HC Deb 18 June 2003 vol 407 cc468-76

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

7.1 pm

Mr. Martin Caton (Gower)

I cannot remember how many times I have sat in the Chamber and heard hon. Members from all political parties and from all parts of the United Kingdom pay tribute to the central role that the local post office plays in our communities, particularly our rural communities. Indeed, I have done so myself before this evening, on more than one occasion.

Whether we are talking about the contribution of specific post offices in our constituencies or, more generally, about the role of the wider post office network, there is a consensus across the House that British post offices are vital facilities, especially to many of our most vulnerable citizens, and that they need defending and developing. In recent years, faced with the prospect of post office closures, the Government and the House have spent a fair amount of time speaking about how we can find new forms of business for our local post offices to help make or keep them viable. Increasingly, we see the provision of banking services spreading through the network, the general practitioner experiment in Leicestershire, which does not seem to have been rolled out yet, rate relief schemes, and even direct financial support.

All those schemes are welcome and represent a clear recognition of the importance of the local post office. It plays a crucial social and economic role, offering 170 different services and products, its existence often making the local shop viable when otherwise it would not be. Sub-post masters and their post offices also play an invaluable part in many communities by providing support for vulnerable residents, including elderly and disabled people. Often, they will interpret official letters, find lost property, take messages and offer emotional as well as practical support. It is such a postmaster and his wife about whom I shall speak briefly this evening, but before doing so, I shall set the situation in the village of Kittle in my constituency in the wider context of the post office network in rural Wales.

I am a member of the Select Committee on Welsh Affairs, which over recent years has investigated the impact of post office closures on local communities, and in particular what the Post Office was doing to keep local post offices open, or to find replacements when that was not possible. We were assured that Post Office Ltd. would do all it reasonably could to avoid the closure of post office branches in rural areas. We were also told about the consultation procedure agreed between Post Office Ltd. and the Consumer Council for Postal Services, Postwatch, which gave the strong impression that the Post Office was willing to listen to and respond positively wherever possible to the concerns of local communities. In the case that I am about to describe, I believe that Post Office management at regional level and possibly higher has not done all it reasonably can to avoid a closure, and it has failed to respond positively to the views of its customers in Kittle and the surrounding area.

John Mizen and his wife Lynda took over Kittle post office in February 2000. In doing so, they signed a contract that required them to keep the post office open between 9 am and 5.30 pm. They do not dispute that. They signed the contract in the expectation and hope that they would be able to manage under such a regime. However, as they set themselves to providing the service to their customers and building a very good reputation for the quality of that service, they found the requirement to keep the post office open without a lunch break burdensome and that it even impacted on their health and well-being.

In July last year, the Mizens therefore contacted the local Post Office management to request that their contract be reconsidered. They were informed of the procedure that they should follow. Essentially, it consisted of auditing the customer services that they provided between 1 o'clock and 2 o'clock over a month and consulting their customers about the possibility of the post office being closed at that time. They did that and submitted the results, which showed very low demand, to Post Office Ltd. in Bridgend with a request for a variation of contract hours, as is allowed for in Post Office rules.

The Mizens made that submission last September, with a request that the new hours, with lunchtime closure, should begin in the new year on 3 January 2003. They were confident that they would be granted the variation that they requested. However, even by mid-January, they had heard nothing in response, so they contacted the Post Office management saying that, as they had heard nothing, they presumed that their request had been agreed to and would therefore begin the new hours in the following month, February. They were told that they could not do that and that management would have to conduct its own review. No explanation was given as to why such a review had not been carried out between September, when the submission was made, and January, when the proposed changes would have started. Following the management review, they were told that they could not shut the post office for lunch in any circumstances. No reasons or details of the review findings were provided.

That has been one of the most worrying aspects of this whole sorry episode. Post Office management has failed to engage with Mr. and Mrs. Mizen in any meaningful way. In my view, that is a failure by the management properly to carry out its duty to manage positively. No wonder that Mr. and Mrs. Mizen were now at the end of their tether and deeply frustrated. They decided to close the post office for lunch periods anyway from 3 February. On 14 February, they were warned that, if they continued to close for lunch, they would be in breach of their contract, which could put it at risk. Still no rationale was provided and no offer was made to discuss the situation, let alone negotiate a way forward. The same was true on 11 March, when management was again pressed to reconsider the matter. There was still no real and meaningful communication about the central issue.

On 7 April, Mr. and Mrs. Mizen were given notice because they were not in compliance with their contract. However, Post Office Ltd. has, to date, failed to find anyone else in the village to run the post office. That means that it plans to close the branch that the Mizens run on 7 July without an alternative in the village. It says that the post office will be closed temporarily, while it finds a new sub-postmaster, but the head of the area community network for the post office appears to have set her mind against allowing Mr. Mizen to be considered for any new contract.

