Appendix 2: Post Office Ltd Response
Post Office Ltd Memorandum in respect of the House
of Commons Business, Enterprise and Regulatory Reform Committee
on the Post Office Closure Programme—Third Report of Session
2007-08
Post Office Ltd sets out below in this Response Memorandum
its views on the conclusions and recommendations set out in the
third report of Session 2007-08 of the House of Commons Business
Enterprise and Regulatory Reform Committee (the Committee) on
the Post Office Closure Programme.
Post Office Ltd's comments and responses are set
out in italics below each of the conclusions and recommendations
made by the Committee.
Role of Government and the future of the network
1. In answer to a Parliamentary Question,
the Government said a network of around 7,500 offices would suffice
to meet the national criteria. We do not think it is satisfactory
simply to accept that the network may continue to shrink in an
unplanned way between now and 2011; Post Office Ltd should be
obliged to use its best endeavours to keep the network at a minimum
of 11,500 fixed outlets. (Paragraph 7)
While Post Office Ltd has no plan or desire to
see any further reduction in the overall size of the post office
network, it does not believe it is possible or desirable to set
a minimum number of fixed outlets. Post Office Ltd is keen to
develop in conjunction with Postwatch and its successor, the National
Consumer Council, a new Code of Practice in relation to the future
size of the network which would include an agreed process for
dealing with future branch closures. Post Office Ltd is fully
committed to replacing branches where the minimum access criteria
is not currently met or where a closure would have a material
impact on the ability of customers to access postal services.
Post Office Ltd has received Government funding which should enable
it to maintain a network of around 11,500 outlets to 2011.
The Consultation Process
2. We urge the new National Consumer Council
to place continued monitoring of the post office network among
its highest priorities. (Paragraph 8)
Post Office Ltd looks forward to working with
the National Consumer Council in a similar constructive way as
it has worked with Postwatch.
3. 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. (Paragraph 12)
Post Office Ltd has noted the suggestion made
by the Committee and is taking appropriate steps to introduce
greater clarity in its Network Change literature. For example,
Post Office Ltd has amended the Area Plan Proposal booklets by
adding the following clarification wording: " ……Post
Office Ltd must reduce the number of branches and this is being
implemented through a programme of change known as the "Network
Change Programme". The purpose of the local public consultation
for this area is to obtain your views to assist Post Office Limited
in selecting the appropriate branches for closure or closure and
replacement with an Outreach Service". However, from the
outset of the Network Change Programme, Post Office Ltd made it
clear in its communications that the Programme was not designed
to be a vote about whether branches should close, but was about
ensuring that Post Office Ltd had the best available knowledge
to allow it to make the most informed decisions about which branches
should close at local level.
Confidentiality
4. 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. (Paragraph 14)
Post Office Ltd is grateful for the Committee's
acknowledgement that it has been more open as the process has
evolved. Post Office Ltd is trying to ensure that it puts out
into the public domain all relevant information that it is able.
This includes details of customer sessions at branch level, greater
information in respect of demographics and key data used to draw
up the initial local plan. The only information which is withheld
is information which is commercially sensitive to Post Office
Ltd or which relates to a specific sub-postmaster. Post Office
Ltd can assure the Committee that it will continue to do all that
it can to ensure as much information as possible is given at the
outset of the public consultation process for each local area
plan proposal.
5. 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. (Paragraph 16)
Post Office Ltd is reviewing all of its posters
and materials in the light of feedback received to date. Post
Office Ltd thanks the Committee for its suggestions and can confirm
that the suggested changes are already in hand. For example, Post
Office Ltd is in the process of amending the poster relating to
Post Offices no longer proposed for closure, so that this decision
is clearly indicated at the head of the poster.
6. 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. (Paragraph
17)
Post Office Ltd can confirm that the work done
in liaising with local authorities, MPs and sub-postmasters to
assist formulating proposals prior to public consultation is not
hampered by the need to maintain confidentiality. In addition,
Post Office Ltd does not believe that confidentiality is hindering
proper discussions taking place with other relevant parties, in
particular, the process of entering into meaningful discussions
with potential receiving branches or branches which might act
as a "core" to operate outreach services. The instances
of sub-postmasters who have refused to participate in confidential
discussions with Post Office Ltd prior to the publication of the
area plan proposals are extremely rare. In these instances, it
has not hampered or delayed or had a material impact on the process
leading to the publication of the local area plan proposal.
