Select Committee on Welsh Affairs Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. When an imminent closure is announced, do I take it that there will be an immediate publicity campaign of some kind?
  (Mr Sweetman) We will follow the procedure set down in the Code, which does include contacting all the local interest groups and actually putting out into the marketplace the availability of that sub-post office. Primarily it will be in the interests of the retiring sub-postmasters to do that because it is their business that is being sold. I think it is a combined interest that we have with them. The prime responsibility to initiate that, if they are selling it as a going concern, would be for them. If we see that there is a potential problem, then this code of practice kicks in.

  101. When you discover there is a potential problem, are we then going to have delays and things hitting the buffers because of a time delay? I want to sell my business: at what stage do you say to me, "You have a problem. Can we help you?" and what do you do?
  (Mr Sweetman) Normally a sub-postmaster will give us three months' notice. It is our objective from that point on to ensure that there is continuation of service. We will then have an interview and discussion to find out what their plans are for putting the sub-post office on the market. It could be that they decided that, no, they are turning their premises into private accommodation, and then we have a real problem because we have to find an alternative site. That is when, once we know whether they are selling it as a going concern or are taking the site off the market, we decide whether to kick in with our local community contacts.

Mrs Williams

  102. Do you agree, and you have the Code of Practice in your hand, that, because of the complaints we have already discussed with you this morning, that Code of Practice which has now been issued by Government was long overdue?
  (Mr Sweetman) Yes, I think you are right. We did not have a consistently applied Code of Practice. I think from my point of view this is an important step forward and, while the PIU report last summer did recognise we had done a lot in rural areas, it did recognise we had to ensure that we were consistent with the document. I go away with the firm message that in the past we have lacked consistency. We have not demonstrated our commitment and for that I apologise. I think, now that we have this in the public arena, we will be measured publicly and systematically on that by PostCom. I think that is where the regime has been toughened up by Government. I will do all I can, certainly after this morning, to ensure that we do not let the people of Wales down.

  Chairman: Thank you very much. It is very nice to hear that.

Ms Morgan

  103. As we have already said, one of the aims of the initiative is for a new Government fund to help support volunteers and community groups to maintain or re-open post offices. I think the Government thinks that this could possibly help in establishing 200 community post offices throughout the UK. Do you think that this type of non-profit post office is going to play a significant part in the development of the post office service?
  (Mr Sweetman) My hope is that it might be more than 200. That will be the minimum level in my expectation because there are solutions which would literally cost a few hundred pounds, which is a lot of money at parish level. I think this is one of our tools to maintain the network. It is an important move. All our other initiatives are primarily about building up but we are actually talking here about a successful business. We have not spent much time this morning perhaps on what are the underlying services that people want from a post office. I think at the heart of my job at national level is actually getting people like Basil Larkins here generating new products and services which will keep post offices open. What we have seen are lots of attacks across many different channels so that people can now get the services they traditionally received from post offices elsewhere. What I am planning to do is to grow the scale of the business going through post offices and make it much more varied, more diverse, and improve that long-term prospect if we can land all the deals. Our big move into banking, government information services, stakeholder pensions and smart card ticketing are all things which will revitalise the post office and hopefully will move back the economic pressures which have caused closures. That is how I would like to look at the future of the post offices. It is because we are providing relevant, modern services and leaving behind a lot of the moribund services which proved expensive to our clients and that is really what I would like to spend time on because that to me is where the real security and sustainability is going to come from.

  104. So the help to voluntary groups and community groups is only a small part of it?
  (Mr Sweetman) It is only a small part but I think it will make a difference in several hundred communities up and down the country. If the Government decides to give a specific sum of money to local communities, I hope there will be several hundred communities which will have their post office sustained for the foreseeable future because we have just overcome one of the difficulties that in the past we have encountered.

  105. I am glad you say that you think the figure will be more than 200. Obviously if there are 50 closures per annum in Wales, it will not make that much difference, will it?
  (Mr Sweetman) No, but 200 would imply £10,000 each. I think you could do a lot in a local community with £10,000 but you would get a lot more communities affected at £1,000 or £2,000. I think we will make the money go a long way and be very effective.

Mr Llwyd

  106. Can I return you to page 6 of your memorandum, the second paragraph in 4.2.1 where you refer to using more creative ways of offering services? You go on to mention the use of pubs, garages, local authority offices et cetera. Have any of these been piloted as yet?
  (Mr Sweetman) I do not have the figure for Wales. We have a couple of dozen post offices that have now gone into pubs. I have had meetings with representatives of publicans and letters from breweries saying that they would like to open up certain pubs for post office business. Certainly that is for real and we have taken that forward. We have a number of post offices in garages, if that is right for the community. Not all filling station sites are ideal but some are. I think we do have to be more inventive to find business partners who can incorporate post office services within their offering. That is certainly the challenge that we have picked up.

