Postwatch response to the Business, Enterprise
and Regulatory Reform Committee report 'After the Network
Change Programme: the future of the post office network'
The relative slowness of the Government and Post
Office Ltd replies would have been easier to understand if they
had been final statements of the position. In fact, there have
been further developments since then. We regret the Government
and Post Office Ltd response were either speedy or definitive.
1. The Committee's interest and scrutiny have
made for a better programme. Postwatch will continue to do all
it can to keep the Committee promptly informed of relevant developments
affecting the network of post offices.
Local Authority and MP involvement
Since the Government and Post Office Ltd responded
to our report on 3 April, Post Office Ltd has announced that in
future it will engage with MPs "10 days before the start
of public consultation in their constituencies in relation to
the current Network Change Programme, rather than a few days before
the consultation begins as at present". While this is welcome,
we do not understand why it did not form part of the response
to our report, and consider it disappointing that the Post Office
took no steps to revise its response. (Paragraph 7)
2. Postwatch agrees with the Committee that the
earlier engagement with MPs by Post Office Ltd is a welcome step
forward. We hope that Post Office Ltd will now see early and full
communication with MPs as an aid to the effective operation of
the closure programme, and that, more generally, they take full
advantage of opportunities to communicate with their customers
We note that successful dialogue requires both
parties to engage properly, and urge local authorities and Post
Office Ltd to work together as the programme continues. (Paragraph
3. We agree that the constructive involvement
of local authorities is essential in helping to ensure that the
right decisions are taken by Post Office Ltd. Postwatch works
closely with local governmentboth with the LGA and local
authorities through its Counters Advisory Group and through local
contacts between regional offices and local authorities.
Sustaining the Network
We accept that the Government has no desire to
see the network shrink below 11,500 outlets between now and 2011.
Indeed, it is investing £1.7 billion to safeguard the network.
However, there is no guarantee that there will not be further
closures after the Network Change Programme as a result of individual
postmasters and postmistresses' decisions. We note that Post Office
Ltd itself does not believe "it is possible or desirable
to set a minimum number of fixed outlets." We expect Post
Office Ltd to share the Government's commitment to maintenance
of the network. (Paragraph 10)
4. A statement by the Government, clearly backed
up by Post Office Ltd, clarifying the commitment of both to maintain
a network of 11,500 outlets would be welcome to customers and
would provide much needed certainty to postmasters and postmistresses.
The Government has asked Post Office Ltd to work
with Postwatch to "develop a new code of practice covering
'business as usual' network changes to reflect the current policy
and lessons learned from the Network Change Programme, "and
Post Office Ltd told us that it looks forward to working with
Postwatch and its successor body, the National Consumer Council,
to draw up such a code. In successive Reports we have expressed
our concern about the transfer of responsibility from Postwatch
to the NCC at such a critical time in the Network Change Programme.
We recognise that Postwatch is currently heavily burdened by the
need to monitor the Network Change Programme itself. However,
we think it is important that the Code of Practice is drawn up
speedily, and that the transfer of responsibility does not cause
delay. We urge Postwatch and Post Office Ltd to start work immediately.
The future shape of the network is a matter of
direct political concern and will be determined by the Code of
Practice. We wish to see a draft of the code before the summer
recess. Ultimately, Government, as sole owner of Royal Mail Group,
cannot duck responsibility for the shape of the network. While
we do not expect it to replicate other parties' monitoring, we
expect it to use those monitoring returns to ensure its considerable
subsidies are being used to secure a network which meets public
needs. (Paragraph 13)
5. We welcome the Committee's continued interest
in the development of the new code of practice on post office
relocations, closures and conversions. We agree that maximum use
should be made of our experience of network change issues. We
are currently engaged in dialogue with Post Office Ltd and have
established the main principles. The revised code will:
- take account of the Government's distance criteria for access to post
- explain how POL will take account of local information when managing and
developing the network;
- describe how customers and local representatives can participate in consultations
on changes to the network; and
- provide information on action that can be taken if the code of practice
is not properly followed.
6. We have also given our successor organisation,
Consumer Focus, information to allow it to decide on its role
in ensuring that the code of practice is complied with.
7. We believe it is realistic to expect that
a revised draft will be in place before our abolition at the end
of this September.
