House of Commons - Business, Enterprise and Regulatory Reform

Select Committee on Business, Enterprise and Regulatory Reform Third Report

2 The Consultation Process

9. In summary, the Network Change Programme sets out its proposals for a reduction in the network in a series of local area plans. Each plan is dealt with in stages:

In the first 11 weeks, Post Office Ltd draws up its initial plan, and engages with Postwatch in "detailed plan development discussions". It also speaks to the sub-postmasters and mistresses in the area. Both sets of discussions take place in confidence. Local MPs are notified in the final week of that process;
After that, there is a six-week period of local public consultation, in which details of the proposals are made publicly available for the first time;
There then follows three weeks before final decisions are announced (assuming no proposals are taken to review: there is a four stage review process that Postwatch can initiate if it feels it necessary); and
A further four weeks for implementation.[13]

10. Although the NFSP told us that its experience of the consultation process had generally been positive,[14] and they strongly supported the six week consultation period, this period has proved to be unsatisfactory for other parties—just as we predicted. What we had not anticipated was that the early involvement of Postwatch is also causing difficulties. Mr Thomson of the NFSP told us that "I think Postwatch are doing a very good job and they are doing most of that good work at pre-consultation" and that in Glasgow Postwatch had persuaded Post Office Ltd to change its plans for 24% of the offices at this pre-consultation stage.[15] This is not generally appreciated, and despite the observation in the documents setting out the proposals for change that 'x%' of proposals have been changed as a result of pre-consultation, the process is opaque.[16] Postwatch's involvement has not always been obvious.[17] Moreover, the success of public consultation is often taken to be the number of changes made, but Alan Cook considered that this was not an appropriate measure, when so much preparatory work had been done.

11. This lack of transparency also leads to a misunderstanding of the nature of the consultation among local residents, and has engendered the belief that the public consultations are a sham. As the Leader of the House said, when challenged about the consultation on Post Office closures, "We must ensure that, if at any stage a Government Department or agency engages in consultation, it is genuine consultation; otherwise it is worse than simply taking the decision itself."[18] The Minister told us that it was important to be clear about the basis for consultation. The decision to reduce the size of the network has already been taken; the local consultations are not about whether post offices should close in a particular area, but about whether Post Office Ltd's proposals identify the right offices for closure. The problem is that the consultation materials do not clearly set this out.

12. The Local Area Plans contain a great deal of information about the process, and note the involvement of Postwatch and local authorities. Indeed, Postwatch's first report to us on the closure programme noted that it would welcome a more succinct approach.[19] We agree. We consider the Proposals' description of the local consultation is overly optimistic: "each area plan proposal is subject to local public consultation to ensure that the views of local people are taken into account before any final decisions are made by Post Office Ltd". This implies that the strength of feeling among customers will be a factor, even though Post Office Ltd itself told us that it cannot be taken into account.[20] These are not local referenda. Although Alan Cook, Chief Executive of Post Office Ltd, told us that the decision that a particular office was to be closed did not mean that all other offices were to stay open, the information currently available, particularly in individual sub-post offices, makes it appear that the consultation is about the fate of individual branches, rather than about how services should be configured overall. It should be made absolutely clear that if the consultation reveals that a particular post office should remain open, others may be closed in consequence. Post Office Ltd should be far clearer about the basis on which the public is being consulted. All its literature should make it clear that there will be reductions in Post Office provision, and that the question being asked is simply whether the right branches have been identified for closure.

CONFIDENTIALITY

13. Rt Hon Sir John Stanley MP noted that "no explanation was offered as to why, in a democracy, confidential pre-consultation should be granted to a quango and not to elected MPs and elected local councillors".[21] Local MPs are meant to be given a week's advance notice of Post Office Ltd's proposals, but it is clear from the responses to our letter to MPs that this has not always been the case.[22] Although many MPs found Post Office Ltd itself as courteous and helpful, and some found the process well run,[23] most of the colleagues who responded to us were dissatisfied with the process, particularly with the limited opportunity to change proposals.[24] Nick Palmer MP noted that early notification was of limited use if confidentiality restricted discussions.

14. There would be more opportunity to make changes if the pre-consultation phase were more open. We asked why the pre-consultation needed to be kept confidential. The NFSP and Postwatch were both concerned that sensitive business details would be revealed,[25] although Postwatch considered there was scope for more openness.[26] Although sub-post offices are individual businesses, and Post Office Ltd operates on a commercial basis, the closure programme is being funded by public money and closures can inevitably have a great impact on the public. Many of our respondents complained that, even after considerable effort, they were given no reason why particular branches had been chosen for closure.[27] When we put this to Alan Cook, he told us that these grounds were given in the final decision booklet, and since the proposals were tentative, it was inappropriate to give reasons why particular branches were put forward for closure at an earlier stage.[28] This is not good enough. The closure programme is not just about the commercial needs of Post Office Ltd—it also about the needs of communities served by individual sub-post offices. If people are to respond sensibly to proposals to close a particular sub-post office, they need to know why that branch has been put forward for closure. There may be some details which need to be kept confidential, but this should be strictly limited, given the substantial public investment in the network and the keen public interest in the outcome. We welcome the fact that Post Office Ltd has been prepared to share more information as the process has evolved; it should give such information at the outset of the consultation process.