  Mr Llwyd: I am interested because the example I referred to earlier on of Mallwyd was a very successful garage. Obviously at first glance it was not good enough but now it is.

Mr Livsey

  107. I have a couple of points in this respect. I have a community post office sited in what was a shop in a little village called LLangunllo. My constituency is the largest geographical area of England and Wales. There is also a community in Llanbadarn Fynydd which has received awards. Many of these offices are part of a network. Last summer Presteigne post office in my constituency had a relationship with the Llangunllo community office, which was sited in an old shop. I asked the Minister—there were difficulties in fact in continuing this service—and he agreed to do something about it and I was given the reassurance that with new the IT this was going to be all right. Yet, your PR department was saying it was going to close down and there were all kinds of difficulties. There seemed to be a complete breakdown in communication on that occasion between Bangor, your PR people, who I think were sited somewhere in the Midlands, and the DTI. Have you improved your communication system since then? We actually saved the situation after being very vociferous about the whole thing.
  (Mr Sweetman) That is an example where clearly we were not joined up. I would hope that we have improved from lessons like that. I can assure you that it is our intention to be joined up. Unfortunately, there are examples which we have heard about this morning where clearly we are not. I apologise for that.

  108. It was a very serious situation because I was sending letters from the Minister to the local post office and your PR people were saying precisely the opposite of what the Minister was telling me.
  (Mr Sweetman) That is clearly an unacceptable position to get into.

  109. They believed me rather than your PR person, fortunately.
  (Mr Sweetman) I apologise for that.

Mrs Williams

  110. You say that the proposal to pay benefits through bank accounts from 2003 is a significant threat to the Post Office network. We found during our inquiry into social exclusion that there are nearly half a million adults in Wales with no bank account of their own. Is it possible that the decision will cause people to open accounts with the new Universal Bank, thereby increasing the Post Office's business?
  (Mr Sweetman) Yes, certainly we are responding very vigorously to this challenge or threat. As you are well aware, some 35 per cent of Post Office business going across Post Office Counters is to do with the payment of benefits. I will ask Basil Larkins, who is leading the development of our Banking Services, to respond in more detail.
  (Mr Larkins) I think this will be the single, most fundamental change to our business over the next few years. The bedrock of what has been going on in Post Offices for as long as anyone can remember is distributing Government services and the contract has been the payment of benefits. We have really been in the payment of benefits business and other things. By 2005 we will not any longer be in the payment of benefits business; we will be in the access to bank account business, which is a different business. That is going to be a major challenge for us as a management team and for our network of sub-postmasters to deal with. You mentioned the new Universal Bank; it is actually the new Universal Banking Services. The agreement that was reached between Government, major banks and ourselves in December was that on the one hand the banks will open up through their computer systems access to basic bank accounts at Post Office Counters for free. We think that a large number of the people who are currently "unbanked" may well choose that option to open up one of these accounts with one of the well-known banks or building societies. Secondly, in addition, there may well be people who either will not or cannot open that account and they will instead choose to open up what we are going to call the Post Office Card Account, which is referred to as the Universal Bank. The Post Office Card Account is going to be the name we use. That will be for a very large number of people we think, although of course we are two or three years away from the launch and who knows exactly how many. Of course, the vast majority of people who are in receipt of a pension or a benefit already do have bank accounts. We expect that their option will be by and large to choose to put that money into an in existing bank account. For our purposes from a commercial point of view, I have to ensure that they will still go into the post office to access that bank account. That is particulary the case for example in rural areas where there are very few bank branches anyway. Unless we get those deals put in place, then the person will have to travel further to get their money and that is obviously not a good idea. The good news is that we have made some of those arrangements already with several major banks. I am very optimistic that, since the banking community has committed to access to the basic bank account, there is no reason why we should not provide commercial-based operations for ordinary customers as well.

  111. So you would agree that, rather than pose a threat to the Post Office network, it could be a benefit?
  (Mr Larkins) It certainly does pose a threat and there is no doubt about that, but in every threat there is an opportunity as well. When change takes place, that is both a threat and an opportunity. Certainly the removal of the payment of benefits by the traditional method is a threat. That is exactly why, for example, the second-hand market in post offices has been reduced because there is a lack of confidence there. We have to find this new business. Once those contracts are in place and once we have a total watertight agreement both with the Government and the banks, then with a very high degree of certainty we will get that confidence back into the marketplace again and our consumers and our sub-postmasters will feel reassured that there is a long-term future, but we have not got there yet. We are making extremely strong progress but we are not here yet.

  112. But if removing traditional methods does happen, people can still, if they wish, have their pensions and benefits paid in cash at the post office?
  (Mr Larkins) At the moment, but that will not be the case after 2005, unless through one of the very mechanisms I have described to you.

