Examination of Witnesses (Questions 1-19)
MR ALAN
COOK CBE, MS
PAULA VENNELLS
AND MR
HOWARD WEBBER
10 JUNE 2008
Q1 Chairman: Good morning, even though
we know you all so well, would you begin by introducing yourselves
for the record?
Mr Webber: I am Howard Webber,
Chief Executive of Postwatch.
Mr Cook: Alan Cook, Managing Director,
Post Office Ltd.
Ms Vennells: Paula Vennells, Network
Director of Post Office Ltd.
Q2 Chairman: This is a rather unusual
occasion in a sense. We are inviting you to anticipate your response
to our report published last week, in many senses, and asking
you about some of the issues that flow from that. I want to begin
by the mighty edifice I erected on a phrase or two in your response
to our previous report where we describe what you said—and
I am looking at Mr Cook in particular—about your views on
the minimum size of network as being more nuanced than the Government's.
You said in your response, and I quote: 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. What do
you make of our view that the Government is paying for 11,500,
which you acknowledge further on in that response?
Mr Cook: Could I make a couple
of introductory remarks first in which I will pick that up? The
first thing to say is that we have no plan or desire to shrink
the network further after this current network change programme.
I believe we have always been clear about this and we strongly
desire to maintain a network size of 11,500 plus 500 new outreach,
making 12,000 in total, and to be as near to that as possible.
That will be a mix of full-time and part-time outlets and access
points, including the outreaches for the full 12,000, all of which
will provide access to a range of Post Office services. We do,
though, have to work within government funding and government
policy but we would oppose any further plan to shrink the size
of the network for commercial reasons that I will come on to no
doubt during the course of the morning. We are committed to replacing
branches which close voluntarily after completion of the programme
unless in very exceptional circumstances there is no customer
base of any size, but we would also expect to be able to open
new outlets in areas of new or dramatically increased customer
demand as a result of a new housing development or shopping complex
or whatever, for example. All our business planning, as submitted
to the Government as our shareholder, assumes a total network
of those 12,000 outlets. We are working extremely hard to introduce
new marketing services to deliver that. That is our position on
the size of the network. May I go on briefly on the Network Change
programme as a whole?
Q3 Chairman: Let us do the size of
network first and then I will give you an opportunity to make
a second submission to us because this is a really important point.
What I would like to do is look to Mr Webber at this point. The
committee attaches great importance to the code of practice on
business as usual in Network Change. We said we would like to
see a draft of the code before the summer recess. First, and this
is a rather leading question, do you think we are right to attach
such importance to the code and, secondly, is our timescale reasonable?
Mr Webber: You are certainly right
to attach importance to that. We hope it is reasonable. It is
a matter on which we will be working over the next few weeks with
Post Office Ltd very closely to try to achieve. Obviously the
implementation of the code is not going to be for Postwatch itself;
it is going to be for the new National Consumer Council beyond
the end of September, but we have their mandate—we have
been working closely with the Chief Executive of the new National
Consumer Council—to negotiate that. We hope very much to
get certainly the principles settled, and some of the practicalities,
before the recess.
Q4 Chairman: This is not an unimportant
point. A lot of us have suspicions and we were discussing them
before the session began. I know that there have been different
managements in the Post Office. In the past, sometimes the Post
Office seems to have been quite keen to seize the opportunity
created by a retirement and to shrink the network modestly and
it has not always thrown itself heart and soul into finding a
replacement. That is what underlay this committee's concern in
our report. There has been a history of that. Do you understand
that?
Mr Webber: There certainly has
been a history but I think there has been unanimity from everyone
from the National Federation of Sub-Postmasters, to Postwatch,
to the Government, to Post Office Ltd that 11,500 plus outreach
is the sort of level that the network should be at, and that is
where we hope it will remain.
