Examination of Witnesses (Question 580-599)
MR ALAN
COOK AND
MR GRAHAM
HALLIDAY
9 MAY 2006
Q580 Chairman: You have to show Alliance
and Leicester that this just is not on.
Mr Cook: What I would like to
do is give this Committee my assurance, 11 weeks into the job,
that I am pretty determined that we roll-out an extensive free
to use ATM network and where we have these inherited loopholes
that we move on them as rapidly as we can to get them put right.
Q581 Chairman: Would you be quite
happy to write to Alliance and Leicester following this evidence
session and share that letter with us?
Mr Cook: I would be more than
happy to write to them.[5]
26
Q582 Chairman: Share that letter with
us and tell them exactly what you think of them.
Mr Cook: I would be very happy
to do that.
Q583 Peter Viggers: A point that
has concerned me for some time is I would have thought that in
many ways the Post Office is right up there with Coca-Cola and
McDonalds and Ford in terms of being a trade name. To what extent
have you studied the value of the trade name, worked out whether
you can build on it, whether you can modernise and bring in training
which would make people more conscious that the Post Office means
good value and, therefore, increase the value of this franchise
generally?
Mr Cook: It is what got me into
the job, to be perfectly honest. As I say, 11 weeks in, what attracted
me to the proposition, the Committee may be aware I was with National
Savings & Investments before, another trusted brand if you
like, was not only is it equally, if not more so, trusted, it
is much more visible and much more accessible and much more reachable.
The opportunities I think to turn the trust that the British public
have in the Post Office brand into something more powerful than
it is today are huge, particularly if one were to look, for example,
in financial services where many of the British public have lost
confidence in their financial services provider. I think there
is a role for an organisation like the Post Office to provide
safe, secure, simple and reliable products that would meet ordinary
customers' needs, if you like. That would be my aim to try and
exploit—exploit is probably not the right word—maximise
the benefit I can have.
Q584 Peter Viggers: What do you need
too? Do you need more investment? Do you need backing? Is there
anything holding you back?
Mr Cook: Is there anything holding
me back? We need complete clarity about what the definition of
success would look like and that is something I am working on
right now to get some clarity behind what do people want a post
office for, why would one go in there? I think in yesteryear you
went into a post office because you had a parcel to post or because
you had some benefits to collect. We will no doubt get on to the
latter topic shortly but the benefits business is receding. I
think there are other things that people would go into a post
office for, given time, but I think today they mostly would go
in to post a parcel and they find other interesting and relevant
things and they do those. Where I would like to get to is they
go into a post office not just to post a parcel but because there
are other reasons that they strongly associate a post office with.
I think one of those areas would be good value for money, what
we might call financial services products, which is probably a
complicated term in its own right, products associated with money.
One of the reasons that the Post Office has been so successful
with foreign currency, which is now the market leader, is because
there is a resonance there because it is money and I think people
trust the postmaster with their money, whether it is to save it
or whether it is to exchange it into a foreign currency. I am
putting a lot of effort into that now, to get that clarity behind
that vision.
Q585 Peter Viggers: There is a lot
to go for because the Committee has recently taken advice that
the cost of advising upon pensions is massive and if there could
be a universally accepted, valid, worthwhile pension scheme which
obviates the need for advice, if you were able to capitalise on
that and tune into it—
Mr Cook: I am not sitting here
before you today announcing I am going into pensions, that would
need quite a lot of thought. I have spent much of my career involved
in pensions. What I am saying—and it speaks particularly
to the topic we are talking about this morning—is I think
financial services in general is just too complex, too difficult,
too specialised. I think there is room for enormous simplification.
That is what will make those sorts of products more accessible
to the public. I have found myself an opportunity where I have
the chance to run a brand that has the reach, the accessibility
and the customer trust. What we need to do is deploy the right
sort of products, the simpler the better.
Peter Viggers: I am encouraged by what
you say.
