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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 292-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE BUSINESS, ENTERPRISE AND REGULATORY REFORM COMMITTEE
THE POST OFFICE CLOSURE PROGRAMME
Tuesday 29 January 2008 MR GEORGE THOMSON and MS SALLY REEVES Evidence heard in Public Questions 1 - 139
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Business, Enterprise and Regulatory Reform Committee on Tuesday 29 January 2008 Members present Peter Luff, in the Chair Mr Adrian Bailey Roger Berry Mr Michael Clapham Mr Lindsay Hoyle Mr Mike Weir Mr Anthony Wright ________________ Memorandum submitted by the National Federation of Sub-Postmasters
Examination of Witnesses Witnesses: Mr George Thomson, General Secretary, and Ms Sally Reeves, Chair, Negotiating Committee and Executive Officer, the National Federation of Sub-Postmasters, gave evidence. Q1 Chairman: Thank you very much indeed for coming in for this first evidence session of our inquiry into the closure programme for post offices. It is quite a busy timetable that we have set ourselves and we meet again next week to hear from the Post Office and the Minister and we hope to produce any recommendations which might or might not flow very quickly thereafter, if we can manage it. We have had an enormous volume of evidence from interested parties, including yourselves, and I would like to thank you for your written evidence, and I am sure we will enjoy your oral evidence too, but it was extremely comprehensive, very thorough and very well argued, and we are grateful for that. We have also had a huge response from colleagues, Members of the House of Commons with experience of the closure programme, and we will seek to reflect that particularly in our evidence next week and ask the Post Office and the Minister about the issues, so it has been a very, very intense volume of evidence we have received and we are grateful for it. What I would like to do is to begin by asking you, as I always do, to introduce yourselves and then perhaps to go on and, in the words of Morecambe and Wise, ask the question, "What do you think of the show so far?", how the consultation process is going overall before we start digging down into the details. Mr Thomson: I am George Thomson, the General Secretary of the National Federation of Sub-Postmasters, and beside me is Sally Reeves who is the Chairman of the Negotiating Committee of the National Federation of Sub-Postmasters. I believe that the Network Change Programme is going relatively smoothly, given that this is the second closure programme within five years, given that within this programme 18% of the UK post office network is proposed to be closed and that the Post Office, in my opinion, have handled a very difficult subject relatively well. The difference this time round, and people have to remember this, the last time round the closures were on a voluntary basis, that sub-postmasters volunteered to go and, as a result, holes did appear in some parts of the network, whereas this time round the conversations and the visits are a little bit harder because some people are being forced to leave, let us be absolutely honest here, who do not want to leave, but I would just give you the thought that, for every one phone call that we have at our headquarters from a member who is upset that they are being compulsorily closed against their wishes, there are another four or five, this is absolutely true, who, once the area plan has been finalised, realise that they are not being closed and are upset that they are remaining in a network with such a difficult past and quite a difficult future over the next two or three years. On the whole, yes, there have been some difficulties, but things are being done relatively well and I am quite relaxed about where we are at this stage, given the difficulty of the programme. Q2 Chairman: And given your regret that you are in this situation at all? Mr Thomson: Yes. Q3 Mr Weir: There has been a lot of talk about the length of the consultation process, particularly the public aspect of it. In their rejection of 12-week local consultation, the Government said that they were "mindful" of your own call for "speedy local consultation to minimise uncertainty for sub-postmasters and customers", and that seems to have become the reason given by DBERR for the six-week period. Would you have supported allowing the local consultation to last for 12 weeks to allow for better local consultation? Ms Reeves: I think the element of the six weeks is quite right for the rationale that was there of sub-postmasters' interests, consumers' interests and of the communities that sub-postmasters serve, but also in the wider interest of Post Office Limited. If we get all of the work right before public consultation, it is important for sub-postmasters and the communities that they know what is going to happen to their business because at the moment everything is in limbo both for sub-postmasters and their businesses and for Post Office Limited because nobody within the post office network, until they know what is going to happen to their business, can invest in their business. They are very wary about the purchasing of stock because they do not know whether they are going to be here next year to sell through and that will have an impact on the communities. Also, for Post Office Limited, I think they need some stability in the network to know what is going to happen to the network, to be able to go out and get business for sub-postmasters and to approach the clients, so I think the six weeks is long enough for the consultation period. There has been quite a lot of publicity before it actually gets to the public consultation area and in the run-up to that six weeks, most of the people in the consultation areas do seem to be ready to add their voice to public consultation, and Post Office Limited themselves seem to have got an awful lot of emails and correspondence during the public consultation period which seems to indicate that people are aware of what is happening. Mr Weir: First of all, if it had been lengthened to 12 weeks, it would have only lengthened the process by a period of six weeks. Is it that crucial? Q4 Chairman: But the process has effectively been going on for how many years now? Effectively, the uncertainty has been for two or three years? Ms Reeves: Yes, it has been a long process and the actual process from the beginning to now has produced a lot of negativity within the post office industry for sub-postmasters and I believe that that needs to be addressed very quickly and very cleanly to be able to move forward in a more positive light, and I believe that any lengthening of the time is just time too much for people's investments. Q5 Mr Weir: The problem for the public, and I realise what you are saying, but they do not know the specifics of which of their post offices are marked for closure until the area plan is actually published, so when you talk about a much longer process, from the public's point of view it is six weeks from day one, "Your post office is going to be closed" to then come up with a campaign or whatever, to consider the implications of the proposals and mount a campaign. Local authorities have the same problem when they are working in generally a four-week timescale, and there have been some concerns, for example, by local authorities that they are not given prior notice of what is happening. Mr Thomson: I think what also has to be remembered is that this is the second closure programme and also that the Government's consultation on the future of the network went out on 14 December 2006 and that consultation, which finally evolved into the report on 17 May on the future, started from the premise that the Government were putting in a £150-million-a-year network support payment and that they wanted the network to fit within that. We have also got to remind ourselves that these 2,500 closures is the Government trying, working with the Post Office, to get a network that is both sustainable and affordable within the £150 million, so there was the initial consultation on the principle that we needed a small post office network. Q6 Mr Weir: But there is a massive difference between the principle of a closure programme and the effect on individuals, communities and post offices. On one specific, and this talk of six weeks or 12 is interesting, but, for example, it transpired in Glasgow that where a post office was going to be closed, a public campaign was mounted and that post office was reprieved from closure, then another post office which was previously told it would not be closed was simply substituted in its place. Now, that seems a bizarre way of dealing with the programme and it does appear that it has become merely a numbers game for closing a set amount of post offices in each area. Is that your experience of it? Mr Thomson: My view, and I have got sympathy with the last point you said there and I have made the Post Office aware of that point, but I do think that there is genuine consultation, but that is undermined by a simple substitution when you reprieve, in brackets, one office to then substitute it with another. I think it lends credence to the people saying that the consultation is not genuine. I believe it is genuine, but I think that the one-for-one policy is wrong and I do not believe in it and I certainly think that the Post Office