Post Office

Oral Answers to Questions — Business, Enterprise and Regulatory Reform – in the House of Commons at 10:30 am on 7th May 2009.

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Photo of Alan Reid Alan Reid Shadow Minister (Northern Ireland), Shadow Minister (Scotland) 10:30 am, 7th May 2009

What plans he has for the future viability of the Post Office network.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

The Government will continue to support the post office network financially with a subsidy worth £150 million per year until 2011 and, building on the recent allocation of the contract for the Post Office card account, we will continue to work with Post Office Ltd to support new areas of work and new business opportunities for the post office network.

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Photo of Alan Reid Alan Reid Shadow Minister (Northern Ireland), Shadow Minister (Scotland)

I thank the Minister for that answer, but with the banking system in great difficulties and discredited in the eyes of the public, the Post bank proposals give the Government an ideal opportunity to provide local and trusted access to the banking system. The banks have long been closing branches in rural communities, but the Post Office's extensive network has the potential to put local banking back at the heart of our communities and give our post offices a secure future. Will the Government commit to setting up a Post bank?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I agree that banking and financial services are an important part of the Post Office's work, and it is already the leading supplier of foreign exchange services to the public. It also provides savings products and insurances, and millions of bank accounts held with high street banks are also available through post offices. It makes sense for Post Office Ltd to build on those services, and I know that both the company and sub-postmasters are very keen to expand their services in the banking and financial services area.

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Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

Does the Minister agree that Post Office and Royal Mail are inevitably linked? Can he comment on the suggestion that the Network Rail system should be used to get over the problem of selling off certain parts of Royal Mail? Will he ensure that there are other ways of developing that idea and that they are discussed later on, including at the national executive committee meeting in a fortnight's time?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I very much agree with my hon. Friend that Post Office Ltd and Royal Mail are linked. There is an inter-business agreement between the two and that will continue under the Government's plans in the Postal Services Bill. As to the issue he raises about Network Rail, the Government do not legislate with a closed mind, as I have said several times this week. However, some of the plans put to us do not meet the test of transforming Royal Mail, and we need a future for that organisation that does not just attract new capital, but provides a convincing plan for transformation. That is what we have set out in the Postal Services Bill.

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Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

Having slashed the post office network by 2,500 branches, the Minister and Lord Mandelson now say soothingly that they have no intention of supporting further closures. But why should we believe the Government on this, any more than in relation to any of their other phoney economic forecasts?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Unlike the Conservatives, we have supported the post office network financially. As I said, we give a subsidy of £150 million a year to the Post Office that helps to sustain many thousands of branches that might otherwise be under threat. With the Conservatives' new-found enthusiasm for cutting public expenditure, I wonder whether they could guarantee a subsidy of that size. They certainly have not said so, and people would have good reason to doubt whether that would be the case.

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Photo of Kerry McCarthy Kerry McCarthy Labour, Bristol East

As chair of the all-party group on credit unions, I know that the credit union movement is very keen to be involved in a Post bank if such proposals are on the table. However, various separate discussions seem to be taking place—the Communication Workers Union has a plan, as does the National Federation of SubPostmasters. Can the Minister assure me that he will do what he can to bring together all interested parties so that we do not have several different proposals?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

My hon. Friend makes a good point. As she will remember, we have met to talk about credit unions offering services through post offices. Following that meeting, I spoke to the managing director of Post Office Ltd and I understand that discussions are taking place between the company and the Association of British Credit Unions.

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Photo of John Thurso John Thurso Shadow Secretary of State for Business, Innovation and Skills, Liberal Democrat Spokesperson (Business, Innovation and Skills)

The legislation passing through the other place offers a once in a generation opportunity to give the Post Office a viable future, quite apart from the proposals for Royal Mail. May I again urge the Minister to seize the opportunity when the legislation comes to this House to secure the future of the Post Office by giving it its own board and proper resources so that it can develop a strategy on a Post bank, instead of leaving it as the poor relation of Royal Mail, withering on inadequate subsidies?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Given the hon. Gentleman's question, I think that he will agree that there is much in the Bill that the Post Office can be enthusiastic about. It will have its own board, which will give it an increased standing. With the Post Office card account contract awarded by the Government just a few months ago, as well as a new contract between the Department for Transport and Post Office Ltd on the renewal of driving licences, there is reason to look forward to greater stability in the network. There is a great deal for the Post Office in the Government's plans to reform postal services.

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Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

As a member of the Select Committee on Business and Enterprise, which has been challenged to come forward with a report on the future of the Post Office, I know that we all want it to have a sustainable and viable future that ensures that the network remains in its entirety. We should establish the community bank by using Northern Rock, which has branches throughout the country, in rural and urban areas. That community bank would then pose a real challenge to the high street banks. As he is well aware, the Post Office does not have a banking licence and to set up a bank would cost millions, but the Government already own a bank that my right hon. Friend could use, so will he consider that as a good vehicle for the way forward?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I am happy to work with the Select Committee on its inquiry into the future of the post office network, and I have already met the Committee to discuss that. Of course we want to see the Post Office build on its provision of banking services, but in any discussion of the expansion of those services we must remember the existing agreements with the Bank of Ireland. However it is done, I am sure that banking services will be a major consideration for the future of the post office network.

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Photo of Robert Smith Robert Smith Shadow Deputy Leader of the House of Commons, Opposition Whip (Commons)

Will the Minister take forward the Post bank proposal with more urgency? It is not just about giving the Post Office a new breath of life, but about restoring confidence for individual small savers in a basic simple banking system, where they put in deposits and small loans are made out. The Post bank could restore confidence after the banking crisis.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I assure the House that there is no lack of urgency or energy on the part of the Government about working with the Post Office on securing its future. Only yesterday, I was extolling the Post Office's potential to provide services for the new identity cards, but, sadly, if the Liberal Democrats were in power that opportunity would not be available to Post Office Ltd.

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