Examination of Witnesses (Questions 260-278)
MR GERRY
SUTCLIFFE MP AND
MR NIGEL
LEESE
14 DECEMBER 2004
Q260 Richard Burden: Given that history,
to then be told there is another review unrelated to it that may
change the conclusions of that first review and actually cause
a lot of concern for the credibility of that first review, do
you not see why people are concerned about that and why we are
concerned about that?
Mr Sutcliffe: I would if there
is a plan for closure but there is not. I would if it is that
they are going to shut down half of the Crown post offices, they
are not going to do that.
Q261 Richard Burden: We put this to them
when they gave evidence to us a week or so ago and we put it when
we were discussing it with them on the Urban Reinvention Programme
and we put it to them when we were talking to them about the impact
of direct payment. What is the problem with them sitting down
with stakeholders in an area, whether they be Members of
Parliament, councillors, users' representatives or Postwatch,
and saying "Look, this is not about consulting with regard
to closures, it is about saying how do we construct a viable post
office network serving this community? What do you want to see
out of that plan? What do we want to see out of that plan? What
are the constraints? What are the opportunities?" They have
never ever done that anywhere and what is the problem with them
doing it? That is what we keep asking them to do.
Mr Sutcliffe: I have some sympathy
with that in the sense that I do not see it is going to be a mass
closure programme, that is not what it is going to be. I see a
need for Post Office Limited to speak to their employees and work
out, as a starting point, those arrangements. Postwatch and Post
Office Limited are reviewing the relationship they have got following
the Urban Reinvention Programme, so that could be part of it.
I will ensure for the Committee I will speak to David Mills to
make sure that happens.
Q262 Richard Burden: It is proactively
looking at the plans for an area rather than reactively looking
at plans?
Mr Sutcliffe: It must be in their
interests in the overall position we are trying to achieve, which
is a viable network.
Richard Burden: Absolutely. Thank you.
Q263 Mr Clapham: Minister, can we turn
to franchising because we were told by Allan Leighton and David
Mills that this next year there would be no more than five or
six of the direct managed branches closed. Given the figures which
we know are being bandied about from the review that is taking
place, the direct managed network is going to rely very heavily
on conversion to franchises. Given that the Communication Workers'
Union is opposed to franchises and given that both parties have
suggested in the past that the service provided by franchising
is not of the same standard as the service that is provided by
the direct managed branches, are you confident, for one thing,
there will be sufficient franchisees of a proper standard in order
to ensure that the service is able to be provided and the service
will be able to be sustained?
Mr Sutcliffe: How I would answer
that is, first of all, there need to be—and I know that
this is taking place—ongoing discussions between Post Office
Limited and the trade union about the future of Crown post offices
and the franchises that are taking place. I am quite happy because
it is one of the things I asked to look at about the criteria
of franchising to make sure that was adequate. I was concerned
there had been issues raised by Members of Parliament about people
not being able to get franchises and different franchisees being
picked, so I am quite happy now with the criteria that exists.
As Mr Leese said earlier, there have been some changes in terms
of some of the larger supermarkets not wanting to continue with
post offices and that has been looked at, I do not know if he
wants to comment on any of those. I think franchising and the
criterion for that is adequate but, of course, there has to be
the negotiation taking place between the company and their employees.
Q264 Mr Clapham: Has the union submitted
to you their concerns about franchising?
Mr Sutcliffe: Not at this stage
but I have been in discussion with the union today and I am looking
forward to a document they are going to present to me in the not
too distant future.
Q265 Mr Clapham: Given what they have
said about franchising and their concerns, are you satisfied that
Post Office Limited is a proper monitoring system in being to
be able to oversee what is happening in the franchised branches?
Mr Sutcliffe: I am at the moment,
but clearly I look at any concerns that are put to me and review
those concerns in the light of what evidence is given to me.
Q266 Mr Clapham: Would you be prepared
to ask them to provide you with evidence that customer service
standards are maintained in the franchised branches?
Mr Leese: They have already provided
us with that type of information because they monitor the service
levels provided through their own branches against ones that are
recently franchised and, indeed, through sub-post offices. Those
consistently show high levels of customer satisfaction. There
is very little difference between a Crown office and a franchised
one. On some counts, higher scoring for the franchised offices
which typically might be open for longer hours and offering a
wider variety of products that customers want.