Local Authority and MP involvement
7. 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. (Paragraph 20)
Post Office Ltd supports and appreciates Postwatch's
involvement before during and after the consultation process.
In addition, Post Office Ltd is actively engaging directly with
MPs affected by local area plan proposals, as well as meeting
with them on request. Likewise, Post Office Ltd actively writes
to all Local Authorities at various points during the programme
and engages with Local Authorities as appropriate. Where local
authorities have requested greater involvement in the pre consultation
phase, Post Office Ltd has been pleased to engage with these local
authorities more fully. Further information on this is set out
in the response to paragraph 8 below.
Profitability
8. 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. (Paragraph 21)
Post Office Ltd has throughout the Network Change
Programme sought to engage fully and effectively with local authorities
to ensure that they are given full opportunity to input into the
Programme. All local authorities were written to in July 2007
setting out an overview of the Programme and how they could help
shape the proposed changes, particularly in respect of issues
such as accessibility, impact on the local economy and local transport
developments. Post Office Ltd asked Local Authorities to provide
any information they thought was relevant in determining the future
pattern of the network in their area. Some examples of information
that Post Office Ltd explained would be helpful were regeneration
and development plans in the local authority area; proposed new
settlements; major road schemes likely to have a material impact
on accessibility between communities and significant public transport
changes including enhancements, new provisions and likely withdrawal
of key services. Each local authority is then contacted again
at the time Post Office Ltd is starting to draw up its local area
plan proposals and they are asked for any further relevant information
such as the availability of public transport, alternative access
to key post office services (such as access to cash), local demographics
(such as age, sex, disability, race, religion and ethnicity) and
the impact on customers and the local economy. Local Authorities
are also invited to meet with Post Office Ltd to discuss the initial
draft proposals for an area. To date, Post Office Ltd believes
that this engagement is working well in the vast majority of cases
with local authorities contributing to the pre consultation planning
phase in a meaningful way. As at the date of this Memorandum,
the following table shows the scale of dialogue with local authorities:
| No. of local authorities contacted
| No. of written responses to Post Office Ltd contact
| No. of local authorities with whom follow up meetings held or scheduled
|
| 468 | 345
| 100 |
9. 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. (Paragraph 22)
Post Office Ltd works closely with Postwatch in
accordance with the agreed Memorandum of Understanding, when drawing
up local area plan proposals. Whilst Post Office Ltd maintains
a focus on the overall financial viability of its business, a
whole range of considerations are taken into account including
financial ones when Post Office Ltd makes its proposals. However,
it should be noted that all of the branches proposed for closure
would enable Post Office Ltd to make financial savings. This may
include branches which sub-postmasters might consider as profitable.
Post Office Ltd is committed to the sustainability of the network
as a whole and does not believe that any other party (including
Postwatch) should have the right of veto over its commercial decisions.
Alternative support for post offices
10. We welcome Post Office Ltd's apparent
willingness to contemplate introducing locally supported post
offices. (Paragraph 24)
Post Office Ltd will continue to explore with
third parties various options for local funding.
Management style
11. 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. (Paragraph 28)
You will be aware that the managing director of
Post Office Ltd personally apologised on behalf of the business
for this regrettable error which was as a result of an administrative
error and Post Office Ltd's has, since the incident referred to,
put in place measures to ensure such an error does not happen
again. Post Office Ltd is committed to delivering the Network
Change Programme in a professional manner and to show respect
to all those who may be affected by any of the changes, in particular
the business's sub-postmasters and customers.
The Government Access Criteria
12. The evidence we have received from local
authorities suggests the detailed information required to implement
the access criteria properly has not always been taken fully into
account. We are particularly concerned that in some cases the
local area plan has failed to reflect arrangements to transfer
Crown Offices to franchised premises in a different location.