should stop doing that. If an office is reprieved, I do believe that we should not automatically substitute another one. Q7 Mr Hoyle: The suggestion of £150 million, people view this as just another layer. Instead of being the death by 1,000 cuts, this is actually the death of the post office network by five cuts because it will be the £150 million and then three years down the line it will suddenly drop to £100 million and then £50 million and we are just actually going to end up taking more out. Is that true or not? Mr Thomson: A very good point. The Federation this time round have supported this closure programme reluctantly, but what I will say in a public forum is that the answer to the problems facing the Post Office cannot continue to mean every two or three years closing 2,500 offices. Five thousand offices will be closed within four years and that takes us to what I would call the 'critical mass' The network that we will have left of about 11,500 offices, whatever happens, the solution to future problems has to be working with the Government, Labour, Conservative, Liberal, it does not matter who, but working with the Government to say, "How can we make the 11,500 offices that are left sustainable? How can we help bring work in?" We think that one of the ways we can do that is for a post-bank to be created, and we have to win the Post Office card account tender too, but what I do know is that I will not come along as General Secretary and support another closure programme. We have to make sure that those left have got a future. If you think about it logically, the UK has a population of 60.5 million, we have the second-biggest population in Europe after Germany, we have the second-biggest economy in Europe after Germany. Now, surely we must have the ability and the brains to support a network of post offices of 11,500 for a population of 60 million, so we have worked with the Government up to now, but we now have to sharpen up the game. We have to say, "How do we make sure that the Post Office, after this closure programme, has a future", and I would say on this point that that has not had enough work done on it in the past by any government. Chairman: I think we have a lot of sympathy with that point and this Committee's earlier reports have pointed in that direction. Q8 Mr Weir: On the substitution point, can you enlighten us as to what happens then when a new post office is then targeted for closure? Is there a further consultation period on that and how does it affect the overall consultation period? Mr Thomson: There is a further six-week consultation period when one office is reprieved and a substitution is put in its place. Q9 Mr Weir: Do you think that is long enough, given that the customers and postmasters will have been told, "You are safe, you're not being closed", but somehow they change their minds and decide, "You are being substituted"? Do you think that six weeks is long enough for that to be dealt with? Mr Thomson: What I do know from looking at the figures, and the vast majority of people who want to reprieve an office take it to their councillor, they will take it to their Member of the Scottish Parliament, they will do the same in Wales and the same in Northern Ireland, or they will take it to their MP, so I think really that, if the councillor or MP is on the ball and they are really organised in trying to save an office, six weeks is fine, and I really do think that. Making it longer than six weeks does add to the uncertainty. The Federation are absolutely comfortable with people having six weeks to start a campaign or put their arguments against the closure of a particular office. Q10 Mr Weir: On the point about the programme, we have been told that the Post Office only visited those post offices suggested for closure, not the nearby 'receiving' ones. Is that the case? Ms Reeves: No, it is my understanding that anybody who is going to be a receiving office is approached by Post Office Limited as part of the overall resolution of the access criteria within that area and, if an office is closing, wherever that work is likely to migrate to is visited as being a receiving office, and that has been my experience. Q11 Mr Weir: Are you satisfied that sufficient local knowledge has gone into drawing up the local plans to ensure, for example, that where a post office is being closed, the receiving branches are large enough to take the additional work? I have to say, in my own constituency the experience of past closures is that it has led to difficulties in some of the receiving branches because of an unplanned closure. We have not got our area plan yet, but I am a bit concerned that you end up with a situation where the receiving branches are being swamped. Is that a worry and an experience that you have had? Ms Reeves: At the moment, it is not a worry or an experience. I think there are some concerns perhaps, and there have been some concerns in the past, for offices closing in town centres around crown offices, branch offices, directly managed offices. I think that has been an area of concern, particularly for Postwatch up until now, but out in the wider community it seems as though most of the offices seem to have capacity or else there are arrangements being made to increase their capacity to be able to take on any of the business from a closing office, so it does seem to be working well and there are funds around to increase capacity in some offices. I think locally there may be not as much information given to Post Office Limited in the early part about local arrangements for transportation, local council plans and things like that in the early stages, and I do know from working with local councils locally to my area which are coming up towards the consultation process, they are getting far more information through to Post Office Limited before they start to make any decisions about an area so that Post Office Limited are properly informed about future plans locally within the council areas. Q12 Chairman: I am not really inviting comments at length, but I think it is important to get it on the record in the oral session that paragraph 3.12 of your written evidence talks about the grants that have been made available to help receiving offices cope with the extra work, but you do say that you believe that the investment is "massively insufficient in providing the investment the network as a whole needs in order to achieve the Government's desired 'necessary changes to transform the network'". That is in your written evidence, but I think it is important that people hear that in public as well. Ms Reeves: I think there are two issues there. One is the issue about the grants that are available to be able to take capacity in, but I think the other issue is about any grants that are available to improve the network as a whole to make it fit for purpose for the different types of products and different services that will be delivered in the future. Q13 Roger Berry: If I could raise the issue of proportionality, in Postwatch's submission to the Committee, they say that it is of course right to avoid disproportionately high numbers of closures being proposed in any particular area in line with what the Government has said, and they then go on to say that this "could exacerbate existing levels of disadvantage". I must confess, I am left not knowing where Postwatch is on this issue, but do you think, as a representative organisation, that there is any alternative to the proportionality principle? Mr Thomson: I think the principle is fair and equitable. On average, 18% of all post offices in an area plan are being proposed for closure and, in all honesty, I do not think it could be done any other way. It has taken a direct percentage of what already exists on the ground and it is averaging 18% per area plan. I think to try to do it any other way would have caused far more problems than by taking a proportional approach throughout the UK, accepting that, regrettably, with the 14,200 offices that are in the network at this moment in time, there are too many post offices for the work that is within the network and I am absolutely comfortable with 18% on average in an area plan. Q14 Chairman: On a point of fact, there are nearer 14% at present in the outcomes, I believe. Mr Thomson: Yes, but there are 18% proposed and again there are about 31 offices which have been pooled as well. Q15 Roger Berry: I can see from a business point of view that proportionality might actually make quite a lot of sense, although, recognising that some areas of the country are far better endowed with post offices than others, there does seem to be a sort of issue of fairness here which might mean that, if you have an already disadvantaged part of the country in terms of the availability of post offices, proportionality might actually make those areas even more disadvantaged. Mr Thomson: Well, there are large parts of the Highlands and Islands, and 37 of the 38 excluded postcodes because they do not meet the minimum criteria are in Scotland and there is a situation where the Post Office are actually having to improve, and increase, the provision to make sure that these areas do have a better service than they have had historically in recent years. Q16 Roger Berry: Do you think Postwatch is doing a decent job? Mr Thomson: I think Postwatch are doing a very good job and they are doing most of that good work at pre-consultation. I do get a