Memorandum submitted by the Post Office
1. INTRODUCTION
The paper outlines the current situation as
regards the Post Office Network in Wales and highlights strategies
and plans for future developments in this area.
2. THE POST
OFFICE NETWORK
IN WALES
2.1 The Post Office Network in Wales contains
the full range of different types of Post Offices, extending from
large city centre offices to small community offices open for
a limited number of hours each week to meet local needs.
2.2 The Post Office keeps track of an overall
number of post offices which are open and closed across the whole
network, however as the offices are managed at a local level and
data continually fluctuates due to re-openings, centralised lists
are unavailable. Obtainable overall figures though show 1,501
post offices in Wales in March 1999, 1,459 in March 2000 and 1,409
in December 2000 resulting in 50 net closures over the first three-quarters
of this year.
Every quarter the number of post office closures
is validated and reasons for closure are investigated to report
accordingly to Postcomm.
Across the UK, for the first three-quarters
of this year there were 434 net closures. The national reasons
for closures are re-produced on the two tables below. No detailed
research has been undertaken into reasons for closures in Wales
specifically, although the picture in Wales is considered to closely
mirror the natonal picture.
| Sub postmaster reasons for closure April-September 2000
| % |
| Subpostmaster retirement—Age/ill health
| 43% |
| Other | 19% |
| Financial viability of outlet | 9%
|
| Horizon | 6% |
| Change career/business | 18%
|
| Transfer to other office | 3%
|
| Result of trauma—Burglary/Robbery |
2% |
| Sub postmaster reasons for closure October-December 2000
| % |
| Subpostmaster retirement—Age/ill health
| 46% |
| Other | 21% |
| Financial viability of outlet | 5%
|
| Horizon | 5% |
| Change career/business | 15%
|
| Transfer to other office | 1%
|
| Result of trauma—Burglary/Robbery |
7% |
| |
2.3 Details concerning the situations of the four post
offices particularly specified by the Welsh Select Committee are
as follows:
Cae-Hopkins—This post office closed on 12 June 1998,
nearly three years ago. The sub-postmaster resigned, did not make
their premises available and nobody came forward to operate a
post office. The majority of the business from the office has
now migrated to a nearby office.
Fellinfach—The sub-postmaster has decided to retire
and an applicant has come forward to take over. At present we
see this as a normal commercial transfer taking place and do not
expect any break in service to our customers.
Bwlchgwyn—The sub-postmaster for this post office wishes
to retire and will not be making their premises available. Currently
there do not appear to be any suitable premises available, however
we are currently exploring the provision of a "roving"
(satellite) service by a nearby sub-postmaster.
Penrynside—The sub-postmaster retired from running
the post office in July 2000 although he kept the retail shop
open, therefore the premises were not available. An option of
the provision of a "roving" service by a nearby sub-postmaster
is currently being explored.
3. CODE OF
PRACTICE
Recommendation 11 of the PIU Report stated "The Code
of Practice should require the Post Office to consult additional
stakeholders in deprived urban areas (such as the proposed Local
Strategic Partnerships in England, and corresponding bodies in
Scotland, Wales and Northern Ireland) as a condition of closure
and relocation of post offices in these areas".
Accordingly, an agreement has been reached with the Post
Office Users National Council (now the Consumer Council for Postal
Services) for an appropriate revision to the Code of Practice
on closures and relocations. This was agreed before Christmas
2000 in accordance with the PIU timescale, and has been published
in bilingual Welsh/English format.
As well as fulfilling the specific PIU recommendation, the
revision also increases the length of time for consultation in
the case of a directly operated post office being "converted"
to an agent operated post office, and explicitly includes the
Post Offices' commitment to do all it can to avoid closures in
rural areas.
These changes have therefore updated the code to take into
account the immediate aftermath of the PIU report. However, the
Consumer Council and the Post Office both recognise that further
review of the Code is sensible in the light of the need for the
Post Office Network to adapt to the wider implications of the
PIU report and the forthcoming impacts of Benefits work being
transacted via Automation Credit Transfer through the banking
system. Therefore both parties are further engaged in discussions
about changes to the Code. It is anticipated that these discussions
will be concluded in the Autumn.
4. PROPOSALS/STRATEGY
FOR THE
FUTURE OF
POST OFFICE
OUTLETS
Plans have been put to Government in response to the Performance
and Innovation Unit report into the future of our business and
year one of the plans has been agreed.
The information below falls into three categories—proposals
for commercial opportunities, plans for Network Reinvention and
plans for increasing confidence in the market place.
