Examination of Witnesses (Questions 40-59)
MR ALAN
COOK CBE, MS
PAULA VENNELLS
AND MR
HOWARD WEBBER
10 JUNE 2008
Q40 Mr Binley: You have already intimated
that the payment from Royal Mail does not include a profit element.
I believe that is what you intimated. There is a profit and loss
element. Can I ask whether the payments from services such as
Local Collect are shared between Post Office Ltd and the Royal
Mail?
Mr Cook: You mean picking up parcels
at a post office? That is typically performed for Parcelforce
and there is a charge. It is one of the many items in that inter-business
agreement for which there is a payment.
Q41 Mr Binley: You think that is
included in that financial relationship between the Royal Mail
and yourself?
Mr Cook: Yes.
Q42 Chairman: I have a note here
which is just an example of the lack of transparency that concerns
this committee. It says that the Royal Mail offers a local collect
service which offers business the chance to offer their customers
the option of collecting at their local post office for the charge
of £300 per year. I imagine that is for letters.
Mr Cook: Yes, that is businesses
picking up from mail centres.
Q43 Chairman: That is from mail centres
and not from local post offices?
Mr Cook: No. There is a feature
with Parcelforce where you can have a parcel that has been delivered
to your home dropped off at the local post office to collect.
That is what I thought you were talking about.
Q44 Chairman: Is that not a bit of
business you ought to get your hands on, Mr Cook? If I were a
small businessman who gets my post at two or three in the afternoon
rather than at nine o'clock in the morning, I would certainly
welcome the opportunity to go to my local sub-post office and
collect my letters. Is it a business that you are trying to get
into?
Mr Cook: It is certainly a conversation
that I am having with Royal Mail. There are some mail integrity
issues around making sure we would have enough space because some
of the small sub-post offices are really small and by "mail's
integrity" I mean it cannot just be left sitting by the side
of the counter in the shop or Postcomm would have plenty to say,
Q45 Chairman: Except for incoming
post?
Mr Cook: No, I think it is an
opportunity.
Chairman: An opportunity created by the
sheer awfulness of Royal Mail Letters' current performance. It
is an opportunity you should seize.
Q46 Roger Berry: Mr Cook, a related
question on transparency: you will be aware because I have had
correspondence about this that in February I inquired of the 14
post offices in my constituency how many were commercially viable
from Post Office Ltd's point of view. It took three months, countless
emails including back and forth and telephone calls, before I
finally was told that one out of the 14 is actually commercially
viable. My question is: did it take three months because of working
out what commercially viable meant or did it take three months
due to inefficiency or did it take three months because to say
that without Government support all but one of my post offices
would close would undermine your commercial position? Why did
it take three months to answer a simple question like that? May
I add: should you not be telling every MP how many post offices
in his or her constituency are not commercially viable from Post
Office Ltd's point of view because that is the important part
of the debate, is it not?
Mr Cook: The important part of
the debate is if we wanted to close one, I think. The number of
post offices that is commercially viable I hope is going to climb
steadily over the next few years, partly as a result of the cost
reduction I talked about and partly as a result of revenue improvements
as we launch new products and undertake new activities. The number
of post offices that is commercially viable for us will move all
the time, but I cannot for one minute begin to defend why it took
three months to get an answer to your question. All I can say
is that there was no plot; there was no ulterior motive. You do
have the information now.
Q47 Roger Berry: I have it now after
the consultation exercise and after the decision has been made.
Would it not be helpful to inform public debate, if you have,
as in my case, 14 post offices and one proposed for closure? Would
not part of the debate about the future of the service be better
informed if people had known that actually without taxpayer support
all but one would have been closed? Is that not relevant?
Mr Cook: We have always felt that
what we should be providing is information on the branches that
are proposed to be closed, not branches that we are proposing
to keep open, if you see what I mean.
Ms Vennells: There is another
point as well, which is that the consultation process is not actually
about the financial viability or not of the post offices. I forget
the number exactly but it is round about 99.5%, maybe slightly
higher than that, that all lose money for POL. It is very unfortunate
that where we close one that is financially viable but the consultation
process is not about exposing those figures in the public domain;
it is not about people's views as to whether a particular post
office is profitable or not. What an agent will see very often
is the potential that their business may well be profitable because
they will be looking at different figures. The consultation process
is about the future provision. It is about asking within a locality
what their view is in terms of our recommendations, and so whether
actually we have got it right in terms of the branch access criteria:
have we looked at the right transportation, have we looked at
the locations, certainly for receiving offices? The consultation
is not about the actual financial viability of the branch or not.
The importance of that is the importance to us in terms of the
amount we save for a branch. We have, particularly since your
correspondence with Alan, made that information available to all
MPs now and to date I think we sent it out to over 20 who have
actually requested the information. Savings information is available
but it is not something that we want as part of the consultation
process because that is not our brief from Government.
Q48 Roger Berry: I just think it
should be on your website and that people ought to know. If the
post office is in their constituency, they ought to know from
your point of view how many are commercially viable and which
are not commercially viable and therefore require taxpayer support.
That is the context in which the current debate is taking place.
Most of my constituents, until I told them, had not the faintest
idea that without taxpayer support all but one would have closed.
All they knew was that they started with 14; you were proposing
to close one; surprise, surprise, people were unhappy. I was lucky.
Without Government support, I would be even less lucky. I think
it is part of the debate. I am astonished and amazed that in terms
of financial transparency we do not know in each constituency,
given that is the basis for the consultation exercise and the
information sharing, and that you are not telling people how many
would be shut without public support. Maybe I am just odd in that
respect.
