Examination of Witnesses (Questions 40-57)
NATIONAL FEDERATION
OF SUB-POSTMASTERS
29 JANUARY 2008
Q40 Mr Hoyle: Let us just look at
that because I think that is part of it. We have just been given
a list for Chorley and I contacted the sub-postmasters, but they
were nervous about speaking to the MP because they actually believed
that they would be leaned on by the bad cop, not the good cop,
that is operating within Post Office Limited, so they did feel
under pressure about speaking publicly about what was happening,
therefore, there was a reluctance about how to deal with what
was happening, so that was part of it. Another question is: was
there any threat to compensation if they kicked up a fuss at the
beginning?
Mr Thomson: There was in the initial
letter which was then pulled and an apology put out. There was,
and that was the reason that people were absolutely up in arms.
I think, in fairness, the Post Office would admit that it was
a monumental own goal so early in the campaign.
Q41 Mr Hoyle: So they were not always
put off through the letter, but they put the fear through the
whole of the post office network and then said, "Well, we'll
withdraw it", but they knew behind that that there was a
real threat. Is that fair to say?
Mr Thomson: On the subject of
confidentiality, I do believe it is very important, and I gave
an example earlier on, that it could be that an office is perceived
to be a receiving office, so he knows that the nearest post office
to him is probably up for closure, and I think it is important
that that sub-postmaster who is staying and has that confidential
information is not able to mouth off, quite frankly, that the
office down the road is closing because that would not be fair
on the office down the road. I understand the logic of confidentiality,
but, having said that, they could come to the Federation at any
time, they could also speak to their accountant or their financial
adviser because it is commercially confidential, so they are allowed
to speak to people who can give them professional advice.
Q42 Mr Hoyle: But, as you would expect,
the local councils are saying, "We want to keep all of our
post office network". Do you think there is a whiff of hypocrisy
seeing how you cannot pay your council tax at the post office
in one or two areas?
Mr Thomson: Very much so. Everybody
wants a thriving post office network. The Government wants it,
the devolved assemblies want it, local authorities want it and
what we are saying in the future is, "At the end of the day,
you are going to have to start putting work where you mouth is",
because we have to have a sustainable network going forward, and
local councils are very guilty of what you have just said there.
They jump up and down when there is a closure programme, but when
it comes to putting work the post office's way, they have not
been very good in the past, but things are starting to change
and hopefully local authorities will realise that sub-postmasters
do not want subsidy, but sub-postmasters want work.
Q43 Mr Hoyle: But it is a bit of
an insult that you are allowed to pay it at Paypoint, but not
at your local post office.
Mr Thomson: Totally, yes.
Q44 Mr Hoyle: If I could move you
on now to support for the post offices, is more training for sub-postmasters
needed, for example, to improve the customer experience and to
grow their business in support of the network, or do you actually
think they know their own businesses best?
Ms Reeves: I think there are lots
of things that can be done to help sub-postmasters as Network
Change is going forward. There are new products coming through
into the network that sub-postmasters do need lots of help and
support to be able to offer. We are in a massive change from being
a service industry, which we were before, to now being a retail
industry and that needs different skills, and I think there is
an area there where Post Office Limited can help more with training
for the new products, but I also believe there are other areas
that we can work on with other people to give business training
to some sub-postmasters who might not have come from a retail
environment before and may need help with that environment as
it changes in the future, and I am thinking of people like Business
Link and things like that that we can work with.
Q45 Mr Hoyle: We live in a 24/7 world,
as you read in the media, yet somehow Post Office Limited still
live in these set times. Do you think there is a case that we
ought to be paying sub-postmasters to work in the evenings when
people might actually access the services better? As we know,
a lot of people work during the day and, by the time they are
getting home, there is no post office open. What do you think
about this? How can we do this? Would you support paying them
for evening work?
