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Post Office Counters Ltd.
12.56 pm
Dr. Vincent Cable (Twickenham): I am grateful for this opportunity to initiate an Adjournment debate. The debate's grand title on the Order Paper, "Competition policy and Post Office Counters", stems from one case, but it is a case that has stirred up a great deal of emotion in my constituency. Approximately 4,000 people signed a petition in a very short time, and many local businesses were outraged by the behaviour of Post OfficeCounters Ltd.
The case raises wider issues of policy, which I want to put to the Minister. In particular, it arouses concern among many of the 17,000 or so postmasters and postmistresses who run the small businesses that operate the Post Office network. In most cases, their relationship with the network is perfectly good and, with enlightened management, the Post Office network can be very creative. However, in many cases, of which my constituency case is one, the postmaster or postmistress is in a commercially vulnerable position, and is wholly dependent on the monopoly operation of Post Office Counters Ltd. In this case, Post Office Counters Ltd. has been highly authoritarian and there have been unacceptable forms of management. I want to focus on that relationship and make some suggestions.
I shall make three proposals before I turn to Dr. Oraki's case, which highlights the issues. The first relates to the nature of dismissals. Post Office Counters Ltd. can dismiss those who have a contractual relationship with it. That may happen for a variety of reasons, including impropriety or the failure to maintain proper standards of service.
What is strange is that those who have a contractual relationship with the Post Office--the sub-postmasters and postmistresses--do not have a right of appeal in the normal sense. Many of them have tried, as my constituent has, to go through an appeal process using an industrial tribunal, but that has not been accepted as valid in law. There is no proper appeal system in cases where management exercise their powers capriciously and improperly. My recommendation, to which I shall return later in my remarks, is that the Minister should approach Post Office Counters Ltd. to set up a more equitable and balanced relationship.
My second proposal relates to the security of investments of this large number of small business people. Many of them are going into business for the first time and all their life savings are put at risk. Those savings can effectively be cancelled out at the stroke of a pen as the result of a decision by a Post Office network manager to relocate a post office. That is not normal commercial risk; it is highly unacceptable and it is subject to the abuses that any monopoly situation will create. Will the Minister investigate how he can steer Post Office Counters Ltd. into fairer relationships?
The third point relates to the consumer watchdog, the Post Office Users National Council. In this regard, I sought for the first time as a Member of Parliament to make use of that organisation's services. To put it brutally, I found it completely and utterly useless, totally unresponsive to consumer feeling in my area and, as far as I could see, largely a mouthpiece for the Post Office management. That is a very unsatisfactory relationship for
an organisation that is publicly funded, and it should be questioned. I should like the Minister to consider policy in those three basic areas. I shall briefly go over the case that brought all that to light and led me to the conclusions that I have pursued.
Like many people, Dr. Oraki wanted to enter business through owning a post office. Five years ago, she bought a post office in Whitton in my constituency, for which she paid roughly £100,000 plus a franchise fee to the Post Office. Since then, she has run a fairly successful commercial operation. She had some teething difficulties in the first year and there were a few complaints, but as far as I can establish, there were only roughly 15 complaints over the entire period. Since the Post Office does not publish complaints by individual post office, it is difficult to judge the seriousness of that number of complaints, but, as far as I can gather, it is extremely low among post offices of comparable size.
Last year, however, one incident produced a major crisis in the otherwise relatively uncontroversial local post office. A customer entered the post office and asked to send a parcel to Chile. Dr. Oraki's employee at the counter did not know where Chile was. The customer was outraged and wrote a very strong letter of complaint to Post Office Counters Ltd. Acting on that complaint, the Post Office management descended on the local post office, which led to a set of circumstances in which the contract was terminated and Dr. Oraki lost her post office.
Dr. Oraki believed that the circumstances of the termination were bizarre and totally unreasonable, and contested her dismissal at an industrial tribunal. Because she was doing so, she did not take advantage of the Post Office's suggestion that she put the post office on the market. In time, the industrial tribunal reached a negative result, but in a very bizarre twist, which caused me and many others to question what was going on in the Post Office, she was offered a job with more responsibility in a bigger post office. That raised great doubts about why on earth her contract had been terminated in the first place.
In addition, the Post Office proceeded to issue a contract to another post office further down the road. That was the point at which I and others members of the community became aware of it, because under the statutory public consultation process, we were duly notified. I was told without any explanation of the context that a new, bigger, better-equipped office was due to open in the area. That turned out to be largely a fabrication, but was none the less the context in which I was first drawn into the case.
I will not bore the Minister with any more details because he clearly cannot intervene directly--the law is clear. Post Office Counters Ltd. has commercial independence in this respect and it would be improper to push the Minister directly to interfere beyond where his powers lie. I shall, however, summarise the case.
A small entrepreneur invested her life savings in a post office, which at the latest estimate is worth £150,000, and subsequently lost almost all of it because the building had very little resale value without the post office in it. She lost a major investment as a result of what appears tobe a capricious decision by Post Office Counters management. The Post Office gained another post office down the road, another franchise fee and the opportunity to deal with another employee under a more favourable
contract. Frankly, if that happened in business, we would call it sharp practice. As it concerns a public utility, it raises questions about public policy. I shall proceed from the personal case to describe the public policy issues stemming from it, which I ask the Minister to consider in detail.
The first such issue relates to the circumstances in which a sub-postmistress or sub-postmaster can be dismissed or have their office terminated. The background is a unique, complex and difficult legal structure. The 17,000 or 18,000 people who work as sub-postmasters and sub-postmistresses provide employment for services; they are officeholders with emoluments. They fallinto a distinct semi-employment, semi-contractual legal category--a hybrid.
When such a hybrid relationship works well, it apparently works very well. The federation that represents postmasters and postmistresses is not suggesting for a moment that the fundamental basis for the relationship should change. When it works well, it gives sub-postmasters commercial freedom and some of the elements of employment, but when it works badly, with unenlightened or authoritarian management, it works extremely badly. A postmaster can be pitched out of his post office with no legal protection and no independent source of appeal.
I ask the Minister to approach Post Office Counters Ltd. in order to require it to introduce a genuinely balanced relationship with its sub-postmasters and sub-postmistresses, establishing for them a quasi-judicial appeal process of the kind that they would enjoy if they were employees. That would rectify the many cases of often severe injustice.
The second matter--it is related--on which I ask the Minister to intervene is the question of loss of investment. As has happened in this case, a small business person may put her life savings at risk and lose it all. Even if there had been no controversy and Dr. Oraki had simply decided to retire and the Post Office had decided to move the service up the road, she would have lost all her investment. It is wrong that a monopoly--the Post Office network is of course one such monopoly--should have the power to negate an entrepreneur's investment. That is even more pertinent given that anybody who wishes to acquire a post office must pay the Post Office a substantial franchise fee. Will the Minister intervene in order that a system in which some security of tenure is provided, so that small businesses are not put at such risk, which is not normal commercial risk but depends on the good practice of a monopoly utility?
The third policy point relates to the functioning of post office consumer groups, which are statutorily provided. I approached the POUNC to help to support this case. It was certainly very courteous and approachable, but it became very clear that it was acting on advice from management. It appeared unable to respond to local feeling--it seemed to regard the very large petition as wholly irrelevant--and simply responded to me by quoting back information from the Post Office that was simply wrong.
I am afraid that that episode led me to lose confidence completely in the impartiality of the supposed consumer watchdog. I hope that, in the Minister's negotiations and discussions with the Post Office, which are of course taking place in a wider context, such deficiencies will be understood.
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