Select Committee on Welsh Affairs Minutes of Evidence

Memorandum submitted by Consignia plc



  This paper has been prepared in response to a request from the Welsh Affairs Committee for an update on issues raised during the Committee hearing on 30 March 2001. It provides information on the four individual cases mentioned at the original hearing[6] and those raised in the Chairman's letter of 12 December 2001.


  Whilst the past few years have seen a reduction in the number of Post Office branches in rural areas, we have been taking important steps to arrest this decline. Two of these key approaches are outlined below, and the effect of these initiatives can be seen in the outlet figures.

  Our most recent analysis shows that at the end of September 2001 there were 1,386 Post Offices in Wales. There were 13 net closures between March 2001 and September 2001, comprising of two urban and 15 rural office closures[7] together with one urban and three rural office openings. Five of these closures occurred in the second quarter of the financial year. We expect this improving trend to continue when the third quarter results are published in February.

  This figure of 13 net closures over the first six months of this financial year compares favourably to 64 net closures over the full year last year (April 2000 to March 2001). This follows the national trend where there was a net reduction of 159 offices between March and September 2001 compared to 299 over the same period in the previous year.

  When rural closures have occurred during the last quarter it has been the result of the incumbent sub-postmaster leaving the business—for example through resignation—and no new applicant coming forward to take over the outlet, despite Post Office attempts to attract them. If subsequently a suitable candidate can be attracted, then steps can be taken to reopen the office.


  Following a pilot in the Midlands and North East last year, a network of new posts has been established across the country (31 in total) with the specific aim of preventing or reversing Post Office closures in rural areas. Rural Transfer Advisors (RTAs) have been appointed to help provide fresh and imaginative solutions to closures, working closely with Parish Councils and other invested parties to provide information on the range of grants and initiatives available through a variety of organisations. The role also ensures full deployment of Post Office policy with regard to avoiding closures, and the Code of Practice as agreed with Postwatch (not printed) whilst also monitoring and documenting the handling of reopening opportunities.

  At the last Welsh Affairs Committee hearing in March last year, the concept of RTAs was just beginning to be rolled out in Wales with the appointment of two RTAs. There are now four RTAs in Wales working to an Area Manager who has direct responsibility for rural outlets in Wales.

  Since the introduction of the RTAs, the closure rate has slowed significantly, accompanied by an increased number of reopenings and success in preventing closures.


  The Sub Post Office Capital Subsidy Scheme was introduced in October 2001. It provides an additional source of funding to assist in circumstances where a rural Post Office branch has recently closed, or is likely to close and where, it appears that without a subsidy, the community would lose its Post Office branch permanently. The scheme creates a fund of 2 million, from which payments not exceeding 20,000 per application are available. However, it does not replace existing sources of grants, but provides an additional source of funding in situations where the associated set up costs cannot be found from elsewhere. Further details about the scheme can be found in Annex 2.

  To date, there have been over 500 requests for further information about the scheme and 123 of these have generated requests for application forms of which 27 have so far been returned. Seven applications for support have now been approved and other applications are under consideration. One payment of 13,200 has been made in respect of an initiative at Capel-le-Ferne in Kent and of the Welsh applications, further details are being awaited regarding Tavernspite Post Office in Pembrokeshire and in principle funding agreement has been given to Deri Post Office whilst awaiting detailed costs. In addition, a further nine applications have been sent out to Welsh offices.


  The sub-postmistress resigned due to the automation of her office, and an initial enquiry was received from Mrs Griffiths who ran the local garage with her husband. A visit was undertaken in May 2000 to assess the suitability of the premises before submitting an application, and this was found to be appropriate for the purpose of a small Community Office. The application was received in July but there was concern about various aspects of the business plan and further information was required. Unfortunately, there followed a misunderstanding regarding further communication, with Mrs Griffiths believing that the Retail Line Manager (RLM) would be contacting her with a decision, whilst the RLM believed that Mrs Griffiths would be contacting him. Therefore it was September 2000 before the RLM informed Mrs Griffiths that her application had been unsuccessful.

  In October 2000, the case was reviewed, and Mrs Griffiths provided updated information. On this occasion, the application was approved based on the resubmitted business plan. Mrs Griffiths accepted the appointment and the Post Office reopened on the new site on 28 February 2001.

