Community and Sub-Post Offices

Motion made, and Question proposed, That this House do now adjourn.—(Jeremy Quin.)

It now feels like we are actually in a Friday sitting, as we have been here such a long time already. I rise to raise growing concerns that have been brought to my attention by the National Federation of SubPostmasters and by many sub-postmasters in my constituency. I know that colleagues from across the House will have heard similar calls themselves. Several colleagues have already indicated a desire to intervene, which I am keen to accommodate; all I ask is for brevity when they do so.

The simple and undeniable fact is that many post offices face increasing challenges and huge uncertainty with regard to their long-term financial viability. In the modern digital world, with the likes of Amazon, grocery delivery and online banking, many of our small village and town centres, particularly in rural areas, face systemic degradation and challenges unlike anything they have seen before. This is at a time when big banks continue to up sticks and close their local branches at short notice, often with little consultation with their supposedly valued customers and local representatives. The role of the Post Office as the community banker is therefore becoming increasingly pronounced.

I am here to support the hon. Gentleman, because this issue is very important to me and my constituency. Does he agree that, in rural communities, post offices are the hub of country life? They are more than a link to essential services; they further social interaction. It is so important that elderly people in rural communities can have contact with post offices. For many people, the post office is their life.

I agree with the hon. Gentleman. I will go into detail on some of that. After the shenanigans of the last hour, I feel that his intervening in the Adjournment debate has restored balance to the force.

The post office is a community institution in Scotland, and, as we have heard, the rest of the UK. Over the years, famous firms like Woolies, BHS and Blockbuster, in addition to countless small family retailers in our towns and villages, have closed their doors for good, but the post office continues to be a fixture of our local communities.

Under successive Governments, we have faced decades of aggressive privatisation of nationalised industries that many, particularly in older generations, felt immense pride in contributing to. The Post Office looks very different today from 25, 50, or even 100 years ago, yet it requires still further modernisation. However, to paraphrase a former Tory Prime Minister, it remains one of the only pieces of family silver that has not been flogged for a fraction of its market value for the sake of ideological privatisation. Even as its partner, the Royal Mail, has been privatised—cheaply, I might add—Post Office Ltd remains in public hands.

Post office closures disproportionately affect Scotland, with 40 occurring from 2011 until March last year, compared with England’s 297. Per head of population, those closures are happening at a rate that is one third faster in Scotland than south of the border. Add to that mix Scotland’s geography and size—including 94 inhabited islands—compared with England, and it becomes clear that the continuing viability of the post office is of extreme importance to Scotland, particularly in the light of the number of bank branches being slashed.

Will my hon. Friend give way?

My hon. Friend had not indicated his desire to intervene, but I will give way if he is brief.

I congratulate my hon. Friend on securing this debate, as his commitment to local businesses in his area is very strong. Bank closures have had such an impact on small towns in rural areas like my own. Will he ask the Minister about the charges, given that post offices are increasingly taking the burden of those bank closures in rural areas?

Absolutely. I will go into more detail on that subject in my speech and I will press the Minister on the issue.

The important role that the post office plays in our lives is felt more sharply in small towns and rural communities, which are disproportionately dependent on designated community post offices and sub-postmasters. In this debate, I will emphasise the challenges that the latter face due to unfair deals with big banks for providing basic banking services. Despite the growth of online and phone banking, there is still—and, for the foreseeable future, will remain—an undeniable need for easily accessible face-to-face banking, which is of particular importance to the elderly and those with additional support needs. As banks flee the high street, post offices are fulfilling this vital role.

I commend my hon. Friend for securing this debate and for the way in which he is setting out his case, which is very strong. He mentioned the problem of closures in communities across Scotland. We are very fortunate in my constituency of Airdrie and Shotts, because we have managed to secure a new post office in Plains that has since been very well supported. Does he agree that that support should send a strong message to the Government to open new post offices, not to close them?

I do not need to add to my hon. Friend’s contribution; the Minister has heard him.

Is it not bizarre that the Department for Work and Pensions has pushed people to open bank accounts away from the post office in order to receive benefits, when they actually end up back at the post office? Maybe we should make post offices more secure to provide access to cash.

I agree 100% with my hon. Friend that the entire exercise is, quite frankly, a piece of nonsense; she makes her point well.

The fees that banks pay to Post Office Ltd, which in turn compensates its sub-postmasters, to carry out this work have been ridiculously low––so much so that the majority of these transactions are actually carried out at a loss to the sub-post office. For example, for every £1,000 of cash accepted over the counter, Post Office Ltd is paid 24p. There is no differential between the commissions paid for coins and for notes, so in effect if the post office had to count 100,000 pennies, it would get to keep 24 of them as payment. To be clear, Post Office Ltd also pays a transaction fee, but the combined fees are insufficient to cover those costs. It is clear that the current deal is deeply unfair and unsustainable.

I congratulate the hon. Gentleman on bringing this debate to the House. Of course, there are issues in rural areas in Scotland, but we also have an issue in Brentford town centre—a small town centre in the suburbs of London. We have lost our sub-post office, which closed in the new year because the sub-postmaster did not want to keep it on. No one else could be found among any of the other businesses to run the sub-post office because, as he has just outlined, it is just not viable. Does he agree that the Government need to review their tapering down of the network subsidy payment, which was supposed to be what made sub-post offices viable? In Brentford’s case, it is clearly no longer viable.

I totally agree. It is simply not viable to be a sub-postmaster at the moment.

My hon. Friend made an excellent point about the fact that our post offices are being expected to pick up the slack because the banks have abandoned our high streets. Does he agree that this is putting postmasters in crisis, because the remuneration is so poor that, on average, many earn below the minimum wage?

It is as if my hon. Friend, who is sitting next to me, had read my speech, because I am about to come to that.

There is a fantastic post office in the village of Dunlop in my constituency where people do great work. It has a fine range of whiskies and beers, by the way, so it is well worth a visit. They have the same issue. The sub-postmaster has worked out that on the hours he does, he gets paid less than the minimum wage, yet he hires staff and correctly pays them the money they are due. Is this not an injustice?

It absolutely is. That sub-postmaster will have even less money once he has paid the commission to my hon. Friend for the advert he has just given.

At this point, it is worth giving some background and context regarding sub-postmasters’ remuneration. Previously, all post offices received a fixed element of pay—a core payment—that also allowed for six weeks’ annual leave. Now, only a small number of offices—about 400—that did not go through the network transformation, plus offices designated as community offices, continue to receive a fixed element of pay. Overall, the total amount paid to sub-postmasters has dropped as a result of the removal of this fixed element of pay from the majority of offices. The total amount paid by Post Office Ltd across the whole network in 2017-18 was 17% lower than in 2013-14, and that is before adjusting for inflation. As a result of the transformation programme, new post office models—main, local, and local-plus offices—are paid on commission only for the transactions they carry out. Main-model offices receive commission rates that are roughly one third higher than local-model offices.

It is with this backdrop that the Post Office is currently engaged in renegotiating the deeply unfair banking contracts with UK Finance, the body that represents the banks. Given that the Government have hidden behind the post office network countless times at the Dispatch Box while defending bank branch closures since 2015, and that, on behalf of the public, they own the Post Office, I hope that they will act as the proper stewards of the Post Office they should be and ensure that the deal ends up being a fair and sustainable one.