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Post Office Closures (Stroud)

Volume 475: debated on Tuesday 6 May 2008

I am pleased to be able to raise the issue of post office closures in Stroud, even if this is the day on which we get confirmation of what is happening, which is terribly sad.

I thank the Minister for meeting me in advance of these formal proceedings. I also met Post Office Ltd, Royal Mail, Postwatch and the individual post offices affected. On the good side, in the past 11 years, I have been associated with saving post offices in Stonehouse, Cam, North Nibley, Paganhill, Oakridge and Kings Stanley. However, sadly, I have also been associated with those that have closed, and I shall have on my epitaph Whiteshill and the nine that are now deemed fit for closure in the Stroud constituency as part of the current review.

Receiving notice of the proposals on Friday, on the back of the local election results, did not cheer me up. It was not a good day to bury bad news—the news became even worse. We are faced with losing Uplands, Ebley, South Woodchester, Dersley Highfield, Sharpness, Forest Green, Horsely, Miserden and Cranham. The latter two will be replaced with outreach arrangements, on which I shall seek clarification from the Minister. In my constituency, the news is seen as little short of catastrophic. I am afraid that it adds to the sense of cynicism about politics and it makes me question the future viability of the Post Office. I can now talk in complete openness—this is in the public domain—but, until today, the news was under embargo.

Bizarrely, Stroud is in the Gloucestershire and Oxfordshire sub-region, even though it is in the south-west as far as everything else is concerned. However, whatever the sub-region, the news is not terribly good. Like many hon. Members, I have undertaken a proper and comprehensive investigation of each affected post office. I went to each at least three times, and also to some that would be recipient post offices. From the outset, I got to know those postmasters and postmistresses who wished to stay and those who wished to go. Disappointingly, there are not many post offices where the future of the postmaster or postmistress is one of unalloyed joy, and I wish to say something about where we go after this sad day.

With network reinvention, we chose the people who wished to go, but this time we chose the post offices that were most suitable for closure by location. If we had put the two approaches together, we could have come to the right conclusion but, sadly, network reinvention did not seem to work, and I obviously have my doubts about the current restructuring.

I wish to make some points about the general closure programme, but I shall exemplify that by looking at one post office in particular: Uplands. From the process that has taken place, one can see what is happening in the area. The magical figure of 18 per cent. is always referred to—it is the proportion involved in the likely closure programme—but, in Stroud, 25 per cent. of the remaining post offices will be lost, and we will go from 36 to 27. As I have made clear, some of the remaining 27 are highly vulnerable because of how some people see their future, or lack of it.

The Minister knows that I shall concentrate on Uplands, and I hope that he will refer to it in his response, as well as to the issue in general. Uplands is an interesting post office. It is in a part of Stroud that I would define as semi-urban—most of my constituency is semi-rural. It is on the edge of Stroud town, but it is an important post office in a poorer part of my constituency. It is abutted by another post office, which is important, and by the Crown post office, which is in the centre of town. It is a good walk to the Crown post office and from the top of the ward, which is a hilly part of Stroud, it is a long walk—vulnerable or disabled people would find the walk very difficult.

There was a major community response to the consultation in which I took part, and I gave the results to Post Office Ltd. Interestingly, the postmaster of Uplands, Robin Craig, fiercely defends his business. He wants to stay as a postmaster and will do everything in his powers to do so. We turned to him when Paganhill was threatened with closure. Tesco did what it does only too well and decided that it did not want a post office within its one-stop branch. We managed to set up a community response in the Maypole hall. Robin Craig took that on as part of his empire, as it were, and now runs the two post offices, which has worked out well, as far as I can establish. Business at Paganhill has increased, and it remains buoyant at Uplands. Post Office Ltd again turned to Robin when it was looking for outreach arrangements, and he is the postmaster who will take on those at Cranham and Miserden in the Stroud constituency, and two others in the Cotswold constituency.

Most importantly, Stroud town council decided that it wanted to enter into proper negotiations on Uplands. It is pleasing to see the mayor of Stroud, John Marjoram, in the Public Gallery—I know that I should not refer to people there. He did an awful lot of work, as did Andy Read, another town councillor, and produced the documentation that was submitted as a starting point for the negotiations. Post Office attended a public meeting and agreed to enter into negotiations. It had stated that publicly, so we expected the negotiations to go forward. That was the touchstone of whether the consultation would be meaningful. Postwatch has had a watching brief—I put it no more strongly than that—and knew about the negotiations, and I understood that it supported them. It was well known that Paganhill was on the original list for closure, but Postwatch persuaded Post Office Ltd to take it off the list because of the amount of public money and money from Tesco that went into saving the branch. Of course, that meant that we again thought that someone would listen to us.

