§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]
§ 11.3 pm
§ Sir Michael McNair-Wilson (Newbury)I am grateful for this opportunity to speak about the future of sub-post offices. I do so because of representations that have been made to me about the commercial pressures under which sub-post offices are operating, and because I am conscious that they are a valuable adjunct to any village store, enabling many villagers to sustain a local shop against the massive competition from supermarkets and hypermarkets.
In effect, the sub-post office allows a local community to retain a retail outlet that might otherwise disappear, to the disadvantage of village people. It does more than that. The village store is not just a place where local people shop. It is a social centre where local people meet each other, where village gossip is exchanged and where, according to the length of time the storekeeper has been in possession, information about local services is disseminated. I do not think it is an exaggeration to say that a village without a church, a school and a local shop is no village at all. As I said, the viability of the shop will depend to a great extent on whether it contains a sub-post office.
Thus, the future of sub-post offices is of great importance to every locality which has one, particularly villages; their future must also be important to the Post Office. Yet today a shadow lies across their future. Four years ago, there were 20,000 sub-post offices. Today, there are 18,500. In the past 12 months, well in excess of 100 sub-post offices have closed, mainly because they or the village shops had lost their commercial viability. In 1985, for example, it is estimated that the sub-post office network lost 4 per cent. of its business.
The new uniform business rate will impose an additional financial burden from which commercial pressures will prevent sub-post offices from seeking relief. Thus, it seems more than ever necessary for the Government, in their own right and as the effective owner of the Post Office, to consider whether they are making the maximum use of sub-post offices and whether section 7 of the Post Office Act 1969, amended by section 58 of the British Telecommunications Act 1981, is too restrictive.
As the Select Committee on Trade and Industry stated in its report last year:
In 1986 the Government recognised the case for wider powers and indicated that it would seek an early opportunity to introduce legislation to extend the Post Office's powers.It added:No legislation has emerged: nor have Ministers granted wider powers.The Select Committee recommended that the Government should take steps to grant wider powers; so do I. The reason is simple; 10,000 of the smallest sub-post offices operate at a loss of between £20 million and £30 million each year. They transact 14 per cent. of total sub-post office business and represent 21 per cent. of total sub-post office costs. Without more business, they will cease to exist.The profitability of other sub-post offices is threatened by changes that the Post Office has introduced recently, and particularly by its willingness to let other retail outlets sell stamps and, speaking locally, to allow a sub-post office to open in a hypermarket at Theale on the edge of my 1043 constituency. That approach undermines any security that a sub-postmaster may think he has as an agent of Post Office Counters.
No doubt the Minister will tell me that Post Office Counters allows sub-post offices to provide banking and money transmission services, and certain services for central and local government, public corporations and some former nationalised industries, and that, since 1984, it has allowed sub-post offices to sell milk tokens and British Telecom phonecards and to provide facilities for cashing cheques drawn on banks other than Girobank and the payment of family credit. All these are to be welcomed, as is the intention to allow the community charge to be paid at sub-post offices. In no way do I complain about the number of Government-funded services that sub-post offices can provide.
What I am asking is whether sub-post offices could be allowed to do more, and how I should respond to those sub-postmasters in west Berkshire who have told me that their contract with the Post Office is too heavily loaded in favour of the Post Office, which effectively lays down what a sub-postmaster can or cannot do without proper negotiation. It may be argued that that is reasonable, since the sub-postmaster is the agent of the Post Office and has had to pay the first quarter of his remuneration to take over the office in the first place. Perhaps, but when he gives up his sub-post office, he will receive no pension or gratuity; he must provide that for himself that out of whatever savings he has been able to accumulate. Therefore, the profit of his sub-post office will be crucial.
I find myself in agreement with the National Federation of Sub-Postmasters, which asked Post Office Counters to enable sub-post offices to offer a wider range of services than the Post Office or the Government have hitherto considered. As the federation said, the more people use the sub-post office, the more Post Office business will be done, which is good for the postmaster, good for the Post Office and good for the continuing viability of the village shop.
