HC Deb 26 February 2004 vol 418 cc508-14

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

6 pm

Mr. A. J. Beith (Berwick-upon-Tweed) (LD)

The Minister answers many debates on post office closures, but this one is different. Many are about rural or suburban sub-post offices, closed either because of the reduction in business resulting from pressure to get benefits paid into bank accounts, or because of the Post Office's network reinvention programme—a title that does not impress some of my colleagues because of the closures involved.

So far, most village post office closures in my constituency have been because no one could be found to take on the business. In fact, I have found the Post Office to be generally helpful and flexible in seeking to identify new sub-postmasters, and it has taken up my suggestions of experienced staff who could take on village post offices temporarily. I have had a useful and fruitful relationship with Post Office management locally on many village sub-post office closure issues, and it has tried hard to maintain the service wherever possible.

The case that I wish to raise tonight is different, because it concerns a main town centre post office, which used to be a Crown office but which was franchised out some years ago. Its closure, since August 2003, is not the result of policy decisions or viability problems, but of the failure of the Post Office to set up alternative facilities following a landlord-tenant dispute. It is very important to the people of Berwick, and it raises issues about the network of town centre post offices, the former Crown offices, which provide the widest range of Government-related facilities, including the issuing of motor vehicle licenses and provision of passport application assistance. I shall return to the wider issues after I have given the Minister something of the story of Berwick post office's closure.

I regard it as a disgrace that Berwick should have been without a main post office for seven months, with still no sign of it reopening. For many years—as long as anyone can remember—Berwick's town centre post office was a Crown office, occupying, in recent times, modern Post Office-owned premises combined with the Royal Mail sorting office. In the early 1990s, it was franchised out, and when we expressed widely held concerns about that, the Post Office insisted that the new arrangements would ensure the continuance of a conveniently sited central post office.

That facility was in fact provided in the Co-oppremises for six or seven years, but when it gave up the contract three years ago, a new contractor and premises had to be found. Central premises were found, and the post office reopened. In February last year, the postmaster gave up the contract and a new postmaster was appointed, using the same rented premises.

At the end of August last year, the post office suddenly closed, for what was described as "operational reasons". Pensioners were advised to collect their pensions from sub-post offices, and motor vehicle licences could be obtained only by travelling to Scotland—to Duns or Eyemouth—or to Wooler, which. is 16 miles away. On 11 September, it was revealed that the post office might not reopen for two months, and staff received their P45s. That was a grim day for them. A Post Office spokesman said: Due to circumstances beyond our control, it is now highly unlikely that the branch in Berwick will reopen in its current location. We are now working with a number of organisations to try and find an alternative solution but this could take up to two months to finalise. We would like to apologise to our customers in Berwick for the inconvenience this is causing them but we want to reassure them that we are doing all we can to reopen a branch in the town as soon as possible. Then, on 25 September, the post office reopened, with a picture in the local paper. Within days—on 1 October—it had closed again, and it became known that there was a dispute between the tenant and the landlord. That resulted in the Post Office being unable to gain access to the premises. One consequence was that people who had bought motor vehicle licences began to receive letters from the Driver and Vehicle Licensing Agency warning them that they had committed an offence because they had not licensed their vehicles. The records were locked in the safe of the former post office.

Meanwhile, sub-post offices in the area were working hard to fill the gap. One is in Castlegate, quite close to the town centre, and I pay tribute to the sub-postmaster, Mr. Alistair Fairbairn, for the hard work he has put in. There has been great pressure on his sub-post office, sometimes with queues down the street of people collecting pensions and benefits. The Spittal post office took on motor licences, a valuable service that meant people could avoid the long journeys I mentioned earlier. The Tweedmouth and East Ord post offices carried extra responsibilities. There is no feeling among the sub-postmasters that they welcome the absence of the main post office, even though they might gain some business in the longer term if people choose not to go back to it.