little bit frustrated when I hear from MPs obviously that the consultation is a sham. In Glasgow, for example, the first area plan, 24% of the offices that were proposed for closure in private before it started, so pre-consultation, Postwatch persuaded the Post Office to change 24% of them, so before it even went to public consultation. The beauty about doing that before it was at public consultation is that, if an office is changed behind the scenes by Postwatch and Post Office Limited, it means that it never went out to the public and that office was not blighted. What happens is that once it goes out to public consultation, a decision is reversed and a post office stays open, that sub-postmaster has already had posters up for a few months saying that he is closing down and directing people to another post office. When an office is reprieved, and there are at least 31 already, when it has been through public consultation, it means that that office, although it has been saved for the community, and that is good for the community, that sub-postmaster finds himself in a very, very difficult situation. At pre-consultation, Postwatch are having a major input and not just bringing in the criteria, but they are talking about, if you like, topography, they are talking about roads, they are talking about social and financial inclusion and they are talking about the amount of pensioners in a particular area, so Postwatch are having a major input in making sure that POL are doing their job properly. Q17 Mr Weir: I am just interested in that because what you are saying basically is that a lot of decisions are made before the public consultation, but do you not see that as part of the problem, that the public are seeing a plan being presented to them where the decisions have already effectively been made and there is very little chance to change it within the short period of six weeks they are given, and that is the feeling that the public feel, many people feel, that it is a failure in the consultation process? Mr Thomson: I understand what you are saying, but, given that something like 31 have been reprieved already and my calculation is probably well in excess of 100 after the programme finished on 30 November, that would suggest that not only are there changes at pre-consultation with Postwatch in particular, but Postwatch are listening, POL are listening and the Government, to some extent, are listening and that changes are being made at area plan level after public consultation. I think the numbers are stacking up that would suggest that that indeed is the case, so much so that myself and Alan Cook in recent weeks have had to actually sit down and look at what we could put in place which would be a programme that would help these offices that are being reprieved which, because they have lost much of their customer base because they thought they were closing, how can we make sure that they have a future and how can we try and protect the salary level, for example, how can we try and give them publicity to tell the public they are still open, do we look at products, do we enhance the products that they have now to try and win back the customers. We realise that there is a problem and that problem is that we are going to have something like 100 offices which will have been reprieved which will have lost a lot of their customer base, and it is how we actually rebuild that customer base. Q18 Mr Weir: There is another side to the problem as well which is of those that are substituted for the reprieved post offices where they have been saying, "Everything's okay, chaps" and suddenly it is not, but they are closing and they have six weeks to mount a campaign. It just seems a bizarre way of going about it. Mr Thomson: I was in Derby last week giving a presentation and that was an example of what you said there. This was a sub-postmaster who thought he was safe and never realised he was being closed and he was very upset. I have indicated to the Post Office particularly in the last two or three weeks that I feel that replacing a reprieved office by another office does not do justice to the consultation process, and I think it is a genuine consultation process and I believe that, when a reprieved office is saved and another one it is put in its place, that brings it not only into disrepute, but it certainly makes the consultation process a little bit more questionable. Mr Weir: I do not understand how, if a post office after the consultation process is not to be closed, and it is presumably under the criteria of the process, it is deemed to be either needed or viable or whatever, why then does another one then suddenly become not viable, needed or whatever and is substituted for closure? It seems to me like a straight numbers programme where in saving one, another has to go. It is bad enough in urban areas, but in rural areas we can have a village fighting another village if they are relatively close together. Q19 Roger Berry: Your answer to my question about Postwatch was that the evidence they were doing a good job was that in pre-consultation they ---- Mr Thomson: Changed. Q20 Roger Berry: Well, that is my question. You see, if it is proportionality, then I would expect that the Post Office would come up with a number of closures and that the debate then is going to be about which post offices are viable and which are not, to put it in those terms. The way you have described what happens has led me to think that the Post Office came up with rather more closures than they needed, that Postwatch popped in and said, "Hey", but is it not that? We all know the way these things go, that over-egging and then turning out to be nicer guys at the end of the consultation is classic. Can you reassure me that that is not happening? Mr Thomson: Not only can I assure you, but the Federation would be jumping up and down if that was the case. The logic is that, if they over-egged the pudding and then offices were reprieved after public consultation, it means that we have more members in a situation where they are being blighted because members of the public have been told that they are being closed, whereas they have actually been saved. On the issue of Postwatch, what happened with the Glasgow plan with 44 closures, the initial 44 that the Post Office put forward were based on the first stab, if you like, before all the other aspects were taken into account, but 24% of these first 44 were changed, so Postwatch were very, very involved. It was not a case where the Post Office gave Postwatch 60 and Postwatch saved 24, but Postwatch actually changed 24% of the 44 offices that went forward initially because they took account of all the local issues on the ground, so Postwatch were doing their job. Q21 Chairman: I would just put on record my concern that the 18% figure you are talking about at the time is not being matched by the reality on the ground. The actual closure rate is so far 14% and this suggests to me that the later closure plans, including the one in my own constituency, so I have an interest here, will have to report a higher hit to meet the 2,500 number. If we are only closing 14%, not 18%, that is storing up a problem for later consultation in the process, and your members would be up in arms in Hereford and Worcestershire. Mr Thomson: Well, we believe that 2,500 closures are regrettable, but are needed to get the network back on a sustainable footing and also to make sure that the £150 million network support ---- Q22 Chairman: We know that, but it is not happening equally across the country. Mr Thomson: But again it comes back to Mike's point as well, that, if you want offices reprieved and you do not want other ones to take their place, that will cause problems with percentages as well. Q23 Chairman: So people coming later in the process will pay a heavy price for this process? Mr Thomson: Not necessarily. Q24 Mr Bailey: One of the problems with the whole process has been the lack of clarity and understanding about exactly what constitutes profitability with a sub-post office. We are told that the Postwatch involvement has to be private at first and that details of usage and profitability cannot be given because of commercial confidentiality. Why do you think this is? Ms Reeves: Post Office Limited make an assessment, first of all, on the access criteria and then again on customer usage within that, and I do not believe that to make that sort of commercial information available in the public domain would do anything for maintaining Post Office Limited's business plan going forward. We have also to relay that the future of the Post Office's business is on that business migrating to somewhere else and we are not the only players in the market for a lot of the products that we do, so there is commercial confidentiality both on Post Office Limited's side, but it is also about protecting the commercial confidentiality of the sub-postmaster involved because it is his private business and not necessarily for public consumption. Mr Thomson: On the issue of profitability, if we take an example, a sub-postmaster may get £30,000 remuneration per year and, because he has attached usage or a convenience store, he has a profitable overall business and he believes that that £30,000 makes him profitable. The reality is that the Post Office have to pay £30,000 in the first place and the Post Office then have to provide audit teams, they have to provide stock