4.1 Summary of Commercial Opportunities
There are three key areas where we said we would develop
our new products and services:
Banking and financial services:
— providing an alternative for the banks' customers
having to travel long distances to their nearest bank branch;
— developing Universal Banking Services to enable
those without a traditional bank account to do basic banking transactions
and in particular obtain access to benefit payments through their
local Post Office outlet; and
— providing financial services which also cover
a number of other bill payment transactions, including stakeholder
pensions and ticketing services.
Mailing and Home Shopping:
— building on traditional mailing services and stamp
sales by enabling people to pay for their home shopping purchases
and collect them.
Government General Practitioner:
— building on existing work with Government to become
the "one stop/first stop shop" for access to, and information
about Government departments, local government, and similar official
bodies such as the Citizens Advice Bureau, and the Police.
4.1.1 Banking and Financial Services
Network Banking:
— the manual, paper-based service offered at the
moment is currently being developed to provide branch networks
with a range of transactions from banks and building societies;
— a number of banks (Alliance and Leicester, Lloyds
TSB, Barclays and the Co-Op, Internet banks Smile and Cahoot)
have already been signed up and discussions are underway with
other banks and building societies; and
— a deal has recently been concluded to enable on
line authorisation and we are working to upgrade the Horizon system
during 2002. It is believed that this will enable over 200 million
transactions a year for the network banking service. The upgrade
will also make it much easier to introduce a wide range of new
products and services—not just in banking.
Universal Banking:
Plans are to set up two new types of accounts nationwide
by 2003:
— the first centres around basic accounts offered
by banks, which provide facilities such as direct debits but exclude
overdrafts and other financial services. They will be accessed
at Post Office outlets, as well as bank branches and/or ATMs;
and
— the second is "Post Office Card Accounts"
accounts—for those who are not eligible for, or who do not
want any type of bank account, and therefore need an alternative
to enable them to collect benefits, pensions and allowances. It
will be a simple account, accessed using a plastic card, but will
not offer overdrafts.
Smart Cards:
— a trial is currently being developed in Manchester
with Smart Cards which customers can "charge up" at
a Post Office outlet. Journeys on public transport will be debited
from the card automatically, without customers needing to pay
as they step on, for example, the local bus. The Post Office has
"preferred supplier" status as the place to go to recharge
cards fro the market leader in this sector; and
— an agreement has recently been reached with the
SWIFT Consortium in South Wales, made up of six local authorities.
The trial, which launched in Caerphilly on 5 March 2001, will
provide concessionary travellers with Smart Cards to be used on
local transport. The remaining five authorities are planned to
go live in April 2002.
Stakeholder Pension:
— from 6 April, Post Office outlets will provide
a free first time application checking service and an automated
payment service for Standard Life Stakeholder Pensions.
Lottery:
— the Post Office's stakeholding in Camelot ensures
that we remain the major retail partner for the Lottery. There
are exciting ideas for new games to build on successful core business
and new terminals will be installed in due course.
4.1.2 Mailing and Home Shopping
— the Post Office is presently working with home
shopping companies and developing partnerships with major Internet
companies like Amazon, to offer collections, returns and a convenient
payment point;
— the use of Post Office outlets for initial delivery
address/alternative deliver addresses is being trialled in 1,000
Post Office outlets, with clients such as the Cotswold Company.
One thousand Post office outlets are involved of which 25 per
cent were open longer than core hours and five per cent were open
on Sunday. Rollout of this service is planned from the middle
of 2001; and
— opportunities for customers to browse and order
goods in Post Office outlets in addition to existing payment and
returns services are currently being scoped. Once the collection
service is up and running, we would expect to be able to link
the services with returns.
4.1.3 Government General Practitioner
— a large scale trial in the Leicestershire and
Rutland area involving 280 outlets will start in July with the
Government investing £25 million in the project;
— the service will be trialled with a range of partners
for some selected subjects and specific customer groups, in order
to provide a taste of what Government GP could offer;
— additional training for sub-postmasters and the
staff in trial offices will be provided. This will be issues based
and will also include new transactions such as the validation
and authentication of official forms and registrations;
— horizon will be enabled to store and print certain
forms and information and provide access to information Government
internet sites, ensuring that the offices will be able to give
customers a wider range of leaflets and publications;
— customers will be able to pre-order forms and
pick them up at a later date, with the sub-postmasters helping
to identify those who might need specialist forms, assisting in
completing them correctly and then forwarding them to the right
place;
— webphones (a phone with a small screen, and keyboard,
enabling access to Internet sites) and kiosks (a computer housed
in a box, with a touch sensitive screen and keyboard) will be
installed in many offices to enable customers to access the information
themselves; and
— the idea of "surgeries" is being considered
to give customers the option to meet with an expert in a particular
issue eg Citizen's Advice Bureau.