  Whilst in this case, there were concerns with the delays experienced in assessing the prospective sub-postmistress, this is not a typical experience. The process has subsequently been tightened up with extensive and thorough communication of the necessary steps to be followed in accordance with the Code of Practice, and the appointment of the RTAs to ensure consistent, effective and timely deployment.


  The sub-postmistress tendered her resignation on 9 December 2000 as a result of the Business's decision to introduce the Horizon computer system across the network. Support visits were made to the sub-postmistress to assist her but she concluded that she was not happy using the Horizon system. A requirement was not made by Post Office Ltd at any time to undertake any costly structural work related to this.

  The sub-post office was closed in March 2001 and the Code of Practice was followed comprehensively, with the Head of Area also offering to meet local MPs with the aim of taking any issues forward. Under the Code of Practice the office is due for a 12 month review in early March 2002.


  The sub-postmaster at Bwlchgwyn resigned at the end of March 2001, and wishing to convert his premises into private accommodation at that stage, he did not make them available for continued Post Office use. Although four parties expressed an interest in the position, unfortunately this interest did not materialise into firm applications. Efforts were made to persuade the sub-postmaster to reconsider his decision, and although an initial remuneration review in July 2000 suggested revised hours due to a fall in business volumes, it was later agreed that the full-time status of the office would be maintained should the premises continue to be available for Post Office use. Unfortunately though, the sub-postmaster did not reconsider and whilst a number of applications were suggested in early January 2001 following a meeting with a local councillor, these failed to materialise.

  However, a local Community Centre was proposed as a possible location for the Post Office and as a result, a satellite service was arranged in the centre which opened for business in early April 2001. The office is open four half days a week with the hours distributed to accommodate the local nursery school that operates alongside the service, taking into account the obvious concerns about safety. Anecdotal evidence shows that the service appears to have been well received by the local community; nevertheless an application from someone wishing to establish a more permanent arrangement would obviously be considered as per our existing policy.


  Unfortunately, Dynefor is not a name recognised or used by Post Office Ltd as a Post Office and having checked with the Borough Council, is not recognised as a district either, therefore it was not possible to obtain specific details on this case. However, if the Welsh Affairs Committee wishes to provide more details it can certainly be examined further.

  In general though, as regards delays in vetting new purchasers, certain procedures have to be followed when appointing a new sub-postmaster to ascertain suitability and these are undertaken in a timely way. Occasionally, delays have occurred as in the case of Mallwyd Post Office, but primarily these have been due to delays in third parties returning paperwork or the need for further information to ensure a thorough vetting procedure. Over the last year, measures have been put in place to monitor the implementation of this process and the Rural Transfer Advisors have specific responsibilities to ensure full and effective deployment.


  In accordance with the agreed Code of Practice between Consignia and Postwatch, a 12-month review is currently being undertaken to see if there has been any material change since the original attempts to maintain the service. Since the closure of the office in July 2000, work has been ongoing to restore the counter services in Penrhynside. The sub-postmistress advised us that she would be making her premises available for continued use as a Post Office subject to agreeing terms. The possibility of maintaining a service with the sub-postmaster at Craig y Don was examined but nothing came of it. Additionally, there was an interested party in October 2000, however the potential candidate ruled himself out of the running at the end of January 2001.

  Since the closure of the office, we have kept in touch with the former sub-postmistress (Mrs Sumbland) to see if anyone was showing an interest in her premises. However, in early February, Mrs Sumbland requested that all Post Office fixtures and fittings be removed from her shop as she was looking to carry out some improvements. In view of Mrs Sumbland's intention to alter the layout of her premises and the possibility that we might find a visiting sub-postmaster to provide a satellite service, we asked her whether we could still use the premises for a potential visiting service and to confirm what rent she required. A rental figure was subsequently agreed and discussions took place with two neighbouring sub-postmasters during the summer of this year. Unfortunately, neither sub-postmaster felt able to offer the satellite service because of concerns about providing cover in their own offices whilst they were in Penrhynside.

  The Post Office fixtures and fittings have now been taken out of Mrs Sumbland's premises and we continue to review the situation.


  To date, there was no threat of closure for Llangunllo Post Office, nor any uncertainty over its future. Presteigne Post Office operates and will continue to operate three satellite services in Walton, Norton and Llangunllo.

