On the Politics Show, Sunday 01 June 2008, Jon Sopel interviewed Business and Enterprise Minister, Pat McFadden MP
Business and Enterprise Minister Pat McFadden, MP
JON SOPEL: Well I'm joined now by the Minister with responsibility for the Post Office, Pat McFadden.
Pat McFadden, welcome to the Politics Show, thanks for being with us.
We saw in the film there, a viable, profitable Post Office, which is slated for closure. Why?
PAT MCFADDEN: Well, it's difficult for me to comment on a single individual office. One of the things about profitability, which has been raised throughout this, is that there are two factors to consider.
One is the income of a particular branch, like the one that we've just seen and the other is the central support costs which are very, very high for the Post Office, that's the cost that the sub-postmaster, doesn't see but which Post Office have, things like cash and IT and so on, and when you take those things in to account, three out of four post offices in the country are actually running at a loss and that's part of the reason why some are having to close.
JON SOPEL: Sure. We'll come to that in a moment, but if the aim is to save money, what possible sense can it make to be closing a profitable one.
PAT MCFADDEN: Well I think you've got to be cautious about saying a particular branch is profitable because what may appear to be profitable from the sub postmaster's point of view, may well not be profitable, when looked at from the post office's point of view, because when you take in to account the costs at the sub postmaster doesn't see, in terms of the cash delivery and handling for that office, which the sub postmaster doesn't see and doesn't pay for - the IT and other services which are provided centrally. Three out of four branches actually lose money.
JON SOPEL: So can, by your own criteria, of what is profitable or the post office's criteria, can you give a categorical guarantee, that no profitable post office will close.
PAT MCFADDEN: No, but I think it would be very rare in this closure programme. It is possible in circumstances that a profitable one would close if the post office still saved money by doing that because there were other profitable ones nearby that could handle the business and so on. But it will be very rare ? (interjection)
JON SOPEL: Minister, you don't think that sounds perverse, that you could have, by your own criteria, a potentially profit-making post office and yet you still close it.
PAT MCFADDEN: It's not perverse because the finances of the post office could still be helped by the closure of that branch and that's important here because the post office network is losing half a million pounds a day. It's lost four million customers a week and that's not a static picture.
Those losses of money and customers have actually increased in recent years and that's why some branches are having to close.
JON SOPEL: Do you agree that a post office performs a social function as well.
PAT MCFADDEN: Absolutely, which is why the government subsidizes it to the extent that we do. If the post office were to run as a purely commercial network, instead of fourteen thousand branches, which there were at the start of this closure programme, there would only be four thousand and because we subsidize the network to the tune of a hundred and fifty million pounds a year, that actually saves thousands of branches, which would be otherwise under threat.
JON SOPEL: So reconcile that for me will you, with what your boss John Hutton said, when he said, It's a business and they're making a whacking loss. He's wrong then, it's not a business, it's a social function.
PAT MCFADDEN: Well it's not a conventional business but - and the reason that we subsidize it is because we recognize that and John Hutton recognizes that .. (interjection)
JON SOPEL: Well he said, It's a business - quote, unquote.
PAT MCFADDEN: But he also defends the subsidy that I'm talking to you about and in fact we put more than the subsidy in. The total amount of public support, going in to the post office, taking everything in to account over the next few years, is up to 1.7 billion pounds and without that, the network would be facing an even bigger challenge than it is at the moment.
JON SOPEL: Because if you did accept the logic of John Hutton's position, then you would cut the number of post offices from fourteen thousand to four thousand and just have those profitable ones.
PAT MCFADDEN: Well, that's not John Hutton's position. But if you accepted the position that it was a purely commercial network, you'd do that. That's not the government's position. We don't want to see the post office reduced to that size. We think there is a social side to this and that's why we give is such a large public subsidy.
JON SOPEL: We've got a Select Committee Report coming out on the post office closure plan tomorrow and as we heard there in the introduction, there are plans to close two and a half thousand. What if the post office wants to close more than two and a half thousand and let me just finish the question, or you have a sub-postmaster, mistress, retiring, other reasons for closure. Are you saying, it will not go below eleven and a half thousand or it might.
PAT MCFADDEN: What we are saying is we've given the post office network enough subsidy to maintain a network of around eleven and a half thousand sub post offices. Now, it's not a national service, we can't force people to be sub postmasters in a network of that size, of eleven and a half thousand, which I should say by the way, is the size after the closure programme. That's still three times larger than the top five supermarket chains put together. In a network that size, of course some people are going to retire and leave, and the post office will make every effort to make sure that they're replaced, but they don't have the power of summons.
JON SOPEL: The key question there is, is there a flaw on the lowest number of post offices you, as the government are prepared to accept.
PAT MCFADDEN: Well we're ? (interjection)
JON SOPEL: The answer sounds to me to be no. It depends how many people retire, depends how many people want to give up.
PAT MCFADDEN: We have given subsidy to maintain a network of around eleven and a half thousand. We think that's the kind of size of the network that the post office should be able to provide even after the current closure programme is completed.
JON SOPEL: So it could be lower than eleven and a half thousand.
PAT MCFADDEN: It's possible, but the post office have got money to maintain a network of eleven and a half thousand, so they should be able to maintain that number of branches in the future.
