The Rt Hon Malcolm Bruce MP

Malcolm Bruce Challenges Government Over Postal Services

Malcolm Bruce addressing the Commons

Malcolm Bruce (Gordon) (LD): Will the Minister address the particular problems in Scotland, where the Scottish banks have not co-operated with the Post Office? There is a rundown of services and a switch away from benefit payments at post offices, but the option of receiving payment through a bank account will not be available in Scottish post offices. Does he have a separate plan for Scotland? In Aberdeen, where the Post Office wants to close 15 branches, when the city asked for discussions with the Post Office about council tax payments being made through local post office branches, the Post Office was not even prepared to discuss it. Can the Minister explain that?

Mr. Timms: On the hon. Gentleman's first point, every high street bank, including those in Scotland, is now offering basic bank accounts, which can be accessed at every post office branch, including those in Scotland. Secondly, there have been some encouraging discussions-several of my hon. Friends who represent Scottish constituencies have taken part in them-with at least one of the Scottish banks, which suggests that we may see some progress on that front. I agree that it is important for Scottish post office customers that we encourage the banks to consider opening up their accounts to access at post office branches, as we have seen on the part of Lloyds, Barclays and Alliance and Leicester in England and Wales.

The programme that commenced at the end of 2002 is difficult and is causing inconvenience, but it is absolutely necessary to maintain an urban post office network with reasonable access for customers in every urban area. With about 16,000 branches, the network still has more branches than all the high street banks and building societies put together. Before the programme started there were more than 1,000 urban offices with more than 10 others within a mile. There is no longer sufficient business to sustain so dense a network, and to his credit, the hon. Member for Lichfield has accepted that.

Malcolm Bruce (Gordon) (LD): I commend the Minister for the energy and enthusiasm with which he responded to the debate. He must almost believe everything he said, and believe that he could persuade the House. If the picture were as rosy as he describes, people would be clamouring to open post offices, rather than snatching the money to close them as fast as they can. That is the reality. Nobody wants to open a post office in the present circumstances. We have a long way to go before we can achieve even an equilibrium and a confidence in the future of the post office network that will encourage people to retain or move into the business. That is what concerns many of us.

I shall deal first with issues relating to the Royal Mail service. It is true that the letters service has come back into profit in the past year, which is welcome. The loss in the previous year was partly due to the fact that in spite of the Royal Mail's application for a postal increase, it was denied for more than a year and the company lost £1 billion of revenue. Although Royal Mail should properly justify increases and ensure that it maintains efficiency, when costs have genuinely risen and the revenue is not allowed to rise, that clearly drives the organisation into loss. As a consequence of that, many of the savings come from reductions in service, rather than from the investment about which the Minister boasts.

I accept that it is difficult to defend the long-term future of the second delivery, given the disparity between costs and customers. Most of us could be persuaded to accept that if we were confident that the standard of the first or only delivery was rising, rather than falling. Royal Mail has difficulty in creating confidence because it has only bad news to tell.

Those of us who visit post offices, as we all do at various times of the year, have some sympathy with people who have to come in at 4.30 am, 5 am or earlier to sort and deliver the mail. I can see the difficulties in making them come in at 2 am. That is where investment is required to increase mechanised sorting, so that the whole process can be completed early enough to achieve an acceptable delivery time.

This week, for example, I received representations from a company that has made representations to me before that its delivery has slipped back two or three hours. When a company complains, the Post Office endeavours to accommodate it by shifting the delivery around. That means that someone else's delivery is put back and, when they complain, the original schedule is reinstated. Until the whole delivery system is brought forward, the problem will not be solved; it will merely be moved about.

A new development that has not been mentioned slightly puzzled me, and it is rather important. Last week, my local postie arrived and asked whether I liked his new transport. He said, "I've become white van man." He had parked a hire van outside my front door. I asked what had happened-I assumed that he had accidentally put his vehicle off the road. He said, "No, it is new policy in the Post Office not to own the fleet, but to contract it out and reduce its size."

That is a serious point. If hired vans of any hue can go around masquerading as Post Office vans, it will have an effect not only on image, but on confidence. When people see the little red van coming up their drive, they know and have confidence that it is their local postie. Allowing some anonymous white van to deliver the mail clearly opens up the possibility for fraud, misrepresentation and lack of confidence. If there is a serious cost saving to be made, as I am assured is the case at a local level, we should know the ramifications. This is not just a matter of diluting an image; it has serious further implications. I would be interested to know whether there is an answer and explanation at a policy level.

