestrian crossing facilities. I honestly think this is an unrealistic and unreasonable offer to my constituents in the Abbeville road locality.

I must draw my remarks to a close. I must say to my hon. Friend the Minister that I do not have a head-in-the-sand attitude towards the post office network change programme. I accept that the Post Office has lost millions of customers and is losing very large sums of money as customer habits change and traditional post office services become available elsewhere. Changes clearly need to be made if the post office network is to have a sustainable future and if there is to be a proper return for the taxpayer. That must include a reduction in the number of branches. Let me also say that I applaud our Labour Government’s willingness to commit large levels of subsidy in support of the Post Office’s community and social role—£2 billion since 1999 and a further £1.7 billion up to 2011. That is all in huge contrast with the total absence of subsidy under the Conservative Administration, and with the Lib Dems’ plans to privatise the Royal Mail.

However, in opposing the closure of Abbeville Road post office, I say this to my hon. Friend. For the long-term future of the Post Office, it makes no sense to close a profit-making branch or to disrupt the lives of 2,000 to 3,000 customers of Abbeville Road post office and send them off to other branches that either cannot cope, or which might not exist sooner or later down the line. I gather that experience so far suggests that up to 15 per cent. of the initial proposals can be changed as a result of the consultation process. In London, I hope that that will include Abbeville Road post office. It is a successful and much-cherished local institution and it deserves a future.

I congratulate my right hon. Friend the Member for Streatham (Keith Hill) on securing this debate on the Abbeville road post office in his constituency. I have known him for many years. He is, as we have just heard, an effective and passionate advocate for the people of Streatham, and today he has put his case with characteristic skill and eloquence. As he said at the beginning of his speech, he has concentrated today not so much on post office closures in general, but on the particular circumstances of the Abbeville road post office. I join him in paying tribute to the efforts of Mr. and Mrs. Patel and the work that they have done for the local community over the years.

My right hon. Friend will understand that, as a Minister, I do not have a role to play in decisions to close or not to close individual post offices. That is rightly a matter for Post Office Ltd, after the local process involving Postwatch—the consumer voice—local people, Members of Parliament and other local representatives. I am sure that Post Office Ltd will have heard what he has said today and will give it proper consideration. He said that Post Office Ltd had got certain aspects of what is happening in that branch wrong. I encourage him to take that up with Post Office Ltd and with Postwatch.

There is the possibility of a review process. It does not involve me, as the Minister; it does involve Postwatch recommending to Post Office Ltd that it look again at a particular decision. When that has happened previously, Post Office Ltd has so far normally been willing to do so. The process is capable of escalation from the local level right up to an ultimate decision being taken by Allan Leighton, the chairman of the Royal Mail Group, so my right hon. Friend might wish to make representations to both Post Office Ltd and Postwatch about the possibility of review, if he believes that the facts set out in these circumstances were incorrect.

I want to say something about the background to the closure process affecting Abbeville road post office and, indeed, post offices in other parts of the country. I of course accept that this is a difficult and unpopular process. People have an attachment to their local post offices, even if as a society we use them a lot less than we once did. As my right hon. Friend said, the Government’s starting point has been to support the post office network. We are in the midst of a programme of support worth up to £1.7 billion between 2006 and 2011, which includes an annual subsidy of £150 million. So we do not view the network as purely commercial. The commercially viable branches number about 4,000 of the 14,000 existing branches. The subsidy given by the taxpayer enables thousands more post offices to stay open than would otherwise do so. The subsidy that this Government give did not exist in the past.

Although the proposals are easy to attack and to criticise, I have yet to see a viable alternative from the Opposition parties. They variously refuse to match the subsidy that this Government have provided or to come up with viable ideas. In a recent debate, the Liberal Democrats proposed that the Post Office collect parcels ordered through the internet—that initiative is already taking place. It is easy to criticise, but it is less easy to come up with a viable alternative when even with this large level of subsidy, the network is not sustainable in its current size.

That is why some branches are having to close. That is accepted, albeit reluctantly, by the general secretary of the National Federation of SubPostmasters, who recently said:

“Although regrettable we believe that closures are necessary to ensure the remaining Post Offices are able to thrive in the future.”

As my right hon. Friend mentioned, the reasons for this situation are that the Post Office lost £174 million last year, which is close to £3.5 million a week. Every day the network opens it loses £500,000, and 4 million fewer customers go through the doors of our post offices than did so a few years ago. In some of the least used post offices—I accept that the Abbeville road branch is not one of them—in the country the subsidy per transaction can be up to £17. There is also a problem in the urban areas, because even though a number of urban sub-post offices have closed in recent years, some 1,000 sub-post offices still compete for business with at least other six other branches within a mile of them, and that at a time when the number of customers is falling.