Q267 Mr Clapham: In terms of the proportion
of franchised units, which I understand is about 900 out of the
1500, is it possible to say how many of those franchised units
have been given a tick as providing a high standard of service?
Mr Leese: That is a question we
would have to ask the Post Office.
Q268 Mr Clapham: Is it one we can ask?
Mr Leese: We will.
Q269 Mr Clapham: Is it one that you will
ask?
Mr Leese: We will ask that question.
Q270 Chairman: There are certain services
which are provided by the Crown post offices, for example the
verification of passport information and things like that, are
you content that the consumers' interests are being protected
in the franchised facilities?
Mr Sutcliffe: I am, and that is
the advice given to me by the officials.
Mr Leese: Crown offices all do
have the full range of post office services but they do not have
those exclusively, there are at least another thousand post offices
that carry the full range. Whenever they franchise they carry
that full range into them and I think it is covered by my previous
answer that the quality of service continues to be high.
Q271 Chairman: You have repeated on a
number of occasions this afternoon that provided the unions are
agreeable and the Post Office is agreeable, you are quite happy.
What about the customers? At the end of the day they are the people
for whom the service is provided; it is not for the unions, it
is not the Post Office.
Mr Sutcliffe: The reason why I
make the comment I do is as Minister for Consumer Affairs and
that is why it is under my responsibility that a consumer must
come first. At the end of the day it must be a service to the
consumer which the consumer wants. That has been part of the problem
in terms of the changes that have taken place because consumer
needs have changed. We are talking about a complex organisation,
complex sets of relationships where there have been historical
problems. What I want to see is the consumer being put first but
that there is good discussion between Royal Mail and their employees
either at the group level or at the Post Office Limited level
to take it forward because at the end of the day if there are
not good industrial relations then the consumer will lose out.
Q272 Chairman: One of my colleagues is
going to come on in a moment to one or two notable examples of
closures. One of the things which we have discussed with the Post
Office, and we have not raised with you, is the length of time
available for consultation. Quite correctly it is appropriate
that the workforce in the place concerned should be consulted
or not consulted but told what is going to happen, it would be
nice if they were consulted but the chances are under our legislation
at the moment, because of the Government's refusal to introduce
consultation legislation on the European model, we just have to
take what we can get. Given that you have to speak to the unions
first, are you satisfied about the length of time for consultation
because the Cabinet Office has said that they think 12 weeks is
the best available time for public consultation? The Post Office,
as I recall, moved from six weeks to eight weeks and the 12 week
period is being set down as a gold standard. Why do you think
that this body which you are a major shareholder of should not
be required to meet the same standards as the Cabinet Office?
Mr Sutcliffe: Chairman, my other
responsibility is that of Minister for Employment Relations and
in April next year the Government will be introducing its new
regulations on information and consultation which is a key cornerstone
to industrial relations and employment relations in the United
Kingdom. I would hope the principles which are applied in that
legislation, which takes place in April, are applied in the relationship
between Royal Mail and its employees now because we are trying
to get voluntary arrangements in place. I am aware of the Committee's
concern about the 12 weeks but, as I said earlier, no decisions
have been taken yet. I will ask David Mills to look at the viewpoint
of the Committee that 12 weeks might be an appropriate time.
Q273 Judy Mallaber: If I can follow up
on that and also the positive response you made to Richard Burden's
questions. It looks to us really as though we are in your hands
to get Post Office Limited to accept any consultation at all or
the requirement to do it. They rejected prior consultation and
the points that Richard Burden was making, and I was pleased at
your positive response. As you know, as with the Urban Reinvention
exercise, we found huge dissatisfaction with the way Post Office
Limited consults stakeholders prior to any changes. They will
not consult in advance on what their programme might be but even
when they have got their programme on the detail of what is happening
with individual closures or changes they seem to be rather reluctant
and there is a great dissatisfaction with how they go about it.
Are you satisfied with the consultation they have used and what
can you do to try to give them a kick to consult in a more positive
way and regard that as being an important function?
Mr Sutcliffe: The criticism of
Post Office Limited perhaps is a bit too harsh in the sense that
the way that the consultation has taken place has given the opportunity
for Postwatch, particularly the Urban Reinvention Programme, to
have its say in terms of issues it could take to another stage.
There have been, as I said earlier, occasions that have caused
me concern which I am taking up with Postwatch in terms of some
next steps that may have taken place that did not take place.
