Select Committee on Welsh Affairs Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Good morning and welcome to the Committee again. I think it was 4 July you were here last time talking to us about social exclusion in Wales. In the light of the answers to some of our questions, we thought we ought to invite you back to explore the issues of post office closures in Wales a little bit more deeply, and possibly also some broader issues relating to social exclusion in Wales. Could you begin by introducing yourselves? I think we have seen two of you previously.

  (Mr Sweetman) Yes. I am Stuart Sweetman, Group Managing Director, Customer and Banking Services, in the Post Office. Basil Larkins is Managing Director of Network Banking. Mike Granville is Head of Network Policy in the Post Office Network.

  2. Before we begin, could I clarify one small matter? In section 2 of your memorandum you refer in several places to "the first three-quarters of this year". Since it is only March, is that the first three-quarters of last year, 2000, or is it the first three-quarters of the financial year?
  (Mr Sweetman) It is our financial year, so the nine-month period is up to the end of December 2000.

  3. In your memorandum you state there have been 50 net closures in the first three-quarters of the year. Could you possibly tell me how many net closures there have been in the last three years?
  (Mr Sweetman) It is of that order per annum. I do not actually have the figures for the last three years for Wales.
  (Mr Granville) Equally, I do not have those figures to hand readily.
  (Mr Sweetman) This is a bad start but we can certainly provide the Committee with those figures.

  4. Would it be right to say that it is somewhere of the order of one in eight of the existing post offices?
  (Mr Sweetman) I think it would be less than that per annum. It would be probably of the order of 50 in each of the last three years, about 1400 to 1500 offices, so that would be about 8 per cent.

  5. What is your latest figure for the total number of post offices in Wales?
  (Mr Sweetman) 1409 at the end of December; we have not updated these figures yet but we will be doing so for our year-end, which is the end of this month.

Mrs Williams

  6. On the same point, and you do not have the up-to-date figures, are they going down or going up?
  (Mr Sweetman) They do move up and down. At the moment they are probably very slightly up on the long-term average. We are finding that this is a net fall in the turnover of offices. We have had a lot more closures for which we have found replacement sub-postmasters. We have found that in the last year the rate of turnover has decreased, unfortunately principally because sub-postmasters, who probably would like to sell the business, are unable to find a replacement sub-postmaster but are sticking with the office. The important thing for us at the moment is that the rate of turnover is down because there is lower confidence in the marketplace for sub-post offices. That is a long answer to your question.

Mr Llwyd

  7. There is this fluctuation, you say?
  (Mr Sweetman) Yes, there is.

  8. So you cannot be precise at any given time as to how many offices you have got?
  (Mr Sweetman) We know how many we have got locally. We bring the figures together once every three months on a national basis and the next figures that we will collate will be effectively after next week, which is our year-end date. That will be available when we publish our annual accounts, which I believe is in June.

  9. On this question of fluctuation, I do not think I am any different from any other member of this Committee in my experience, in that all I have found in my constituency is closures. I do not know about this word "fluctuate". I know off-hand of perhaps one new post office in the whole of my constituency; all the rest have been closures. It is really closures, not fluctuations, is it not?
  (Mr Sweetman) Unfortunately, over the last few years, we have been experiencing net closures, yes. We have also re-opened a number of offices throughout the country and we are finding replacements for many sub-post offices where we have resignations, for whatever reason. There is a churn in the numbers but unfortunately the numbers are reducing.

  10. Can I refer you to an example in my constituency, and I will name it, a place called Mallwyd, where there was an elderly lady who ran a sub-post office. She gave notice in January of last year that she would not be running that post office from her home six months after that date. Some constituents of mine have a very successful garage business with a turnover of just over £1 million per annum, having been in business for nearly ten years. They are very highly regarded and respectable people. They approached the Post Office locally through Bangor before the end of January, then in March and then at the beginning of April. At some time in April the Post Office took them seriously and put them through the hoops. In August they said, "I am sorry, but you are not people whom we can trust to run the post office". I intervened and said that I could not understand why this was and the decision a month later was reversed. I am extremely unhappy about that kind of thing. Firstly, why should they have to ask three times before any kind of response comes forward from the Post Office Counters? Secondly, if they were unfit in August, how come they are fit in late September?
  (Mr Sweetman) Unfortunately, I do not know the details of the office.
  (Mr Granville) I do not have the details to hand.
  (Mr Sweetman) I think we are going to have to pick that up and deal directly with you on it. From the information you have given us, I cannot excuse the lack of a response three times.

  11. I picked up that you said you would find replacements . I have never seen any replacements that have been found locally in my patch. It may be that in theory it happens but I have not seen it.
  (Mr Sweetman) Again, these are national numbers: in the nine months up to the end of December for the whole of the country I think some 900 replacement sub-postmasters were found where people had resigned. Our annual turnover for post offices is probably about 8 per cent per annum where sub-postmasters resign and we find replacements. It is unfortunate that we cannot always find replacements. The replacement process is handled locally by the people who know the community and know the alternatives. I am afraid, I cannot respond to the particular example that you have given but I will follow that up.