If Post Office Ltd cannot take into account information about
matters that it controls, confidence in the wider information
underlying these plans is undermined. Post Office Ltd must do
more to demonstrate that local area plans are accurate and based
on current information. (Paragraph 31)
When Post Office Ltd draws up local area plan
proposals, all post office branches and current proposals for
them are taken into consideration including the conversion or
closure of any Crown Offices. The example quoted in the Committee
hearing was an isolated case and related to the conversion of
the Liverpool city centre Crown Office into a franchised branch
to be operated by WHSmith who were relocating their own branch
into new premises. Post Office Ltd was confident that when the
local area plan proposal was published, it reflected the best
available information available at the time. Only subsequently
did an unexpected delay occur in securing the Landlord's consent
to the lease of the new premises. Thus, due to circumstances beyond
Post Office Ltd's control, it was not possible to reflect the
franchise branch details in the local area plan proposal and this
had a consequential effect on the implementation timetable for
two other branches.
13. We underline the fact that
the geographic access criteria are national, and can be met even
if coverage in certain local areas falls well below the national
standard. We do not know the extent to which the national criteria
are met in each local area plan. We expect Post Office Ltd, as
far as possible, to take the geographic access criteria into account
at local area plan level, not just meet them nationally. (Paragraph
32)
Whilst Post Office Ltd does not measure the National
Criteria at local level, it does monitor the impact of each local
area plan proposal to ensure that overall, the network remains
compliant with the National Access Criteria laid down by Government.
Post Office Ltd would also point out that (a) there is a local
criterion contained within the minimum access criteria, namely
that 90% of the population in each Postcode District must be within
6 miles of their nearest Post Office outlet and (b) that the "no
one area to be overall significantly more adversely affected than
any other area" requirement provides further local protection.
Also, while compliance with the National Access Criteria is measured
on an "as the crow flies" basis and in compliance with
national criteria, when Post Office Ltd is planning at local level,
it measures the distance between branches on the basis of road
distance to reflect the real journeys of its customers. This
is one of a number of important measures looked at by Post Office
Ltd when assessing customer's ease of access to Post Office premises
including availability of public transport (and disabled access
to it), branch specific accessibility (eg ramps, doors, hearing
loops) and local demographics (such as age, sex, race and ethnicity).
Accessibility
14. We welcome the fact that Postwatch surveys
proposed franchises for accessibility. We trust it also considers
accessibility when it considers proposals for sub-post office
closure made as part of the Network Change Programme. However,
we are far from convinced that Post Office Ltd itself is fully
engaged with the need to ensure that services are accessible to
all. This needs to be given much higher priority. (Paragraph 34)
Accessibility has been a key issue throughout
the Network Change Programme for Post Office Ltd. Post Office
Ltd has carried out extensive consultations with appropriate stakeholders.
In addition it surveys all affected branches, including those
proposed to remain in the network and particularly where a branch
is identified as a potential receiving branch for customers migrating
from a potential closing branch. Post Office Ltd welcomes the
comments of the Committee on this important issue and continues
to monitor closely its performance and make continuous improvements
to the Network Change Programme as appropriate. In particular,
Post Office Ltd is working closely with sub-postmasters and making
significant investment in improving accessibility and capacity,
where required, for those branches identified as receiving branches
(ie those which it is expected will be most affected by the migration
of customers from a closing branch). As at the end of February
2008, Post Office Ltd has completed works at over 80 branches
with a significant number of further works currently in the pipeline.
In addition, Post Office has looked at the availability of products
across the network and as a result has enhanced the products on
offer, making a wider range of products available to its customers
in 332 branches.
Local economies
15. We believe that there should be a presumption
against closing a post office where this is the last shop in the
village, or in a deprived urban area. (Paragraph 35)
Post Office Ltd understands the potential impact
of closing a Post Office where it is the last shop in a village
or in a deprived urban area and as such it is one of a range of
important factors which Post Office Ltd takes into account when
drawing up each Local Area Plan Proposal. Post Office Ltd does
look at the criticality of the retail offer and the health of
the ancillary business. These factors are specifically identified
during the on the ground validation by its Field Change Advisors
and through information supplied by others throughout the consultation
phases of the Programme. The number of branches that will be retained
in the network that support the remaining retailer are then set
out within the Local Area Plan Proposals. Whilst there is no presumption
that Post Office would not close a branch which formed part of
the last essential retailer in a community, it is an important
factor in respect of which Post Office does have due regard. To
date, Post Office Ltd has maintained support for 636 branches
which are identified as being the only essential retailer in a
community.
