Examination of Witnesses (Questions 660-679)
SIR MIKE
HODGKINSON, MR
DAVE MILLER
AND MR
GRAHAM HALLIDAY
CBE
10 FEBRUARY 2005
Q660 Chairman: And the trend is going
up.
Mr Halliday: Nationwide have already
deployed over 150 free machines in post offices, and we are in
continual discussion with them about where they might like to
deploy further machines.
Q661 Chairman: This is a bit worrying,
because the next time at Prime Minister's questions, maybe a few
people on this Committee will be popping up and saying, "Prime
Minister, could you give a word of sympathy with the Post Office;
here they are, poor financial illiterates here; they have cash
machines in their offices; they are making £10 million, but
hey presto it is going down the pan; they do not know where it
is going."
Mr Halliday: It is not actually
going down the pan. The bulk of it is going to the sub-postmasters
to support the sub-postmasters in their businesses.
Q662 Chairman: But 4 pence a time?
Mr Halliday: There are a variety
of—
Q663 Chairman: I think you would have
to supply us with this information, Mr Halliday.
Mr Halliday: I would be very happy
to provide you with more detailed information, if I can just stress—
Q664 Chairman: But you have written to
us already, and it has never cast a light on it for us already,
so I think you need to be clear in terms of these finances.
Mr Halliday: We will, but can
we stress that there are different models—
Q665 Chairman: I would have thought you
would have been clear before that. Can I ask maybe the last question
before passing on. Did any of the charging cash machine suppliers
make one-off payments to the post office for exclusive access
to the branch network?
Mr Halliday: Not that I recall.
Q666 Chairman: So that is not in place.
Mr Halliday: Not that I recall.
Sir Mike Hodgkinson: Can I say
one thing that it is important for people to understand? People
have to remember that we have invested £100 million to ensure
that everybody can draw money over the post office counter free,
and as we have introduced free banking over the counter for people's
cash through our 15,000 network, of course some of the machines
that had high volume transactions have lost volume because people
can now draw cash through our 15,000 outlets across—
Chairman: I will tell you that the ordinary
person's view of that, Sir Mike, is this. First of all, they cannot
get anything out if they are members of HBOS, RBS or HSBC because
they have been before us and have said, "this is a competitive
issue", and I specifically asked that question to the representatives.
That is 43% of the network that cannot get access through your
counters. Any post office you go into—and I do not think
my post offices are any different to anybody else's—you
could be talking about a 15-minute wait in a queue to get served.
You get a choice between a 15-minute wait in a queue or only a
cash machine which is charging. That does not seem to me to be
a fair balance. When you talk about investment of £100 million,
I think it could have been invested more judiciously.
Q667 Mr Beard: We understand that you
have applied to join LINK. On what basis have you applied to become
members of LINK, and what is the progress so far on that?
Mr Halliday: We have applied to
become members of LINK in the hope that LINK will register the
scheme to enable all banks that are members of LINK to then allow
all their customers, including the banks that the Chairman has
just mentioned, to use our counters for access to free cash.
Q668 Mr Beard: It is a matter for the
counters rather than the—
Mr Halliday: It is for the counters.
Our network, as we have mentioned, is very extensive, 15,000 locations—far
more locations than there are ATMs in post offices. By doing that,
we can extend the access to free cash in virtually every community
in the country.
Q669 Mr Beard: Where have you got to?
Mr Halliday: That application
is still resting with LINK. They will be considering it, hopefully
this month. The indications are that because we are applying for
a different classification of service, which is a manned terminal,
rather than ATM, then that may very well be declined, but we await
the outcome of the approach.
Q670 Mr Beard: Why does the Post Office
make arrangements with independent ATM deployers rather than installing
its own brand of ATMs, which would allow it to become a member
of LINK automatically?
Mr Halliday: It is quite simple:
on top of the money that we were investing in the banking services,
which the Committee may recall were labelled "universal banking
services", which we had to invest in to ensure there was
a service available in all post offices, we quite simply did not
have the capital to invest in the further network of ATMs across
our network.
Q671 Mr Beard: How many of the cash machines
in post offices are supplied by the independent ATM deployers,
and which are your main suppliers?
Mr Halliday: We have a very strong
relationship with Alliance & Leicester, but the rest of the
suppliers are quite well spread, and I would like to provide
you with that information on a confidential basis.
Q672 Mr Beard: You cannot give us a broad
percentage now?
Mr Halliday: Not at the moment,
no.
Q673 Mr Beard: Does the Post Office have
any special arrangements with any individual ATM operators that
allow them first refusal on any potential sites on which to place
their machines?
Mr Halliday: Our historical relationship
with Alliance & Leicester has meant that A&L in the past
had what we would call first look at the network, but that now
does not exist.
Q674 Mr Beard: How is it decided? Who
will have what site?
Mr Halliday: The opportunity to
put an ATM on a site is put out to the ATM deployers, and then
the sub-postmaster decides which ATM he would like to have.
Q675 Mr Beard: When tendering for companies
to install machines, did the Post Office approach all ATM suppliers
to see if they could install a free machine, before re-tendering
the contract amongst those who install charging machines?
Mr Halliday: We tender widely
on an informal basis across all ATM suppliers as far as I am aware.
Q676 Mr Beard: To see whether they would
provide a free machine?
Mr Halliday: To see if they would
provide any machine.
Q677 Mr Beard: The point is, did you
start by asking for tenders from people who provided free machines
and then go to a paying machine?
Mr Halliday: Initially, we focused
on free machines because the thrust to put ATMs into offices arose
before the changes to the market, which actually resulted in the
growth in the placement of charging machines.
Q678 Chairman: The original point about
installing cash machines in post offices was a recommendation
of the report published in June 2000 Modernising the Post Office
Network from the Downing Street Performance and Innovation
Unit, was it not? So did you go back to the Innovation Unit and
say, "we have tried to get free cash machines in post offices,
but we have failed, so we have got to go the charging route"?
Did you report to the innovation unit and make that statement?
Mr Halliday: Not that I recall.
Chairman: No, maybe you did not really
try too hard!
Q679 Mr Beard: If you were letting a
tender tomorrow in some particular site or sites, would you first
of all ask for tenders for free machines and only then go to ask
for tenders for paying machines; or are you asking in these circumstances
for a tender for paying machines straight away?
Mr Halliday: No, we would ask
for tenders for all machines.
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