15. Postwatch, Post Office Ltd and the NFSP defended the pre-consultation process on the grounds that post offices which were considered likely to close lost business and would have difficulty in winning it back if they were later reprieved.[29] Given this, they considered it was sensible to ensure that the proposals which would be made public were soundly based.

16. NFSP considered that postmasters in offices where closure proposals have been revoked should be given financial and practical help. Indeed, George Thomson told us he was in discussions with Post Office Ltd about this.[30] Part of the problem appears to us to stem from Post Office Ltd's publicity. Proposals for closure are extremely clearly set out on posters displayed in the post offices concerned. The "reprieve" notice might be expected to open with a clear statement that "This office is remaining open" when the information is in fact given in the middle of a densely printed statement. Post Office Ltd should review the publicity material in the Network Change Programme. Area Plan Proposals and their associated publicity should make it clear that closure, although likely, is not inevitable, and that the status of post offices scheduled to remain open may change. The notification that an office, is to remain open should be far more clearly worded.

17. Post Office Ltd told us that it observed confidentiality in dealings with sub-postmasters:

There will be two types of sub-postmasters. We will go to one sub-postmaster and say, "We are proposing that your office is closed," but equally, we are likely to go to another postmaster and say, "We're proposing that your post office stays open, but the one down the road is proposed as closing and that being the case, it is going to produce additional work in your post office. We need to assess whether you can cope with that, whether you need a grant, whether you need an extra counter position or whether you would be prepared to run an outreach service." We are then discussing someone else's business with that sub-postmaster and so that needs to be in confidence because I cannot be discussing with postmaster A the fact that we are likely to close postmaster B. If postmaster A refuses to have that conversation in confidence then we just cannot have the conversation because it would not be fair. It does not invalidate the work we do. It probably makes it slightly more likely that a closure decision could be overturned because we have not had as good and as thorough a conversation as we would like with all the affected parties. [31]

We find it difficult to understand how Post Office Ltd can draw up sensible proposals for change if, for example, commercial confidentiality means it is unable to discuss the capacity of neighbouring offices to take on the business that might be displaced by a post office closure. The Chief Executive of Post Office Ltd told us that the proposals in Local Area Plans were refined through the pre-consultation process and that this preparation is some compensation for the limited time allowed for public consultation. If this is so, commercial confidentiality should not prevent Post Office Ltd from holding the discussions necessary to make sensible proposals.

Local authority and MP involvement

18. The Government response to the consultation on the post office network implied that local authorities would be involved at this pre-consultation stage, although it was imprecise about the nature of this involvement:

The early stages of the local process will involve detailed area plan development discussions with Postwatch and the involvement of local authorities in advance of formal public consultation.[32]

19. Post Office Ltd wrote to local authorities asking for information about their areas at a very early stage in the process. Alan Cook and Paula Vennells told us that local authorities had been fully involved in the pre-consultation phase, and had been able to comment on proposals.[33] However, several local authorities submitted evidence precisely because they felt they had not been properly consulted at this stage. In practice, some local authority involvement appears to be limited to checking Post Office Ltd's factual data. Many local authorities have complained to us that Post Office Ltd's proposals are often factually inaccurate, or take no account of future housing development plans.[34] There is also concern that local authorities might have plans for the future of their areas which would be affected by the siting of Post Office facilities. As Stirling Council said:

We suggest that early sight of the proposals by local authorities is vital, not only because of the detailed information systems and analytical capability to examine the proposals held by local authorities but also to assist with planning effective local consultation and community engagement. Local authorities commonly deal responsibly with sensitive and commercially confidential information on a range of issues. We find the suggestion from Post Office Ltd that any information provided in advance to local councils would be leaked to be offensive and ungrounded in fact.[35]

20. We also note that although Postwatch appears to be doing a good job in influencing proposals in the pre-consultation period, several of the MPs who responded to our request felt that Postwatch could have been more closely involved in discussions with them. Postwatch is the only organisation able to take proposals to review; it would be helpful if it always discussed its position with interested MPs. [36]

21. Local authorities and local MPs should be more closely involved in the pre-consultation process. Postwatch appears to be doing a good job, but it simply does not have the wider responsibilities of local government, or the representative role of MPs. The Chief Executive of Post Office Ltd told us that local authorities were involved in drawing up local area plans before they went out to public consultation; clearly, some local authorities do not feel they have been properly involved. Local Area Plans would be improved if local authorities and Post Office Ltd worked together.