The number of customers is falling because of significant lifestyle change, much of which is technology driven. Eight out of 10 pensioners have their pension paid into a bank account, and among new retirees the figure is nine out of 10. That is unlikely to reduce. The Government have rightly made available the capacity to pay bills and carry out services online. The online car tax service is relatively new, having been available for only a few years. When it began, 500,000 people a month renewed their car tax online, but now about 1 million people a month do so, half of whom do so outside the office hours of 9 to 5 when my right hon. Friend told us his local post office was open. There is a significant demand for services to be provided outwith those opening hours.

Other changes such as direct debit and competition in the bill payment market from other providers have also had an impact. There is a cost to Government in the way that services are provided. For example, it costs 1p to pay a benefit or pension into a bank account, 80p to make such a payment through a Post Office card account and £1.80 to do so through the traditional girocheque method. I am not sure that it would be right for the Government to reverse the changes, nor I am sure whether any future Government will reverse the trend towards putting services online and making direct payment, or go back to the system of girocheques.

All those factors served as the background to the announcement last May by my right hon. Friend the Chancellor, when he was Secretary of State for Trade and Industry, that the Government would continue the subsidy until 2011 but that there would be up to 2,500 compensated closures, with 500 new outreach services replacing permanent post offices in some parts of the country. That is the process that has been carried out through area plans such as the one covering my right hon. Friend’s constituency.

My right hon. Friend mentioned the access criteria. I will not go into them in detail, but broadly speaking they are that people in an urban area should live within 1 mile of a post office and people in rural areas should live within 3 miles of a post office. The access criteria are designed to ensure reasonable access to post offices throughout the country. We have tried to ensure that even though the network has to reduce in size it will do so in a planned way, rather than having holes appear that could diminish people’s access in urban and rural areas. The process is difficult, but we should remember that even after the current closures have taken place, the network will be larger than that of all the banks put together and some three times larger than the top five supermarket chains put together.

I wish to make one more point about the consultation process, and it is a point that was stressed by the Business, Enterprise and Regulatory Reform Committee in its most recent report on the issue. The consultation is not simply a matter of asking people whether they believe their post office should close. After all, people are unlikely to queue up to say yes to such a proposition. The decision to reduce the size of the network was announced by the Secretary of State last May. The consultation is about how that is to be done in particular areas. The Post Office made that clear in the letter that it wrote to MPs in July about the process. That letter stated that the local consultations

“would not concern the principle of the need for change of the network, nor its broad extent and distribution—that has already been established by the Government in its Response Document issued on 17 May. Rather consultation will be seeking representations on the most effective way in which Government policy—as set out in the Response Document—can be best implemented in the particular Area in question.”

So both the Government and the Post Office have tried to make it clear from the outset that the consultations are about how that is to be done.

As my right hon. Friend pointed out, that does not mean there can be no change in the plans. Before consultation plans are even published, the Post Office discusses them with local authorities and sub-postmasters. The figure to which he referred includes changes made within the period before the plans were put out to consultation. After the public consultation phase, some further changes will be made, but the point about the actual question in the consultation bears repeating.

My right hon. Friend said that the Abbeville road post office was profitable. I would urge caution on him and indeed other hon. Members who say that a particular post office is profitable. There are two factors to take into account when assessing the profitability of a particular post office. First, we must consider the business done in a post office and the level of payment from the Post Office directly into that branch. Normally, that will be transparent to the sub-postmaster and may even be shared with hon. Members. Secondly, however, we must consider the central support costs from the Post Office that are attributable to a branch. Those include IT costs, cash handling and other services that are not paid by the sub-postmaster and do not appear in his or her accounts, but are nevertheless very real costs to the Post Office. If all those factors are taken into account, it is shown that three out of four post offices cost the Post Office money to keep open, including some relatively busy offices. My right hon. Friend may wish to explore with the Post Office that point in relation to his local post office. The Post Office has confirmed that the average saving to it of a branch closing is around £18,000 per annum, when all factors are taken into account.

My right hon. Friend mentioned some of the services available at the Abbeville road post office. For the future, the Post Office must keep developing new products and new reasons for customers to go through the door. I am pleased to tell him that there has been significant progress in that direction. The Post Office is now the largest foreign currency dealer in the country. It has developed car and household insurance products. It provides broadband in association with BT and it continues to innovate. That will be necessary if customers are to have new reasons to come through the door in the network that remains after this difficult closure process.

I appreciate the concerns that my right hon. Friend raised tonight. I encourage him to raise them with Post Office Ltd and Postwatch. Post office closures have been happening for some years. They are also happening in some other countries for some of the same technological and lifestyle change reasons. Throughout this process, the Government have tried to manage the reduction in the size of the network in order to ensure reasonable access criteria for the population, to compensate properly people such as Mr. and Mrs. Patel for the hard work and service that they have shown to the community, and to give Post Office Ltd some financial certainty for the future.

Question put and agreed to.

Adjourned accordingly at fourteen minutes to Six o’clock.