Mr Thomson: Well, to take on the
competition from Paypoint, the Federation and the Post Office
created what is called a `pay station' which is to do all the
products that Paypoint do in effect over a retail side in a post
office. We now have something like 8,000 who offer that service
and it is going to be rolled out so that every office in the network
that is left after the closure programme will have a pay station
which does bill payment at night, so I think the Federation and
the Post Office both recognise the need that there have to be
certain services available beyond the traditional nine to half
past five that we have had in a post office, and that method,
I believe, is pay station and future enhancements of the pay station
model which is very similar to Paypoint, but I believe it is actually
going to be better than Paypoint.
Q46 Mr Hoyle: That is great, but
it comes back to the key question. Those post offices which want
to remain open will want to offer that service, but they are being
closed and yet those who want to close who are not allowed to,
do you really think that they are going to renounce the service?
Ms Reeves: I think for those people
where the closure programme has been through that part of the
network and perhaps they wanted to go and they have not gone,
I think that is where we need to get through this closure programme
as quickly as we possibly can because we need to now start the
dynamics of the business changing, and those people who did not
go now need to be in a position, and have some confidence, to
be able to sell their business on, if that is what they want to
do. I think there is a way with Post Office Limited going forward
that we have all got to be a bit more innovative about the way
we address the public's needs, and I think that is started to
be seen in the way that we are developing together core and Outreach,
and also there are ways that we need to address different populations.
As you quite rightly say, there are some sub-postmasters whose
villagers do not return from commuting until six o'clock in the
evening and we need to look at innovative ways of going forward
and managing that process for the benefit of sub-postmasters and
the communities.
Q47 Mr Wright: Part of this process
is about the closures, but it is also to bring into effect the
500 Outreach branches. Do you consider that the minimum standard
they have set down is enough, that two hours a week is enough
for a local area?
Ms Reeves: The hours that have
been designated for the particular area have actually been based
on fact, not fiction, and it is backed by what Post Office Limited
have been doing about the amount of customer transactions that
there have been in that branch up until now and then trying to
work out how best to put that time together into the community.
For the community, it is about probably the change from being
open far more hours to having a fixed time to be able to attend,
but it is actually based on the types of transactions and the
timings of transactions that are done in that branch before it
closes.
Q48 Mr Wright: So do you support,
does the Federation support that concept then, that two hours
a week would be enough?
Ms Reeves: If that is the traffic
that is there and if that is the only amount of customer usage
that that office has now, and that has been proven, and that is
the amount of usage that it has, the trick is what time is that
two hours to match the community and what is the right time.
Q49 Mr Wright: It is the thin end
of the wedge and surely this is going to be a sop to say, "Well,
this is what we are going to put in place for the time being",
but in reality, if there is minimum usage of a post office at
the present time and it amounts to two hours of business over
a week and, say, we have got a two-hour slot on a given day, at
a given time and in a given area, it does not meet the needs of
every single person who would have used it over that time. Invariably,
what will probably happen is that you will get migration from
the customers that use it at the time and the two hours itself
probably in a short space of time would probably be too much,
leading inevitably to the closure at that point.
Mr Thomson: On that point, there
will be people within that community, that village, and it could
be the pensioner who has not got a car or the bus service is poor,
but at least she will know that for two hours a week she can get
her pension on a Post Office card account and she can still use
the post office, but, you are right, it is not as good as the
service that we have got at this moment in time, but unfortunately
that service is being closed down. I suppose you would have to
argue that the Outreach provision is not as good, but it is far
better than having nothing at all. On the subject of how they
work it out, if the post office is open for two hours per week
in that Outreach, they base it on 25 customer visits per hour
per counter, so, if it was deemed to be 30 visits in that village
wanted, they would still give them the two hours, even though
it should be 50 customers using it, even if it were 30, so that
is the criterion they are using. That is far more generous than
in an urban area where they work out that there will be 40 customer
visits per counter position per hour. In the rural area for this
closure programme throughout the UK, they are basing it on 25
customer visits per position per hour, so someone could get two
hours, even though there may just be 30 customer visits being
used in that village at that time. I think yes, it is not as good
as we have, but it is certainly far better than what the banks
did years ago when they just pulled out of villages and communities
altogether. At least the Post Office at 500 locations are trying
to put something in place so that the public still have access
to Royal Mail services and Post Office Limited services, and it
helps the socially and financially excluded in these villages
as well.