Q586 Mr Mudie: It is very useful
to have you here, and I think that is a starting point. That was
the starting point with the Prime Minister's unit when it was
first looked at in 1997-98.
Mr Cook: So I understand.
Q587 Mr Mudie: At that time, of course,
they said you needed time to build up that alternative business.
Whilst you are building up that alternative business to 2010,
what was your reaction to the DWP ending Post Office Accounts
in 2005 in effect?
Mr Cook: I like the words "building
up to the alternative business", that is what we are doing.
The problem is the legacy business is leaving us faster, or potentially
leaving us faster, I think that is my challenge, than the business
we are trying to build up to come to the rescue of the network
as a whole.
Q588 Mr Mudie: Announcing it five
years prematurely surely cannot have helped you?
Mr Cook: It is a disappointment
without a doubt. It is a financial blow to the network.
Q589 Mr Mudie: Did you contest it
when you were told about it or did you just shrug your shoulders?
Mr Cook: I didn't enjoy it actually.
Q590 Mr Mudie: Mr Cook, what was
the formal response? We have only had tales from ministers and
they give the impression that the Post Office was very happy with
the decision to end this Post Office Card.
Mr Cook: I think you well know
that I wrote to a variety of MPs in my first or second week expressing
disappointment. What we are now engaged in, I think, is a series
of what I think would be much more constructive debate with the
DWP about where we go from here. Is the situation we find ourselves
in desirable from a Post Office perspective, from our customers'
perspective? Absolutely not. Can we try and find a way forward
that makes the best of a situation? Well, that is part of my job.
We have to find a way forward. I have to believe though that the
outcome of this will not be that the million plus customers who
currently have a card account and do not have a bank account,
I cannot imagine they all end up with a bank account at the end
of this. We have to find, I believe, an alternative more functionally
rich successor, if you like, to the card account and that is the
conversation I am trying to engage the DWP in now.
Q591 Mr Mudie: These decisions were
taken some years ago in terms of giving you until 2010. They were
conveyed to us as backbench MPs as a breathing space to let you
broaden your business base but, in terms of our constituents,
time for you to work on the universal bank that would have allowed
people to go into the post office continually. What work has the
Post Office done up to now on the universal bank with the Government?
Mr Cook: As I mentioned right
at the outset, I think one of our core attributes has to be providing
free access to cash. Basic bank accounts are accessible, wherever
you took them out, in a post office, ordinary current accounts
are not. We have signed a series of bilateral agreements with
a variety of banks to try and get to the point where we can provide
free access to their cash. Even since we last came before the
Committee Nationwide have signed up to do that. Now about 40%
of current accounts can be cashed at post offices. For me an absolutely
crucial objective is to raise that percentage to as near 100%
as possible.
Q592 Mr Mudie: Mr Cook, that is not
what I am asking you. It was not for you alone to build the universal
bank, the impression was ministers were going to be beside you
in terms of influence, in terms of resources. They saw the universal
bank as a joint thing.
Mr Cook: Yes.
Q593 Mr Mudie: I am asking what work
have you done with DWP and maybe the Treasury in terms of the
universal bank? Has there been a taskforce? Has there been a working
group? Have there been papers prepared? What is the stage of it?
Mr Halliday: Perhaps I can clarify
what we are talking about in terms of universal bank and universal
banking services. The original PIU report did recommend that there
should be a universal bank established. In actual fact, when the
cost of running a single bank account, with all the functionality
that you would imagine would be attached to that was looked at
it was discovered that it would not work financially. What was
set in place was universal banking services and universal banking
services had two legs attached to it. One of those was the creation
of banks' own basic bank accounts which were accessible at the
post office; the other leg was the Post Office Card Account. At
the same time the Post Office was endeavouring to build its banking
capability, trying to get the banks to sign contracts for all
of its customers to use the bank and for us to be a source of
encashment for those customers. It was the build up of that particular
service, alongside basic banking services, that I think everybody
hoped would happen which would enable Post Office Card Accounts
to perhaps change its scope and scale later in the day. There
has not been any further drive to create a universal bank. What
we have been working at, as Alan has just said, on the news of
POCA's demise is whether we can put something in its place which,
again, has got richer functionality to help those customers at
the bottom end of the scale, customers who have not got a bank
account.