  12. I can understand why you cannot respond to specific cases, Mr Sweetman. I think we all have, and certainly those of us representing rural areas, similar cases. It does seem to us on the ground that it is almost a policy of Post Office Counters not to make a great deal of effort to re-open and look for other sites. I do not wish to touch on things we are going to be discussing later. Perhaps you could address your mind to that fact as we go on.
  (Mr Sweetman) It is absolutely our policy in the rural areas we are talking about, which are the most exposed communities up and down the country, to look aggressively for new sub-postmasters. In fact, the Department of Trade and Industry has very much a requirement to maintain the rural network, with the exception of force majeure closures. A number of issues come into play as to why an individual sub-post office might come under threat of closure. From my point of view, what I am trying to do over the longer term is build up confidence in the network of post offices so that individual sub-postmasters and respected sub-postmasters have confidence that they are actually involved in a business which is sustainable. That is why we are developing new products and services. Ultimately the decisions are made by individual sub-postmasters on whether their outlet is viable within their own personal circumstances, and we have to respond. I think the PIU report, which we discussed last year, did recognise the lengths to which we actually went in trying to maintain the rural post offices. We do try very hard and it is our policy and there are laid down procedures which are followed locally by our retail network managers. I do not accept what you have just said.

  13. I will let my colleagues ask questions on this shortly. What you are saying is actually not what is observed on the ground. You say that you want to keep post offices open but we have all had cases—and I am sure you will hear this from my colleagues—where the amount of hours and therefore the remuneration of post offices is cut down at the point when somebody retires. That cannot be an encouragement to keep the post offices open. I have two cases, and I am sure my colleagues have others. We have had a survey from one of my other colleagues which shows that this is the case. That cannot help to keep post offices open.
  (Mr Sweetman) I think you are right. That has happened on a number of occasions in the past where the volume of business has not justified maintaining the hours which the post office was open, that there was not the local demand. In the past we have used the change of sub-postmaster to change the offer, which is one of the ways that we are following our value-for-money principle and trying to maintain a service but at a reasonably economic cost. Recently, since the requirement from the DTI has been laid on us, we have reviewed that policy and are no longer reducing those hours. It is something which we are very conscious of, although in the past we have done that.

  Chairman: It is good to hear that.

Mrs Williams

  14. I am aware of the most recent Code of Practice which you have to follow, but what you are saying to us today does not quite match what is happening in our communities. Mr Llwyd has mentioned one and the Chairman another. I want to re-visit another case in my constituency later. I reiterate my point to you that what you are saying does not match up with what happens in our communities.
  (Mr Sweetman) If that is the case and you give me the evidence, then I will follow that through because that is not our intention. If the deployment of our policies on the ground is patchy, then we will do something about it.

Mr Llwyd

  15. I think Mrs Williams is right. There is an abundance of evidence to show that what we are facing day in and day out are closures and nothing else. Can I add to that rather disgraceful example I gave you earlier on that the representative from Post Office Counters in Bangor, when he eventually came to Mallwyd four or five months later, actually mentioned to the applicants, "You don't really want this. There is not much money about, so why are you bothering?" What do you say to that?
  (Mr Sweetman) As a remark, that was not an appropriate thing to say.

  16. Exactly, and that colours our view as Members of Parliament. Frankly, and I think I speak for us all, we think the word "rationalisation" comes in and that there is a Freudian slip in the letters from Post Office Counters. When a place closes, they always refer in the final paragraph to where the nearest one is. That is a Freudian slip in my view. You want to close down half the net work, do you not?
  (Mr Sweetman) No, we do not. That is not our policy. Our policy is to maintain the rural network. The main way we have to do that is to make the whole network sustainable by ensuring that the threatened business that goes through post offices, which in many of the rural areas will be the payment of benefits, is replaced with new lines of business and those are firmly coded into our plans over the next five years. We are going to roll out banking services, government information services and a new range of commercial services which, over the next five years, will actually make the business as a whole much more sustainable, but we have no plans for rationalising the rural network.

  17. At the current time and five years from now, if closures continue at the rate they are now proceeding, we will have half the network anyway to play with, will we not?
  (Mr Sweetman) I think the real issue here is the confidence that individual sub-postmasters have in the future. That has taken a number of real knocks over the last few years. They can see their business declining. As individuals, they are making decisions that say: "I am afraid, I am not going to continue with this business." Then they are having difficulty in finding replacements to take over the businesses. Many of the people we are talking about are probably not providing the service as a business but as a service to their individual communities. Many of them are in their own homes or in village halls where they provide the service. Some individuals say, "I am not prepared to provide this any more" and then we have a real problem in finding a replacement. The decisions on individual outlets are, firstly, made by the individual sub-postmaster. Some of those are economic reasons and some personal and then we respond as soon as we find out. If you will provide me with evidence that we are being inconsistent, then I will certainly take that away, because that is not our intention.

  Chairman: We will be touching on some anecdotal evidence later.

Ms Morgan

  18. How many of the remaining post offices in Wales are likely to close in the next five years or so?
  (Mr Sweetman) I really cannot answer that question because it does depend on individual decisions by sub-postmasters.

  19. If it goes along on the present trend?
  (Mr Sweetman) I am trying to reverse that trend, so I am not in the market for forecasting what will happen over the next five years. I have produced a business plan for the whole of the Post Office Counters' business which shows real growth over five years. The business that we are planning to create, Post Office Ltd., in five years' time will be 30 or 40 per cent bigger than the business is at the moment. We have had a whole series of road shows to sub-postmasters up and down the country which have set out our plans and we hope that that will build confidence. I hope then that the trend that we have been talking about of closures will be reversed, but I really cannot answer the question.

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