Examination of Witnesses (Questions 160-169)
CWU
5 FEBRUARY 2008
Q160 Mr Wright: In terms of the numbers
of staff that are transferring to the WHSmith branches, how many
are taking redundancy? Have you any figures on that? I spoke to
one person in my branch who said that they were not moving across
to WHSmith, they were taking the redundancy money, but they would
not go into the details.
Mr Furey: To the best of my knowledge
nobody is transferring on TUPE to WHSmith. There are approximately
1,500 employees in the Post Office and that includes managers,
cleaners and the counter staff. Each of the counter staff and
the cleaners—this is about 1,300 of our members—has
been offered redundancy on enhanced terms that is paid for from
the Government's subsidy of £1.7 billion. Those enhanced
terms are better than any that is agreed with the CWU. Those people
that do not wish to take redundancy and wish to remain in employment
are offered alternative jobs commensurate with their skills in
other post offices and in order to make room for them effectively
there is "bumping", ie people are offered redundancy
in the receiving office to make room for those who want to remain
in employment. The net result is there will be 1,300 less CWU
members working in Crown post offices, either in the ones that
are TUPE franchised or in ones where people are moving into.
Q161 Mr Wright: You are saying WHSmith
have got the market advantage in terms of being able to have a
clean sweep and start from scratch with every single employee,
are you not?
Mr Furey: Yes.
Q162 Roger Berry: Some Crown post
offices have been franchised to the Co-op. Is the experience there
any different either in terms of service provided, transfer arrangements
and so on, or are your criticisms of WHSmith equally applicable
to those transferring to the Co-op?
Mr Furey: They are. What has happened
pre-Alan Cook's reign within Post Office Ltd is that franchising
was done on an ongoing piecemeal basis with small companies, it
was done over a period of time. What Alan Cook has done is he
has done one big commercial deal with 70 Crowns to be franchised
over a period of just under a year. That was different from any
other franchise in that franchising was effectively done in dribs
and drabs, ones and twos were announced on a rolling basis and
nobody knew what their future was because they did not know whether
the sword of Damocles was hanging over them or not. The difference
on this occasion was it was one commercial agreement for 70. There
were already six Crowns franchised to WHSmith and so at the end
of it there would be 76. In essence, in terms of TUPE and terms
and conditions, there is no difference.
Q163 Roger Berry: What happens if
a franchised office closes? What has been your experience of this
if there have been any so far?
Mr Furey: Thankfully it has not
happened too often, but where it does happen the community loses
a service altogether. One of our fears from the CWU's perspective
is that where you have a Crown post office, it is owned by the
Government ultimately and that provides a service that is guaranteed.
When it is put into private hands, if that private company was
to go bust, then effectively the post office would close and would
not be replaced. That is a big concern. In relation to one of
the earlier questions about Europe, France actually has the equivalent
of more Crowns than private concerns. It is a complete reversal
of the model that applies in the UK where the sub-post offices
make up about 12,500 versus 400 plus Crowns. In France it is the
complete reverse of that. That way, by being publicly owned, it
preserves a service and gives a guarantee. If WHSmith was to go
into liquidation and go bust then the post offices would be closed.
Q164 Roger Berry: Could you give
me a rough idea of what proportion of franchised offices have
been closed? Secondly, in the cases where that has happened, does
Post Office Ltd not consider another franchisee nearby to carry
on providing the service, or am I being totally naive?
Mr Furey: The franchising programme
has been going on since 1988. There were 1,500 Crowns then. So
something like 1,000 Crowns have been franchised in the last 20
years. Some of those have been franchised and then subsequently
closed because the sub-postmaster has then taken a package to
go. In the previous network reinvention programme there were illustrations
of that happening. There have also been companies effectively
not being able to trade any longer because of financial problems.
I do not think you are being naive. Where possible, to be fair
to Post Office Ltd, they will try to find alternative premises
and another company to run the post office, but this is a wing
and a prayer. Whether that can happen or not is debatable. There
are no guarantees.
Q165 Chairman: In my own constituency
we did have a franchise which had to close, but they are under
a commercial obligation—it was the Co-op—to continue
to meet their contractual obligation to provide the postal services.
They transferred it back to the old Crown office again which was
still empty. In that case the company had not gone bust, but it
had the financial resources to enable the service it was contracted
to provide to be provided. Have you got much evidence of that
happening? Could there be some sort of funding arrangement with
WHSmith whereby if they did want to close offices there is an
obligation to open up another one somewhere else?
Mr Furey: We do not get to see
the contracts because of commercial confidentiality. If I were
to answer your question I would be surmising as to what I thought
would happen. In previous franchising programmes the franchisee
has been given a contract for five or seven years. If you take
Wimbledon where our head office is, the Crown post office in Wimbledon
was franchised into a department store called "Elys".
At the end of their seven-year contract they decided not to carry
on operating the post office. For a long time, once the post office
closed in Wimbledon, there was not a decent service. Post Office
Limited eventually found another private person to run a post
office and another sub-post office opened up not far from where
the franchise was, but in the intervening period, something like
two years, the service to the public in Wimbledon was atrocious
because the franchisee had made a commercial decision that they
wanted the space in their department store for selling their products
rather than people queuing for postal services. It is very much
a hit and miss affair. As to what the terms of the contract are
with WHSmith, I would be delighted to see that!