  There has been a recent change of sub-postmaster at Presteigne Post Office. However, services were not under any threat and indeed, all services remain unchanged with the satellite offices continuing to open for four hours a week and Presteigne continuing as full time.


  Llanbadarn Fynydd operates within a community-run shop and again is not facing any threat of closure or uncertainty over services available. The only current issue relates to the offer of an on-line Lottery terminal for the office, however, problems exist regarding the division of accounting responsibility between the shop and the Post Office and we are attempting to resolve these problems at this time.


  Post Office Ltd has a commitment to Government to maintain the rural network of Post Offices and we take this commitment very seriously. To this end, we aim to be as effective and as responsive as possible in order to preserve the provision of Post Office services for the local community. Over the last year we have worked hard to improve both the processes that are in place to support this, along with the deployment and monitoring of these processes, and recent network figures showing a slowdown of rural net closures, illustrate the positive effects of this work.

  These results have also been achieved against a backdrop of market uncertainty and financial challenge. The situation faced by Post Office Ltd today remains difficult, given for example, the significant loss of income through the move to ACT from 2003, simply in order to survive as a business and to sustain the network.

  To counter this threat, Post Office Ltd continues to identify and develop new proposals to replace this business. Consignia and the Government have already jointly invested over 1 billion on Horizon, which has automated counter transactions and provides a platform on which to build future product development with clients. We are also trialling in Leicestershire "Your Guide", a service offering customers information on government services, local information and jobs. In the banking arena, we are developing the "banking engine" technology which will enable us to convert current manual transactions into fully technically enabled transactions for many banks. Whilst in terms of Universal Banking, the major banks in the country have signed a memorandum of understanding, committing 180 million over five years towards the venture.

  These vital national activities help to support local outlets, and complement the work that continues at a local level, where we have dedicated processes and resources directed towards keeping rural offices open.

Annex 2



  The above scheme has been introduced to provide an additional source of funding to assist in circumstances where a rural Post Office branch has recently closed, or is likely to close, and where, but for the payment of subsidy, it appears likely that the community in question would lose its Post Office branch permanently. The scheme is not intended to replace existing sources of grants, but provides an additional source of funding in cases where the associated set up costs cannot be met from elsewhere.

  The scheme creates a fund of 2 million, form which payments not exceeding 20,000 per application are available (including VAT). For an application to be successful, all of the following initial criteria must be met:

    —  a sub-Post Office in a rural settlement has closed within the 18 months preceding the making of the application for a payment; or it appears that an existing sub-Post Office in a rural settlement is likely to close within six months but for the making of a payment;

    —  it appears that, but for the making of a payment, no replacement sub-Post Office will be established in that settlement;

    —  the reopening of a sub-Post Office in that settlement would not adversely affect other sub-Post Offices in the vicinity;

    —  there is a suitable person willing to act as sub-postmaster in respect of any proposed replacement sub-Post Office; and

    —  the settlement in question has a population of fewer than 10,000 inhabitants.

  As implied in the name of the scheme, subsidy is only available towards the costs of certain defined eligible items required for the re-establishment or continued operation of the Post Office branch in question. Examples of eligible items are:

    —  building works and structural alterations;

    —  installation of partitions, screens, counters and store cupboards;

    —  improvements to the means of access to the premises;

    —  redecoration and making good of the premises;

    —  provision of fixtures, fittings, furniture and equipment;

    —  provision of water supply, electricity supply, telephone lines, and other services to the premises;

    —  costs of obtaining planning permission, building regulation approvals and other consents and approvals; and

    —  legal costs and other professional fees.

  Applicants who believe that they may qualify for a subsidy from the scheme must complete and submit an application form, the contents of which will be verified and adjudicated against the defined criteria. Successful applicants will of course be required to produce documentary evidence at various stages of the process, such as estimates, invoices, receipts etc. The scheme will be administered on behalf of the Secretary of State for Trade and Industry by Post Office Ltd. Application forms and associated guidance notes are available from:

    The Sub Post Office Start Up Capital Subsidy Scheme, Post Office Ltd, Verulam Point, Station Way, St Albans AL1 5HE or


6   Mallwyd, Houghton, Bwlchgwyn and Penrhynside. Back

7   Post Office Ltd defines rural offices as outlets in areas of less than 10,000 people. Back

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