We got the bombshell on 26 April. The town council was formally informed, via a message on the mayor’s answer machine followed by an e-mail, that Post Office Ltd was no longer willing to enter into negotiations. Such was the state of play that Post Office Ltd had demanded that the town council enter into a confidentiality agreement so that they could discuss money, which is at the root of the issue. No negotiations took place, yet the confidentiality agreement was signed. That suggests that Post Office Ltd was serious from the outset, otherwise it could have said, “Go away and don’t darken our door.” However, it did not do so; rather it said that it was willing to enter into negotiations if an Essex-type proposal was forthcoming. Will the Minister say what is happening in Essex? At the very least, we feel that there has been a breach of faith.

I have read the reasons that Post Office Ltd gave on 26 April for why it was no longer interested in pursuing negotiations. I will not read out the person’s name, because that would be most unfair, but she says in her e-mail to John Majoram:

“I wanted to speak to you before sending this email as I know it will be very disappointing, but unfortunately, I’ve not been able to get hold of you.

As you know, I’ve been working on your request for information about locally funding Uplands Post Office branch in Stroud. After examining the impact on other local post office branches”—

that is the key thing—

“I am unable to progress a local funding application or provide the information as requested.

As I explained when we spoke, we carry out a check on each application to see what effect a locally funded service would have on other Post Office branches in the area. After carrying out the check for Uplands, the result is that there would be an unacceptably high detrimental effect on the sustainability of the Post Office network in that area. We have identified that, as a result of the closure, a significant amount of business is predicted to migrate to other Post office branches. In the even of these branches re-opening, this business would not now migrate and these nearby branches would become less viable.”

She goes on to discuss issues such as the network change programme. The interesting point is that Robin Craig, who runs the Paganhill branch almost next door to the Uplands branch, is receiving the money. He therefore knows what impact there will be on Paganhill if Uplands closes and, conversely, if it stays open.

The only other post office that could feel the impact is the Crown branch in the centre of Stroud town, and that also raises an interesting point. On 3 January, before the process started—again, I was ahead of the process, and I am grateful to Post Office Ltd for coming to see me in my constituency that day—I asked whether it was a question of protecting the Crown post office, and I was assured that it was not. Sadly, the Crown post office is not in the best location, although it has had good management and it has good staff. The reality, however, is that it faces some questioning because of the time that it takes people to get served. That is not made easier when staff are asked to market Post Office services. I know that that is about getting business back in, but it does not help throughput. Having been given that assurance on 3 January, I question the reasoning set out categorically in today’s closure notice. The Post Office gives its reasons for not keeping Uplands open, but, interestingly, there is no reference to the impact on the Crown branch; the closure notice merely says that the Uplands branch is not viable.

I can go only on the postmaster’s knowledge of what is happening. He has grown the Uplands branch over a period of years, and it is very successful, although it is admittedly small. He tells me that about £2.7 million a year passes through it, on which the return is about £27,000 a year. That does not sound a huge return, but it is important, because we would maintain that the post office is profitable. To return to the debate initiated by my hon. Friend the Member for Hastings and Rye (Michael Jabez Foster), to which my hon. Friend the Minister responded, there is the issue of the central costs that Post Office Ltd expects to meet, compared with its overall return. If anything is viable, however, it is our post office. Our postmaster is doing good business for Post Office Ltd, he runs another post office and he is willing to take on outreach work. At best, the Crown post office is suffering because it is nearly, or already, at capacity. We have an assurance that the process is not about protecting the Crown post office.

What has been going on with the consultation? It is highly dubious. Are we looking at anti-competitive practices? Are we looking at a failure to realise that there is a degree of collusion to keep Royal Mail happy? Has Post Office Ltd done others’ bidding for them? At the very least, the consultation has been ham-fisted and has left complete scepticism in the community about what has happened and about why there was no meaningful attempt to pursue negotiations.

