Examination of Witnesses (Question 560-579)
MR ALAN
COOK AND
MR GRAHAM
HALLIDAY
9 MAY 2006
Q560 Chairman: We see you in a new guise,
Mr Cook.
Mr Cook: We do.
Q561 Chairman: You used to report
directly to the sub-committee, now you have been promoted and
you are reporting directly to the main committee, so that is good.
What do you see as the main role of the Post Office in promoting
financial inclusion? Is its role in promoting financial inclusion
a key consideration in decisions about the future of the Post
Office network?
Mr Cook: I think by its very existence
the Post Office promotes financial inclusion, it is what it is
about. Some primary aims I think of the Post Office are providing
consumers across the land with free access to cash, with bill
payment facilities, with simple and straight forward saving schemes,
a variety of which, no doubt, we will get into during the course
of this conversation. Inevitably, by its very existence, the Post
Office is providing a significant contribution to the financial
inclusion effort. It is not currently the case that Government
requires that of us as a formal remit, if you like, but by our
very nature we have to make that contribution to be successful.
Q562 Chairman: The previous Treasury
Committee concluded that the Post Office's policy regarding charging
machines ran counter to the Government's aim of tackling financial
exclusion, and we concluded that there needed to be a fundamental
change of strategy. Can you update us on your policies? What has
happened since that Treasury Committee report?
Mr Cook: Certainly. Immediately
after that Committee I think Post Office gave a commitment that
we would roll out a thousand free charging ATMs and remove from
the Post Office estate—
Q563 Chairman: How many have you
installed today?
Mr Cook: We currently have about
75.
Q564 Chairman: 75, that is not really
rolling out, is it, that is crawling along.
Mr Cook: 75 of the new ones plus
600-odd free machines that are still Alliance and Leicester based.
Q565 Chairman: When are you going
to get a move on?
Mr Cook: This is what I am just
about to tell you, Chairman. We are going to roll them out at
a rate of about 10 a week. Our expectation is that we will now
raise that target limit of 1,000 free ATMs to 1,500, so our plan
is to put 1,500 free ATMs, Post Office branded, across our sites.
That will include replacing existing machines that are in post
offices that are charging.
Q566 Chairman: Your written evidence
to us states that the Post Office is currently reviewing all sites
where there are currently charging cash machines and considering
the viability of replacing these in due course with a free machine.
What criteria have you applied to determining whether a free machine
is viable?
Mr Cook: The economic viability
is primarily down to the potential usage of the machine. If the
machine can generate sufficient use then it can be economically
viable. This sits really well with what the Post Office stands
for, which is about providing people with free access to cash.
Obviously the Post Office is going to be there as well but as
we currently stand we do not have the facility available to us
from all banks to cash cheques and make withdrawals from current
accounts, so pushing much harder on free ATMs is a way of making
up for that.
Q567 Chairman: In the last Treasury
Committee's report Speke featured quite prominently. When can
the residents of Speke in Liverpool expect the Post Office to
install a free cash machine?
Mr Cook: I am going to allow Graham
the honour of filling you in on that, Chairman.
Mr Halliday: We have already.
We saw Speke as an early opportunity to be able to change the
strategy.
Q568 Chairman: When did you do that?
Mr Halliday: Only a few weeks
ago.
Q569 Chairman: Just before your appearance
before this Committee?
Mr Halliday: Yes, that is factually
correct. It was an early opportunity to do that and I think the
good news is that the feedback we have from our sub-postmistress
there is that machine is growing in terms of the number of transactions
it is doing. Not only that, it is bringing additional benefits
to the sub-post office and also the retail outlet that the sub-postmistress
runs within the premises.
Mr Cook: Whilst we are grateful
to you for drawing that to our attention, Chairman, the fact of
the matter is that location does pass the economic viability test.
It is a viable machine.
Q570 Chairman: You will know from
the press last week that a working party has been established
to look at ATMs, which I am chairing. I consider that the Post
Office is an important element in that regarding the issue of
financial inclusion. Ahead of that, can you give me an idea of
what account you have taken of deprivation in low income areas
when deciding whether to install a free machine or not? That will
form part of our working party.
Mr Cook: Just to say, we are very
keen to be involved in that working party because, as I say, it
is a really important feature for us. We are looking at all the
locations where we are currently based. We are currently site
surveying 20 locations a week. We are undoubtedly going to be
installing machines in every type of location, not just deprived
but not excluding deprived. We have to take each location on its
merits. The deprivation factor is less of an issue than the likelihood
of the machine being used.
Mr Halliday: We have got about
1,100 post offices in areas of deprivation and of the free machines
that we have at the moment, that is the total space including
the existing machines, about 90 of those are sited in those locations.
Of the new machines which have just gone in, out of the 75, 10
of those are in areas of deprivation. The data that we look at
takes into account residential area, travel to work area, the
retail part of the area that the outlet is in and when we bring
all that data together it will tell us whether a machine can be
viable or not. What we will do is overlay the considerable number
of services that we are doing over the deprivation indices that
we have got to see whether there are any gaps when we have finished
that piece of work.
Q571 Chairman: Has the Treasury shared
its list of postcodes with you?
Mr Cook: No, we have not got them.
Q572 Chairman: Okay. Information
supplied by LINK indicates that machines in 45 post offices have
been converted from free to charging by Alliance and Leicester.
Why have they undertaken this action?
Mr Cook: That is correct. It is
not for me to comment on why they have done it. I guess it is
fair to say that is inconsistent with the strategy we want to
follow. We will be swapping those machines out.
Q573 Chairman: How long has your
contract with Alliance and Leicester got to run?
Mr Cook: The total contract runs
for five years so the longest time an ATM could be there is five
years. There is a different contract for each ATM so as soon as
the contract expires we will swap out the Alliance and Leicester
machine and put a new machine in
Q574 Chairman: Five years starting
from what date?
Mr Halliday: It is five years
from the date that the machines went in. We have seen progressive
roll-offs taking place now.
Mr Cook: About six months ago,
I believe. In theory the last one could be four and a half years
away.
Q575 Chairman: These places could
have charging machines for the next four and a half years?
Mr Cook: They could in theory.
One of the conversations that we are having with Alliance and
Leicester is the extent to which we could speed up that migration
of those machines. Contractually they are entitled to do it.
Q576 Chairman: The LINK database
also indicates that some cash machines in post offices now charge
£1.75 per cash withdrawal. Why have Alliance and Leicester
decided to break the agreement not to charge above £1.50?
Mr Cook: Again, those machines
are the Alliance and Leicester machines and it is really for them
to respond, to be perfectly honest.
Q577 Chairman: You must have a view.
It is very important in this forum that you give that view so
that it is conveyed to the public.
Mr Cook: My view is it is not
acceptable to charge £1.75.
Q578 Chairman: They are going against
the financial inclusion strategy and they are going against the
commitments they gave earlier. It is pretty reprehensible.
Mr Cook: It is certainly something
I would like to see changed, and we are going to change it as
soon as we possibly can. If we can roll those machines out quicker
than the current contractual commitments so much the better.
Q579 Chairman: Is there nothing you
can do at the moment to run parallel free machines alongside the
Alliance and Leicester charging ones?
Mr Cook: Some of these are literally,
physically, hole in the wall machines. It is all very well to
say "Put another one in" but it is quite a complex task.
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