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Westminster Hall

Thursday 29 November 2007

[Sir John Butterfill in the Chair]

Post Office Restructuring

[Relevant documents: Third Report from the Trade and Industry Committee, Session 2006-07, Stamp of Approval? Restructuring the Post Office Network, HC 276,Eighth Report and Seventh Special Report from the Trade and Industry Committee, Session 2006-07, on Restructuring the Post Office Network, HC 593, and Restructuring the Post Office Network: Government Response to the Committee’s Eighth Report, HC 1083.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Blizzard.]

Sir John Butterfill (in the Chair): A huge number of Members wish to speak in the debate, of whom no fewer than 15 have already advised me of their wish to speak. We have three hours, and the Minister and Front-Bench spokesmen will need at least 15 minutes each to respond to the debate. If Members wish to help their colleagues to get in, they will need to be tolerably brief in their contributions.

2.31 pm

Peter Luff (Mid-Worcestershire) (Con): It is a great pleasure that the swansong debate of the Select Committee on Trade and Industry, now the Select Committee on Business, Enterprise and Regulatory Reform, should be so popular. I am informed by the Speaker’s Office that this is the most popular ever Westminster Hall debate on a Select Committee report, so I shall try to be brief in my opening remarks. It may help the House to know that I intend to waive my right to reply at the end, unless the Minister sits down before the formal end of our proceedings. That will enable him to deal with interventions from colleagues on all sides of the House.

The new Select Committee will launch an inquiry early in the new year into the progress of the post office closure process. We will have hearings, probably in late January or early February, and will revisit the process then, because this matter is obviously of deep concern to many colleagues.

When the Committee produced the report, there were 14,263 post offices—8,000 fewer outlets than in 1979 and 4,000 fewer than in 1997. The National Federation of Sub-Postmasters reminds me, in its helpful brief, that the network is bigger than the major bank and building society networks combined. Its very strength is its depth and reach, and although the Committee has reluctantly gone along with the Government’s target of 2,500 closures, I am still concerned that that depth and reach are threatened by the closure programme. It is worth remembering that those 2,500 further closures, which will reduce the network by a further 18 per cent., are ones for which sub-postmasters will be compensated.

Mr. Peter Bone (Wellingborough) (Con): Will my hon. Friend give way?


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Peter Luff: Of course, I shall give way to my former colleague on the Committee.

Mr. Bone: I regret that I shall not be serving on the new Committee, which I should have liked to have done. I wonder whether my hon. Friend can explain the following situation to me. In Little Harrowden, in my constituency, the sub-postmasters, John and Muriel, want to continue their profitable business. They do not receive any subsidies, yet they are being closed down. Some 150 villagers attended a public meeting about it last night, and there will be a march of protest. Is there any chance for it?

Sir John Butterfill (in the Chair): Order. Interventions must be brief, particularly in these circumstances.

Peter Luff: I rather suspect that that question was meant more for the Minister than for me. First, let me say how much we miss my hon. Friend on the Committee. He made an outstanding contribution to its work and I was as surprised and disappointed as anyone else when he was removed from it. Its number has been reduced from 14 to 11, so that is why; it was not a punishment.

My hon. Friend makes an important point. It still is not clear to me what commercial criteria are being applied to the closure of individual offices. I know that colleagues on both sides of the House share this concern. It seems as though commercially viable offices are sometimes being closed in preference to less viable offices.

Mrs. Maria Miller (Basingstoke) (Con): Will my hon. Friend give way?

Peter Luff: I am not surprised to hear from my hon. Friend.

Mrs. Miller: I thank my hon. Friend for giving way on that point. He may be aware that the two post offices proposed for closure in my constituency are our two top-performing post offices. Does he find that surprising?

Peter Luff: I do indeed. Without pre-judging the Committee’s inquiry, that is one of the issues that we want to look at in the new year. Clearly, it seems strange to punish the sub-postmasters or mistresses of vibrant and commercially successful offices for their success.

David Lepper (Brighton, Pavilion) (Lab/Co-op): I apologise to you, Sir John, and other hon. Members, because I have an event in my constituency at 5 pm and will not be here to hear the concluding part of the debate. May I offer the hon. Gentleman another example along the same lines? The Trafalgar street post office has the highest number of customers of any sub-post office in my constituency, yet is one of the four selected for closure. Does he agree that there seems to be no rhyme or reason to that?

Peter Luff: I wear a strictly bipartisan hat today. I sit on the Opposition side of the House, but I represent an all-party Committee. All that I will say is that the post office business has a difficult task in finding the 2,500 closures that the Government have demanded. I have been told that the number could be plus or minus 10 or 20 either way, but they have required and requested 2,500 closures. That is likely to lead to some difficult
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decisions. That figure seemed suspiciously round to our Committee. As we said in the report, we do not understand how the figure was arrived at. I strongly suspect that it is a Treasury-driven figure rather than a network-driven one. I hope that the Government will show more flexibility as they go through the processes and find offices, such as those that have been mentioned, which genuinely need to be kept open.