In evidence to the Select Committee on Trade and Industry, the general secretary of the National Federation of Sub-Postmasters put it succinctly:
To make sub-post offices more viable, we need more work.In conclusion, therefore, I ask my hon. Friend what discussions have taken place to encourage the Department of Transport to increase the number of post offices that can issue vehicle excise licences over the current 3,610—including Crown offices—that so far are allowed to do so. Bearing in mind the fact that there are 18,500 sub-post offices, one may ask why the Department of Transport does not use those additional outlets to provide such a service to the ordinary citizen.Has it been suggested to the Post Office that if it intends to use other retail outlets to sell its services, it cannot, in equity, deny that freedom to sub-postmasters? Also, are discussions taking place with representatives of district councils in England and Wales to enable all sub-post offices to handle payment of the community charge? I understand that that matter has been under negotiation. I should be grateful if I could be told whether it has been finalised.
These three measures could all help to improve the viability of sub-post offices. There are others, such as allowing them to provide financial advice, or to act as 1044 agents for TNT parcels, to name but two. I do not ask that sub-post offices should be granted a privileged status. However, I want my hon. Friend to consider what other services sub-post offices could be allowed to handle to improve their viability. In effect, I am asking him to underline the Government's commitment to the future of the sub-post office network and, indirectly, to the future of the village shop and village life.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)I congratulate my hon. Friend the Member for Newbury (Sir M. McNair-Wilson) on having raised a subject which I know is close to the hearts of many hon. Members. It is a tribute to the strength of his feelings and his commitment to sub-post offices, not just in his constituency but throughout the land, that he has taken the opportunity to raise the subject in an Adjournment debate.
I recognise the special place that the Post Office occupies in our society. It has been in existence for a long time. Its connections with the Crown make the Post Office a national institution. Everyone makes some use of the local post office and is very much aware of its place in our society. However, I intend to spend a few minutes on trying to put in context the work of the Post Office.
It is easy enough to focus, as my hon. Friend has so eloquently done, on the problems that arise from time to time and to overlook the success story that the Post Office represents today. Since it ceased to be a Government Department and became a public corporation—as long as 20 years ago—the Post Office has transformed itself into a profitable organisation which is run very much on commercial lines. It has had a sustained run of profitability for at least 10 years.
In the past, the Post Office tended to operate as a monolithic, single business, though covering a number of distinct activities—letters, parcels, counters and Girobank. During the past few years there has been an increasing separation of the different businesses, which has provided the Post Office with a much more commercial incentive to make the best possible use of its assets and to develop its own businesses that deal at arm's length with other parts of the Post Office.
Post Office Counters was incorporated in 1987 as a wholly owned subsidiary of the Post Office. Since then, Post Office Counters has managed to make a small, though, I think, significant, operating profit on its turnover of some £800 million per annum.
It is also true to say that quality of service has been improved at the same time. The Post Office management certainly recognises that there is still scope for further improvement. Many of us might ask about the long queues in post offices. Research has shown that, despite such factors, customers generally have a high regard for the service that is provided by their local post office, particularly the sub-post offices. Customers believe that they offer a much more direct and personal service. As my hon. Friend rightly observed, they are regarded as an essential part of the local community. In rural areas, post offices may even be regarded as social centres.
Recent research by the Post Office Users' National Council, an independent body which is the Post Office's statutory watchdog, found that in general queuing times are shorter in post offices—particularly in sub-post offices 1045 —than in banks, building societies or supermarkets. A new chapter on quality of service was introduced into the sub-postmasters' contract in 1989 setting out the standards of quality of service required nationally. We welcome that statement of a continuing commitment to improved quality.
We should also remember that the Post Office operates the largest retail network in the country. It has a network of about 20,000 post offices throughout the United Kingdom—considerably larger than any bank or building society and more per head of population than in France, Germany, Japan or the United States. In the United Kingdom, post offices are easily accessible to all but those in the very remotest areas. In urban areas, the aim is to have offices distributed so that no one is more than a mile from a post office, and in rural areas no more than two miles. Only a small proportion of offices—1,385 out of over 20,000 at the end of 1989—are directly owned and operated by Post Office Counters.