Another service that I think many of us use personally, but which is also used commercially, is the household delivery service, whereby postal deliverers will deliver unaddressed mail along with addressed mail. That service is used by supermarkets, commercial operators and, believe it or not, by political parties to get their message through people's doors. It is increasingly difficult, however, to negotiate with the Post Office in order to transact such business, which must be bad for both the commercial and the public service operators that want to do so.

My experience is that it is impossible to get a firm cost, time or schedule. Indeed, the clear indications are that the Post Office does not want such business, which is regarded as a nuisance. Private companies are moving into the field, charging more and not necessarily giving as good a service. Again, no rational explanation has been given. It seemed to us that the service was a good one, and that it was good for the Post Office to ride on the back of the fact that it was delivering to households anyway. It is not clear whether the Post Office has decided that such business is not profitable, that it does not want it and that it is prepared to leave it to private operators-if that is so, it would be better if it were open about it-or whether, as has been suggested to me, some other constraint is preventing it from expanding what should be a profitable add-on business that supports the rural network.

My experience-I have also talked to one or two colleagues-is that we do not get a constructive relationship in which the Post Office says, "If you bid for this, you can have it" or "We can't do it." Instead, we get a lack of response, firm dates and clear guidance, which is poor management, it seems to me.

I do not know what such business represents for the Post Office, but it is going the right way about losing it. It is clear that other organisations think that it is worth stepping into that business and taking it away. As a customer, my local party-this point is relevant to everybody who uses such services-is now contracting privately, not out of choice, but because we cannot contract with the Post Office. That is unfortunate. I do not know whether there is an answer, but it would be appropriate for Royal Mail to explain why it regards such business as marginal or of limited interest. If such business is development business, it would be interesting to know why the Post Office is not developing it more efficiently and in a more organised way.

A poor delivery service, the phasing out of the second delivery and a growth in competition are creating a worry about Royal Mail's future. When one speaks to it, it says that the most serious competition that it faces comes from the Dutch and the Germans. Most of its business is business-to-business business of the sort that is not based on delivering granny's post card. Businesses simply want guaranteed delivery on a large scale. They do not mind who does it, but they want reliability at a competitive price.

If Royal Mail does not respond soon, it will find when it has put its house in order that a lot of the business has already gone elsewhere. That is a matter of concern. Indeed, Royal Mail's capacity to maintain a universal service would start to be called into question if it were to lose too much of its business to competitors. I do not share the Minister's confidence that the management can deal with that competitive threat.

For most members of the public, concern about the mail pales into insignificance compared with the future of their local post office and post office services. Perfectly rightly, the Minister said that the culture has changed, and that people prefer to have payments made into their banks and no longer want cash from the local post office in the same numbers. None of us denies that point, and we all recognise that we must respond to it. However, many people, including those with bank accounts, want to use their local post office, whether to obtain cash, make payments or use other services. They want to know that such services will exist in the future, but that is not currently the case.

I am slightly surprised that the Conservatives chose to debate this topic, because 3,344 post offices closed between 1981 and 1997 under the Conservative Government-2,543 post offices have closed since 1997 under the Labour Government. My concern is that few more than 14,000 post offices, half of which will still lose money, will be left at the end of the current process. Postwatch says that 250 post offices that closed in recent times should not have done so given their locations and the need for them, but such decisions cannot be revisited in order to reopen post offices.

One of the most difficult tasks for any MP is to persuade the Post Office to open a new post office, even after a major population change occurs. During my 21 years in Parliament, I have succeeded precisely twice, and the second opening caused the Post Office promptly to close another post office in the same town, so my campaigning had a marginal effect.

The Government have not made it clear what will happen in the future. If the branch network were reduced to 14,000 offices, half of which would lose money, what aspect of the business plan leads the Minister to believe that enough business, whether public or private, exists to secure a viable, long-term future? His assurance that the network will be stable at the end of the organised programme is belied by the fact that post office closures will continue once the programme is completed-they will continue haphazardly as people retire or decide to give up because they are not making money.

[I am not arguing] for withdrawing money from post offices, but both rural and urban post offices want to know about guaranteed public business, access to services such as vehicle licensing and passports, and how long it will take for the private business that the Post Office is bringing on stream to provide viable business plans for individual post offices that make them worth investing in and that give them long-term futures.