On 30 October, the Post Office said that regrettably, it will be a minimum of 6 weeks before any solution can be put in place We had already been warned that it would take two months, yet on 30 October we heard that it would be another six weeks. On 4 December, a company interested in taking over the post office complained that it could not obtain basic information to enable it to decide whether to make a bid, especially financial information relating to the number of staff it would need.

On 18 December, just before Christmas—the busiest time for a post office in terms of mail delivery and counter business—the Post Office announced that three sites were under consideration. On 12 February 2004, the Post Office confirmed that there was no further progress to report, although there had been plenty of local rumours that various premises were being considered. That was only a few weeks ago, but no further progress had been made by the Post Office. We are entering the seventh month since the closure of the town centre post office with no announcement that it will reopen.

I have repeatedly raised the matter with the Post Office and with Postwatch. Earlier this week, I presented a petition from readers of the Berwick Advertiser to the chief executive of the Post Office. Now, it is the Minister's turn. He should be involved, because a principle of public policy is at stake. Surely, we must retain a network of town centre post offices, like that previously provided by Crown offices. Like Departments and public offices, such post offices must remain open, rather than closing for six months or a year at a time; or are the former Crown offices simply regarded as being like other sub-post offices—possible victims of the network renewal programme? Are they to be put in the balance? Will some of them have to go, or do they have a special place—as I believe—because they. are the main town centre facility and usually provide services that smaller sub-post offices cannot offer? When the franchise offices were created, every assurance was given that the tradition of the town centre Crown office would be maintained. Those offices provide vital public services and their retention should be a primary obligation for the Post Office. Franchising is supposed to provide those services, but the Post Office will have to deal much better with the loss of postmasters and premises to maintain service.

It is inevitable that franchise arrangements will break down occasionally, but the Post Office should have adequate emergency arrangements when that happens. A team of post office staff should have been brought in, using temporary premises or a mobile office, such as those used by banks, to maintain the service until a new contractor could be found, approved and, if necessary, trained—a process that is likely to take weeks or. possibly months.

The Strategic Rail Authority does not allow the suspension of rail services for six months while it finds a new train operator—.at least not so far; perhaps we shall. reach that state eventually. The county council does not close schools for six months while it finds a new school transport contractor; it has to make emergency arrangements rapidly when things go wrong. Surely, the Post Office should have such mechanisms, including standby facilities to deal with emergency interruptions to service at main post offices, especially if that would lead to loss of service for long periods.

People in Berwick are very angry about the situation, which reflects badly on Post Office management. A similar situation could arise in other towns where the Crown office has been franchised out. Next time the Post Office proposes to replace a Crown office with a franchised office, the example of Berwick will be thrown back at it. The Post Office will no longer be able to give assurances with any credibility; they will no longer be believed, because people will refer to what has happened in Berwick.

The answer is twofold: the Post Office should get on with the job of setting up a replacement post office, and it should have an emergency facility that can be moved in whenever and wherever such a crisis occurs. The Minister should recognise that a matter of public policy is involved, put pressure on the Post Office to restore the service that Berwick ought to have and ensure that the Post Office considers how it can provide arrangements whenever this sort of thing happens in any part of the country.

6.10 pm
The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen timms)

I congratulate the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on. securing this debate, and I thank him for what he said about the work of the Post Office's rural transfer advisers. I agree that they have been very effective in ensuring, wherever possible, that an alternative branch in a nearby location can replace rural Post Office branches that are threatened with closure.

The right hon. Gentleman spelt out very clearly and fully the problems that the main Post Office branch in Berwick-upon-Tweed has faced, and he gave a detailed account of events since last September, when the problems first arose. Let me emphasise that Post Office Ltd. considers the current closure to be temporary, and I entirely sympathise with the frustration that he has expressed on behalf of his constituents about the fact that it has lasted so long. The Post Office and I very much wish that it will be able to provide a service again to his constituents as quickly as possible.