Q50 Mr Wright: I totally accept the
point that it is better than nothing, but my concern, speaking
about my local area, and they have not got come up with the proposals
in my area, but, if there was a proposal to have a two-hour point,
I talk to pensioners in my area, for instance, and it may well
be in the middle of winter when it is a rainy or an icy day when
the Outreach is open and they cannot get to it and they then have
to wait until the next week. They may well feel under the weather
and they cannot get to it, and they are then stuck, they have
not got access and they have not got transport and they cannot
get to another point, so they are stuck from one week to the other.
That is my concern about the two hours. Yes, it is better than
nothing at all, but would it not be a point from the Federation
that in those areas where there is a lack of transport and a lack
of other services that they support the concept that, rather than
be a two-hour opening point, there should be access to shared
operations and a partner approach rather than the two hours?
Ms Reeves: Although we have trialled
this before, this concept of core and Outreach has been trialled
for some 18 months or so in various locations to see where it
works, the Post Office, in discussions with us, are adamant that,
as this evolves going forward, they will monitor what is happening
and they will look at that and, if necessary, things can be changed
going forward if it is not working out properly either for the
community or for the sub-postmaster. I do not think you can ever
look at anything and say that something is now fixed in stone
because things just have to evolve as it goes along.
Q51 Mr Wright: What level of the
consultation with the sub-postmasters is about the Outreach proposals?
They know the local area, they know the people.
Ms Reeves: The person that is
looking to take over and to run the Outreach, yes, they would
know the area, they are consulted and they do talk considerably
to the outgoing sub-postmaster and find out all the information
locally and they are involved in trying to find the Outreach locations
that best fit the community, so they are very involved from day
one.
Q52 Mr Wright: Moving on to the future
of the network, what is the Federation's position on the post-Network
Change programme future of the network? Are you concerned, as
the predecessor Trade and Industry Committee was, that filling
holes in the future network might be difficult and that new sub-postmasters
might be hard to find?
Mr Thomson: I totally concur with
what you said then. My big fear is that the Government have put
altogether something like £1.7 billion into the post office
network to try and bring about sustainability. I know that there
were other issues about scrapping the Horizon benefit card ten
years ago, and I will not go back there, but they have put £17
billion into the network, and my biggest fear on the horizon now
is that the Post Office card account two is out to tender and
in the tender process all submissions must be in by 31 March and,
if the DWP did award the Post Office card account contract to
anyone else apart from the Post Office, the Post Office would
start to unravel, absolutely clearly. It is the law of unintended
consequences and the £1.7 billion would be absolutely wasted
because everything would fall apart. Finally, the Post Office
can bid for bill payment relatively cheaply and business banking
because, when that money comes into the post office network, we
pay out to pensioners and other benefit recipients every year
through the Post Office card account £27 billion. If we lose
this contract, if we do not win the new contract, everything starts
to unravel because we do not just lose the £200 million we
get from the Government for the Post Office card account, but
we have a situation where we cannot bid for bill payment as low
as we want to because we do not need the money over the counter
anymore and we cannot give Alliance & Leicester the tremendous
rates they give their customers in taking the tens of millions
a year from their customers because we have nothing to do with
that money, so all of a sudden the business model collapses. I
have said that, if we lose the Post Office card account two, do
not just think that, because you have not got many card accounts
if your office is mainly a mail bank and business banking, it
will not affect you; the whole model collapses. I would say to
the Government, and I have said it to Pat McFadden, that with
the law of unintended consequences, the Government and the DWP
would not mean for the post office network to fall apart if they
awarded the contract to someone else, but I make it absolutely
clear that is what would happen, and I see the Post Office card
account tender being renewed to the Post Office as a stepping
stone to the Post Office becoming a post bank like that of our
successful colleagues in Italy, in France and in Germany.
Chairman: You must not touch too much
on the future because this is about a closure programme, this
inquiry.
Q53 Mr Wright: So you see that really
as the key not just to attract new postmasters into the service,
but also as key to the ones that are left behind, the Post Office
card account and that is key to what you consider in the future?