Mr. John Horam (Orpington) (Con): My hon. Friend goes to the heart of the matter. How was the 2,500 figure arrived at and how much flexibility is there in it? If we are stuck with that figure, does it mean that one post office will be competing against another, rather than on whether it should survive?

Peter Luff: That is exactly what is happening. One post office is, indeed, competing against another, which is often regrettable.

Mr. Mike Weir (Angus) (SNP): Will the hon. Gentleman give way?

Peter Luff: I am approximately one third of the way down my first of nine pages, but I give way with pleasure to my hon. Friend on the Committee.

Mr. Weir: I thank the hon. Gentleman. Is the situation not even worse than that? People who have campaigned against post office closures have been told that if they save a post office in their area, another one in that area is then immediately targeted. What is the point of a consultation in those circumstances?

Peter Luff: I agree. Speaking as someone whose constituency comes at the tail end of this process, I am very concerned that every time an extra office is squeezed in, the Hereford and Worcester area loses its flexibility to save an office, so we might be really stuffed. I think that a number of people in the west midlands share that concern.

Mr. Oliver Letwin (West Dorset) (Con) rose—

Mr. Nigel Waterson (Eastbourne) (Con) rose—

Peter Luff: Can I make a tiny bit of progress and finish my thought? Then I shall give way again, I promise.

The attendance at this debate shows how very serious this issue is, and we are talking only about compensated closures. We must also face the key issue of what will happen after the uncompensated closures that will surely come as a result of retirements and other processes. We must always remind ourselves how vital post offices are to the communities they serve, particularly in rural and deprived urban areas, which do not feature enough in public debates on this issue. Post offices are often the only place where cash can be obtained. The Government rightly talk about financial inclusion, but there is no more basic element of financial inclusion than getting cash, and post offices are often the only place where one can get it. Now, to whom did I say I would give way next?


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Mr. Waterson: My hon. Friend is being very generous. May I give him an example from my constituency, in which five post offices are threatened with closure? One of them, in Willingdon village, is popular, makes money and was refurbished only a few years ago at a cost of £40,000. The postmaster, Andrea Etwell, is keen to keep it going, so what is the logic of shutting it down?

Peter Luff: I must say that I am ignorant on that point. Surely the compensation costs will be higher for closing such offices; that should be of some concern to the Minister.

Mr. David Drew (Stroud) (Lab/Co-op): The hon. Gentleman mentioned the issue of rural versus suburban, let alone urban. The social network payment, which we welcome, was invented to support the rural network. Even with the very least ambition, that will now be spread much thinner. Does the hon. Gentleman agree that it is wrong to invent something and then fundamentally change it? Within that budget, money was set aside for reinventing post offices that needed refurbishing. If we lose that money, we lose the Post Office completely.

Peter Luff: I am very happy to agree with the hon. Gentleman. I shall return to that matter in more detail if I am able to get there within a reasonable time.

Mr. Letwin: Will my hon. Friend give way?

Peter Luff: Sir John, I shall give way to everyone who wishes to make a point, because I think it is only fair, given the importance of the subject.

Mr. Letwin: Does my hon. Friend recognise that the discussions about which post offices should be closed down create envy for some of us? My sub-postmasters have no idea which one is to be closed down, and we have recently been informed that we are not going to be told for months to come. Does he realise that that is causing severe dislocation?

Peter Luff: I do indeed. My right hon. Friend anticipates something that I intend to speak about shortly in my remarks, if I can get there. I shall make one more point from my script, and then I shall give way again.

Another issue that concerned me greatly over the summer was the apparent attempt to gag sub-postmasters. In effect, they were not allowed to campaign for their own future. I have had a comprehensive apology from the managing director of Post Office Ltd for that, but, as I wrote in reply to his apology—I have had no further response—I find it difficult to understand why such threats found their way “by accident” into important communications with sub-postmasters. I believe that the company realised how disastrous would be the idea of mystery shoppers checking up on what sub-postmasters were saying, but it was a deliberate policy. The Post Office appears to have backtracked on it, but it has left a legacy of fear in the minds of many sub-postmasters.

Jeremy Wright (Rugby and Kenilworth) (Con): On the consultation, did my hon. Friend see in the press over the weekend reports of a list of post offices intended to be closed in several counties? The list accidentally included several other counties, including Warwickshire, and several post offices in my
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constituency, including one in Kenilworth. Does he agree that it would be disgraceful if decisions had already been taken, in some cases before consultation has even begun?