Q166 Chairman: We cannot separate
these two themes. We will be talking mainly about sub-post office
closures with our future witnesses but clearly there is a read
across. Most of the sub-post offices in Worcester are delighted
that the Crown offices are being franchised because they reckon
there will be a large transfer of business away from the Crown
offices towards the sub-offices. There is also the concern that
the post office closure process is not taking account of the transfers
of Crown offices to franchised offices, because often these are
geographical moves of some significance as well that can impact
on the viability of sub-post offices in the area. Have you any
comments to make on the interaction between the franchising process
and the sub-post office closure process?
Mr Furey: We are very concerned
that the franchising process has been a negotiation between WHSmith
and the post office. I suspect WHSmith have got what they want
from that negotiation. A good illustration of that is in Coventry.
When the main post office in Hertford Street closes there will
not be a Crown office in the eleventh biggest city in the UK.
That is a big concern. The reality is that the franchise that
is moving into WHSmith is moving closer towards where another
franchised post office is and that franchisee is not happy because
they are going to be competing for the same custom and trade.
You can actually see the sign for the other post office outside
the WHSmith indicating where you can get post office services.
There is a lack of planning, there is no doubt about it. There
are large parts of the United Kingdom where clearly there should
be Crown post offices and there are not. Whilst the sub-postmasters
are private businessmen and women, it is about being able to do
postal services and post letters and recorded deliveries and registers
and it is about undermining the whole universal ethos of the service,
but also our postmen and women collect and deliver mail items
to those post offices. It is an attack on the infrastructure of
the whole of the Royal Mail group to close sub-post offices. I
do not think there has been much analysis done of the interaction
between a franchised Crown post office and the sub-post offices
that are closing.
Mr Hayes: When we had Sunday collections,
which were taken out unilaterally by the business, the collection
pillar boxes tended to be the sub-post offices. They tend to be
where the phone boxes are because we were the GPO many, many years
ago. It tends to be a focal point for the community and not just
rural communities but urban communities. On a lot of council estates
the only thing that is keeping the shopping arcade going is the
sub-post office or the Crown office. There is a synergy there.
Q167 Mr Hoyle: Can I just take you
back over a couple of things that we have discussed? Something
we talked about, and the Chairman was quite adamant about, was
the queuing problem. Do you feel that the queues are being deliberately
created? What I have heard from one Crown post office is that
the queues are extended in order that you can be picked up while
you are in the queue to offer to sell you services and if you
go and listen to the services that are on offer you then only
wait one minute in a queue. Priority is given to those people
who may talk about insurance at the expense of everybody else
who may only be queuing for a stamp.
Mr Hayes: I think that gets in
the way of the transaction. There is a point about buying another
product whilst you are there.
Mr Furey: The culture that Post
Office Ltd is trying to bring in is one of sales and trying to
sell financial products. Three or four years ago that would have
been fairly alien to post office counter staff in that they saw
their primary role as serving the public. There has been a change
there. They are encouraged to engage in customer conversations
effectively to sell travel insurance, home insurance, car insurance,
et cetera. There has been a move to put out on the public side
of the counter what are described as "meeters and greeters"
so that they can then engage in this sales culture. If somebody
walks in with a car tax renewal they are an ideal person to identify
for car insurance. The CWU has been supportive of trying to increase
revenue via sales because we want the Crown offices to be turning
back into profit so they are not at threat of further franchising.
It is a bit of a double-edged sword for us because we want new
revenue coming in to protect the jobs in the Crown offices but
at the same time, the culture of having an interaction with the
public about selling does take longer and undoubtedly will have
a detrimental effect on the length of the queues and that is a
worry for us.
Q168 Mr Hoyle: I think that is right.
You have Granny Smith who is coming in for her pension, but the
person behind her is there to renew their car tax and is taken
straight out of the queue and offered some services. They are
served within one minute and Granny Smith has to stand on her
feet for the next five minutes because she is not worthy of being
offered any of those services. I think there is some frustration
creeping in. Do you share the concern that Crown post offices
are being closed even if they are valuable and it is about selling
off the silverware? It is not really a justification about anything
else but the fact that they can get a big cash receipt by moving
it into a WHSmith. It is a double whammy. First of all, they can
save on the TUPE transfer and, secondly, they have received a
big lump of money by selling off the Crown post office.
Mr Hayes: The Post Office has
got one of the biggest real estate portfolios in the UK and they
tend to be in prime locations.
Q169 Chairman: Mr Hayes and Mr Furey,
we have come to the end of our allotted time. Is there anything
you would like to add?
Mr Hayes: We have also got the
Royal Mail review coming up. There has been some suggestion in
some quarters about separating Post Office Counters from Royal
Mail. We would be opposed to that. We see the synergy of the network
in the universal service we provide. We would be opposed to any
separation of Post Office Counters from the Royal Mail Group.
Chairman: It is very likely, although
we are not committing to this, the Committee will look at these
issues later in the year. Thank you very much.
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