APPENDIX 9
Memorandum by the Postal Services Commission
(Postcomm)
1. Postcomm's assessment of the current
position on Directly Managed Branches (DMBs) is set out in its
Post Office Network Annual Report "Building a viable network"
which was published last month. Postcomm's report reflects advice
and information on the DMBs from a variety of sources including
Post Office Ltd, CWU, CMA and others. Postcomm's thinking is also
informed by meetings around the UK to hear the views of Post Office
customers and their representatives.
2. Postcomm recognises that DMBs are running
at a considerable loss to the network (over £70 million in
2003-04) and that Post Office Ltd needs to take action to make
them more sustainable. However, there is increasing concern at
local and national level about these branches because of an apparent
lack of transparency and consultation about their treatment and
the knock on effect for the rest of the network. A key concern
is that DMBs are being assessed outside of the Urban Reinvention
Programme and that this could lead to gaps in the network and
a poorer service for customers.
3. Changes to or potential closures of any
of DMBs tend to be controversial because traditionally they are
larger branches, based in prominent high street locations, offering
customers more counters and a full range of services. In the light
of comments on the DMBs, Postcomm therefore takes the view that
for DMBs to become sustainable a range of issues need to be taken
into account:
— High property and occupancy costs,
and property no longer fit for purpose (some of them were also
once sorting offices);
— Low investment in the actual interior,
coupled with high support and central costs;
— Uneconomic use of cash distribution
due to poor planning;
— Loss of benefits traffic, and dealing
with Government products that do not offer the network high monetary
rewards; and
— Ineffective reward schemes for staff
who are therefore not properly motivated, and who are paid a higher
wage costs than staff in comparable businesses such as banking.
4. There is currently no evidence to suggest
that service provision has suffered once a DMB becomes a franchise
store, as it is expected to continue to offer the Post Office
Counter services that were previously available at that branch.
In fact it might be argued that customers may benefit from the
wider range of goods being made available at a franchise store.
There are also signs that with investment and planning some of
these branches could act as "flagship" stores. North
Finchley DMB, for example, has been given a new lease of life
with a modern refurbishment, zoning, and a floor walker to assist
with queue management.
5. It appears that customers still want
to use these branches in order to access the wider range of services
and talk to knowledgeable staff that they trust. However, the
general trend, as in other parts of the network is one of declining
customer use as they increasingly find other channels to access
the services they need. Postcomm's view is it important that Post
Office Ltd takes account of the lessons from the Urban Reinvention
Programme and actively involves stakeholders to ensure that its
approach to the DMBs fits with what is happening locally and elsewhere
in the network.
RESEARCH
6. In our annual report on the network,
Postcomm recommended that there should be research into queuing
times in DMBs and other urban branches, to assess the impact on
different client groups. This is because we want to examine the
effect of Urban Reinvention on these branches, as we are told
that that as a result of the programme DMBs have gained more business.
Postcomm is currently undertaking this research in a joint project
with Postwatch. The results are expected in December 2004.
7. The research is expected to evaluate
any differences between Directly Managed Branches and franchise
offices that were once DMBs. In particular it will examine:
— Queuing—time spent in the queue
and the number of counter positions open, any queue management
measures, numbers queuing;
— Other Observations—counter
advice, product knowledge, customer service, standard of outlet
and disabled access;
— Availability of Information in the
Post Office—opening hours, posting dates, complaints information,
Post Office financial services and products;
— Observations away from the post office—transit
times of posted items, receipt of posted items.
8. In the New Year, Postcomm plans to follow
up this research with a wider review of the impact of the Urban
Reinvention Programme on customers, subpostmasters and the viability
of the network. This research will include an assessment of any
differences between urban and urban deprived branches and of the
impact on vulnerable groups.
BACKGROUND
Postcomm's role and duties in relation to the
network
9. Postcomm's role is to monitor and provide
independent advice on developments in the post office network.
Postcomm's work results from the recommendations of the Performance
and Innovation Unit report "Counter Revolution: Modernising
the Post Office Network" (accepted by the Government in June
2000) to:
— report annually on developments in
the UK's network of post offices;
— advise the Government on the best
way to target financial assistance to the rural network of post
offices; and
— develop a shared understanding of
the role that post offices should play in the longer term and
advise the Government on the main options for the policy framework
after 2006.
10. Under section 42 of the Postal Services
Act 2000, Postcomm is required to give the Secretary of State
advice and information on the number and location of public post
offices and their accessibility to users of postal and other services.
11. Since 2001, Postcomm has published four
reports drawing on research and the views of customers, subpostmasters
and stakeholders to assess whether the network's services and
number of outlets meet the current and future needs of customers,
especially those in rural and deprived urban areas. As part of
a widely based research programme, Postcomm has looked at what
services are particularly needed by customers, at the role of
post office branches in areas where there are few retail outlets
and limited service provision, at how people cope when access
to post office services is difficult, and at regional differences
in customer behaviour and service provision.
Postcomm's overall advice on the network
12. Postal services are vital to the social
and economic life of the UK, and as well as providing access to
postal services, post offices provide a vital link to advice,
information and cash locally. As part of its remit to monitor
network developments, Postcomm therefore pays particular attention
to how post offices meet the needs of isolated communities and
people disadvantaged by physical disability, old age, low income
and difficulty in accessing transport.
13. In the light of research and consultation
on the network, Postcomm's independent view is that what matters
is accessibility of post office services to those that need them,
rather than the number of post office buildings. For this reason
we attach great importance to the work on pilots that Post Office
Ltd is stepping up now so that it can report at the end of 2005
on different ways of getting post office services to customers.
Furthermore, Postcomm also believes that the future health of
the network depends upon the Government being clear about what
it wants from the post office network and what support it will
give it to deliver those objectives.
Access to postal services
14. Postcomm does not regulate Post Office
Ltd (part of the Royal Mail Group) and only 25% of post office
business is postal services. However in its role as the national
regulatory authority for UK postal services, Postcomm overseas
the minimum requirement for accessibility of access points for
postal services (ie Post Offices). In this respect, Royal Mail's
licence specifically states that: "the distribution of access
points capable of receiving the largest relevant postal packets
and registered mail is such that:
— in the authorised area as a whole
the premises of not less than 95% of users or potential users
of postal services are within 5 kilometres of such an access point,
and
— in all postcode areas the premises
of not less than 95% of users or potential users of postal services
are within 10 kilometres of such an access point, and
— such access points are available
to the public in accordance with conveniently published schedules".
November 2004
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