As the right hon. Gentleman said, the office closed following a dispute with the sub-postmaster, and the Post Office is continuing to try to re-establish the service. As he also said, despite the Post Office's efforts in the early weeks, it is unlikely that it can resume a service in the previous location at Marygate. He has rightly paid tribute to the sub-postmaster at the Castlegate branch, which has been struggling to cope with the increased traffic. Since the closure in October 2003, Post Office Ltd. has been working with the local borough council and others to try to find a solution lo reopen a branch in the town.

I can confirm that the Post Office is committed to finding a long-term solution for the town on the north side of the river. There is certainly no intention at all to leave things as they are. The Post Office is talking to possible new sub-postmasters and is still looking for new premises, which should be close to the town centre. As the right hon. Gentleman said, nothing has yet been confirmed, although I understand that detailed discussions have taken place with prospective candidates for the position of sub-postmaster.

In defence of the Post Office, I would make the point that, clearly, if finding appropriate premises is a real difficulty, that may well constrain—I imagine that it has done so—the speed with which the replacement service can be provided. However, I entirely accept that the current position is unacceptable and the fact that it has last so long is deeply regrettable. I am sure that the Post Office would wish to express its apologies to all the right hon. Gentleman's constituents, who have been so severely inconvenienced over the past seven months.

The right hon. Gentleman raised some ideas about what might be done in the future. A lot of post offices have been converted from Crown offices to privately run offices. That happened at Berwick, where the Co-op initially operated the office. About 570 post offices are still run by Post Office employees—the directly managed or Crown offices. The process of conversion started in the 1980s as a means to strengthen the economic viability of the Post Office network.

Concerns arose as a result of some of the earlier conversions, so in May 1997, the then newly elected Government imposed a moratorium on further conversions pending a review. That moratorium was lifted in December 1998, following agreement on proposals submitted by the Post Office to the trade unions on a future strategy for the Crown office network. Those arrangements were included in the White Paper on the Post Office published in July 1999, and they require Post Office Ltd. to ensure that a significant proportion of its total business transactions are carried out at Crown offices. Currently, that figure is at least 15 per cent.

The performance and innovation unit report on the future of the network in 2000 concluded that as a matter of priority the Post Office should pursue work to maximise the commercial potential of the network, the efficiency of its operations and the quality of individual post offices. In particular, the report concluded that more Crown offices should be converted to privately run operations as a means of addressing the poor profitability of the Crown office part of the network. The network of directly operated offices, which, as I said, numbers only about 570, loses about £80 million a year. In the last financial year, Post Office Ltd. as a whole lost £194 million before exceptional items. We therefore need to be cautious before suggesting that we could move to an arrangement with substantial new subsidies for offices that were previously Crown offices and have since been franchised. I understand, however, the point that the right hon. Gentleman made about the inconvenience suffered by his constituents. I will convey the frustration and anger that he conveyed on their behalf to the management of Post Office Ltd., and encourage them to find a solution to the problem as quickly as possible.

Mr. Beith

The Minister has just made a helpful point, because he has demonstrated that many post office staff are still working in Crown offices. There is therefore a pool of staff, so it is surely possible to draw a few people from here and there to staff a temporary facility where such a change has taken place. That would help the people of the area, and if such action is not undertaken it will become increasingly difficult to franchise any more Crown offices, as people will think that the continuity of service may be lost.

Mr. Timms

I can reassure the right hon. Gentleman that the situation that he described is extremely unusual. As he said, I frequently respond to Adjournment debates and receive letters form hon. Members about post office matters, but this is the first instance of such a situation that I can recall. I do not think that we are seeing the beginning of a general pattern, and I certainly do not think that there are grounds for concern about other conversions of Crown offices, as happens from time to time, to franchised status. If it became a frequent occurrence in any way the right hon. Gentleman's argument would be a strong one.

The Post Office does not have numbers of people around the country who can be moved in, as the right hon. Gentleman suggested, although I agree that that ought to be considered if the problem lasts much longer. However, there would still be a problem with providing premises. He proposed a mobile arrangement, but we would have to address logistical issues. However, I shall certainly convey to the management of Post Office Ltd., the problems that he has described fully this evening, and encourage them to do everything possible to sort them out.