in cash and they have to provide leaflets, so all the actual paraphernalia of being a post office could well mean that, although the sub-postmaster thinks he is profitable and his overall business could well be profitable because he and his partner are making a living having set up a newsagency in a post office, the Post Office could well be losing £10,000 or £12,000 because they have given the £30,000 for his work done and they also have all the other costs associated with delivery, plus they have the fixed costs of having an organisation. POL is an organisation based at Old Street which has cut its costs dramatically over the last two years in terms of numbers directly employed by POL, so they have done the job. I know it is very difficult for a postmaster to understand that, but their business could well be profitable, but for the Post Office, they are losing money. Given that the Post Office are working within criteria where they are being told by the Government that the loss-making part of the network can only be supported with the £150-million-a-year network support payment and the Government think that we have to close 2,500 offices to make that work, then it is a very difficult choice. Chairman: Mr Thomson, you are going a bit wide sometimes in your answers to questions, so please try and focus on the questions. Q25 Mr Bailey: On the basis of the debate I have seen so far, what you have said may be valid for Post Office Limited, but it is often the actual sub-postmasters who are proclaiming their profitability, so in terms of commercial confidentiality, it would appear that in this context they have got no problem. Mr Thomson: In what respect? Q26 Mr Bailey: Well, if they are proclaiming their, if you like, commercial information, then they are not too concerned about commercial confidentiality. Mr Thomson: A sub-postmaster may say he is profitable, but it does not then automatically follow that he is happy to share that information, and a lot of sub-postmasters want you to know they are getting £30,000 or £40,000 a year or whatever. I believe that there are very few offices under a salary of £48,000 which actually make money for the Post Office as a rough rule, very few under £48,000 make money for the Post Office, once you apportion all the costs. Q27 Mr Bailey: Earlier on, and I am not sure which of you, but one of you said that sub-postmasters would not want to divulge details of their commerciality, and I am not sure that is always reflected in actual practice. If I could just move on, in the event of the community or another organisation buying the business, do you not think it is reasonable that, if you like, some sort of information about turnover and profitability is part of the due diligence process? Ms Reeves: Another organisation - are you talking about, for instance, in the rural environment if there was a community buy-out, so they were going to open it on a community basis? Q28 Mr Bailey: Something like that. Ms Reeves: I think there are two issues here. One issue is that at the moment under the closure programme that we are in we are about trying to fit the network for future sustainability and viability, and we are doing that because the business is not enough for the amount of offices we have got. If Post Office Limited are now trying to use the Government's access criteria to make that fit for the future, if you are talking about a community taking over after the closure programme has been through, well, yes, there is a rationale for saying that you could open up the books, so to speak, for the income-generating side to that business. If you are talking about an office being designated to be closed, but then subsequently the community coming in and saying, "Well, don't close it, we'll run it", then there is a slightly different argument to that because then you might not be heading towards sustainability of the network going forward, but you are perhaps trying to change the access criteria model that is being laid down at the moment. I think that is an area which is fraught with difficulty. Q29 Mr Bailey: Can I just move on to the consultation with sub-postmasters. POL told us that they were inviting every sub-postmaster to a network roadshow and one-to-one meetings with each one affected. Based on your experience, has that been worthwhile? Mr Thomson: Yes, it has been for something like 99% of all sub-postmasters. They could not be forced to go to the roadshow, but over 99% went to these roadshows and they were very well received and sub-postmasters were made aware of the situation, where we were going and the need for the closure programme. Every sub-postmaster, including in the offices that are closing, the ones that are going to be involved in the core and Outreach, and we know that there are going to be 500 Outreach offices opened by various measures, a mobile plan of home delivery, they have all been visited, and any office that was a receiving office has been visited as well. I will come back to the six weeks, but one of the reasons why confidentiality was needed and also, I believe, the six weeks is that you had a situation where you were actually going to be receiving a sub-postmaster, ie, he was going to get more business because an office nearby was closing and you needed confidentiality because that sub-postmaster may have made people aware that an office very nearby was closing. In some cases, you could identify that easily and also the six weeks helped there as well, so I think on that point that has been handled very well. Also, what I will say is that, although sub-postmasters have signed a confidentiality agreement, when they have broken it and gone public and have had campaigns, technically speaking, they have broken their contract, but obviously the Federation has been involved in that and we have made sure that POL have used a bit of commonsense and that they have not been heavy-handed. Ms Reeves: Just on the back of that, as well as having those roadshows, what Post Office Limited also do is they have regular newsletters going out about the network change process and how the process works and they have also set up telephone lines and email contacts for sub-postmasters in the effort to keep them involved. For the first time, I think, in a long while we see that the network roadshows that they were doing for sub-postmasters actually took themselves out into the very rural locations and they travelled out to the sub-postmasters rather than the sub-postmasters having to travel into larger meetings, more formal meetings, so I think that worked very well for them both to reassure and to show them how the process would work. Q30 Mr Clapham: Mr Thomson, can I ask you about the compensation package. We are talking here about 2,500 sub-postmasters who are going to be made redundant. Obviously, you have had, shall I say, an input into the compensation package. Are you satisfied with it and can you tell us what the terms and conditions of that package are that you have negotiated with Post Office Limited? Mr Thomson: We believe that up to 28 months' compensation that people have got recently, and there is a sliding scale which is very fair, is an adequate payment for people leaving the network and, on the whole, the overwhelming majority of sub-postmasters realise that because it is fair to say that the franchise, because of all the uncertainty, probably is not as attractive as it once used to be in terms of people wanting to purchase into the network, so we believe that 2.3 times salary, at 28 months it works out to 2.3 times salary, is a fair payment for people leaving the network. Once again, I would have to reiterate the point that the overwhelming majority of sub-postmasters are happy with that. One or two things that we have negotiated with the Post Office is that there is an exceptions fund of £1 million which has been created to help sub-postmasters leaving who have exceptional costs and who can apply to this exceptions fund, which is three people from the Post Office management and three people from the Federation, so it is equal representation on that. We have had three or four meetings and the first cases are just coming in, so we have created that. One of the things that we have also worked on is that one of the problems in Network Reinvention, which was the last closure programme, was that, because people were able to do what they wanted, not as much work migrated to the mailing offices as we anticipated, so what we have done this time is we have worked with POL to make sure that we retain as much work in the post office network as we possibly can. This is not just about helping 2,500 sub-postmasters to leave with their investment and dignity in tact with the compensation that has been agreed through the Government, but this is about making the network have a future, and a major part of that future has to be that as much work as possible migrates from a closing office to a receiving office, and we have worked with Post Office Limited 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. Q31 Mr Clapham: Can I just ask you then, in terms of the exceptional conditions fund that you referred to, would that cover, for example, a situation where a sub-postmaster had put some investment on his own initiative into his post office to try to attract custom and to keep the customers that he had? Where he has put that investment in, as I say, on his own initiative, would he be able to