16. Post Office Ltd must take
great care to ensure that any reduction in compensation to a sub-post
office that closes, but where the remaining business intends to
offer new and competing services, is not excessive. The purpose
of reducing compensation is to limit competition with, and encourage
business to migrate to, remaining post offices nearby. The argument
for this reduction is weaker in areas where there is no ready
access to such offices. Because of the importance of such facilities
to the local communities, Post Office Ltd should always be realistic
in its assessment of the degree to which alternative services
would really displace business for the post office network. When
reaching its decisions it should give the benefit of the doubt
to the business and so to the people it serves. (Paragraph 38)
Post Office Ltd has been careful to balance the
needs of Post Office Ltd, the use of public funds and the future
needs of any affected sub-postmasters. Sub-postmasters have the
option to select from a range of choices including the ability
to offer similar services but from an alternative supplier within
a 12 month period of the branch closing. Payment for the right
to continue to provide such services is based on the income generated
from that product or service. After the 12 month period, the sub-postmaster
is free to offer similar products or services without payment.
Also, Post Office Ltd agreed the compensation terms and conditions
with the National Federation of Sub-postmasters who agreed that
they struck the correct balance. Indeed, the chair of the Federation
stated in his evidence to the Committee that
"……..we have worked with Post Office
Ltd unashamedly to make sure that the terms and conditions of
Network Change not only give the sub-postmasters a fair deal for
leaving, but also make sure that as much work as possible is retained
within the remaining post office network because at the end of
the day that is what it is all about, it is making sure that this
network has a future."
17. The
timetable for the Network Change Programme is extremely compressed.
We would be concerned if postmasters had to decide whether to
accept the cut in compensation before they had the time to establish
whether they could attract bill payment or other services, or
explore the terms of such contracts. Postmasters should be given
adequate time to explore these factors before deciding what compensation
to accept. (Paragraph 39)
To ensure that Sub-postmasters know the choices
which will be made available to them before any final decision
to close their branch is made Post Office Ltd's Field Change Advisors
make Sub-postmasters aware of the compensation package in advance.
During December 2007 Post Office's Field Change Advisors contacted
every sub-postmaster of a branch that had already been proposed
for closure to make them aware of the terms of the compensation
package. From December 2007 onwards, those Sub-postmasters whose
branch is proposed for closure are made aware of the terms of
the compensation package when Post Office Ltd initially engages
with them. Sub-postmasters have at least three months from the
point at which they are proposed for closure before a decision
is implemented. When Sub-postmasters are contacted to explain
Post Office Ltd's final decision regarding the proposed closure
of their branch, they are reminded of the terms of the compensation
package. In addition, sub-postmasters themselves know better than
anyone the future customer demand as they have already been providing
such services to their customers.
Outreach
18. We agree that open-ended questions about
the type of Outreach which may be appropriate are not helpful
but welcome the fact that in recent consultations Post Office
Ltd suggests what Outreach arrangements could be provided. We
also welcome the assurance that Outreach services will continue
until at least 2011. In addition we welcome the statement from
Post Office Ltd that they are prepared to consider Outreach services
in areas which had previously lost their postal services but are
within the new national criteria. (Paragraph 42)
Post Office Ltd is pleased that the Committee
has acknowledged the steps taken by it to make consultation on
Outreach more meaningful to customers. Funding is in place to
support Outreach provision until 2011. Outreach is an alternative
model to a traditional branch, which is being introduced to ensure
that alternative access to Post Office services is maintained
in areas affected. The purpose of an Outreach service is to ensure
that customers continue to have access to Post Office services,
although they will be delivered in a different way than those
previously offered. However, an Outreach provision is no less
secure than an independent branch. Additionally, Post Office Ltd
would expect that Outreach provision would be covered by the proposed
Code of Practice referred to in response to paragraph 1 which
would cover the issue of the provision of Outreach services to
ensure that the national access criteria are met.