Q5 Chairman: I would agree the National
Federation obviously takes that view. A number of individual sub-postmasters
find themselves disappointed not to have been closed. The compensation
terms are relatively generous, if we are honest. My concern is
still that risk that quite a body will decide to go shortly after
the process ends because they have lost their opportunity to get
out with decent compensation terms. Am I wrong to have that concern?
Mr Webber: There is obviously
a risk of that. The number of business as usual closures over
the past year I think has been slightly below that of previous
years, though that is understandable because the main compensated
closure programme has been going on. It is important for Post
Office Ltd and the Government to make sure that that does not
happen, obviously alongside customers making sure that offices
remain open and that they are well used.
Q6 Chairman: Mr Cook, do you want
to respond to that monstrous allegation I have just made?
Mr Cook: The most common way for
a sub-postmaster to cease being a sub-postmaster is to sell his
post office. That does not necessarily present us with a problem.
They may have found it difficult to sell in the build-up to Network
Change with the uncertainty. As that uncertainty goes, it would
become easier. I do not believe that the other side of Network
Change we will get a flood of closures. We may get a number of
postmasters who are disappointed not to have the opportunity to
retire and seeking to sell their post office. My job is to make
sure the market in post offices is sufficiently buoyant that they
can find a buyer. I think one of the ways that I make sure it
is sufficiently buoyant is by providing a secure commercial future
for Post Office Ltd. When I am tendering for business, for example
like the Card Account with the DWP, the size of this network is
an asset. A huge disadvantage for me is lots of speculation that
that asset is going to get smaller. The publicity that we have
had in recent weeks concerning whether there could be more closures
does not help Post Office Ltd at all win a tender like the Card
Account.
Q7 Chairman: Then why did you say
in your response to us that it is not possible or desirable to
set the minimum number of fixed outlets?
Mr Cook: Do not forget that was
part of the sentence. Your press release had the second part of
the sentence in it. The first part of the sentence reinforced
our desire to maintain 11,500 Post Offices. It is not actually
my gift to give.
Q8 Chairman: It says: Post Office
Ltd has received Government funding which should enable it to
make the network run at the 12,000 offices at 2011. The word is
"should".
Mr Cook: If I could use a more
positive word, it will. Up to 2011, I have funding to maintain
that number of post offices. Beyond 2011, income could fall in
one of two ways: either income as a result of our losing some
other government business, for example; or the size of the social
network payment could reduce. My strong understanding is that
the Government shares the view that the size of the network is
at the optimum level and expects a social network payment to continue,
but it is for them to commit to that and they have not committed
beyond 2011.
Q9 Chairman: The problem is that
we know that the access criteria can be met with 7,500 offices.
Mr Cook: That is true but my understanding
is that the Government's current position is that it believes
11,500 fixed offices plus the 500 outreach is the right number.
I would expect post-2011 still to be financially able to support
that but it is not a commitment I can give, hence the point about
the practicality of committing as Post Office Ltd.
Q10 Chairman: Until 2011, you can
give a commitment that that is your firm objective. Obviously
the world changes.
Mr Cook: We will be campaigning
for it. Yes, I can give a very strong commitment and it is our
very strong aspiration post-2011.
Q11 Chairman: Can I be clear? You
talked about 11,500 plus 500 outreach, so your objective is for
11,500 fixed offices?
Mr Cook: There are already outreaches
in the 11,500 that have been around for a number of years. I did
say 11,500 plus 500 new outreach.
Q12 Chairman: The 11,500 figure is
a figure actually to which you are really making quite a strong
commitment for the next two years, after all?
Mr Cook: Yes, and in a way it
is 12,000 because it includes the 500 outreach.
Q13 Chairman: Mr Webber, what needs
to be in the code of conduct? What features need to be there to
give us as politicians the reassurance that these warm words will
actually be delivered in practice?