receive an extra payment from that exceptional circumstances fund? Mr Thomson: They would have to apply and every case would be judged on its merits. There are, however, certain criteria and, I would have to say, the answer would be not automatically so and it would depend on the scale of the costs for exiting the industry. Q32 Mr Clapham: But, if he came to you, that is something you would take up on his behalf? Mr Thomson: We would certainly look at that and it would go ---- Ms Reeves: Under the criteria set for the exception service, yes. Q33 Mr Clapham: Just returning to that point that you made a moment ago about the need to ensure the viability of the remaining post office, does that mean that where, for example, a sub-postmaster has lost his post office business, but retains his retail business, he would not be able, for example, to take on services where he would be in competition with a post office? Mr Thomson: The first point, and I make it absolutely clear, there are no restrictions on what exiting sub-postmasters can do. That is the first thing. However, there are two things. There have been choices put in the way of exiting sub-postmasters and the four main choices are whether they want to continue doing bill payment, which they do at this moment in time, whether they want to continue doing premium mails, whether they want to continue doing currency and whether they want to continue doing the Lottery, so they can do all of that, but it does have an implication for the compensation that they get, and why would it not? If you think about it, if a sub-postmaster, for example, was earning £5,000 a year on the Lottery commission and he just wanted to move that Lottery to the retail side, so he is going to keep it, why would the Government possibly want to use taxpayers' money to give someone compensation for something they are continuing to do? That makes absolute sense, so, in other words, if someone has the Lottery and they want to retain the Lottery and that, therefore, will not be migrated to somewhere else in the network, why would you want to give them compensation when they are not losing that part of their salary in the first place? That is the first part of that equation, but the second part is that when sub-postmasters are being closed within what they signed in their terms and conditions, you are actually told to help migrate as much work as you can to receiving post offices, and that is part of the rationale. Again, if you are a sub-postmaster who makes the decision that, for example, you want to keep the Lottery within your remaining business, no one could sit down and say logically, "You're not actually telling your customers to migrate to the nearest post office", but you will be telling the customers, "Go down to my shop and keep doing the Lottery there", so those are the two reasons why I believe it makes absolute sense to give sub-postmasters choices and, if they want to keep the Lottery or bill payment, I think it makes absolute sense that that comes off of that part of the compensation because they are not losing that part of their income, so why would they be compensated for it? Mr Hoyle: What you are saying is that compensation will be held back if people keep the Lottery, yet the Post Office, or whatever they want to call themselves, do not own the Lottery. Chairman: They do it under contract though. I am not going to allow you to answer that question because there is not the time, but I think Mr Hoyle has made his point and I share his concerns. Q34 Mr Clapham: Could you tell us a little about the postmaster matching scheme? Has it been successful and, if it has, what are the main features that have made it successful? Ms Reeves: I think what it has been is almost used as a portal by some sub-postmasters. To date, we have had about 40 sub-postmasters who have come through to us at Federation headquarters, expressing the interest in, "Well, I am going and I'm going under the closure programme and I'd like either to become a temporary sub-postmaster or I'd be interested in doing holiday relief work or I'd actually be interested in looking to buy back into the network", and what we can do is direct them and help them in the direction they need to go to achieve the objectives. Sometimes, it is about talking to them and pointing out to them what some of those offers are that are open to them after they have gone because they want to stay within the post office industry that a lot of them have worked in for a lot of years, so it has been taken up by several sub-postmasters. Mr Thomson: A perfect example is that I was in Derby last Monday and a sub-postmaster had two offices and unfortunately both of them were being closed under Network Change. What he told me is that he is a 50-year-old and an accountant to trade and he is actually putting that money together and buying a bigger post office, so that is an example of what we are trying to do. That is someone who thinks there is a future in the post office network, which I believe there is, quite a good future if we work hard together, actually putting his money where his mouth is. Mr Hoyle: So there will be bigger compensation next time! Q35 Chairman: Mr Hoyle's questions about the migration of business, we will have to put them to the Post Office itself next week rather than asking you to explain the rationale for it, which is why I cut him off, but there was one issue I just wanted to clarify. When you are not migrating business currently done in a sub-post office, why do you want to take on new competing business, for example, specifically Paypoint? Mr Thomson: On Paypoint, we have a restrictions policy. If sub-postmasters in the 14,000 offices were allowed universally to take on Paypoint, what would happen, let us be absolutely clear ---- Q36 Chairman: I am not talking about existing businesses. I am talking about an ex-post office that is being closed. Can that shop take on Paypoint after it has lost the post office? Mr Thomson: That is part of the choices. He would give an undertaking for a 12-month period that he ---- Q37 Chairman: He cannot? Mr Thomson: We will not stop him and the Post Office will not stop him doing that, but, if he wants to take Paypoint on straightaway, there will be a financial implication to his compensation. Ms Reeves: He would have to make a business decision. Q38 Chairman: How big is that implication to his compensation? Mr Thomson: It is based on his salary three years ago and it is based on the 28th month of that on bill payment, so it is a direct correlation, and every sub-postmaster will be told what that amount is before they sign up to do it or not to do it. Chairman: Thank you. I am very grateful for that clarification. Q39 Mr Hoyle: We are led to believe, or some people think, that there could be some intimidation taking place. Now, I just wonder, were sub-postmasters threatened at the outset of the process? Was there a good cop and a bad cop operation being used on sub-postmasters and mistresses? Mr Thomson: What I do believe is that the original letter was a massive own goal by the Post Office and we were inundated at Shoreham with complaints, I have to say, at headquarters. Having said that, I do believe that Post Office Limited have taken a very level approach to what happens if a sub-postmaster technically breaches his contract and is launching a public campaign to stay open. I believe they have not been heavy-handed and have not threatened anyone at all with the loss of contract, so it is a difficult subject. Q40 Mr Hoyle: Let us just look at that because I think that is part of it. We have just been given a list for Chorley and I contacted the sub-postmasters, but they were nervous about speaking to the MP because they actually believed that they would be leaned on by the bad cop, not the good cop, that is operating within Post Office Limited, so they did feel under pressure about speaking publicly about what was happening, therefore, there was a reluctance about how to deal with what was happening, so that was part of it. Another question is: was there any threat to compensation if they kicked up a fuss at the beginning? Mr Thomson: There was in the initial letter which was then pulled and an apology put out. There was, and that was the reason that people were absolutely up in arms. I think, in fairness, the Post Office would admit that it was a monumental own goal so early in the campaign. Q41 Mr Hoyle: So they were not always put off through the letter, but they put the fear through the whole of the post office network and then said, "Well, we'll withdraw it", but they knew behind that that there was a real threat. Is that fair to say? Mr Thomson: On the subject of confidentiality, I do believe it is very important, and I gave an example earlier on, that it could be that an office is perceived to be a receiving office, so he knows that the nearest post office to him is probably up for closure, and I think it is important that that sub-postmaster who is staying and has that confidential information is not able to mouth off, quite frankly, that the office down the road is closing because that would not be fair on the office down the road. I understand the logic of confidentiality, but, having said that, they could come to the Federation at any time, they could also speak to their accountant or their financial adviser because it is commercially confidential, so they are allowed to speak to people who can