Peter Luff: I agree with my hon. Friend. In fact, I find it difficult to understand how the Post Office can approach its job without having a rough idea of which offices it will actually close. That is why I have a great deal of sympathy with what my right hon. Friend the Member for West Dorset (Mr. Letwin) said about the issue. There are significant variations in the reduction outlets listed in plans that have been published so far, ranging between 18 per cent. in the east midlands and 10 per cent. in North Yorkshire. The Post Office must know roughly what it plans to do, otherwise it could not hit the Government-imposed target of 2,500. I fundamentally share the concerns of my hon. Friend the Member for Rugby and Kenilworth, (Jeremy Wright).

Mr. Russell Brown (Dumfries and Galloway) (Lab): I am just seeking clarification. The hon. Member for Wellingborough (Mr. Bone) said that the sub-post office that is to close in his constituency is profitable, and the hon. Member for Eastbourne (Mr. Waterson) said that one of his sub-post offices makes money. Is the hon. Member for Mid-Worcestershire (Peter Luff) able to say how they got that information? I am not aware that it comes out in the public domain.

Peter Luff: The hon. Gentleman is absolutely right. Sub-postmasters themselves know how much money they make. It is fair to say that there are some extremely successful sub-post offices. They make considerable sums of money for their owners who, I should add, work hard to earn that money. Equally, there are some marginal and less than marginal sub-post offices. I anticipate that the Minister’s response will be what I believe he said in this place on Tuesday during a smaller debate on the same subject. That is, that the network as a whole loses money and that there are costs in supporting the whole network, so that even an office that makes money for its proprietor might lose money for the network. I understand that he has to juggle such issues. The only way of getting such information is by relying on information from sub-postmasters themselves. I may be wrong, but that is the only information source of which I am aware.

Mr. James Arbuthnot (North-East Hampshire) (Con): My hon. Friend had reached a point in his speech, if he can remember that far back, when he was dealing with the importance to the local community of post offices. I wonder whether there is a disconnect between some of the Government’s policies in other Departments and the policy on post offices. For example, in Passfield in my constituency, some sheltered housing was given permission to be built only because it would be close to a rural network shop and local post office. If that post office were to close, as is threatened, would the sheltered housing also have to close, given how important the post office is to it?

Peter Luff: My right hon. Friend makes an extremely powerful point. Indeed, the regional spatial strategy plan revisions going on at present around the country suggest that many new houses will be built in parts of
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the country where post offices are probably about to close. The issue that he raises so powerfully on behalf of his constituents has a wider policy resonance, and I entirely share his concern.

The network change programme—I wish it were instead called the national closure programme, which is a much more honest phrase—has begun in earnest. It began in three areas on 2 October. My own area is last.

David Taylor (North-West Leicestershire) (Lab/Co-op): Will the hon. Gentleman give way?

Peter Luff: I was about to make a point about my own constituency, but I shall give way.

David Taylor: I am not sure whether it is an advantage to be last in the process, because I think that when the Chairman of the Select Committee gets the branch access reports for the sub-post offices that are slated for closure, he will be disappointed by the cursory data that exist therein. In fact, as far as I can see, no weight is given to the fact that a post office that is slated for closure is the last shop in the village. Of the 25 post offices in North-West Leicestershire, just two are slated for closure, and one of them is the last shop in the village. The decision to close it is not sensible, to put it mildly. We need a more transparent process and fuller calculations.

Peter Luff: I am grateful to the hon. Gentleman for making that important point. I cannot say that I am looking forward to receiving the reports—they are clearly inadequate—but I am grateful for his information.

My own consultation process has been profoundly flawed. Bizarrely, Worcestershire has been put in with the black country as a coherent geographical entity, which I do not understand at all. I have had some strange correspondence with Post Office Counters and the Minister about the location of Bromsgrove and Redditch, which the Post Office seems to think are not in Worcestershire but in the west midlands. I have not been able to put that right yet, and even the Minister’s most recent letter of 13 October repeated the same mistake and said that they were part of the west midlands. The Post Office’s grasp of geography does not give one great confidence, never mind anything else.

I also do not yet know the schedule for my consultation period. Originally, the process was due to begin in mid-July and run precisely for the period of the school holidays, which was just about the worst and most idiotic time to have a major consultation. I went on to the website at the weekend and discovered that the date had been moved to late August. My researcher rang up the network consultation team yesterday but could not get through. She was eventually told to send an e-mail, which has been acknowledged as a response to the consultation, not as a request for further information. The consultation team cannot even tell us when the consultation will begin. That does not give me great confidence in the consultation and communications procedures being used by the Post Office. I do not necessarily blame it for that. We always thought that this was an ambitious closure programme and a tight time scale, and I am sure that its resources are being stretched thin by the process.


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