  113. Is that your understanding?
  (Mr Larkins) The DSS has made it quite clear that the current method of paying benefit will be changed to ACT, which means payment into a bank account, either a new bank account or an existing bank account, by 2005. That is DSS policy.

  114. Are you not aware that the Minister has made it quite clear more than once that people will be able to get their pensions and benefits in cash at post offices?
  (Mr Larkins) Absolutely, but by access to the bank account, not by access to the counterfoil system we have at the moment.

Mr Livsey

  115. After you gave evidence in July, you sent us a note saying that you had approached the National Assembly to make them aware of potential users of the Post Office network for a range of Government business. What kind of services could the Assembly offer through the Post Office network?
  (Mr Sweetman) I think that is principally information services. We have reached agreement with the Department of Trade and Industry on an initial trial of such services for the whole of the country. The trial is taking place in Leicestershire and Rutland but the results of that will be made available to all parts of the country. I think the main interests from the Assembly point of view will be in information services that will be provided and financial support that can be provided to communities. We anticipate in many post offices there will be information kiosks and leaflets. We will be training sub-postmasters to be able to answer the simple inquiries about: where do I go for this and where do I go for that? That is one of the skills that we recognise sub-postmasters have got, being a trusted source of information about financial support, social support, community support and small business support.

  116. I certainly agree with that. Could you say, though, given that the Assembly is very e-conscious and conducts most of its business through that medium, whether you have made further progress in that area? Do you foresee facilities for getting information, say through the internet, from the Assembly?
  (Mr Sweetman) Certainly the model that we have on trial in Leicestershire with the support of the DTI is a mixture of face-to-face information support absolutely supported by technology. This will be in various forms. It will be through the internet with kiosk facilities on the public side of post offices and there will be direct phone lines to inquiry centres with phones where people can talk through web screens. It is quite an exciting proposition. With something like the Assembly, which is very e-literate, it will be a natural extension to provide those services through many post offices up and down Wales. The great advantage is that you know information can be updated overnight everywhere at the same time and therefore the information available is totally up-to-date. That has advantages over some of the more labour-intensive methods.

  117. I think there are potential problems. I am very pleased to hear you have a dual approach because in some areas there is an ageing population and they are not familiar with the new technology. I think it is absolutely vital that you maintain that dual approach to people and give them access in a way that they feel absolutely appropriate.
  (Mr Sweetman) Certainly all our market research shows that there are large numbers of people of the population that we serve which are not personally confident about using new technology but they would trust the sub-postmaster to talk them through it. We have also found that, once that confidence has been built—this is how you do it, this is what you do and what you see—then they take to it like ducks to water. We have found that with sub-postmasters as we have introduced the Horizon system. People who were initially worried about the technology, once they have been taken through it and have been hand-held through the process, find their confidence grows. I think that will happen with our customers as well. Our strategy is to offer customer choice: you can have it this way or that way. The uniqueness about the network of post offices is that you have a fundamental core and face-to-face contact and that is where the trust is built up but if people want pure technology, then they will have pure technology available as well.

  118. Finally, are you satisfied that your sub-postmasters are up to scratch in terms of training? Do you provide training for them? Given, for example, the age of the postmistress Mrs Williams was mentioning, which is not untypical at 70 plus, are these people actually going to be able to deliver that kind of service?
  (Mr Sweetman) That is why we chose a single geographical area like Leicestershire, which has a mixture of urban, market down and deep rural within it, actually to test these products and services for real. This trial starts in July and runs for six months. Then we will make all the results available. The two key things that we are looking at are: the response to customers and what they like; and then our organisational ability to support that. If our experiences on Horizon are anything to go by, age is not a barrier when it comes to providing customer service with technology. For some people it is an issue but the majority of our sub-postmasters, irrespective of age, have taken to Horizon and the technology involved incredibly well. Therefore, I have confidence that when we do package up the final solution which we can roll out right across the country, we will get something which has been proven and will actually bring business and footfall back into post offices.


  119. That is a very good note to end our session today. Thank you for coming and for acknowledging the failures. It is important that you did that. Can I ask you one last question? Would you update us in six months' time or so on the various individual cases that we have raised today?
  (Mr Sweetman) Yes. I think I have learnt a lesson from coming this morning. We do run a devolved management system and rely on many hundreds of people to keep everything together. I have learnt the lesson that we are certainly not perfect. You have given me strong evidence that that is the case. Our intent absolutely, though, as is set down in the Code of Practice, is to keep this network of rural post offices going. It is a tough job but our lack of consistency has certainly come back and hit us today. I leave with the bite marks showing, in the nicest possible way! A personal lesson has been learnt and an organisational lesson, too. I feel accountable to you to come back in six months' time with evidence that the words are actually supported by action.

  Chairman: We look forward to that. Thank you very much indeed.

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