give them professional advice. Q42 Mr Hoyle: But, as you would expect, the local councils are saying, "We want to keep all of our post office network". Do you think there is a whiff of hypocrisy seeing how you cannot pay your council tax at the post office in one or two areas? Mr Thomson: Very much so. Everybody wants a thriving post office network. The Government wants it, the devolved assemblies want it, local authorities want it and what we are saying in the future is, "At the end of the day, you are going to have to start putting work where you mouth is", because we have to have a sustainable network going forward, and local councils are very guilty of what you have just said there. They jump up and down when there is a closure programme, but when it comes to putting work the post office's way, they have not been very good in the past, but things are starting to change and hopefully local authorities will realise that sub-postmasters do not want subsidy, but sub-postmasters want work. Q43 Mr Hoyle: But it is a bit of an insult that you are allowed to pay it at Paypoint, but not at your local post office. Mr Thomson: Totally, yes. Q44 Mr Hoyle: If I could move you on now to support for the post offices, is more training for sub-postmasters needed, for example, to improve the customer experience and to grow their business in support of the network, or do you actually think they know their own businesses best? Ms Reeves: I think there are lots of things that can be done to help sub-postmasters as Network Change is going forward. There are new products coming through into the network that sub-postmasters do need lots of help and support to be able to offer. We are in a massive change from being a service industry, which we were before, to now being a retail industry and that needs different skills, and I think there is an area there where Post Office Limited can help more with training for the new products, but I also believe there are other areas that we can work on with other people to give business training to some sub-postmasters who might not have come from a retail environment before and may need help with that environment as it changes in the future, and I am thinking of people like Business Link and things like that that we can work with. Q45 Mr Hoyle: We live in a 24/7 world, as you read in the media, yet somehow Post Office Limited still live in these set times. Do you think there is a case that we ought to be paying sub-postmasters to work in the evenings when people might actually access the services better? As we know, a lot of people work during the day and, by the time they are getting home, there is no post office open. What do you think about this? How can we do this? Would you support paying them for evening work? Mr Thomson: Well, to take on the competition from Paypoint, the Federation and the Post Office created what is called a 'pay station' which is to do all the products that Paypoint do in effect over a retail side in a post office. We now have something like 8,000 who offer that service and it is going to be rolled out so that every office in the network that is left after the closure programme will have a pay station which does bill payment at night, so I think the Federation and the Post Office both recognise the need that there have to be certain services available beyond the traditional nine to half past five that we have had in a post office, and that method, I believe, is pay station and future enhancements of the pay station model which is very similar to Paypoint, but I believe it is actually going to be better than Paypoint. Q46 Mr Hoyle: That is great, but it comes back to the key question. Those post offices which want to remain open will want to offer that service, but they are being closed and yet those who want to close who are not allowed to, do you really think that they are going to renounce the service? Ms Reeves: I think for those people where the closure programme has been through that part of the network and perhaps they wanted to go and they have not gone, I think that is where we need to get through this closure programme as quickly as we possibly can because we need to now start the dynamics of the business changing, and those people who did not go now need to be in a position, and have some confidence, to be able to sell their business on, if that is what they want to do. I think there is a way with Post Office Limited going forward that we have all got to be a bit more innovative about the way we address the public's needs, and I think that is started to be seen in the way that we are developing together core and Outreach, and also there are ways that we need to address different populations. As you quite rightly say, there are some sub-postmasters whose villagers do not return from commuting until six o'clock in the evening and we need to look at innovative ways of going forward and managing that process for the benefit of sub-postmasters and the communities. Q47 Mr Wright: Part of this process is about the closures, but it is also to bring into effect the 500 Outreach branches. Do you consider that the minimum standard they have set down is enough, that two hours a week is enough for a local area? Ms Reeves: The hours that have been designated for the particular area have actually been based on fact, not fiction, and it is backed by what Post Office Limited have been doing about the amount of customer transactions that there have been in that branch up until now and then trying to work out how best to put that time together into the community. For the community, it is about probably the change from being open far more hours to having a fixed time to be able to attend, but it is actually based on the types of transactions and the timings of transactions that are done in that branch before it closes. Q48 Mr Wright: So do you support, does the Federation support that concept then, that two hours a week would be enough? Ms Reeves: If that is the traffic that is there and if that is the only amount of customer usage that that office has now, and that has been proven, and that is the amount of usage that it has, the trick is what time is that two hours to match the community and what is the right time. Q49 Mr Wright: It is the thin end of the wedge and surely this is going to be a sop to say, "Well, this is what we are going to put in place for the time being", but in reality, if there is minimum usage of a post office at the present time and it amounts to two hours of business over a week and, say, we have got a two-hour slot on a given day, at a given time and in a given area, it does not meet the needs of every single person who would have used it over that time. Invariably, what will probably happen is that you will get migration from the customers that use it at the time and the two hours itself probably in a short space of time would probably be too much, leading inevitably to the closure at that point. Mr Thomson: On that point, there will be people within that community, that village, and it could be the pensioner who has not got a car or the bus service is poor, but at least she will know that for two hours a week she can get her pension on a Post Office card account and she can still use the post office, but, you are right, it is not as good as the service that we have got at this moment in time, but unfortunately that service is being closed down. I suppose you would have to argue that the Outreach provision is not as good, but it is far better than having nothing at all. On the subject of how they work it out, if the post office is open for two hours per week in that Outreach, they base it on 25 customer visits per hour per counter, so, if it was deemed to be 30 visits in that village wanted, they would still give them the two hours, even though it should be 50 customers using it, even if it were 30, so that is the criterion they are using. That is far more generous than in an urban area where they work out that there will be 40 customer visits per counter position per hour. In the rural area for this closure programme throughout the UK, they are basing it on 25 customer visits per position per hour, so someone could get two hours, even though there may just be 30 customer visits being used in that village at that time. I think yes, it is not as good as we have, but it is certainly far better than what the banks did years ago when they just pulled out of villages and communities altogether. At least the Post Office at 500 locations are trying to put something in place so that the public still have access to Royal Mail services and Post Office Limited services, and it helps the socially and financially excluded in these villages as well. Q50 Mr Wright: I totally accept the point that it is better than nothing, but my concern, speaking about my local area, and they have not got come up with the proposals in my area, but, if there was a proposal to have a two-hour point, I talk to pensioners in my area, for instance, and it may well be in the middle of winter when it is a rainy or an icy day when the Outreach is open and they cannot get to it and they then have to wait until the next week. They may well feel under the weather and they cannot get to it, and they are then stuck, they have not got access and they have not got transport and they cannot get to another point, so they are stuck from one week to the other. That is my concern about the two hours. Yes, it is better