No one whom I have met in the post office business is confident. When I talk to postmasters and postmistresses, they say that they are hanging in until they retire, until they are told to go or until something happens, and not that they really want to be in the business.

Mr. Weir: I am interested in the hon. Gentleman's comments and largely agree with them. Like me, he represents a constituency that is partly rural and partly urban. Does he agree that sub-postmasters are trapped in a vicious circle because they do not know the future of the business but are having to go through the reinvention programme in urban areas, which is closing post offices? Does he further agree that in the absence of an overall view, our constituencies' postal provision tends to be haphazard or lopsided?

Malcolm Bruce: That is exactly right. I do not want to identify individual post offices, but I can say that in the past couple of weeks I have spoken to owners in my area and in Leicester. One said, in effect, "I'm just taking the money because it's on offer." Another said, "I don't want to talk about it because I know that the community is not happy and I'm a bit embarrassed." I said, "You shouldn't be embarrassed, because you're looking after your own interests, which is understandable." However, they still would not discuss it.

Another owner said, "A year ago, the Post Office asked me to take voluntary closure, and I decided against it because I was happy to carry on with the business even at that level." She told me that her office was then designated a compulsory closure under the Aberdeen closure programme. She asked me not to fight for it, saying, "If you succeed, given the state of the business now I'll have to close it in six or nine months' time anyway because there will be no business left, and there is no virtue in hanging on to a business that is not viable." However, it was viable 12 months ago. A particular difficulty is that 150 child benefit element payments have been reduced to four. She told me, "I don't just lose the payments. When people came into the shop they bought sweets, newspapers and other things; now, they don't come into the shop at all. We've lost the footprint-as has the Post Office, because people are going to other businesses for banking services." Where can the Post Office get that business from once it has lost it? That is a serious point of concern.

The Post Office's management have ambitious plans. They are bullish about what they can do, and I wish them nothing but joy and success. However, they are moving into a highly competitive area of business where other companies are involved, and we have yet to see how successful they can be. Because of underinvestment, they are having to develop in partnership with private collaborators. Although there is nothing wrong with that in principle, the fact that they have to share the profits to get access to investment reduces the value of the potential benefits involved. In that context, we must recognise that we do not yet have a business plan that delivers results.

Several hon. Members have been to Leicester, South because of the by-election. When I visited that constituency as my party's spokesman on post offices, I was told that four post offices are threatened with closure-three under the urban renewal programme and one because it is under review. Massive petitions are being signed in the community. People said, "We can assure you that we are using these post offices- sometimes they bulge at the seams and you can't get near the counter because there are so many people coming and going-but we are told the service is no longer required." When I asked them how they felt, they said, "We feel utterly confused, to be honest. These are busy post offices and we use them, but the Post Office, the Government or whoever say they are not necessary." I assure the Minister that that will register when people vote, because they do not understand why it is happening and can see no benefit.

Another issue is that of the activities of supermarkets that have taken over post offices. It is mentioned in the amendment tabled in my name and that of my hon. Friends. The Post Office contracted for a number of supermarkets to operate post offices in their premises. It seemed like a good idea at the time, but now they tend to say that they can make more money selling beans and would rather not have the post offices. That creates further problems. My information shows that Tesco notified the Post Office of 44 closures after the recent takeover and that Morrisons gave notice of 21 after its takeover of Safeway. That presents genuine difficulties because alternative premises and venues may not be available. The Post Office and the Government have lost control, which was effectively surrendered when the branches were given to the supermarkets. Now that the supermarkets no longer want the branches, there is a huge problem. Who will pay for finding alternative premises? Will the cost be so high that the community will lose the post offices?

Mr. John Lyons (Strathkelvin and Bearsden) (Lab): The hon. Gentleman makes an important point about Safeway, which has been taken over by Morrisons. Post office closures, which were never threatened under any programme, are now taking place effectively as part of Morrisons' policy. That is happening in my constituency.

Malcolm Bruce: The hon. Gentleman makes a good point. If the Post Office's presumption was that a post office was needed in a locality, it should go through a process that is different from simply asking, "Is someone available who is prepared to take it over?" There should be positive action, with some investment if necessary, to replace the post office in a suitable nearby location. I hope that the Minister will deal with that point.