Let me return to the Essex arrangements. We were clearly on their coat tails and we entered the negotiations in good faith—I say “we” because I worked with the town council. The council put in its bid and signed the confidentiality agreement, but why did Post Office Ltd never come back to the council to talk about what was involved in taking on the branch and about what the finances would be? We are talking about a publicly owned asset, but can the Minister explain why I, as an MP, cannot understand what the Crown post office’s financial situation is? That information would allow us to balance what we think we know about Uplands against the business that the Crown branch is doing. Those are clear points, and I hope that the Minister will say something about them, because we will no doubt pursue the issue further, given the way in which Post Office Ltd has treated us.

I want now to say a few things about outreach. First, I am disappointed that outreach was never considered for Horsley post office, which is at the top of a hill. Again, no attempt was made to take account of the local geographical and topographical situation. Secondly, I do not want to personalise this, but I have talked to recipient post offices and, indeed, to Robin Craig, who will be taking on outreach work. My worry is that although we are paying off post offices to close, there will be some stings in the tail in terms of what happens to those post offices that remain. In the early days, Post Office Ltd was optimistic and positive about how it would make outreach work. In my area, we have a hosted arrangement, which is at least seen to work. However, I have talked to existing postmasters and postmistresses, and the difficulty is that they are expected to pay out from their redundancy packages to meet many of the basic costs of making outreach work. Those costs include dedicated phone lines, removing the counter, which is a fairly basic thing that one would want to do, and making the new arrangements secure. Romec has traditionally done that, but people are being told that they will have to pay full cost recovery to Romec. None of that is very helpful.

I turn now to what could have been done. I was one of those who sponsored what became the Sustainable Communities Act 2007. We are talking about communities reviving themselves and regenerating their services, and the situation that we are discussing was an ideal opportunity for them to do so. Perhaps the issue arose before the Act took full effect, but Post Office Ltd should, at the very least, know about sustainable communities and should be able to respond to a genuine attempt to enter into negotiations. I hope that we can remind Post Office Ltd that the universal service obligation, which is crucial in this respect, is not just a term, but a reality on the ground.

As the Minister knows—he cannot pretend otherwise—these have been a dreadful few weeks in the Stroud area. That has not been helped by the local election results or by the fact that the closure announcements have come right on the back of them. I hope that he will understand the strength of feeling that exists. The town council entered into negotiations in good faith, but Post Office Ltd has ripped everything up in front of the council. That is not acceptable, and I hope that the Minister will have a word with Post Office Ltd so that we at least have the opportunity to look at what could be a meaningful way of saving the Uplands branch.

I congratulate my hon. Friend the Member for Stroud (Mr. Drew) on securing this debate on post office closures in his constituency. As he said, seven post offices are scheduled for closure, with another two to be replaced by outreach services. Whatever else can be said about the process, I can assure him that no attempt has been made to bury bad news on any day. When it comes to an end, this process will have been going on for 15 months. Judging by the debates in the House and the campaigns around the country, it is many things, but secret is certainly not one of them. There has been no attempt to bury bad news.

I understand, as anyone would if they had been doing my job for the past nine months, that the process is very difficult for local communities. No one likes to see their post office close—even those who do not use it very much. None the less, I hope to be able to explain why the present decision was taken. My hon. Friend has been very active on the issue and has, as he said, met me, Post Office Ltd and sub-postmasters in his area.

The background to all this is the announcement made by the then Secretary of State for Trade and Industry in May 2007. That announcement said that the post office network across the country would reduce from its current level of just over 14,000 branches by up to 2,500, with 500 new outreach services being established in some areas. Obviously, that was a difficult decision, and it is easy in debates such as today’s to concentrate purely on how unpopular it is. I understand that, and do not deny its unpopularity. However, it is also incumbent on us to consider some of the changes that the Post Office faces, which provide the backdrop to the decision.

The network loses £500,000 every day. Those losses have more or less doubled in the past few years. It has also lost about 4 million customers a week, as a whole. In addition to those financial and custom reasons, several major changes are adding up to a big challenge for the post office network. Eight out of 10 pensioners have their pension paid directly into the bank. That did not happen many years ago. Among new retirees the figure is not eight but nine out of 10. We have new online services, such as car tax renewal, which is used by 1 million people a month. That service did not even exist a few years ago, and those 1 million people a month would have gone to the post office, for the most part, to renew their car tax. Now they do it online. Of course, direct debit and other changes are also relevant. There is also competition now. Companies such as PayPoint bid for, and have won, contracts for the television licence and other bill payment services.