than nothing at all, but would it not be a point from the Federation that in those areas where there is a lack of transport and a lack of other services that they support the concept that, rather than be a two-hour opening point, there should be access to shared operations and a partner approach rather than the two hours? Ms Reeves: Although we have trialled this before, this concept of core and Outreach has been trialled for some 18 months or so in various locations to see where it works, the Post Office, in discussions with us, are adamant that, as this evolves going forward, they will monitor what is happening and they will look at that and, if necessary, things can be changed going forward if it is not working out properly either for the community or for the sub-postmaster. I do not think you can ever look at anything and say that something is now fixed in stone because things just have to evolve as it goes along. Q51 Mr Wright: What level of the consultation with the sub-postmasters is about the Outreach proposals? They know the local area, they know the people. Ms Reeves: The person that is looking to take over and to run the Outreach, yes, they would know the area, they are consulted and they do talk considerably to the outgoing sub-postmaster and find out all the information locally and they are involved in trying to find the Outreach locations that best fit the community, so they are very involved from day one. Q52 Mr Wright: Moving on to the future of the network, what is the Federation's position on the post-Network Change programme future of the network? Are you concerned, as the predecessor Trade and Industry Committee was, that filling holes in the future network might be difficult and that new sub-postmasters might be hard to find? Mr Thomson: I totally concur with what you said then. My big fear is that the Government have put altogether something like £1.7 billion into the post office network to try and bring about sustainability. I know that there were other issues about scrapping the Horizon benefit card ten years ago, and I will not go back there, but they have put £17 billion into the network, and my biggest fear on the horizon now is that the Post Office card account two is out to tender and in the tender process all submissions must be in by 31 March and, if the DWP did award the Post Office card account contract to anyone else apart from the Post Office, the Post Office would start to unravel, absolutely clearly. It is the law of unintended consequences and the £1.7 billion would be absolutely wasted because everything would fall apart. Finally, the Post Office can bid for bill payment relatively cheaply and business banking because, when that money comes into the post office network, we pay out to pensioners and other benefit recipients every year through the Post Office card account £27 billion. If we lose this contract, if we do not win the new contract, everything starts to unravel because we do not just lose the £200 million we get from the Government for the Post Office card account, but we have a situation where we cannot bid for bill payment as low as we want to because we do not need the money over the counter anymore and we cannot give Alliance & Leicester the tremendous rates they give their customers in taking the tens of millions a year from their customers because we have nothing to do with that money, so all of a sudden the business model collapses. I have said that, if we lose the Post Office card account two, do not just think that, because you have not got many card accounts if your office is mainly a mail bank and business banking, it will not affect you; the whole model collapses. I would say to the Government, and I have said it to Pat McFadden, that with the law of unintended consequences, the Government and the DWP would not mean for the post office network to fall apart if they awarded the contract to someone else, but I make it absolutely clear that is what would happen, and I see the Post Office card account tender being renewed to the Post Office as a stepping stone to the Post Office becoming a post bank like that of our successful colleagues in Italy, in France and in Germany. Chairman: You must not touch too much on the future because this is about a closure programme, this inquiry. Q53 Mr Wright: So you see that really as the key not just to attract new postmasters into the service, but also as key to the ones that are left behind, the Post Office card account and that is key to what you consider in the future? Mr Thomson: It is absolutely key that the solution to the problem stops being that we take capacity out of the industry. Going forward, the solution has to be, "Let's go to work. Let's make sure the country decides that the UK has a network of around about 11,500". There comes a time where, if you fall below a certain number of post offices, you lose your critical mass and you lose your geographical spread. You lose your critical mass to retain and win contracts and I believe that, if we went any lower than the kind of levels we will have at the end of November this year, then large question marks are put against the whole post office network. Let us work together and let us have a UK post office network that we can be proud of once again. Q54 Mr Weir: You told us at the beginning that for every sub-postmaster that is phoning you and complaining about being on the closure list, there were three or four not complaining about this. Is there a danger of further unplanned closures for disaffected sub-postmasters over and above those that are compensated closures? Mr Thomson: There is always a danger, and obviously there are the access criteria now, but what I will say is that strategically I believe that there has been a lack of direction in various governments over various years, Conservative and Labour, and I do think that the Post Office team that are in place now under Alan Cook are the most focused we have had in POL in my time in the industry, and I have been in the Post Office since 1979 when I was an 181/2-year-old schoolboy. Q55 Chairman: The point is: is there a risk of unplanned closures? Mr Thomson: There certainly is. There could always be unplanned closures, without doubt. Q56 Chairman: And that is the worry. We have been told that actually 7,500 is the size of the network that is necessary to meet the access criteria, so 4,000 unplanned closures, it goes with a nod with all the access criteria being met and that is the problem. Mr Thomson: Yes. Q57 Chairman: Perhaps I can say one thing to you, that this is an inquiry about the closure programme, we are looking at how it is working, that is the purpose of this, and we understand that it is a negative approach. We entirely endorse what the Federation say, and I think the Committee has said this in previous reports, about the future and what you should be doing to build a viable network in the future, but that is a separate subject at the moment, and we entirely endorse all of that. Frankly, what you said in your submission, I think, is very powerful on these points and the answers you have given to colleagues in answering questions, but perhaps I can put one last thought to you. You appear today, quite rightly and properly, defending your members' interests and, when the post office network is stable and flourishing, those interests coincide entirely with the communities they serve, but may I just suggest to you that perhaps on a number of issues today, quite rightly and properly, you have expressed the views of the Federation and its members and not actually views necessarily in the best interests of communities. I looked at the Deputy Speaker of the House of Commons, Alan Haselhurst and what he said to the Committee, and he says on commercial confidentiality and profitability, "I was met with a wall of silence, commercial confidentiality being cited. This is in huge disproportion to the events in cases of life and death to a village". The point I want to put to you is that it is not just confidentiality, but the consultation period, the transfer and migration of business, you are speaking, quite rightly, for the Post Office and your members, but not for the communities served by the closing post offices. Mr Thomson: Let us be clear, if you are asking me: does closing post offices affect the communities there are in? Of course they do. Do I want to be in a situation where we are having to close 2,500? No, I do not. Do I want to be in a position where we have to close more going forward? I certainly do not. Hard choices have had to be taken. I have to come here today to defend the closure programme regrettably because it is a necessary evil at this moment in time; but it will not be happening again on my shift, I can assure you. We have to move away from constantly closing post offices because, you are absolutely right, it does affect the communities that these post offices are in. If in the future governments are really serious about carbon footprint, environmental issues and sustainable communities, the post office plays an intrinsic part of that all coming to a village. Chairman: I think that is a very good note on which to end this evidence session. Thank you for your passion, knowledge and enthusiasm. We are very grateful to you for your time and trouble. If there is more you want to say to us on reflection in answer to the questions, please feel free to send a quick written submission to us; but we are not going hang around on this so it needs to be done quite quickly. If there is not then thank you very much indeed for your time and trouble. Memorandum submitted by Postwatch Examination of Witness