Mr. Russell Brown: I agree with the hon. Gentleman and I know fine well that it appears that Safeway in Dumfries will lose its post office. However, does not that provide a God-given opportunity in Dumfries for the business to be redistributed among the three, possibly four, other sub-post offices within three quarters of a mile of the supermarket site, thereby strengthening their position?

Malcolm Bruce: The hon. Gentleman knows his constituency and his suggestion may be the right answer for it. The decision must be based on local circumstances. If the community accepts it, that is fine. However, I am worried that we are closing so many post offices and it is simply assumed that the business will transfer to neighbouring ones, but that will not happen to all of it. In some cases, the long-term business does not exist, so further closures may be in the offing.

Mr. Timms: The hon. Gentleman is making an important point and I am sure that he, like me, welcomes the assurances from Tesco and Morrisons that they will work closely with Post Office Ltd. when they review their stores that currently accommodate post offices. They will not act precipitately. Only Post Office Ltd. can make a proposal for the permanent removal of a post office. Tesco, Morrisons or any other body cannot make such a proposal; there must be a consultation period in accordance with the code of conduct. I believe that we can work through the issues to which the hon. Gentleman rightly draws attention.

Malcolm Bruce: I hope that that is the case. Unsurprisingly, Tesco has asked to see me tomorrow and perhaps I shall get some further information. I do not make an attack on Tesco and Morrisons; I simply draw attention to a problem that should be properly tackled, not realised by default.

I am conscious of the time, but I want briefly to refer to Aberdeen, where the situation has given me cause for concern. I wish to make it clear that the city of Aberdeen is not part of my constituency, but one of the sub-post offices, Bankhead, was in the Gordon constituency before the previous boundary changes and should be in that constituency after the next boundary changes. However, that will not happen because it will be closed. There are 14 other post offices in the city of Aberdeen, and I made a point about that in an intervention, to which the Minister did not respond.

There was a change of administration in the city council last May, when the Liberal Democrats formed an administration with Conservative support. It approached the Post Office early to discuss the possibility of paying council tax through local branches. The Post Office was not prepared even to discuss it, despite the council's indicating that it expected a budget transfer of £100,000 to the small post offices. That is a disturbing attitude by the Post Office. It claims that it is trying to develop business but when business is on offer, it is not even willing to discuss the possibilities.

The same applies to utility payments and other matters for which the Post Office claims to have an ideal network. I was discussing with a credit card company, which I shall not name, its attitude towards its relationship with the Post Office, and it said, "To us, the Post Office's unique selling point in getting us to use its services is that it has a major network, but it is in the process of destroying it, so why should we bother to engage with it?" That is a serious response from a serious business, and if the Minister does not take it seriously, he is really not in touch with what is happening.

The post office network has to settle at a viable size that people will be convinced will stay viable. In spite of Ministers' assurances, people working in the Post Office do not believe that that will be the outcome of the current processes. I think that the Minister is genuine in his belief, and honestly confident that business will come, but many people engaged in the process cannot see it coming through at anything like the speed or volume necessary to sustain the network that we will have by, say, the middle of next year.

I have mentioned my concern about the situation in Scotland. One of the arguments that has been put to me is that part of the revenue stream will come from people carrying out cash transactions on their own bank account through the Post Office. In Scotland, the Royal Bank of Scotland and the Bank of Scotland have refused to co-operate with that scheme, which affects the vast majority of account holders in Scotland. The only other bank of any significance is the Clydesdale bank, which might be having discussions about it-

Mr. O'Neill: The TSB?

Malcolm Bruce: Well, the TSB is important, I agree, but the hon. Gentleman knows perfectly well that the Bank of Scotland and the Royal Bank of Scotland play a considerable part, and that, because of the decisions made by those banks, Scottish post offices will be significantly disadvantaged in regard to revenue potential, compared with those in England, yet there is no plan to offset or compensate them for that.

The contention that my colleagues and I are making is that change is necessary and desirable. However, a lot of what the Government call investment is actually dead money being paid to shrink the network. In reality, the Post Office needs investment to develop new services, and Royal Mail needs investment to compete with the private sector. The Government's business plan does not inspire confidence that either of those two wings of the post office network will be able to make the investment needed, on the scale required and in the time scale that we face, to deliver a viable, profitable future. In those circumstances, the question will continue to be asked as to whether the Government really are in control of Royal Mail and the Post Office.