The situation in which my constituents in Kittle find themselves is as follows. First, they were asked whether they minded the post office closing for a lunch break and they said "No problem." Notwithstanding that, Post Office management, confident that it knows what is best for them, and after messing the Mizens about for several months, said that the post office must stay open for that lunchtime period. As the Mizens did not go along with that, they were given notice to quit and the post office will close in about three weeks if nothing is done. So, to keep a post office open during the lunch period when its customers do not want to use it, Post Office management is prepared to withdraw all post office services from those customers for an indefinite period. I have to say that the logic defies me.

Having received dozens of letters from people in Kittle and post office customers from neighbouring villages, I have tried to explore management's thinking. I have exchanged letters with the head of the area community network. Her position, as I understand it, is as follows: This is about a serious and wilful breach of contract, the consequences of which were clearly explained to Mr. Mizen on several occasions. In response to the question whether the contract is right for this post office, when the customers have made their views so clear, she informs me: It is the responsibility of Post Office Ltd line management to determine the service criteria. This is largely dependent on the amount of work conducted at the office which then reflects the type of contract that is applicable. In this case, Kittle post office is appropriate for a scale payment office contract and the standard contract hours for service are Monday to Friday, 9 am to 5.30 pm. I honestly believe that the Post Office needs to find a way of introducing the views of its customers into its contract letting and variation procedures. It must be prepared to show far more flexibility if it is to attract and keep good sub-postmasters. That seems to be what those at the top of the organisation want as well.

I asked regional management how many complaints it had received when Mr. Mizen closed for lunch. The answer was none. Let us contrast that with the hundreds of letters received, and the 700 signatures on a petition calling for Mr. Mizen to be allowed to close for lunch.

I think that a central problem in what is now an open dispute is a practical problem. The head of the post office community network in Wales does not accept Mr. Mizen's claim that he cannot have a lunch break if the post office remains open. She says he has reportedly five members of staff—surely someone could cover for his absence. On the surface that seems reasonable, but three of Mr. Mizen's staff are in full-time education and therefore work very few hours. They never work at lunchtime. The other two are good shop workers, but are not interested in learning to do the post office work. Mrs. Mizen has other work to do, as well as family commitments.

Even if a trained post office worker was available, the need to keep two people covering such a quiet period—one dealing with the post office, the other on a shop till—would not stack up economically, and the business cannot sustain it. In practice, Mr. Mizen loses his lunch break—with health and welfare consequences—if he complies with his contract.

I fear that some clues may be provided to the depth of consideration given to the issue by management in a letter that I, along with other interested parties, have been sent by management. The letter, headed "Important Information—Temporary Closure" states Kittle Branch Post Office will close on 9th July 2003. In fact, it is to close on 7 July. The letter identifies post offices in neighbouring villages that Kittle customers will be forced to use. Under a "Disabled Access" heading, it states that Bishopston branch has level access. It has no such access. It says that car parking is available outside Murton branch post office. It is not; there is a bus stop. It gives the wrong opening hours for Southgate branch post office. I think that that ignorance of the situation on the ground in those communities in my constituency demonstrates the real problem: a failure to listen to local voices.

I am not asking for a new and irreversible precedent to be set. Last year in Gower, in the village of Three Crosses just a few miles from Kittle, the post office was granted exactly the sort of variation of hours that the Mizens seek. I believe that the avenue we are going down will mean everyone losing out—the Mizens, the post office and, most important of all, the people of Kittle and the surrounding area who use the post office. Of course, the main losers will be the least well off, the least mobile and the least independent.

It seems to me that heels have been dug in rather too deeply, and that the position should be reviewed by Post Office management at a higher level than that at which the decisions have been made so far. I am sure that if that happens common sense can prevail, and the Kittle post office can be maintained as the vital resource that it undoubtedly is.

I have written to the chief executive of Post Office Ltd. requesting a meeting to discuss the situation in Kittle, and an opportunity to present the 700-signature petition collected by the Kittle community in support of the Mizens. I shall be asking him to arrange for the decisions made so far to be re-examined, and I hope that my hon. Friend the Minister will tell me that he will try to facilitate such a review.

My confidence that if good sense prevails there can be a satisfactory outcome and a secure future for the current Kittle post office has been bolstered by what the chairman of Royal Mail told the conference of the National Federation of SubPostmasters yesterday. In his speech in Scarborough Mr. Leighton outlined plans for post office branches to sell a comprehensive range of financial services in the future, including unsecured personal loans, a Post Office credit card, saving accounts and motor and life insurance. All that will be welcome, as it will increase post offices' income streams.