Q274 Judy Mallaber: Postwatch say that
they never even managed to get any modification on any plans for
Crown office closures and they have not got any changes at all.
The impression certainly from Kensington and Chelsea Council when
the Notting Hill closure came about was that the Post Office believe
they are under no formal responsibility to consult at all and
are only doing so under a protocol negotiated directly by the
DTI and Postwatch because their belief is they are not a public
body but an arms' length private company and, therefore, there
is no requirement for them to consult. Do you think those criticisms
are too harsh then?
Mr Sutcliffe: Post Office Limited,
quite rightly, as they see how the directly managed office fits
within their framework see the separation, differently as it did
on the Urban Reinvention network. As I have said, and you have
heard me say, I do believe there has got to be full discussion.
We are aware that Post Office Limited are reviewing their consultation
procedures.
Q275 Judy Mallaber: Can we take it from
that you are going to be encouraging them to be more open and
to consult more widely?
Mr Sutcliffe: I do not want to
give the impression—and it seems to me to be coming, and
I know not intentionally from the Committee—that there appears
to be a massive closure programme as far as directly managed offices
are concerned. That is not going to be the case.
Q276 Judy Mallaber: If there are to be
any closures or changes at all, you would be encouraging them
to consult maybe more positively than they could be regarded as
having done in the past?
Mr Sutcliffe: It would be good
practice to consult and I have passed on that view to Mr Mills.
Q277 Mr Evans: Just an add-on to reinforce
what Judy said, I am delighted they are looking again at the consultation
process. It is a shame it has happened so late because there are
a number of people who have made protestations about the closure
of their post office. Local newspapers are joining campaigns to
keep them open and it seems as if it is all a done deal, they
are going through the motions and it is all done. The Notting
Hill case, for instance, is a good example whereby some of the
information only came out afterwards as to why they were really
closing it. One of the reasons we suspect as well is we found
out the value of the post office there was £950,000 and I
am sure that somewhat influenced the decision which was finally
taken, not the service they were giving to people around that
area.
Mr Sutcliffe: I hope the Committee
can be clear, and let me be clear, that the Urban Reinvention
Programme and the consultation process that was changed by my
predecessor on 5 February gave adequate opportunity for consultation
to take place. There was a safeguard in terms of Postwatch which
was overlooking from the consumers' point of view about that closure
programme. Members of Parliament and others in co-operation with
Postwatch have managed to be successful in some post offices not
closing. The Crown network is a different body and a different
situation applied. I have said what I think should happen in terms
of Post Office Limited in respect of Crown post offices but I
do not think we should confuse the two.
Mr Evans: I hope they listen to you,
Minister.
Q278 Chairman: Can I thank you, Minister.
I realise there was an interruption to your diary as a consequence
of the two votes. Our concern started initially, as I said earlier,
as a consequence of the receiving branches, and something in the
order of 425 out of the 555 Crown post offices were deemed to
be receiving branches. We know there are likely to be at least
30 closures over five years which may be attributable to leases
ending or other forms of compulsory purchase or whatever. Also,
we know there are probably another 80 on top of that over five
years which have to have leases renewed. We know on the other
side of the coin in Wrexham and in Belfast, at considerable public
cost, there have been new post offices built but if that were
to happen even in a few of them it would not be long before we
were up to the £70 million deficit. We find it a little bit
difficult to balance the ambitions to make the sector financially
viable, the significance of them as receiving branches when other
places are closing and the fact there have to be, for other reasons,
branches changing location. That is the background. It is all
very well to say we have only been told there are 30 branches
closing, what concerns us is there may well be more than that
through circumstances which may in large measure be due to the
financial strictures imposed on this sector of Royal Mail by the
letter sent by the Secretary of State. Therefore, what we want
to make clear, also, is we would look towards, within the whole
of the Royal Mail, that there may well be some flexibility as
far as cross-subsidy is concerned or, alternatively, that you
would look as favourably towards Crown post offices as you have
done towards other urban post offices or rural post offices where
there has been a case made for some form of financial support
because we do think this is important. We hope you will bear that
in mind.
Mr Sutcliffe: Thank you, Chairman,
for the way the Committee has formed this afternoon in terms of
the details of the issues which have been raised. Clearly I will
reflect on not only what the Committee says this afternoon but
in any subsequent report that comes from the Committee.
Chairman: Thank you.
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