Post Office Network

Brendan O'Hara Excerpts

Thursday 25th April 2019 Westminster Hall

[Brendan O'Hara (Argyll and Bute) (SNP)]

It is a pleasure to serve under your chairmanship, Dame Cheryl, for this important debate on the sustainability of the post office network. I congratulate my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) on securing it and on her excellent contribution, which highlighted the ongoing crisis in the Post Office and the pressure faced by those who have to work in extremely difficult circumstances to deliver a service on which so many of our constituents rely.

There have been some excellent contributions, none more so than that of my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson). The Government should be in no doubt about the strength of feeling about this issue and the support that the post office has from Members of all parties. I share the concerns of my hon. Friend the Member for Motherwell and Wishaw, who said that the post office network is being run down and set up for future privatisation, which would have absolutely catastrophic consequences, particularly for those of us who represent and live in rural communities.

I hope the Government take heed of what is being said here today and start to show the level of commitment required to sustain—and, indeed, grow—the post office network. As we have heard, it is a lifeline service for many people living in rural areas, such as my constituency of Argyll and Bute—a vast area covering more than 7,000 sq km and taking in 26 inhabited island communities.

I have my doubts about whether that will be the case. Last month, when responding to an Adjournment debate secured by my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands), the Minister said that, under this Government, the post office network is

“at its most stable in decades”,

and that

“Government funding required to sustain the network has drastically decreased and is set to decrease even further in future years.”—[Official Report, 27 March 2019; Vol. 657, c. 477.]

That is not the message that my constituents want to hear from the Government. The Government have achieved what they describe as stability, but we in Argyll and Bute have lost 20% of our post offices in the past 13 years. In the past two years, six post offices have closed their doors, yet the Government still say they plan to decrease funding drastically in the coming years. We can have no faith in them.

Our rural communities know how important local post offices are in sustaining already economically fragile parts of the country. I am afraid that, as with so many other areas of their lives, when it comes to protecting the rural post office network, they can have no faith that the UK Government will act in their best interests.

It is not just the ongoing threat of closure that threatens many of our rural post offices, but the additional workload being placed on them as high street banks abandon rural Scotland as fast as their desire to make a quick buck will carry them. In the time remaining to me, I want to look at the effect that bank closures are having on the rural post office network. Small rural post offices, which are often community-run, were not designed, and are simply ill-equipped, to replace long-established banks. I want to use as an example the community post office in the village of Cairndow.

Cairndow sits on the shores of Loch Fyne, and is situated 10 miles from Lochgoilhead and Inveraray. Several years ago, the community identified the need for a post office in the village, and in 2015, thanks to the dedicated hard work of local people and Here We Are, a local third-sector organisation, the people of Cairndow celebrated the opening of their brand new community-run post office. The new venture has been hugely successful, and I pay tribute to the people at Here We Are and the entire community of Cairndow for what they have achieved.

It is not all good news. Because of a seemingly endless programme of bank branch closures in Argyll and Bute—most notably, the Royal Bank of Scotland’s decision last year to close the last bank in the town of Inveraray—what was a small community-run post office designed simply to meet the needs of a small rural population has become a replacement bank.

Although the post office at Cairndow has always been more than happy to provide a banking service to small local businesses that cannot manage the 60-mile round trip to the nearest bank in Dunoon or Lochgilphead, it fears that it is now in danger of becoming swamped. It has become the bank of choice for many large international businesses that operate in the local area. It reports that its levels of cash-handling have gone through the roof in recent months, as has the amount of time staff have to devote to it. So much of its time is now taken up providing banking facilities for people: it feels that its core business—providing a post office service—is suffering as a result. As we have heard, it is not even as if the efforts to provide that extra service are well rewarded. It is being asked to fill the gaps left by high street banks as they desert rural Scotland.

After all, it is that post office, along with other rural post offices, that has to shoulder the burden of all the additional security concerns. It now holds a great deal more money than it ever had before, and it has had to put appropriate measures in place for the increased cash on the premises. Despite all that extra banking work and the extra security concerns that come with it, it receives scant reward for providing that increased level of service. As one leading member of Here We Are at Cairndow said to me just yesterday,

“We didn’t set this up to become a community bank. We set this up as a community post office, and now we feel as if we are subsidising both the bank and the Post Office.”

When the Minister responds, I would appreciate it if she advised those people at Cairndow that something practical will be put in place to ensure that they are able to continue as a community post office, rather than having the burden of being a replacement bank forced on them. Despite the loss of 20% of my constituents’ rural post offices in the last 13 years and the funding cuts that the Minister has announced, will she provide a cast-iron guarantee to them that there will be no more post office closures in Argyll and Bute?

--- Later in debate ---

[Drew Hendry]

I do not intend to go too far off track, but I must respond. It is absolutely typical of the Tories to say that we have to fix every mess and failure at the expense of the Scottish public and services in Scotland. That is a ridiculous proposition.

