Memorandum submitted by the Co-operative
Retail Trading Group (POS 23)
INTRODUCTION
A co-operative is a business, which acts together
to meet the common needs and aspirations of its members, sharing
ownership and making decisions democratically, rather than focusing
on profits for shareholders. In the UK the consumer co-operative
movement includes 27 retail Co-operative Societies operating some
4,000 retail units in communities throughout the UK. These aim
to create value for our members by providing them with the best
possible services and to invest in the communities where they
live.
In 2007 United Co-operatives merged with The
Co-operative Group to create the largest Co-operative Society
in the UK with a combined turnover of more than £8 billion
and 87,000 employees. The Co-operative Group is the largest community
food retailer in the UK with more than 2,200 stores and an unparalleled
position at the heart of thousands of communities.
Through the Co-operative Retail Trading Group
(CRTG), an organisation of Co-operative Societies, The Co-operative
Group provides the buying and marketing functions for all these
UK consumer-owned co-operatives. The CRTG Post Office Group enables
Societies to share best practice.
POST OFFICE
NETWORK CHANGE
AND THE
CO -OPERATIVE
MOVEMENT
We recognise the challenges facing the future
of the Post Office Network and support the need for network change.
At the beginning of the Post Office Network
Change Programme there were more than 570 franchised and sub-post
offices operated by Co-operative Societies throughout the UK.
We are the largest multiple operator of post offices in the UK.
The Government and Post Office Limited have
recognised the benefit of co-locating post offices with retail
outlets such as Co-operative stores in local communities. The
combined Post Office and retail store drives footfall for each
other, which enhances the sustainability of both the Post Office
and the community store. During the Network Change Programme we
have become concerned that the stance of Post Office Limited on
issues such as compensation do not take into account the fact
that the Co-op store will continue to operate in the local community
and place unfair restrictions on our continuing delivery of some
of our core consumer offerings such as National Lottery and Bill
Payments. We recognise that Post Office Limited did negotiate
the compensation package with the National Federation of Sub-Postmasters
(NFSP). Co-operative Societies are not members of the NFSP and,
therefore, had no input into these negotiations. We believe Post
Office Limited should negotiate with all operators, not just the
NFSP, on such issues.
We are committed to being part of the future
of the Post Office network. We have been a significant supporter
of post offices and taken over the operation of post offices in
communities throughout the UK. Where it is commercially viable
to do so, we would be happy to consider operating more post offices.
To date Post Office Limited have announced the
proposed closure of 24 post offices operated by Co-operative Societies
(11 of these are now confirmed closures).
EXPERIENCE OF
THE LOCAL
CONSULTATION PROCESS
SO FAR
There have been a number of instances where,
during confidential discussions about potential closures prior
to the public consultation, Post Office Limited has not taken
into account that our staff in co-located post offices are employees
and not self-employed individuals running their own business like
many other sub-Postmasters. They have communicated information
about closures to staff who were previously unaware of a potential
closure. This has increased the uncertainty and confusion for
some of our employees with regard to their continuing employment
in our post office.
In addition, following the public consultation
and the publication of the Area Plan Decisions, there have been
a small number of proposed closure reversals. It appears that
Post Office Limited have decided there should be a fixed number
of closures in each area and the closure reversals have resulted
in additional proposed closures after the end of the original
consultation period. Although, to date, we have not been impacted
by these additional proposed closures, we are concerned about
the future uncertainty which impacts on our ability to make investment
decisions for our business. It is not clear whether the national
figure of 2,500 closures is indicative or a fixed number and this
needs to be clarified.
THE EXTENT
TO WHICH
FINAL DECISIONS
HAVE TAKEN
LOCAL VIEWS
INTO ACCOUNT
This is difficult to ascertain, as it is still
very early in the Network Change Programme. However published
Area Plan decisions indicate that Post Office Limited have reversed
a small number of proposed closures where there have been significant
concerns about accessibility. This does not appear to be related
to the scale of local concern about the closure.
THE NATURE
OF THE
PROPOSED 500 "OUTREACH"
SERVICES AND
SERVICE QUALITY
We have communicated our interest in delivering
outreach services to the Post Office.
It appears that Post Office Limited expects
operators to bear the responsibility and cost for developing the
nature of outreach service provision. This makes investment for
their development uncertain and unattractive and there is a high
risk of disruption of service.
If the outreach services are allowed to develop
in this unco-ordinated manner there is a risk of a detrimental
effect on the remaining branch network leading to further closures
in the future. It could also leave many areas without access to
Post Office services if no business operator is prepared to take
the risk and invest and develop an outreach service in place of
a closed branch.
HOW CHANGES
TO THE
CROWN POST
OFFICE NETWORK
INTERACT WITH
SUB-POST
OFFICE CLOSURES
We welcome many of the changes that are currently
being undertaken by the Post Office Limited to return the Crown
office network to profitability. Improving the commercial offer
of these branches is vital to the sustainability of the remaining
network and we expect the Post Office Limited to continue pressing
for improvements in this area, as consumers are able to obtain
many Post Office services from other outlets.
However, we are also concerned that the projected
migration of customers to the remaining network from closed sub-post
offices may not occur to the levels expected by Post Office Limited
because the customer has a number of options for obtaining certain
services (eg. Bill Payment) from other outlets.
THE FUTURE
OF BOTH
CROWN AND
SUB-POST
OFFICE NETWORKS
It is too early to tell how the Network Change
Programme will impact on the remaining network and we are still
unsure what the future holds for both the Crown and Sub-Post Office
Networks. Our concern is that if the Network Change Programme
fails to produce a sustainable business, we will see more closures
over the coming years. We would like to see Post Office Limited
further develop its relationship with multiple Post Office operators
such as ourselves, and work in partnership with them to strengthen
the Post Office network for the future and beyond.
OTHER ISSUES
We have specific concerns about the compensation
package offered by the Post Office Limited. When the first branch
closures were agreed upon, the Post Office Limited informed us
that they would be reducing the proposed compensation for branch
closure if we continued to operate services such as Premium Mails,
on demand bureau de change, bill payment and National Lottery
terminals. The full compensation package would only be made available
if the branch agreed not to offer these services for one year.
These changes have been implemented without prior consultation
at a late stage in the closure process.
We also believe that these changes to the compensation
package by the Post Office amount to restrictive covenants on
our remaining retail business. Services such as bill payment and
lottery are an important part of our commercial offer and we have
always sought to offer them in our stores regardless of whether
the store hosts a post office. The proposed compensation package
penalises us for providing these services and for honouring our
existing contracts with existing commercial partners such as Paypoint.
In doing so we believe the Post Office is trying to reduce competition
and acting against the consumer interest.
14 January 2008
| 