Mr. Leighton also described plans to give sub-postmasters a greater say in the running of their branches, to provide better incentives for them to make a profit, and to introduce more flexibility to encourage entrepreneurial flair. That too is excellent news. I agree with Mr. Leighton that while the next two years will be challenging, the post office network has a bright future. Let me end by quoting a couple of parts of Mr. Leighton's speech, which I think are relevant to the situation in Kittle. He said We are determined to put our Post Office branches on a better financial footing by giving customers the products they want and letting subpostmasters get on with the job of running their branches to suit their customers. Hear, hear to that. It is what I want, what Mr. Mizen wants and what the people of Kittle want.

Mr. Leighton then went on to say: Other changes to make Post Office branches more attractive to customers will include extended or more flexible opening hours, with subpostmasters deciding when their branches should be open to attract most customers. If the chairman of Royal Mail and his chief executive, David Mills, really believe those words, they need to investigate what has been happening at Kittle and to stop this nonsensical closure going ahead while they do so.

7.15 pm
Mr. Stephen Timms

I begin by congratulating my hon. Friend the Member for Gower (Mr. Caton) on securing the debate. I agree with much of what he said about the important role of post offices in local communities, both rural and urban. He rightly raised a number of issues of wider interest beyond Kittle about the future of the post office network, but I shall begin by concentrating on the particular post office that he is, understandably, concerned about.

I must make the point, though, that he will be heartened by the general trend in post office closures in Wales. As he knows, we have made a commitment that there should be no avoidable rural closures. Kittle is designated a rural post office. The number of closures in Wales has fallen sharply in the past couple of years. In the year ending March 2000, 31 Welsh post offices closed. In the following year the number was 68. In the year ending March 2002 it was 26; in the year ending March 2003 it was 18. We have made good progress in reducing the number of closures in Wales.

I am worried that my hon. Friend said that inaccurate information was given in the course of the closure process. I was informed that the post office was due to close on 9 July; he told us that the date is actually 7 July. Perhaps more serious are the inaccuracies that he mentioned concerning the status of the alternative post offices that people will have to go to instead.

On the central issue of whether it is right to insist on opening hours that are consistent with the sub-postmaster's contract, I must say that I agree with Post Office Ltd. about that, and I shall explain why. My hon. Friend explained that the background is a disagreement between the sub-postmaster and Post Office Ltd., following a request from the sub-postmaster for a variation in opening hours that would allow him to close the post office counters in his shop for an hour at lunchtime while the retail side of the business remained open. In considering such requests, Post Office Ltd. takes a range of factors into account, including the level of transactions undertaken and the trading hours of other retail outlets in the vicinity. In this case, Post Office Ltd. concluded that the level of business was sufficient to justify a full-time branch. The post office is in a parade of shops that all offer lunchtime opening and attract passing trade. It is on a fairly busy road and is used by holidaymakers travelling through the village. All those factors, combined with the sub-postmaster's intention to keep open the retail side of the business at lunchtime, led to Post Office Ltd. rejecting his request.

My hon. Friend raised several concerns about the lack of contact between the sub-postmaster and Post Office management during that process, and I shall certainly ask my officials to check that serious matter. Whatever the deficiencies in the process, however, the sub-postmaster subsequently advised that notwithstanding his obligations under his contract—my hon. Friend said that that is not in dispute, as it is very clear—he would go ahead and close the branch at lunchtime.

My hon. Friend quoted remarks made yesterday by Allan Leighton at the annual conference of the National Federation of SubPostmasters in Scarborough. The trend needs to be towards longer opening hours for sub-post offices. Of course we can all remember the time, not so long ago, when many businesses shut at lunchtime. However, retail businesses, including banks, which formerly had short opening hours, have increasingly recognised that they need to open for longer hours to fulfil their customers' needs. Post offices can be no exception.

The performance and innovation unit report, which was published in the summer of 2000, looked forward to a much stronger commercial future for sub-post offices and devised the description, "bigger, better, brighter." Longer opening hours play an important part in the way in which post offices better fulfil the needs of their customers, thereby attracting more customers and halting the decline throughout the country.

In the case that my hon. Friend raises, the sub-postmaster was made fully aware of the consequences of his breach of contract. Post Office Ltd. tells me that it was left with no alternative other than to give the sub-postmaster three months' notice of termination in February. Post Office Ltd. has advertised the vacancy and is currently pursuing an application to operate the service from alternative premises. I understand that, at least at this stage, the applicant appears likely to be successful. On 5 June, Post Office Ltd. issued a temporary closure consultation letter because the new branch is unlikely to be operational by 9 July. The Post Office greatly regrets—as I do—the interruption to service provision in Kittle. However, I am advised that it will be temporary and that a new post office should be operational as soon as possible.

It is important to understand the broader context and the way in which the issues relate to aspects of the contractual terms and arrangements between Post Office Ltd. and 17,000 sub-postmasters throughout the country. The Post Office was established as a public corporation in 1969 and it has been successive Governments' policy that decisions about the day-to-day running of postal businesses, such as contractual terms and conditions, are the operational responsibility of the board and management. The Government's role in Post Office matters is confined to broad general policy and overall financial control.