Returning to the core debate, there was enormous consensus among hon Members. My hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) pointed out that businesses across communities lose money if post offices close. She said that people are cynical about the politics of the Westminster Government, who make no commitment to post offices and then wring their hands at the consequences. She talked about hand-counting thousands daily, and everything that involves. She talked about the post office being the last place for face-to-face contact in communities. It is more than just a commercial entity, and older and more vulnerable people are the most affected by closures.

It is telling that Later Life Ambitions, a pensioners’ organisation, points out that the post office is important in day-to-day life, because older people, who are often the most vulnerable people in society, rely on post offices. They are a lifeline; they offer access to pensions and benefits, and let people pay bills, get advice and even socialise. Does the Minister acknowledge that this is a social issue, too? For those who do not or cannot communicate digitally, post offices are very important. They are used by 42% of consumers over 65, and 31% of disabled consumers.

The hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) talked about working with my hon. Friend the Member for Motherwell and Wishaw, and about post offices needing to be run in the interests of people. That is absolutely correct. In talking about franchising policy, he highlighted that WHSmith has been voted worst retailer. It is notable that the jobs it advertises are particularly low-paying.

In a very telling speech that hit home with me as a fellow MP representing a rural community in the highlands and islands, my hon. Friend the Member for Argyll and Bute (Brendan O’Hara) shared concerns that post offices are being run down and prepared for privatisation. He talked about the catastrophic effect that can have on rural communities, particularly in the highlands and islands, where often there are huge distances between the services that people rely on. My hon. Friend talked about the stability policy of the UK Government; Argyll and Bute has lost 20% of its post offices, with six post office closures in the last two years. The drastically reduced funding has put post offices in a very vulnerable place, and the public have no faith in the UK Government protecting rural post office services. He was also right to point out the success of Cairndow, and to congratulate those people on taking matters positively into their own hands to try to do something for their communities.

My hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) talked about the transaction charges, and so he should, because his work should be commended. I congratulate him on forcing action, not only through his Adjournment debate, but through continued pressure and engagement. He talked about the impact of the systemic degradation of services in towns and villages and, importantly, the issue of community designation. It is a good thing to have community designation, but the problem is that rural and semi-rural post offices are losing out, while cities can gain. The criteria are too black and white, especially the three-mile rule.

The hon. Member for Glasgow North East (Mr Sweeney) talked about the unsustainable model imposed on the post office network, and shared his concerns about franchising. When there are bank closures in our communities, we have all been told, “Don’t worry; the post office network will pick up the slack.” He also talked about the toxic conditions for the people who run post offices, many of whom got into the job because they thought it was a great thing to do for their communities, a proper career and a valued position in the community. My goodness, how they have been let down by how they have been treated. He predicted a massive failure over the next five years if there is no action.

[Philip Davies in the Chair]

Post offices are not just business; they are focal points for many communities. This issue is about communities and their health and wellbeing, as well as the national and local economic impact. For many, the shiniest jewel in the crown has been prised out and cut up for the profit of those who do not rely on or even need a post office. In 2017, Citizens Advice found that people valued their community post office more than a local pub, a bank branch or a library. Does the Minister acknowledge that importance? In rural areas, 36% of businesses use post offices at least weekly, and 62% of small businesses use them at least once a month. Over 500,000 businesses are registered in rural areas—that is one in four companies—and they contribute more than £200 billion to the economy. These people are creatives and innovators who use post offices to send goods and pay bills. According to Citizens Advice, eight out of 10 of them will lose money if local post offices are closed. Will the Minister take notice of that?

We in the SNP—and others, as we have heard—are clear that we want our Post Office to remain robust, and to serve our businesses and communities, but that is not a priority under the UK Government’s management. Consequently, the Government should devolve power to us to ensure that the Post Office is protected. Under the current policy, there has been a mass exodus of postmasters, often leaving communities branchless. My hon. Friend the Member for Motherwell and Wishaw should be commended for arguing for fair hourly rates for postmasters, but the Minister must undertake to commission independent analysis and answer the big questions about fairness.

As we have heard, pay levels are leading to a major exodus of postmasters. Rather than watch the Post Office crumble, the UK Government should support postmasters and ensure fair remuneration. As was pointed out, the publicly owned Post Office’s North Star initiative is aiming for a £100 million profit by 2021. That is all very good, but postmasters’ pay has declined by £107 million since 2012. The majority of postmasters now earn less than the minimum wage. In many cases, they cannot even get out; their businesses are now too unattractive to sell.

The National Federation of SubPostmasters has raised the issue of sub-post office closures with the UK Government and the Government-owned Post Office Ltd. The federation’s spokesperson said:

“Our records show around two-thirds of closures are due to the resignation of the sub-postmaster— and a survey of our members conducted earlier this year gives an insight into why sub-postmasters are resigning. Income is dropping over time, the majority earn less than the national minimum wage for running their post office—and therefore earn less per hour than their staff—and as many as a third took no time off last year.