Mr Thomson: It is absolutely key
that the solution to the problem stops being that we take capacity
out of the industry. Going forward, the solution has to be, "Let's
go to work. Let's make sure the country decides that the UK has
a network of around about 11,500". There comes a time where,
if you fall below a certain number of post offices, you lose your
critical mass and you lose your geographical spread. You lose
your critical mass to retain and win contracts and I believe that,
if we went any lower than the kind of levels we will have at the
end of November this year, then large question marks are put against
the whole post office network. Let us work together and let us
have a UK post office network that we can be proud of once again.
Q54 Mr Weir: You told us at the beginning
that for every sub-postmaster that is phoning you and complaining
about being on the closure list, there were three or four not
complaining about this. Is there a danger of further unplanned
closures for disaffected sub-postmasters over and above those
that are compensated closures?
Mr Thomson: There is always a
danger, and obviously there are the access criteria now, but what
I will say is that strategically I believe that there has been
a lack of direction in various governments over various years,
Conservative and Labour, and I do think that the Post Office team
that are in place now under Alan Cook are the most focused we
have had in POL in my time in the industry, and I have been in
the Post Office since 1979 when I was an 18½-year-old schoolboy.
Q55 Chairman: The point is: is there
a risk of unplanned closures?
Mr Thomson: There certainly is.
There could always be unplanned closures, without doubt.
Q56 Chairman: And that is the worry.
We have been told that actually 7,500 is the size of the network
that is necessary to meet the access criteria, so 4,000 unplanned
closures, it goes with a nod with all the access criteria being
met and that is the problem.
Mr Thomson: Yes.
Q57 Chairman: Perhaps I can say one
thing to you, that this is an inquiry about the closure programme,
we are looking at how it is working, that is the purpose of this,
and we understand that it is a negative approach. We entirely
endorse what the Federation say, and I think the Committee has
said this in previous reports, about the future and what you should
be doing to build a viable network in the future, but that is
a separate subject at the moment, and we entirely endorse all
of that. Frankly, what you said in your submission, I think, is
very powerful on these points and the answers you have given to
colleagues in answering questions, but perhaps I can put one last
thought to you. You appear today, quite rightly and properly,
defending your members' interests and, when the post office network
is stable and flourishing, those interests coincide entirely with
the communities they serve, but may I just suggest to you that
perhaps on a number of issues today, quite rightly and properly,
you have expressed the views of the Federation and its members
and not actually views necessarily in the best interests of communities.
I looked at the Deputy Speaker of the House of Commons, Alan Haselhurst
and what he said to the Committee, and he says on commercial confidentiality
and profitability, "I was met with a wall of silence, commercial
confidentiality being cited. This is in huge disproportion to
the events in cases of life and death to a village". The
point I want to put to you is that it is not just confidentiality,
but the consultation period, the transfer and migration of business,
you are speaking, quite rightly, for the Post Office and your
members, but not for the communities served by the closing post
offices.
Mr Thomson: Let us be clear, if
you are asking me: does closing post offices affect the communities
there are in? Of course they do. Do I want to be in a situation
where we are having to close 2,500? No, I do not. Do I want to
be in a position where we have to close more going forward? I
certainly do not. Hard choices have had to be taken. I have to
come here today to defend the closure programme regrettably because
it is a necessary evil at this moment in time; but it will not
be happening again on my shift, I can assure you. We have to move
away from constantly closing post offices because, you are absolutely
right, it does affect the communities that these post offices
are in. If in the future governments are really serious about
carbon footprint, environmental issues and sustainable communities,
the post office plays an intrinsic part of that all coming to
a village.
Chairman: I think that is a very good
note on which to end this evidence session. Thank you for your
passion, knowledge and enthusiasm. We are very grateful to you
for your time and trouble. If there is more you want to say to
us on reflection in answer to the questions, please feel free
to send a quick written submission to us; but we are not going
hang around on this so it needs to be done quite quickly. If there
is not then thank you very much indeed for your time and trouble.
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