Mr Cook: Obviously we published
right at the outset the total numbers and how much money Government
was putting in.
Roger Berry: I know that element. I am
talking about individual constituencies to inform local debate,
which is what we have been having.
Chairman: It would actually have helped
your case in Bristol had you made this information available.
Roger Berry: It is about transparency.
I am as unhappy about one closing as I am about 13 but there is
a difference between one and 13 and that information was never
put in the public domain at the time of the consultation in my
constituency and as far as I know elsewhere people have not got
a clue about the big picture. I just think it should be an informed
debate with rational discussion. Why that is not in the public
domain, I simply do not understand. You would never allow a government
department not to provide that information in the context of a
public policy debate.
Chairman: Does Mr Webber think this information
would help?
Q49 Roger Berry: I have not asked
him but he is nodding.
Mr Webber: I am indeed nodding.
It is an illustration of what seems to Postwatch to be the biggest
weakness in the programme. In terms of the administration of the
programme, the selection of the right branches, given that 2,500
have to close (as the Government has decided), we do not have
any serious argument. We know all sorts of individual issues to
take up with Post Office Ltd. The one serious argument we do have
with Post Office Ltd is not just the quality of their communication
but their attitude towards communication. Communication is something
which is not seen as a positive by Post Office Ltd, it seems to
us. It is something which they feel at most is a necessary evil.
It has been improving over the months but not fast enough. I was
not aware of this particular exchange, Mr Berry, but it is an
illustration, as you describe it, of the fact. Customers would
feel at least better informed and probably less negative about
the closures if they knew the sort of information which is now
being made available.
Q50 Chairman: Mr Cook, that is the
case for the prosecution. What is the case for the defence?
Mr Cook: The case for the defence—and
maybe it is too much in the interests of sub-postmasters—is
that there is an issue in publishing that individual sub-post
offices which are not up for closure are unprofitable to us and
in some way hanging the Sword of Damocles over them. It would
certainly affect the financial value of that sub-post office to
the sub-postmaster. It would probably be harder, for example,
for a sub-postmaster to sell that business if it was thought that
it was unprofitable to Post Office Ltd. If I am issuing a confirmation
that 11,500 will be retained, I know logically you would say that
therefore it should not make any difference, but I think if it
has a label over it saying "this one would close but for
government subsidy" it is not an attractive prospect for
a sub-postmaster.
Roger Berry: There are two points. I
specifically said in my initial email in February that I was not
asking for the name of the one commercially viable post office
in my constituency. I was given no individual person's details.
In private, I would be curious. The second point is that we know
that the vast majority of post offices in this country would close
without public subsidy because they are not commercially viable.
Chairman: That figure is 7,500.
Q51 Roger Berry: No, it is roughly
four out of 14 or 10 out of 14—
Mr Cook: I am sorry, I misunderstood.
I thought you were asking for each post office to be named and
whether it was viable or not.
Q52 Roger Berry: No, I have never
been in correspondence on that and I was not asking that this
morning either.
Mr Cook: Then I will not put that
forward as a defence, Mr Chairman, because I misunderstood the
point.
Q53 Chairman: Mr Webber has made
a very serious accusation. He said that you regard communication
as a necessary evil. Historically, that is the experience of all
of us of the Post Office. I think you may be determined to change
this but I am very far from convinced that the culture has changed
in the organisation.
Mr Cook: If that is how it is
coming across, that is a disappointment to me, clearly. If that
is how it has come across to Howard, it is a disappointment. It
is certainly not my aspiration. I think we have improved the standards
of communication, even since the last select committee, to be
frank. Howard is nodding again, just for the record! If that comes
across to Postwatch as reluctant improvements, then that is a
disappointment. That is not the case. I am ready to hear how we
can make it better.
Q54 Roger Berry: I will copy my extensive
correspondence to Postwatch and they can do with it what they
wish, but three months to get the answer to a straightforward
simple question struck me as a bit odd.
Mr Cook: I agree.
Q55 Miss Kirkbride: We have listened
to your response to why you did not give Roger the information.
Bearing in mind that it amounts to pretty much two-thirds of post
offices that are not profitable, it does not seem to me quite
the stigma that you are making out. For those of us who are still
to go through the process of being told which post offices might
be subject to the axe, can you perhaps look in future to telling
me how many of my post offices in Bromsgrove—not identified—would
not be viable?
Mr Cook: Yes, I am sure that could
be done.
Q56 Miss Kirkbride: You could be
clearer about those which would attract public subsidy?
Mr Cook: I misunderstood Mr Berry's
point to start with but, yes. I cannot defend three months. I
can only apologise. Certainly I accept the principle. The bigger
concern, which is something we have to look at, is if it comes
across as a problem in communication, which is a hard-won battle
on the part of either the watchdog or the public or Members of
Parliament. That is something on which we have to work harder.
Q57 Mr Clapham: For clarification
on that point, after the last report by this committee, we received
the assurance that there would be more involvement with the local
MP. Given that assurance, are you now saying that as the consultations
continue, each MP will be informed of the number of viable post
offices, without identifying them, in his constituency?
Ms Vennells: We are currently
doing that where an MP asks for it. We give the information in
private meetings with MPs at the start of public consultation
and 10 days before the end when there is a further meeting and
so there is every opportunity for us to do that.
Q58 Mr Clapham: It is only given
at the end if we ask for it?
Ms Vennells: Yes.
Q59 Roger Berry: A single freedom of
information request would mean that this information would have
to be made available. I am astonished at the reticence. Why can
this not be made available on the website?
Mr Cook: By constituency?
Roger Berry: Yes, because that is how
it has been organised.
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