Q594 Mr Mudie: Have we helped? Have
we offered money? Are we working with you? Is this seen as purely
a Post Office job?
Mr Cook: My expectation is that
at some point we will have to tender for the replacement of the
Post Office Card Account but the conversation I am having with
DWP is to make sure they recognise that a successor vehicle is
likely to be needed.
Q595 Mr Mudie: Why do you feel you
have to persuade them, surely that is Government policy?
Mr Cook: I am just making sure
that the interests of our customers are satisfied and, indeed,
the future of the Post Office network. The danger is we get too
close. 2010 sounds a long time away but we are actually talking
about putting something in place which probably does not exist
today. It is the case that the original specification for the
card account was to make it really simple. You cannot do much
with it at all, you go to a post office, you take the cash out.
If you take too much out by mistake you cannot put any back in.
It literally is an encashment vehicle. I think we can produce
a card account that has more capability, which would enable you
to access cash in different ways and pay bills. I believe that
would be a big step forward for current customers that we regard
as socially excluded who do not wish to make, for whatever reason,
the bigger step towards taking out a current account. We could
produce a successor vehicle.
Mr Mudie: Can I ask you a question only
a twisted politician could put. My fear is particularly when there
was silence after the minister had said, "We have done this
with the agreement of the Post Office", that there are two
parallel negotiations going on at the moment. There is the negotiation
over the future and the cost of the Post Office Card Account to
Government which DWP take the brunt of, and they saw this as a
way of saving money so they cancelled your contract, but why no
outrage from the Post Office? Because the Post Office are in negotiation
about their financial future with the other arms of Government.
Now where do you meet in the middle? There are 14,000 post offices
and then you announce you only need 4,000 to carry out the functions.
The worry is here is a deal that in agreement for letting the
Post Office Card Account go you get the funding for your 4,000
post offices which meet your needs and the Government save all
the brass that they would have had to put in to subsidise the
14,000, so the 10,000 can go. That is what the sub-postmasters
fear, that you are doing a deal with Government to keep the Post
Office alive but not the post offices on the scale we have got.
Is that a twisted politician's question?
Q596 Chairman: In answering George's
question, the issue of negotiating with DWP and the need for a
negotiation across every Government department is important. There
is a credit here for the DWP but there is a debit elsewhere and
I think that issue of you discussing with the Government is important.
We want to reflect that element in our report, so whether you
answer it here or follow up with a further submission to us is
really important. That is a crucial question.[6]
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Mr Cook: It is. Government needs
to take a whole government perspective on the provision of services
for the Post Office. There is no Machiavellian plan certainly
on the part of the Post Office, I do not think we were particularly
backward in coming forward in expressing our disappointment at
the time. Having expressed the disappointment, having written
to a large number of MPs in the House—
Q597 Mr Mudie: Can I interrupt you
here. I had a Westminster Hall debate, and I think there were
36 MPs there. We spent an hour and a half on it. We gave the minister
hell. I did not get one piece of briefing from the Post Office
to enable me.
Mr Cook: We did brief—
Q598 Mr Mudie: No, you did not, because
I contacted you and everybody was amazingly absent. Not one piece
of paper. You were not exactly forthcoming to help people who
were defending the Post Office.
Mr Cook: It certainly seemed to
me that we made a fuss at the time and, unfortunately, we obviously
did not include you.
Q599 Mr Mudie: No, it was the debate.
Normally if you have a debate in Westminster Hall people who are
in that industry inundate you with papers. Here was something
on the Post Office Card Account and the Post Office did not supply
me with a piece of data.
Mr Cook: I think we put our view
forward—
5 26 Ev 438 Back
6
27 Ev 438 Back
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