The post office network faces an enormous challenge, and I have already talked about the losses that Post Office Ltd. suffered last year. Ninety-seven per cent. of the nation's post offices are run by sub-postmasters, private business people who have invested not only their own money in their businesses but a great amount of care and effort to help the post office network achieve its highly regarded status. That is true of a large number of sub-postmasters, including the gentleman in the Castlegate branch to whom the right hon. Gentleman referred. However, declining profitability in the network as a whole has given a severe knock to the ability of sub-postmasters to sell on their businesses, which is how they have moved on in the past. Decisive action has been required to ensure that we maintain a sustainable and countrywide network for the future, and that is the action that the Government are taking. As the right hon. Gentleman said at the beginning of his speech, we must not allow gaps of the kind that have temporarily opened up in his constituency to become a more widespread phenomenon.

That is the reason for the process of urban reinvention—I understand the misgivings of the right hon. Gentleman and some of his hon. Friends about that name—that we have been going through. It is also the reason that we have invested £0.5 billion in technology to ensure that banking services can be provided at every single post office branch in the country. According to the latest figures, about 1 million banking transactions a week take place in post office branches around the country. I believe that there is a very attractive future for the post office network and hope that that will address some of the problems that have arisen in Berwick as a result of the difficulties that people who run sub-post offices have faced over the past couple of years. I hope that a much better prospect for those individuals will emerge in future.

I was pleased to see evidence that the number of sales of post office branches increased in the last financial quarter to the end of December, with 231 successful transfers of urban post offices compared with 148 in the corresponding period of the previous year. That significant increase in successful urban transfers suggests that there is a strengthening market and greater confidence in the future viability of many urban post offices as the implications and effects of the programme work through. That has always been its aim.

Mr. Beith

Is the Minister aware of anxieties about the Post Office card account in relation to the attitude of some Departments towards encouraging, or not encouraging, people to take it up? Although several people are registered, a relatively small number have communicated the details to the Department concerned, and there is anxiety that the system is not developing as originally envisaged.

Mr. Timms

I can certainly reassure the right hon. Gentleman on his first point. Those concerns have been raised with me on numerous occasions. The figures on the choices that people are making for receiving their benefits show that so far more than 60 per cent. of pensioners have indicated that they want a Post Office card account. That means that they have been able successfully to navigate the system by going through the call centre and have got to the stage of expressing a preference for a card account. There are not difficulties on the scale that had been feared.

What is interesting about that data is that if one considers recipients of other benefits, such as the jobseeker's allowance, child benefit and so on—benefits received by people of working age—one realises that the number of those who have chosen Post Office card accounts is much lower. That underlines the importance of the investment that we have made in new technology and other changes such as the work to open up a new range of products and make financial and other services available in post offices, because it is clear that younger customers in particular have different aspirations in relation to the post office from those who receive the state pension.

On the right hon. Gentleman's second point about the number of people who have opened and are using a Post Office card account, I share some of his concerns. We are therefore working with Post Office Ltd. and talking to the Department for Work and Pensions and the National Federation of Sub-Postmasters. All of us agree that we need to make sure that people are able to use those accounts, which they have clearly expressed an intention to use, as quickly as possible. That is in everybody's interest.

With the change that we have been making, we can see a way out of the heart of the problems that the Post Office has been facing—being locked into a shrinking base of customers. Its task in Berwick and across the country is to continue to serve its traditional customers with excellence, which certainly has not been happening over the past seven months, and to attract new customers and give the network access to expanding banking markets, not just dwindling markets as in the past. That is the key to future success, and the groundwork that we have been laying provides a good prospect of that being achieved. I entirely share the concern that the right hon. Gentleman has rightly expressed on behalf of his constituents about the serious disruption in the service provided by the Post Office in his constituency, and I will do everything that I can to encourage Post Office Ltd. to bring those problems to a conclusion as swiftly as possible.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Six o'clock.