All sub-postmasters and franchisees are appointed under contract as agents to provide services. They are not Post Office employees. As agents, their contractual terms and conditions differ significantly from those of an employee. A sub-postmaster's contract is a commercial arrangement between himself and Post Office Ltd. As a standard condition of the contract, both parties can give three months' notice of termination and neither party is required to give reasons. There is no right of appeal on either side. The contract is designed to be even-handed. Sub-postmasters terminate contracts far more frequently than Post Office Ltd.

Several references have been made to the conference of the National Federation of SubPostmasters, which I addressed on Monday. The federation fully supports the principle that underpins the current arrangements, because if one sub-post office provides a poor service, that strengthens the view that the whole network deals shabbily with its customers. That is an important consideration for the National Federation of SubPostmasters and everybody else who works in the Post Office network. It wants people to perceive the Post Office as a modern organisation that, with other retail organisations, is anxious to fulfil its customers' needs and provide a good service, especially as regards opening hours.

Those arrangements have been in place for a long time. There will occasionally be disputes about the background to a decision by Post Office Ltd. to terminate a contract. That is probably inevitable, given the sheer size of the network and the number of people who work in it. On the whole, however, the arrangements appear to operate satisfactorily, from the perspective of the sub-postmasters and of the company. As I have said, I will investigate my hon. Friend's concerns about what seems to have been rather limited contact in the course of the process that he described.

The Post Office maintains the most extensive retail network in Europe. It has more branches than all the banks and building societies in the UK combined. It is vital for the Government that the network should continue to provide services in every part of the country, as it does at present. Decisions relating to the operational arrangements for the postal businesses, including the contractual terms and arrangements relating to sub-postmasters, certainly need to remain the responsibility of Post Office Ltd., but I am certain that the chairman and chief executive will take note of the concerns that my hon. Friend has raised in this debate.

My hon. Friend mentioned Your Guide—the experimental kiosk-based system in Leicestershire—and made the point that it had not yet been rolled out nationally. The Government contributed £25 million to the Your Guide pilot to test the concept of the "Government general practitioner" role for post offices, in line with the recommendations in the performance and innovation unit's report. The pilot showed that Your Guide would not provide a lifeline for rural post offices, as had been hoped. It was very popular with those who used it—people liked it and the postmasters liked having it—but only a small proportion of postmasters reported that it increased the number of people coming into the post office. I think that about 18 per cent. of the people involved in the pilot said that it had increased numbers.

It was, of course, the intention that it would be possible to attract new customers by offering a new kiosk-based service. That was not the experience of the pilot, however. It was therefore concluded that it would not be good value for money in terms of the public spending that would be involved, given the quite substantial cost that would be associated with rolling out the pilot and establishing a nationwide system of kiosks in post offices.

However, the pilot highlighted a number of areas in which Departments might deliver services in the future, and we are looking at those. A number of parties are also interested in a commercial approach to the provision of kiosks in post offices. A pilot started recently in Penwith, in Cornwall, with some quite ambitious aims. I suspect that in due course, we shall see some of the attractions of the Your Guide pilot being taken forward in different ways for the benefit of post offices in rural areas. We remain absolutely committed to the maintenance of a viable nationwide network of post offices in both rural and urban areas. In particular, we remain committed to ending the avoidable closure of post offices in rural areas, and we have backed that up with a commitment of £450 million over this year, next year and the year after. We have recently received European Commission approval for that spending.

The PIU report set out a vision of a modern network with new business opportunities, and we are committed to implementing its recommendations. The package of support for the rural network, together with the introduction of the banking products to which my hon. Friend referred—which featured in Allan Leighton's speech to the National Federation of SubPostmasters yesterday—give a high degree of confidence that that vision will be achieved. At the conference on Monday, it was announced that Lloyd's TSB was close to enabling its customers to obtain cash from any post office in the country free of charge, by putting their cards into the PIN pads that are now in every branch and receiving cash over the counter. That is already happening for customers of Barclays, and of Alliance and Leicester. Nineteen million accounts with those three institutions will soon be accessible in that way from every post office in the country.

That provides millions of people, for the first time in many cases, with a compelling reason to visit their local post office, and we hope that while they are there they will undertake other transactions as well. That is a valuable commercial opportunity for the post office network. There are also new financial services and products, including personal loans—Allan Leighton referred to those too—that represent an attractive commercial opportunity for the network.

The combination of Government support and the expansion of banking products will help the network to continue to play its vital social role, which, as my hon. Friend said, is essential in rural areas—and, indeed, in urban areas, too. I shall certainly look into what he said about what seems to have been a rather unsatisfactory process leading to the decision in respect of the Kittle post office.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes to Eight o'clock.