We also need to consider the subsidy to the Post Office, because in the face of all that I have described the Government have not just walked away. We have committed significant public subsidy to the post office network. In fact, it is estimated that if it were run as a commercial network and left to survive without subsidy, it would amount to about 4,000 branches, with perhaps some more on the margins. We do not believe that that is the kind of network that the country wants, so the Government have made a major decision to subsidise it to the tune of £150 million a year. That subsidy is part of an overall programme of Government expenditure on the post office network of up to £1.7 billion in total in the years running up to 2011. No previous Governments have subsidised the post office network, and without that subsidy there would be thousands more branches under threat than there are now. It is precisely because we recognise the need for a national network that we are putting in that amount of subsidy.

We have a duty to support the network, and have backed it by that subsidy, but we also have a duty as a Government to the taxpayer. Subsidy cannot be unlimited, or ignore the effect of the internet, direct debit, direct payment and all the changes that have a major impact on the post office network. That is recognised not just by the Government but by the general secretary of the National Federation of SubPostmasters, who said at the start of the programme:

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

The Opposition spokesman said in a debate in the House on the issue a few weeks ago that

“we have to face the facts about the future of postal services in this country...we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close”.—[Official Report, 19 March 2008; Vol. 473, c. 947.]

Across the parties there is acceptance of the size of the challenge facing the post office network, which is to do with lifestyle, technology and competition.

The whole point of the attempt that I have been describing by Stroud town council to save the branch was to bring in new money. The town council was not naive enough to think that it would save it by waving a magic wand. Is it not a little surprising, at least, that the notice that I received today does not even mention that Stroud town council offered negotiations? That fact has been washed away. That is not a sign of how a public body should operate.

I am happy to come to the specific points that my hon. Friend has made about Stroud town council, if he will bear with me, but I want to say something about perspective. He talked about the viability of the post office network in the future. It is not easy to call for a sense of perspective when post offices are closing, but is important, because even after the closure programme, there will still be a network across the country that is three times larger than that of the top five supermarket chains put together, with a presence in rural and urban communities throughout the country.

That brings me to the subject of the network change plan for my hon. Friend’s area. Even in the Gloucestershire and Oxfordshire area, 92 per cent. of customers will experience no change in the post office branch that they use, and more than 99 per cent. of the area’s population will either have no change in the branch they use or will remain within 1 mile by road of an alternative post office branch. Although it is a difficult matter—and I accept that it is difficult and unpopular—it is important to stress some sense of perspective about the remaining network.

My hon. Friend talked about outreach and its costs. I am happy to take those points up with Post Office Ltd. However, I think that outreach is a valuable way of providing post office services. When I visited outreach services, it struck me that we should have been providing services more flexibly in the past. He made a critical comparison between the way in which branches were selected for closure in the present programme and the way it was done in the urban network reinvention programme several years ago. I have received representations both ways about that. It is true that during urban reinvention, Post Office Ltd concentrated closures on the areas where the sub-postmaster wanted to leave. The problem was that asking people to come forward to take redundancy packages and leave the network did not entail a plan for the future of the network. It meant that closures were dictated by those who wanted to go. This time round the Post Office has said it does not want to proceed in that way, but wants proper coverage in rural and urban areas, using the access criteria with which my hon. Friend is familiar. Other hon. Members have told me that they are glad that that is happening, because the other way left holes in network provision. The downside is that branches run by sub-postmasters who do not want to go are selected for closure. It sounds to me as if that may be true in the case raised by my hon. Friend. The reason is that Post Office Ltd is trying to go about the process in a way that adheres to proper criteria for distance between post offices.

My hon. Friend asked about Stroud town council. The Government’s position on discussions between Post Office Ltd and any third party or local authority was set out in a letter from my right hon. Friend the Secretary of State to Post Office Ltd and the Local Government Association on 19 March. We have encouraged Post Office Ltd to discuss the matter with any local authority that is interested in the issue. However, certain criteria will have to be considered in deciding whether to proceed with proposals, including whether the authority in question is committed for several years. The full costs of the branch will have to be taken into account—not just the cost to the sub-postmaster. I counsel caution before saying that a particular branch is profitable, given that the sub-postmaster does not see the central support costs for any branch. When those are taken into account, three out of four are not profitable. The impact on neighbouring branches will also need to be taken into account, as was mentioned in the e-mail that my hon. Friend read out. With those criteria set, we have encouraged Post Office Ltd to talk to third parties who are interested in potentially supporting post office branches in the future.