The vast majority of offices are sub-post offices, with which this debate is immediately concerned. They are franchised by Post Office Counters to self-employed agents, the vast majority of whom operate a private business alongside their post office counter—I shall return to that in a few moments. The post office provides a nucleus of business and brings in regular customers to buy stamps, post parcels and collect benefits and pensions; and the sub-postmaster needs to capitalise on that custom and understand and meet the needs of his local community in his private business. The range of private business is wide, and encompasses general stores, confectioners and newsagents, tea rooms, haberdashery and even laundry and dry cleaning.
Post offices—particularly those in rural areas, which account for just under half the network—therefore serve an important social function as my hon. Friend so rightly and eloquently pointed out. That was clearly recognised in the Act establishing the Post Office as a public corporation, which imposes on the Post Office a statutory duty to have regard to the social as well as industrial and commercial needs of the United Kingdom in exercising its powers. The Government have repeatedly reaffirmed their commitment to a network of post offices adequate to enable the Post Office to fulfil its statutory duty—and I am happy to do so again at the Dispatch Box this evening. I gladly take the opportunity to pay tribute to the work both of Post Office Counters and the sub-postmasters; post offices have an important part to play in maintaining local communities.
Decisions about the day-to-day running of the Post Office's business, such as the type and level of service provision in particular areas, are rightly operational matters for the Post Office Board. The Government's role is confined to broad issues of general policy and to matters of overall financial control. The Post Office is fully committed to maintaining an extensive national network, and in particular to keeping the rural network as close to its current size as possible. In recent years, closures in rural areas have occurred only as a result of force majeure—in most cases because it has proved impossible to find a suitable candidate willing to take on the business.
For smaller offices, the opening hours laid down by the Post Office were not always justified by the levels of business and could prove a disincentive to potential candidates. To overcome these problems in its smallest offices, the Post Office has introduced what are known as 1046 community offices. These may be open for only a few hours a week—there is no fixed minimum—at times agreed with the district manager. They may be run from someone's home so that they can offer a very flexible alternative.
Larger rural offices may also operate on a part-time basis with flexible opening hours where it is difficult to keep them open full time. These innovations, my hon. Friend will be glad to hear, have helped to minimise closures and have led to the reopening of 70 offices which had previously been closed. There are now some 1,350 of these community offices.
There is a fairly general perception that the Post Office network is shrinking and that rural offices in particular are fast disappearing. That impression was given by my hon. Friend. In fact, changes in the size of the network have been relatively limited. In 1909, there were 22,100 sub-post offices; 80 years later there are still 19,300. Furthermore, over the last year the sub-office network has been strengthened as some 110 directly run Crown offices have been converted into sub or agency offices.
I do not want to fall out with my hon. Friend over figures, but mine suggest that the net loss of sub-post offices at present is about 100 per annum out of that 19,300 total. I do not say that that is a good figure, but it puts in context the sort of performance that we are seeing from the Post Office in attempting to maintain its network, and that is a more encouraging figure than many believe.
The picture I have drawn hardly seems to be that of a dying business. Indeed, in many ways the business is being expanded. My hon. Friend referred to many of the factors involved. The Crown post offices tend generally to be more expensive to run than the sub-offices, and that, again, is acknowledged by the Post Office in the changes it is making, in a sense switching the concentration to sub-post offices which have a greater variety of business and, therefore, I believe, for the future, this can be regarded as being more encouraging.
The Post Office has power to provide services for central an local government, for public corporations and for some of the formerly nationalised industries. It also has a general power to provide money transmission services
My hon. Friend suggested that the Post Office should be allowed to undertake new business. As he rightly pointed out, this issue was addressed in the recent Trade and Industry Select Committee report on the Post Office. My predecessor, my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie), said in 1986 that we in the Department of Trade and Industry accepted the argument for extending the Post Office's powers, an argument put forcefully tonight by my hon. Friend. The difficulty is to decide in what areas that would be appropriate.