Profitability

22. A constant theme in the consultation has been that Post Office Ltd sometimes puts forward profitable branches for closure.[37]In part, this concern stems from differences in the definition of profitability; an office which supports a sub-postmaster may still make a loss for Post Office Ltd when overheads are taken into account.[38] However, Mr Cook could not give us a categorical assurance that no office which was profitable for Post Office Ltd would ever be closed:

I cannot categorically say no, but it is clearly pretty illogical that we would want to close something that is making a profit to us, unless it was really, really close to another one that was making even more, so you could say, "Is that a nonsense to have those two so close together?" so that is why I do not want to give you an unqualified no because I cannot tell you that we would not find that, but the essence is really that we need to be sure that every one we close produces a material saving to Post Office Ltd and there will be no post office that closes that does not produce a material saving to Post Office Ltd.[39]

We noted this assurance. However we have some concerns about this, given that profitable branches are likely to be busy and valued in the local community. Such closures can only be justified if there is an absolute confidence that receiving offices nearby will have the capacity to deal with the business transferred without inconveniencing customers. Hugh Bayley MP suggested that Postwatch should have power to block the closure of a commercially viable office. Postwatch should scrutinise proposals to close post offices which are commercially viable for Post Office Ltd particularly closely and, if necessary, have powers to block them.

Alternative support for post offices

23. In the course of the closure programme some authorities and local groups have suggested that they might provide support to keep local post offices open. At the outset of the process, there were concerns that commercial information was not shared in a way which would allow this to be properly considered and firm proposals put forward.[40] As Rt Hon Sir George Young MP said, more openness about the viability of the offices proposed for closure would have made the debate better informed and given local authorities and others the opportunity to consider whether they would support particular offices.

24. On 17 January 2008, the Minister told the Chairman of the Committee:

Post Office Ltd is currently putting in place a process for responding to serious expressions of interest in maintaining post office service provision at specific offices by means of community or local government funding. Under this process they will provide information on the costs which would need to be covered and the terms and conditions which a contract for continued operation of that office would need to cover. These include provision of suitable premises and employment of a Post Office Ltd approved sub-postmaster, guaranteed funding until least 2011 of fixed ongoing costs and any setup costs. Where a firm proposal for local funding then emerges, Post Office Ltd will delay physical closure of the existing branch in that locality for a stipulated period to allow both funding and a contract to be put in place.[41]

In evidence to us, Mr Cook said that such locally supported offices would count against the total closure programme, and separately funded offices were a real possibility.[42] However, the NFSP was more wary, and suggested that such offices might raise wider problems about the sustainability of the network.[43] We welcome Post Office Ltd's apparent willingness to contemplate introducing locally supported post offices.

LOCAL AUTHORITY SERVICES

25. There were some criticisms that local authorities were quick to complain about post office closures, yet slow to use the services of the network. We were therefore pleased to hear from Alan Cook:

I think many local authorities have realised that they are losing branches because government services were not being used, as I said in my introduction, as much as was the case. It has created a climate for us where we can go to those local authorities and say, "Look, one of the ways that this could all be less painful is if you put more business our way", and that is becoming quite prevalent.[44]

Management style

26. We were concerned by evidence of Post Office Ltd intimidation. There were claims of bad practice in the Crown Office network. CWU told us that staff in franchised Crown Offices were not told about their rights under TUPE. Post Office Ltd defended its position. We are unable to comment on the issue at this stage, but we have asked both parties for more information and are likely to return to this.

27. At the beginning of the Network Change Programme, sub-postmasters were sent a letter saying:

During the programme, representatives of Post Office Ltd will visit branches at random, on an anonymous basis, in order to ensure that these "key messages" are being delivered in an accurate and professional manner…any compensation package offered to you…shall be subject to you having complied, and continuing to comply with this obligation up to the date of closure.[45]

Although the letter was immediately withdrawn, many of the colleagues who wrote to us told us that it had indeed made sub-postmasters unwilling to express their views, either publicly, or to MPs themselves.[46]

28. Post Office Ltd has assured us that the letter was immediately retracted and Mr Cook reassured us "I think at the end of the day actions speak louder than words and six/seven months on no compensation has been docked"[47], but, as he admitted, "it was disturbing the draft was even produced in the first place."[48] The Post Office's future is a matter of public debate. As we have said, Post Office Ltd is not solely a commercial enterprise. Its network provides access to essential services, and has a greater reach than any other. The Government is the sole shareholder, and the public has a right to expect Government-controlled enterprises to behave in an exemplary way. After the experience of this inexcusable lapse, we expect Post Office Ltd to do so in future.

13 See POS 4 Back

14 Q1, Q3 Back

15 Q 16 Back

16 See POS 6 Back

17 See POS 22, Q 66 Back

18 Official Report 31 Jan 2008, c 473 Back

19 The Post Office Closure Programme: First Progress report to the Business, Enterprise and Regulatory Reform Committee, November 2007, p 10 Back

20 POS 4, para 33 Back

21 Letter to the Committee Back

22 Eg Peter Bone MP, John Greenway MP Back

23 Eg Rt Hon Kenneth Clarke QC MP, Rt Hon Elliot Morley MP, Chris Huhne MP, Rt Hon Ian McCartney MP, Laura Moffat MP Back

24 Eg Ann Widdecombe MP, Derek Wyatt MP Back