Mr Webber: I think we are going
to need to import much of what is in the memorandum of understanding
about the current closure programme. At the moment, the code of
practice is out of date because it is based on issues that were
live before the current closure programme, but we need the Government's
distance criteria obviously to be included in the new code of
practice. We also need the factors in terms of transport links,
effect on the local economy, the demographics, et cetera, to be
included so that customers are fully protected. Just as we are
looking at closures now under the closure programme, we should
be looking at closures in the same sort of way under the code
of practice in future.
Mr Cook: We have already had a
go at preparing a draft of this and we will sit down and work
on that with Howard and his team. It would be quite important
to us to make sure that the NCC were fully brought into what it
is we agree as well.
Q14 Chairman: I want to ask precisely
that point. We are very concerned about the abolition of Postwatch
at this particularly sensitive time in the process. I am sure
the NCC will do a splendid job but it is a period of disruption
we could well have done without. This summer period is a particularly
important period. Mr Webber, what can we do to give you more ammunition
in your battle to ensure NCC gives this the priority it needs
to have?
Mr Webber: To begin with, those
of us who are working in Postwatch on the Post Office closure
programme will remain either in Postwatch or under the banner
of the new NCC while that programme goes on. We are not disappearing.
That was a commitment which the Government gave quite a few months
ago and which we are making sure is being honoured. We will be
around until the end of the year or so to make sure that does
happen. The new NCC has already shown great interest in this.
As I say, I have been discussing with the Chief Executive of the
new NCC issues around the code of practice. He has given us a
very specific mandate to negotiate that code of practice. We are
pretty confident that they are going to give this area a high
priority.
Q15 Mr Clapham: The code of conduct
is going to be so important for the NCC because hopefully it is
going to ensure that the robustness that Postwatch has had in
the way it has approached matters continues. Are we likely to
see anything in that code of practice that relates to appeals?
Is any direction going to be given to the process of appeal and,
if so, could you say how that might change?
Mr Webber: We have not given much
thought to that yet. Off the top of my head, I would say that
I would like something like the current review process to continue,
which does involve high level discussions between the new NCC
as it will be and Post Office Ltd where there are disputes about
replacement branches. I would not commit to that at the moment
but I see no reason why we would not have something similar to
the current review process.
Q16 Mr Binley: May I ask a bit of
an historical question in the first instance? You will know, Mr
Cook, that I wrote to you asking for you to give my part of Northamptonshire
a three-month opportunity to see if we could talk with the County
Council to see if we could keep some of those post offices open.
I might tell you that one of them particularly served an aged
community in a very important and effective way, so it really
impacted at the micro level that affects me rather than at a macro
level, which I understand you are dealing with. Can you tell me
why you could not give me that three months?
Mr Cook: The whole question of
local authority funding—
Q17 Chairman: We will get the full
details later. I think the simple answer you want to give is that
the Government will not let you. Is that the answer?
Mr Cook: We are required to press
ahead with the closure programme. I am really interested in, and
I am making good progress on, the general question of local authority
funding. I think we will come to that detail later.
Q18 Mr Binley: I still want a specific
answer because my elderly people in that patch are saying that
they do not understand it, and they deserve an answer. Why is
this? Is it purely that you have a timetable and the bureaucrats
say you have to stick to it?
Mr Cook: We have agreed a timetable.
We have agreed a process of consultation, whatever. In a sense,
that is true.
Chairman: We will come back to that in
more detail a little later on.
Q19 Mr Binley: May I go on to two
other questions because I am really concerned? I just do not understand
why you did not do more with those people who the Chairman mentioned
earlier who were in fact waiting to get out and wanting to get
out, and there were a number of those. I do not understand why
there was not more of a connection between those who wanted to
stay and continue their jobs and those who wanted to go. It seemed
to me you did not do very much work to see what happened in a
given local area in that respect.
Mr Cook: There is quite a strong
correlation between individual sub-postmaster desires and the
ultimate solution. I have to say, though, that it is probably
more important to make sure there is a stronger correlation with
customer need than sub-postmaster need. Where, for example, you
have a very small community and two sub-post offices not very
far apart, this is not that unusual.
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