Select Committee on Business and Enterprise Tenth Report


3  Financial support for outreach

5. In response to petitions, the Government has noted that it will be providing the £150 million Social Network Payment to support the post office network to 2011 and that "the Government strategy includes provision for 2500 compensated closures and 500 new Outreach services."[5] We have raised the subject of Outreach in previous reports.[6] We were concerned about the level of payment for Outreach services, particularly for partner outreach, in which a local partner, such as a retailer or publican, is appointed by a sub-postmaster or mistress to provide a range of Post Office services.[7] We received evidence that this funding was insufficient from witnesses from Rippingale in Lincolnshire, Tilton in Leicestershire and Devon. At the meeting with Post Office Ltd we asked for further explanation of outreach service funding. We were not reassured by the answers we received.

6. Naomi Nardi, had told us that:

    "PARTNER OUTREACH is the least sustainable of the Outreach Models relying on the work of a third party, who shares payment from POL [Post Office Ltd] with a core sub-postmaster, to deliver services.

    …..

    Perversely, POL does not involve itself in Partner's payment terms. That is subject to individual negotiation with the core sub-postmaster, which means payments will vary across Outreaches for the same work and are open to abuse.

    Whilst some core sub-postmasters will no doubt offer fair deals, others may not. The finance package is not transparent nor has POL considered there to be any need to ensure that Partners get reasonable recompense for the work, responsibility and security of the money and mails that they are handling."[8]

7. When we questioned Post Office Ltd about this, the Managing Director of Post Office Ltd told us:

    "This is a general point across the whole network. There are post offices in Tescos, in WH Smiths, in Co-ops or whatever. We pay those organisations for the transactions they perform for us and they hire staff to do the work. We do not stand back; we actually go in and train those staff. If it is a sub-postmaster, we interview the sub-postmaster to make sure that they are capable of running the business and we exercise a high degree of quality control, mystery shopping and all that sort of stuff to make sure that it works properly. It is their own business and they have to decide the labour rates in their area or whatever."[9]

8. In response to this Ms Nardi told us:

    "Regarding Mr Cook's response using the illustration of employees of Tesco & W H Smith: those are not Outreaches and the structures of the different businesses do not relate to one another at all.

    The core sub-postmasters do not directly employ Partners. If they did, we would very much welcome the minimum wage.

    In fact, Partners are being offered around £2,000 to £3,000 per annum, depending upon transaction numbers and the deal struck with the Core. That is approximately £8 to £12 per day gross for up to 9-10 hours a day, and often across seven days a week.

    In our own situation, given the stricture by POL to offer Partner Outreach for the entire time that our retail side functions, we would earn £1.23 an hour, gross. This is too busy a shop & PO to run single-handed and so in effect, one of us would have to work for the Post Office for almost nothing. If we need holiday or sickness cover, for which we must pay minimum legal rates, we make a loss. In an unguarded moment the core sub-postmaster put forward for us here, told us that he thought a business would 'have to be desperate' to take it on!"[10]

9. We remain concerned that the funding provided for Outreach services may be inadequate. If this is the case, Outreach services will fail and the network be diminished. We note that the adequacy of Outreach funding has been raised by witnesses from several different parts of the country. However, we are not the appropriate body to look at the detailed financial arrangements for outreach, which will involve many different contracts. A significant amount of public funding is provided to sustain the network; we need to be confident the public receives the services this is meant to secure. We recommend that the National Audit Office investigate the financial arrangements for Outreach services.


5   See, for example, Observations from the Secretary of State for Business, Enterprise and Regulatory reform to the Petition of supporters of the "Keep Mayfield Post Office Open" campaign. Back

6   Business and Enterprise Committee, Sixth Report of Session 2007-08; Post Office Closure Programme; HC 292, Business and Enterprise Committee, Sixth Report of Session 2007-08, After the Network Change Programme:the future of the post office network, HC 577 Back

7   Business and Enterprise Committee, Sixth Report of Session 2007-08, After the Network Change Programme:the future of the post office network, HC 577 Ev 4 and Ev 12 Back

8   Ev 28 (Naomi Nardi)  Back

9   Q 164 Back

10   Ev 28 (Naomi Nardi) Back


 
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