We see difficulty in allowing the Post Office to extend its business into areas where the private sector already provides or could provide a service. That sort of direct competition between the private and public sectors would, we believe, inevitably and understandably attract accusations of unfair competition. I do not suggest that Post Office Counters is either uncommercial or insulated from all effects of competition. It is not. But as a public corporation it is not in quite the same position as a private business.
One of the areas where it has often been suggested that the Post Office's powers should be widenend to cover, as my hon. Friend suggested, is that of financial services. The 1047 Post Office already has some expertise in this area through its work for Girobank and the Department of National Savings. It seems to me that the sale of financial services, such as insurance and stock market investments, in post offices could raise serious difficulties. In this case, there is a clear danger that the Post Office label could be seen as implied Government backing for the products. Consumers would be likely to take the view that buying a financial product from a post office was somehow safer than buying it from an independent business. In that sense we would not be providing a level playing field or a fair competitive environment.
My hon. Friend will understand that this is a difficult area for us to justify allowing an extension of powers into those spheres, despite the eloquent case that he made. While I wish to continue to look at the issue, I hope that everyone will appreciate the difficulties that would be caused if we allowed post offices, with the sort of financial arrangements that they have, to encroach into areas provided by the private sector which could put small local private businesses in some jeopardy as a result of the competition that would be provided by the Post Office in that new way.
§ Sir Michael McNair-WilsonMay I reinforce the point I made? If, as it is, the Post Office is now using other retail outlets to sell, say, stamps, it is effectively taking business from the sub-post office, and thereby it is undermining the security of the sub-post office and the confidence that the sub-postmaster has in being a servant of the Post Office. It seems that what is sauce for the goose should be sauce for the gander. If the Post Office wants to use other retail outlets, can it reasonably deny the sub-postmaster the same right to see what he can attract into his sub-post office to maintain viability?
§ Mr. ForthMy hon. Friend makes a fair and interesting point, which I shall consider. I do not want to be drawn into criticising the Post Office for its recent bold initiatives—for example, in selling postage stamps through other outlets, as my hon. Friend has pointed out. I want to find ways of dealing with those issues, but I remain conscious 1048 of the accusation that could be made that, by allowing the Post Office to extend its activities, we would endanger established small, private businesses.
It is fair to reinforce something that my hon. Friend pointed out—over the past few years, the Post Office has considerably extended its business through the sale of milk, gas and electricity tokens and British Telecom phonecards, by cashing other banks' cheques, through family credit payments and community charge stamps, by accepting community charge payments and by processing E111 forms for health cover in other European countries. That is a considerable step forward in extending the range of activities without necessarily competing in the financial services sector about which I have expressed concern. We must recognise the difficulties. I hope that my hon. Friend will be patient as we try to find the best way through them while emphasising the role of the sub-post offices.
When it comes to the relationship between the sub-post offices, the Post Office, other Government Departments—my hon. Friend mentioned the Department of Transport—and, in a different context, local authorities, we would look to the National Federation of Sub-Postmasters to make cases on behalf of its members and, where appropriate, for the Post Office to support it. I shall look at the relationship between the sub-post offices, the Post Office and other Government Departments. As a constituency Member, I have argued for extending the activities of my sub-post office in, for example, providing licences. I have great sympathy for my hon. Friend's view.
I want to strike a balance in paying great tribute to the work that the sub-post offices already do and to the extension of their activities in the community. I reassure my hon. Friend that we give this matter the highest possible priority. My right hon. Friend the Secretary of State and I are aware of the need to maintain the rural sub-post office network in particular. I do not want to over-stress the difficulties, but we recognise those involved in going down the route suggested by my hon. Friend. I intend to keep the issue alive and to try to find the best way forward. We all want the best possible future for our sub-post offices, particularly our rural network.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-seven minutes past Eleven o'clock.