PARLIAMENTARY DEBATE
Post Office Services: Edinburgh West - 27 November 2023 (Commons/Commons Chamber)

The subject of the debate is post office services in Edinburgh West. Although it is about my constituency, the problem could just as easily apply to many constituencies throughout the country. Indeed, I have not spoken to a single Member who has not said that their constituency faces the same problem with post office closures as we face in Edinburgh West.

When I was thinking about the debate, I wondered what the answer might be if I asked any of the children in my constituency what a post office was and what they used it for. I also thought they might look at me with astonishment if I told them that what they now regard as part of the local shop was once the organisation that provided everything from our telephone services at home, our mail and all sorts of Government forms, to pensions and stamps.

I commend the hon. Lady for bringing this matter forward. Last week, the parliamentary group of the Democratic Unionist party met the Northern Ireland sub-postmasters association. Every one of those issues that she mentions were discussed with us. We were told that those opportunities were no longer available in the post office, by which I mean MOTs, car tax renewals, and passport renewals. The post office was also used as a community hub. All of those things highlight how important post offices were. I know that the hon. Lady has said all of that, so I hope that, in his response, the Minister can give us some succour and respite in relation to what the post offices can and should do.

The hon. Member makes a very good point. These were all vital services. Not so very long ago, post offices were central to communities up and down the country. They also provided some of the most spectacular examples of architecture, and they dominated our town centres. The local post office was where I applied for my first driving licence. I opened my first savings account there and queued for what seemed like hours every Christmas to make sure that the family’s cards and presents went off safely to various parts of Australia and Canada—but not any more. The Post Office I grew up with in the 1960s had 25,000 branches. In 2021, that figure had more than halved to 11,415, with more than half of those listed as vulnerable. The organisation itself lost £597 million in the same year.

In Scotland we have the biggest problem in the UK, having lost more than 6% of our post offices in the past two years alone. In Edinburgh West, two have closed and one has been relocated to a different area in the past year. As I said earlier, this problem is not isolated to Scotland or to Edinburgh West. One third of rural post offices are now offered as part-time outreach services.

The hon. Lady makes an excellent point. This is a truly national problem, which unfortunately affects the whole of the UK. Indeed, there is also a related problem of postal deliveries not appearing on time, which is having a huge effect on many residents. I have had closures of post offices in my constituency in Reading and Woodley, and also severe problems with residents not getting post on time, leading to people missing out on paying their bills and many other things.

That is a good point. The national service is being undermined. As the hon. Member mentioned, deliveries are not being made. Moreover, one third of rural post offices are now only part-time outreach services, open for an average of five and a half hours. It is not the service that we knew for many years and that communities are entitled to expect.

The irony of all this is that the Post Office still generates around £5 billion for the economy every year. In constituencies such as mine, which has lost 70% of its bank branches since 2015, we increasingly rely on the post office for banking services and so much more.

I would like to share with my hon. Friend a short quote from a letter that a constituent of mine wrote to me about the reduction of Driver and Vehicle Licensing Agency and other Government services at post office branches. He said:

“Having worked for the Insolvency Service, I am aware that there are many people who do not have bank accounts, are better able to manage their affairs using cash, or need the reassurance of a face-to-face transaction to avoid getting into difficulties.”

Does she agree with my constituent?

I most certainly do agree with my hon. Friend’s constituent. Citizens Advice tells us that almost 20% of people still visit their post office weekly for one of the services that he mentioned. That increases to 23% of those in rural areas, 27% of carers, 22% of over-65s and 21% of disabled people, so there is a need in our communities. On the DVLA services that my hon. Friend mentioned, the contract with the Post Office ends in March next year. Currently, the Post Office handles more than 6 million DVLA transactions annually, which contributes £3.2 million per year to postmaster remuneration.

People rely on their post offices for all these services, yet we are seeing them fail because they do not have the support that they need from the Government. It is not worth their while; the postmasters who are closing in my constituency tell me that they do not have the support that they need. If we are to save what was once rightly claimed to be the front desk of Government in our communities from becoming an adjunct slotted into shops that are willing to put up with it, we need something to be done quickly.

We have all heard the point about post offices being the front desk of Government, but at the same time we are told that Government services will be digital by default. Is not the root cause of the problem the lack of strategy that would stem from a coherent Government position?

My right hon. Friend is absolutely right: there is no coherence to the Government’s position. Digital services do not work for everybody. Not everybody wants them. As with so many of our public services—buses, trains, the NHS and water—we need a recognition that this issue needs action now. It needs investment, and better support for those who supply the services. The reality is that some people will not be able to lead their lives as they would wish without the services that our post offices have traditionally offered, which are being undermined. Most do not want to; they enjoy the comfort of having a post office. They enjoy being able to pop in, particularly in rural communities, and buy their stamps, or collect their pensions.