We agree with Marion Fellows that Scotland has been hit hard by sub-post office closures. This is a particular problem for rural areas in Scotland, as well as across the UK, where people rely on their local post office for vital postal and banking services.”

Action on transaction charges is welcome, but why wait? Why not give the same rates to local branches and main post offices? Around 90% of post offices in the highlands and islands are local branches, not main post offices. Will the Minister challenge that with the Post Office? As my hon. Friend the Member for Motherwell and Wishaw pointed out, there must be a vision for the post bank, and it should be properly funded.

There is more pressure on post offices than ever, given the loss of local banks through short-sighted closures by the Royal Bank of Scotland, Halifax Bank of Scotland and others. Now we find that TSB is starting the process of shortening hours, which is always the cynical first move in reducing a branch’s viability to the point where its closure can be justified. As we heard, all those banks say, “It’s okay, you can use the post office,” but we cannot if they have gone.

Even where post offices remain, Robert Cockburn, a constituent of mine who runs the post office in Drumnadrochit, says the workload is absolutely punishing. He often has to run his business as a single-manned operation, so while he goes behind the screen for the time it takes to deal with a transaction, he loses out on custom from people who come to his business and might have bought goods to help sustain him.

[Brendan O'Hara]

While we have been sitting here, I have received an email informing me that yet another bank branch in Argyll and Bute is planning to cut its numbers ahead, I believe, of closure. The TSB branch in Dunoon now says its customers have to travel what it calls 7 miles to their nearest branch, seemingly unaware that that journey involves a ferry and a bus. Yet again, it is death by 1,000 cuts to financial services in rural Scotland. Will my hon. Friend join me in utterly condemning that latest move.

[Drew Hendry]

My hon. Friend is absolutely right, and I join him very robustly in condemning that move. As I said a moment ago, shortening hours is the first step towards making a branch unviable so it can no longer do business. The call then goes out, “Don’t worry, the post office will pick up the slack.” As we know, that is not always the case.

My constituent Mr Cockburn says it is punishing to run his post office. He told me:

“It is a combination of everything. The work that we have is onerous and does not pay enough money to cover your time. The business banking, for example, we get paid 23p per £1,000 that we count. That’s nothing. You think, on minimum wage, how long it takes you to count £1,000. If you make a mistake or”—

more commonly—

“if the customer’s made a mistake you have to double check it. We get paid for taking a parcel over the counter, but the Post Office took 6% away from us on that because they gave us a faster printer and said we could print labels faster. It’s ridiculous.”

A rural post office gets to print a label faster, and the Post Office cuts its money for doing so. That is ridiculous.

The UK Government must ensure that there are more incentives for new and existing postmasters to maintain and open post offices. Union officials rightly have been clear about the folly of closing Crown offices and franchising the service. As we have heard, franchises often advertise jobs at a lower rate than the Post Office pays. As the all-party parliamentary group on post offices found, the Post Office has no back-up plan in the event of WHSmith failing to deliver the service.

I hope the Minister has taken clear cognisance of what has been said during the debate by people representing their constituencies and communities, the vulnerable people who need these services most, and the postmasters who are being forced into subsistence living and locked into a business they simply cannot afford to get out of. This is a matter of having a social conscience and ensuring that communities have something they can rely on, not just now but into the future. If post offices are going to have to pick up the slack of bank closures and other things, they should be allowed to become sustainable in order to do that job.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael), and the hon. Members for Motherwell and Wishaw (Marion Fellows) and for Paisley and Renfrewshire North (Gavin Newlands), on securing today’s important debate on the sustainability of the post office network.

As I have said many times before, I am always happy to challenge the Post Office on specific concerns that MPs have at constituency level. I am therefore grateful to hon. Members for their contributions. It is encouraging to see that all sides of the House share common cause in ensuring that a vital national asset continues to serve our constituencies for many years to come. It is because of the key role that post offices play in service to their communities that our 2017 manifesto committed to safeguarding the network.

[Brendan O'Hara]

Will the Minister join the consensus across the House to support the retention of the post office network in public hands?

[Kelly Tolhurst]

If the hon. Gentleman would allow me the courtesy of getting to the content of my speech, that would be really useful. I am still at the start. We made a commitment in our 2017 manifesto and are committed to safeguarding the network. The Post Office is publicly owned and it is a commercial business operating in competitive markets. The Government set the strategic direction for the Post Office to maintain a national network, accessible to all, and to do so in a more sustainable way for the taxpayer. We allow the company the commercial freedom to deliver that strategy as an independent business.

I must point out some of the language and words used in the debate, such as “managed decline” and “undermining the network”, and the idea that it is ideological of the Tories to run down post office branches. As the Minister responsible for post offices, I find that incorrect and inaccurate. I do not regard Government investment of £2 billion over eight years as a so-called managed decline or undermining of the network, and I do not regard the establishment of 450 new locations since 2017 as managed decline or an undermining of the network. As hon. Members have outlined, at the end of March there were 11,547 branches. That number is as stable as it has been in many decades, so I refute those claims.