JON SOPEL: Right, but realistically, what you're saying is that you can't stop people and you can't force people to become sub postmasters. It might be a lot lower than that.
PAT MCFADDEN: Well I don't think it should be because the post office have got the money to make sure that they run a network of that size and remember, part of the rational for these closures, is that it makes the rest of the network that bit more viable. That's why the federation of sub postmasters, accepted the need for the closure programme.
JON SOPEL: You see, I suspect that people listening, who've been signing petitions, who are really worried about the closure of their post office will say, well hang on, if you've got people retiring somewhere else, count that as part of the two and a half thousand.
PAT MCFADDEN: Well, we would try, we're trying to do this in a planned way, which is part of the reason why some sub postmasters are being asked to leave the network, who don't want go, which is unusual.
The last time there was a post office closure programme, several years ago, it was just first come first served and that's because we want to maintain a proper national network, in urban and rural areas. But you asked about people signing the petitions and I understand this is deeply unpopular in the areas which are being affected, but there are three big reasons why this is happening: the first is life-style change, we think of the post office as a place for example where we'd go to pick up our pension.
Nine out of ten new retirees don't do that, they choose to have a pension paid in to the bank account. We also think of the post office sometimes in a pre-internet age. We've got services like car tax on line being used by a million people a month now, at their own convenience, that's a million people a month, no longer using the post office. So there's a reason why this is happening and it's about changes that a lot of us have been taking part in. Even the BBC ? (interjection)
JON SOPEL: What do you think of the Labour MPs then who are protesting about it. Are they right to protest.
PAT MCFADDEN: Well I understand why people protest, because ? (interjection)
JON SOPEL: Are Labour MPs - what do you think of Labour MPs who are protesting about your government's decisions.
PAT MCFADDEN: Well, I understand that this is an unpopular and difficult thing to do. What I would say to my colleagues on the Labour side certainly, is, at least remember that we have given the post office network a subsidy of a hundred and fifty million pounds a year to keep open thousands of branches. No previous government subsidized the post office so you know, I understand that it's unpopular, but we've actually backed the network with significant subsidy.
JON SOPEL: Backbenchers in the Labour Party, seem pretty unhappy about everything at the moment don't they.
PAT MCFADDEN: Well you know, we've been in power for eleven years now, it's a difficult time for the government. The issue I find particularly on the streets and we found in the local elections, was really this issue around prices and energy costs which I think are hurting people, I understand that ? (interjection)
JON SOPEL: Post offices, forty two days, I mean the list goes on.
PAT MCFADDEN: Well I haven't found forty two days raised an awful lot on the streets you know, when I've been out and about. Of course governments all have to take difficult decisions and the important thing, particularly on this issue of prices and fuel costs and so on, is to try and steer the country through what is a difficult time. You know, I just come back from India, I was there for a few days on a constituency trip this week, there too, people are concerned about fuel costs. This is worldwide, it's not just an issue in the UK.
JON SOPEL: There are global factors, undoubtedly and let's accept that. But how much of this is down to Gordon Brown and the way he's handled certain issues.
PAT MCFADDEN: I don't really think it's down to Gordon Brown.
JON SOPEL: At all.
PAT MCFADDEN: What we've found is that we've had ten years of a very good and strong economic position. After that ten years, people are now worried about prices, particularly in fuel energy costs and food and of course people begin to take that out a little bit on the government and that's what we've seen in the local elections and what we've seen in the Crewe by-election a couple of weeks ago.
JON SOPEL: And you say that you're a listening government and you want to reconnect with voters and goodness, we've even heard this week that Gordon Brown is ringing people at six o clock in the morning. I don't know whether about post office closures. I mean, I don't know whether he - do you know if he's rung about that issue.
PAT MCFADDEN: I don't believe he has rung people at six o clock in the morning. He may have rung people, but not at six o clock in the morning. That's something he's been doing for some years by the way.
JON SOPEL: All right, okay. But on post office closures, there's been this huge consultation, in inverted commas, so far thirty out of twelve hundred have been spared. That sounds like you're listening with your ear plugs in.
PAT MCFADDEN: The consultation happens in two phases. First of all, the post office network talks to the local sub postmasters, talks to post watch and talks to the local authorities involved, before a closure plan for a particular area is published.
Those plans change by a factor of 10% or more, then there's a six week consultation with the public, when you get to the figures that you've just quoted. What the post office are trying to do is to get this right in the first phase, before they go out to consultation. But it's perfectly legitimate for MPs and others to have an input in to that during that six week process.
JON SOPEL: A final quick thought, and I don't know how to put this to you, but there's a suggestion in the papers this morning that there are too many Scots in the government. Now I know you represent somewhere in Wolverhampton, not Scotland, but what do you think about that and do you think that we could do with an English Deputy Prime Minister.
PAT MCFADDEN: Well, you know, my parents came from Ireland in the 1950s. I was born and brought up in Scotland and I've spent my whole working life really in England. I've always taken the view that it's the job you do that matters rather than the accent you speak with, but everyone's entitled to their view.
JON SOPEL: Diplomatically handled. Pat McFadden, thank you very much indeed for being with us. Thank you.
END OF INTERVIEW WITH PAT MCFADDEN
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The Politics Show Sunday 01 June 2008 at 1200BST on BBC One.
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