This week, I was at my office in Edinburgh West. A gentleman stopped me in the street and asked me, ironically, whether I knew where the nearest post office was. Fortunately, I did. He had an A4 envelope in his hand. He said, “I need to get a stamp and post this, and I can’t find one,” so I directed him along the road. A post office is a simple thing, but they are vital to communities up and down the country. If the Minister, or the Prime Minister, has any doubts I would be more than happy to take them to a post office in Edinburgh West and introduce them to the many people who use the services that are still available—but I would quite like to do it while I still can, and while they are still there.

It is a pleasure to serve under your chairmanship, Madam Deputy Speaker. I congratulate the hon. Member for Edinburgh West (Christine Jardine) on securing this debate. She is right to say how highly valued post offices are to our communities, and to speak up for them in this debate. I promise her that I fully support her perspective, representing a rural constituency myself.

The network of roughly 11,500 branches around the UK that the hon. Member refers to is the largest retail network in the country. As she points out, a recent London Economics report pointed out how post offices not only have economic value in terms of the use of the post office itself—she referred to a gentleman with an envelope looking for a post office for a stamp—but benefit other local shops, cafés and other businesses on our high streets. The knock-on effect adds up to around £3.1 billion a year, according to that report, so we are fully aware of the importance of post offices to communities and to the economy.

I am very keen, and I have been since I took over as Minister for postal affairs about a year ago, among other duties relating to my brief, to challenge the Post Office to make sure that it is doing the right thing by postmasters. The hon. Lady quite rightly points to the level of remuneration that postmasters get. We have to get that right to make the whole network sustainable. I gently point out to her that the Post Office is a commercial business, so it is not something that I direct on a day-to-day basis, but I am keen to take forward challenges on behalf of Members on both sides of the House.

The hon. Lady is aware of the network criteria that 99% of the population must live within three miles of their nearest branch and that—this is relevant to her constituency—95% of the total urban population must live within one mile of their nearest outlet. The network actually is not in decline—more post offices opened than closed over the course of the past year—but we see fluctuations, and it is regrettable that Edinburgh West has seen closures in recent months. I know that is very disappointing for her and her constituents; we know how important the post office is for those communities.

Of course many postmasters are running franchise businesses in their own right, and many of the challenges that postmasters face are faced by many high street businesses. Consumer habits are changing the dynamic and the viability of some postmasters’ businesses, and we need to find ways to make sure that they can run viable businesses that pay them fair remuneration for their work.

The hon. Lady and other hon. Members mentioned relationships such as that with the DVLA. That has been extended until the end of March next year. We want to see a longer-term deal than that, but that is a negotiation between relevant Government agencies and Post Office Ltd.

It is the case that consumer habits are driving down remuneration, and I do not think it is for us to dictate to our citizens how they should access services. Increasingly—I am sure the hon. Lady and other Members have done this—we access services such as passport or driving licence renewal online. That is much more convenient for many people, and it is driving down remuneration significantly. Only a few years ago, some of those Government services were contributing about £500 million annually to the post office network. That is down to a few tens of millions of pounds now, again because of consumer habits, but we are keen to try to make sure that there are other opportunities for postmasters.

The hon. Member for Edinburgh West (Christine Jardine) referred to elderly people and those who are isolated in the community and do not have access to online services. Those are the people who tell me they need their post office. There are many of them. I think the Minister would probably agree that there is a duty on the Government to try to encourage the renewal of those contracts come next March, and to ensure that the people we represent are looked after.

The hon. Gentleman is absolutely right. I say that both as a Member of Parliament serving a rural area and as postal affairs Minister. We want to make sure that every citizen of this entire nation is served properly. Post offices do an important job in that. We need to make sure that post offices are there, not just due to Government support, but because people use them. There are some things that we are working hard on to try to make sure that the level of remuneration, which lies at the heart of this debate, is improved.

As the hon. Member for Edinburgh West is aware, Duart Crescent and Blackhall post offices have both unfortunately closed in recent months, due to their respective postmasters choosing to resign; they were not closed by the Post Office. The Post Office is advertising those opportunities to local retailers to try to reinstate services.

On the Minister’s point about Duart Crescent, yes, the postmaster resigned, but it is proving impossible to get a replacement there and in Blackhall, because the remuneration does not encourage them. Perhaps he will bear in mind another important point: we are all buying things online, and consumers are driving that change, but Royal Mail delivers a lot of them and we often go to the post office to return or collect them.