Although Post Office Ltd has told Postwatch that
they believe relatively few customers will be affected by the
inability of some outreach services to handle packets weighing
more than 2kg, it will mean considerable inconvenience for those
who need to send large packets, and could have an impact on local
businesses. We note that the universal service obligation extends
to packages of up to 20kg. We consider that all Outreach services
should be able to handle packages of up to 20kg. (Paragraph 16)
8. We agree that outreach services should be
able to handle packets weighing more than 2kgand that where
possible this should be up to 20kg, in keeping with the statutory
definition of the universal postal service. We have referred this
issue to BERR and will keep the Committee updated on progress.
Closure of profitable branches
The post office network is a social as well as
a commercial asset; as Postwatch says "profitable offices
are likely to be heavily used, and closures would therefore affect
many customers". We continue to believe there should be a
presumption against their closure. (Paragraph 18)
Post Office Ltd's own figures leave significant
uncertainty as to where £57 million of savings will come
from. It is not surprising there are fears that as offices are
closed, overheads per office will increase, and decline will continue.
Given the lack of transparency about Post Office
Ltd's finances, and the reported deficiencies in Royal Mail Group's
financial systems, it is impossible to be sure that the allocation
of costs to individual post offices is rigorous. Post Office Ltd
is a publicly owned monopoly, which provides many of its services
on behalf of the Government and receives substantial taxpayer
support; there should be far more clarity about such matters.
9. We remain of the view that profitable post
offices are likely to be heavily used and that, accordingly, their
closure is likely to damage the interests of more customers than
the closure of a loss-making office. We would expect proposals
to close profitable offices to be made only in exceptional circumstances,
with clear justification. Such proposals will be very closely
scrutinised by Postwatch for their impact on the community and
on the ability of customers to gain access to post office services,
rather than for the financial effects on Post Office Ltd.
We understand why the Government is reluctant
to become directly involved in decisions on the closure of particular
offices. Closure proposals rest on a great deal of detailed local
and commercial knowledge, which central Government cannot replicate.
Nonetheless, it is not satisfactory that Royal Mail Group is left
as the sole arbiter of the network. (Paragraph 28)
10. We understand the Committee's concern. On
the other hand, first, Post Office Ltd is best placed to take
decisions on the network and to be responsible for defending those
decisions; second, the necessary balance to this is the role of
Postwatch, MPs and other interested parties in overseeing the
way that Post Office Ltd carries out this task; and third, the
current regime provides clarity that all decisions are taken by
Post Office Ltd, and that they must take responsibility for them.
Postwatch would be reluctant to see that clarity eroded.
The statutory framework
We would be concerned if regulators and consumer
bodies were not using their powers to the full. We are likely
to return to this in the autumn. (Paragraph 35)
11. Our participation in the closure programme
has been entirely consistent with the role given to us by the
Government. Certainly, if there were no other way to receive the
information we need to do our job, we would use whatever statutory
powers were available to us. So far that has not been necessary.
There appears to be little or no co-ordination
between regulators, between regulators and Government, or between
government departments about the social effects of withdrawing
payment services from the post office network. Given the grounds
on which state aid was granted, and the current tender for the
new Post Office Card Account, the loss of which could devastate
the network, we believe this needs further consideration.
12. We agree with the Committee that the loss
of the new Post Office Card Account would have a significant negative
impact on the viability of the post office network, and that the
Government should have a co-ordinated approach to securing the
future viability of the network.
We do not think it is reasonable or prudent to
conduct reviews of mail services without looking at the relationship
between Royal Mail Group and Post Office Ltd. Given the lack of
clarity about the finances of the network, and the apparent disjunction
between the Government's desire for a network of 11,500 offices,
and Post Office Ltd's much more nuanced response, we recommend
that Postcomm and the Postal Services Review include a thorough
examination of Post Office Ltd as part of their work. There should
be as much clarity as possible about the operational and financial
relationship between the post office network and the universal
service provider, and about the potential effects of changes in
postal services on the post office network. We intend to examine
output from these reviews in the autumn. One thing is clearhistory
has given us a network which remains among the largest in Europe.
The Government and the European Commission accept the network
provides a valuable service: all Government departments should
bear that in mind when they consider how to provide their services.
13. This links with the Committee's previous
conclusion. We welcome the Committee's challenge to Government
departments to take account of the post office networkand
of what would be lost if it were allowed to witherwhen
deciding how government services should be delivered. We hope
that the Committee will extend this challenge to local authorities,
though we recognise that many of them are already considering
actively and creatively what they can do to support their local
21 July 2008