4.2 Network Reinvention
— It is not expected that any one type of Post Office
will be suitable for all parts of the network. This has always
been implicitly recognised, but will now be more clearly reflected
in the way we work;
— There are four main types of outlets—High
Street, Neighbourhood, Urban deprived and Rural;
— The Network will be split between commercial and
social outlets ie those offices expected to run on a purely commercial
basis and those for which support will be received through the
Government Social Network Payment;
— It is recognised that the outlets need to be convenient,
not just in terms of where but also how and when customers can
use us. A "positive experience" also needs to be offered
which means a friendly, personal service in an attractive location,
forming part of the community; and
— A key element in this will be about enabling people
to pay in the way they want. We are therefore aiming to have debit
cards accepted across the network before the end of 2001.
4.2.1 Plans for rural outlets
— These are defined as outlets in areas of less
than 10,000 people, with one or two counter positions and which
are likely to have a more limited product range than other parts
of the network. However, it is hoped that the availability of
some products will be increased as Horizon reduces the costs of
extending the product networks; and
— Everything possible will be done to prevent avoidable
closures of these offices with more creative ways of offering
services also being considered, eg extending the use of community
offices and partnerships with other people such as pubs, garages,
local authorities etc. The option of a sub-postmaster running
a number of offices in an area on limited hours in each location
will also be considered. There has been a recent announcement
of a £2 million Government fund to help in the set up costs
of such innovative solutions in individual cases.
Plans for urban deprived outlets
— An exact definition of where these areas are has
not yet been finalised although the focus will be on the outlets
which do not have any other Post Office outlets nearby;
— Universal Banking services are likely to be very
important in this segment, as are the Government General Practitioner
services and the expectation is that more self-service ATMs and/or
interactive kiosks will be prevalent;
— Work is ongoing with DTI and DETR with the aim
of targeting grant support to help offices in Urban Deprived areas
and we are looking to provide more assistance particularly on
the retail side.
4.2.3 Plans for Neighbourhood outlets
— This segment is expected to serve around 65 per
cent of the customer base with Multiples forming an important
part of this and the majority continuing to be run by individual
sub-postmasters. The PIU report saw that there was scope for "bigger,
better, brighter" offices in this sector;
— The "combistore format"—where
the Post Office transactions are handled at the same serving positions
as the retail business will be "norm". Results from
12 trial combi-store sites have been extremely positive from both
the customer and operators point of view;
— There will be an extensive Post Office product
range, although this will not include some of the more space hungry
offers such as the advice areas etc. More self-service technology
to allow customers to find out information and do some basic transactions
without the need to a spend time at the counter will also be employed;
— Clearer quality terms will be established ie standards
for waiting times and other service issues that are expected to
be delivered along with longer opening hours in many locations;
and
— A compensation package for sub-postmasters who
do not want to continue to run these types of offices is currently
under development.
4.2.4. Plans for High Street outlets
— It is anticipated that these outlets will serve
20-25 per cent of our customer base, but are only likely to include
a few hundred of the largest Post Offices. They are "Destination
Stores" where people will obtain services they are prepared
to travel for and they will offer the full range of services;
and
— The majority will be either directly managed an
downed branch offices or will be run by large multiples.
4.3 Increasing confidence in the market place
— A recent agreement abolished the appointment scale—the
25 per cent reduction in the first years remuneration that the
Post Office Network has traditionally charged new sub-postmasters
taking over offices—from 1 April;
— These changes have been communicated to sub-postmasters
at conferences throughout January and further communication is
planned with potential sub-postmasters, transfer agents and others
involved in the sub-post office market to explain our plans and
the prospects for the future;
— Counters Club will be relaunched from April in
partnership with NFSP and Palmer and Harvey. This is a key way
in which to help sub-postmasters access the promotions that multiples
receive and to enable them to compete more effectively;
— Automation is being used to obtain major improvements
to our efficiency and accuracy as a business. Horizon, Europe's
largest automation project is in the final stages of rollout and
as of 9 March, 1,326 Welsh offices have been migrated over to
Horizon with the small remainder due to be completed by spring
this year; and
— Horizon will assist in reducing the paperwork
and bureaucracy involved in running post offices by reducing the
work involved in the cash account and eventually removing the
need for it all together. In addition it will reduce the complexity
of transactions, making products more similar to each other so
that they are easy to carry out on the counter.
5. CONCLUSIONS
The Government's decision to pay benefits via bank accounts
from 2003 remains a significant threat to the future of the Post
Office network and the vital role that it plays in the community.
However, to counter this threat the Post Office continues to identify
and develop new proposals to replace this business and new ways
in which to support local post offices.
Stuart Sweetman BSc FCA
Group Managing Director
12 March 2001
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