The hon. Lady makes an important point, and I will come to those comments shortly. Remuneration has to be part of the solution.

Barnton post office and Davidson’s Mains post office are both under a mile away respectively from the previous outlets at Duart Crescent and Blackhall, so there are post office services, and I understand that there are public transport routes to those services, although I have not been myself. The Government understand the disruption that the two recent closures will no doubt have caused. In October, Broomhall Drive post office opened, following a local consultation exercise in line with Post Office’s principles of community engagement, after the temporary closure of the St John’s Road post office.

Let me turn to future opportunities. Post office banking services are really important—again, they are important to remuneration—and there have been some issues with deposit limits. The Economic Secretary to the Treasury and I have applied a certain amount of pressure to banks and UK Finance to ensure that that situation is resolved, and it has improved to an extent, which is good news. We have also legislated, through the Financial Services and Markets Act 2023, for access to cash, which is really important. The Financial Conduct Authority is required to ensure that people have access to cash.

I thank the Minister for giving way again. Does he agree that, when the contract is up shortly, a longer contract, to ensure stability for post offices with the banks, and the creation of more hubs that involve post offices, will be essential?

Absolutely. This is a real opportunity for the network, and not just for a longer-term contract for more stability. It has the banking framework, which forms its relationship with the banks. The banks have made around £2.5 billion of cost savings through the closure of branches. We think that a greater share of those savings should be provided to the post office network to improve remuneration and invest in productivity tools for postmasters, such as cash-counting machines, so that the job of running a post office is more lucrative. We see that as a big opportunity.

In the banking framework, we have been clear with UK Finance and Post Office that they should be ambitious in negotiations and secure extra remuneration for the network. There were some improvements to remuneration in April, but I am aware, as I speak to postmasters all the time, that those improvements have not gone far enough in their view. I work closely with the National Federation of SubPostmasters, and we hear these views all the time, so we are very alive to the difficulties.

The other big opportunity that the hon. Lady implied is in the increasing number of parcels couriered around our country. There has been an exciting development in the parcels market for the Post Office, which has just launched something called Parcels Online. For the first time, Post Office will offer a multi-carrier in-branch proposition: because the exclusive agreement with Royal Mail has ended, a customer can go into a post office and use the services of DPD, Evri and others, which are being sold by postmasters. That is a great opportunity for postmasters and may well lift their revenue. That is the kind of future we see for post offices: providing access to cash and banking services—and getting paid better and more lucratively to do so—and offering parcel hub opportunities. Those are both really important services.

The hon. Lady mentioned banking hubs. That is a slight bone of contention, in my view. At the moment, they have not really been co-located with post offices, and I would like to explore with UK Finance more opportunities for co-location where space allows. It makes little sense to have two different units on the high street when we could have one really sustainable unit. That is something we are looking at too.

On what the Government can do through direct support, we have provided more than £2.5 billion over the past 10 years and will provide £335 million between 2022 and 2025. We have also provided around £50 million through the annual network subsidy for rural post offices, as well as other measures we provide to the general business community, such as rates support worth £13.6 billion. Another £4.3 billion was announced in the autumn statement.

Would the Minister reassure me on the interoperability of post office systems with those belonging to building societies? We have talked about that before, given some of the difficulties with accessing cash in my constituency. Will he also pass on my concerns and those of colleagues to Royal Mail about the lack of cover for postal staff when they are off sick? That appears to be driving some of the problems with delivery.

The hon. Gentleman is absolutely right to highlight those issues. Through the work that the Economic Secretary to the Treasury and I have done with UK Finance, more clarity has been given to postmasters about the limits for certain banks that have particular problems. The feedback I have got from postmasters is that the situation has improved, but I am very happy to hear feedback from Members of the House, including the hon. Gentleman, if that is not the case.

Of course, Royal Mail and the Post Office are two different things. Royal Mail has recently been fined for its underperformance. It has been affected by many different issues, including, of course, industrial action; it has had its share of issues this year. Hopefully it is putting those issues behind it, but we certainly expect to see a much better performance from Royal Mail going forward.

Like all retailers, post offices are facing very significant challenges at the moment. We have been clear about their value, both socially and economically—for our communities and for our economy. We will continue to work with the Post Office to ensure that both the organisation itself and the network are sustainable and fit for the future. We very much appreciate the work that the hon. Member for Edinburgh West does in this area; she quite rightly challenges me all the time on this. We are very much on the same page when it comes to making sure we have a viable network around the country, not least in our rural areas.

Question put and agreed to.