19. We believe a single outreach
session of two hours a week is generally unacceptable; there should
normally be at least two sessions per week. (Paragraph 43)
The number of serving hours is reviewed by reference
to the number of customers of the closing branch in determining
the service provisions to be provided. Post Office Ltd must also
consider the costs of the Outreach provision when drawing up outreach
proposals. There is evidence from some early plans that in some
locations, outreaches have led to extended hours and new locations
to those currently offered by an existing branch, including evening
and Sunday opening. Only a small minority of Outreach services
(less than 15%) are based on the provision of two hours a week
and of these, a majority offer the service through at least two
sessions per week. Wherever possible, Post Office Ltd seeks to
offer a minimum of two sessions per week.
20. We
welcome the proposals to introduce Post Office provision to remote
areas. If this cannot be done by voluntary Outreach arrangements,
we expect the Post Office to provide the necessary services itself.
(Paragraph 44)
Post Office Ltd will do all that is necessary
to maintain the Minimum Access Criteria including providing services
directly if necessary. This will of course include ensuring that
Post Office Ltd meets the specific minimum access criteria at
postcode level, including providing new services in locations
where it currently does not achieve the minimum access criteria.
For example, Post Office is re-opening a previously closed branch
in Otter Ferry in PA22 and proposing to introduce a new outreach
services in Tomatin (IV13), Torridon (IV22) and Laggan (PH20).
Proportionality
21. We welcome the fact that Post Office Ltd
appears to be taking a flexible and pragmatic approach to the
requirement that the closures should not fall disproportionately
in particular areas, and that its programme takes some account
of the varying levels of current provision. (Paragraph 45)
Post Office Ltd is grateful for the acknowledgement
of the Committee about the way the business is approaching the
relative effect of closures in different areas. It will continue
to ensure, where possible, that within the overall Network Change
Programme, it takes account of all relevant local factors, whilst
at all times adhering to the criteria set by Government.
22. The
Network Change Programme has a difficult balancing act to perform
between responding to local needs and concerns and ensuring that
the necessary reduction in the network is achieved. We welcome
the Minister's assurance that areas which are considered late
in the process will not be disadvantaged. We intend to keep this,
and other aspects of the programme, under review. (Paragraph 46)
Post Office Ltd believes that it is on course
to deliver the Network Change Programme in accordance with the
criteria set by Government. Variations are within the range expected
at the start of the Programme and Post Office Ltd will continue
to closely monitor all relevant factors as the Programme continues.
Conclusion
23. Post Office Ltd has been given the task
of reducing the network by a fixed number of branches in a fixed
period. The Network Change Programme began in July 2007 and the
final consultation is scheduled to end in October 2008. That is
a very challenging timetable. As we always feared, this has meant
that consultation has been curtailed, and the whole process has
been rushed. The failure to realise at the outset that the consultation
timetable should take account of the "purdah" for local
elections, and the failure to allow properly for the effects of
holidays on consultation periods, are symptoms of this. The process
has been improving as more experience is gained, but problems
remain. There is not enough clarity about the basis of the consultation;
we are concerned that accessibility is not always taken into account;
commercial confidentiality has prevented sensible discussion.
We hope that all those involved will use this Report as a prompt
to make further improvements. (Paragraph 47)
Post Office Ltd agrees that the Network Change
Programme has a challenging timetable but believes that the Programme
is well planned and resourced to enable proper and meaningful
consultation including pre and post public consultation phases
to take place. To date, Post Office Ltd has received over 65,000
responses in respect of the 22 local area plans proposals which
have been published, showing that there is very extensive participation
in the consultation process by individuals as well as organizations
and that the length of the consultation period is not proving
a constraint for them.
The Cabinet Office Guidelines in respect of purdah
are being applied and the Programme timetable has been duly extended.
It is now scheduled to finish at the end of November 2008.
Post Office Ltd would respectfully disagree with
the Committee's comments that it had failed to allow properly
for the effects of holidays in the consultation process. The timetable
for closures was built around the agreed Code of Practice with
Postwatch. This includes an extension to the public consultation
period of 10 days if consultations span a specific Christmas period,
an extension of two days if public consultations span Easter and
an extension of one week if public consultations span specific
dates during the summer period.
Finally, in respect of the Committee's comments
regarding clarity about the basis of consultation, Post Office
Ltd has already revised its materials as outlined in the response
to paragraph 5 above.
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