Witness: Mr Howard Webber, Chief Executive, Postwatch, gave evidence. Q58 Chairman: Mr Webber, it is just worth putting on record again we are talking today about the closure programme and we are quite restricted on that purpose. We are very grateful to you for coming in. We understand why your Chairman cannot be with us today. I also ought to say publicly that we will actually have another short set of witnesses next week, subject to their availability. We hope the Communication Workers' Union will be able to come and talk about different aspects, in particular the high street Crown post office franchising programme. We hope to have that additional set of witnesses next week, subject to their availability. Thank you very much indeed for your written evidence to us. I believe you would like to make a brief opening comment which, in the circumstances, would be very helpful. Mr Webber: Thank you. It actually echoes much of what George Thomson said in his opening comment. I was not around for Urban Reinvention, the last closure programme, but colleagues tell me that by comparison this programme is vastly better organised, vastly better run, the relationship between Postwatch and Post Office Limited, although by no means cosy, is a very constructive one, and I think we are acting as strong critical friends. We have a much closer role in terms of a lengthy pre-consultation, and I am sure you will want to ask about that. It does mean that the plans which reach the public, when it does reach public consultation, are much better than they would otherwise have been, and probably than they were in terms of Urban Reinvention. That said, we do have a number of concerns, and I hope we will cover those in the course of the next minutes. The main ones I think probably stem from the speed with which the process is being implemented. I can understand why the Government and why Post Office Limited want the programme to be implemented at the speed it is; but, nonetheless, it means there is not as much time for reflection as we would like. It means that Postwatch, as well as the Committee itself, remain deeply concerned about a six-week public consultation period; and we argued strongly, and I know the Committee argued strongly, for a 12-week public consultation period. The main focus of our concern, I think, is Post Office Limited ("failures" is too strong a word) inadequacies in terms of communicating with their customers and with the communities that they are serving. The mechanics of the process are working pretty well given the speed with which it is being implemented. Their communication with customers is not as good as we would like it to be, although it is getting better. Q59 Chairman: Thank you, that is very helpful. You are happy then about the Post Office's processes. Do you think the branch information that is available is sufficiently robust? We have heard some suggestions that it is not always as accurate as people would like? Mr Webber: Generally it is pretty good. With a programme like this, with the whole of the UK being covered, obviously general answers provide only general truths. There are weaknesses, but in general it is pretty good. Obviously one of the weaknesses is that we all have to rely on census data which is now pretty solidly out-of-date, since we are seven or eight years from the last census. Apart from that, in general the information is relatively good. Q60 Chairman: Are you happy that the programme is taking account of future population growth in areas where substantial new house building may be planned? Mr Webber: Post Office Limited have written to local authorities. Local Authorities obviously know what it is going on. They have been invited, and we have reinforced this message, that local authorities need to make Post Office Limited aware of future plans. I think in general they are doing that. Q61 Chairman: Postcomm say while only 3% of the network, Crown offices account for £70 million of the £90 million losses last year. Does that not suggest that the closure programme is aiming at the wrong target? Mr Webber: It seems to me that is a slightly misleading statistic, in that it does not take account of the subsidy which is being paid. The total losses of the network, leaving the subsidy out of it, are about £175 million, as I understand it, so it is £70 million out of £175 million, which is about 40%, admittedly a very high proportion. Although it is only 3% of the network, I think it is responsible for the best part of 20% of the business, because Crown offices tend to be the larger offices. That said, it is not an either/or programme. Both Crown offices and the sub-postmaster network need to be put in order. Q62 Chairman: You are happy about the balance. You have done a very interesting survey of public opinion, and you have set it out in your evidence to us. I do not want to go through it in detail, but the one that jumped off the page at me, and it really was flowing from the National Federation's evidence just now, is that, in areas where closure programmes are happening, only 18% of people said they were aware of a consultation taking place. That really worries me. Mr Webber: It really worried us as well. It does worry us and I will come back to why it worried us and what we are doing about it. On average, only about 9% of the population are in fact affected by the closure programme; 91% of the population on average will have no change in their local post office. One might argue that as long as those 9% are aware of the programme it is not so important that the other 91% are not. Nonetheless, obviously this is a programme of great concern to the population as a whole. Well over 60% of the population as a whole are aware of the closure programme and, in that context, it is really rather disturbing that less than 20% of the population knew that there was a consultation going on in their area. We have done what we can, but we are a small organisation with limited reach. Post Office Limited is a very large organisation with much greater reach. We have been working with them, and certainly seeking to persuade them to make sure that there are good comprehensive press notices provided at the start of the consultation, because we have found that the best way of getting the message across is free media; the local media; local radio; and local press publicising that. That has not always happened as comprehensively as we would like. We need a routine of press notices issued at the start. We need constant reinforcement during the six-week consultation period. The message is getting through to Post Office Limited but things are not moving quite as fast we would have liked, so far. Q63 Chairman: Are there any other issues that flowed from your meeting the Post Office formally in mid-January to discuss the outcomes? Was there any else that flowed from that, to which the Post Office have responded? Mr Webber: This was a separate piece of research (but conducted at the same time) of the post office call centre. We found it was really not up-to-scratch. If people were phoning the post office call centre they were not always getting the accurate information they needed in terms of whom they needed to write to and how they needed to write. They were not getting information about email addresses to give their comments to. Post Office Limited have taken those points on board and is working on them to put them right. There is one outstanding point which we are still in discussion with Post Office Limited about and that is, at the moment people cannot make their comments via the call centre. Post Office Limited accept only written comments. We think that is unfair. Except if people say that they are unable to provide written comments, if there is some particular reason why they are unable, we think that is unfair because there are a lot of people who just prefer not to and find it easier to make comments over the phone. We think Post Office Limited should accept comments over the phone. So far we do not have agreement on that, but we are still working on it. Q64 Chairman: The other thing that worries me, there is a six-week consultation - and the Committee thinks it is fundamentally flawed for a variety of reasons: it may suit the Post Office but it does not suit communities - and I notice your survey said that of those who stated they intended to participate in a consultation, the majority said they would contact their MP or a councillor and they put Post Office Limited third in the list of who they would contact. MPs have offices and staff so we can get that information through quite quickly; councillors might find it much more difficult to pass that information on with resources available to them. Is that a matter of concern? Mr Webber: It is a matter of concern, although it should be possible to get that information conveyed. I hope Post Office Limited will take as much notice of information which reaches them via Members and via local councillors as they would take of information which reaches them directly from customers. Q65 Chairman: Finally from me, your objectivity, your impartiality in the process, is there a danger as you get weary of all these closure plans you get co-opted into the process, become part of it and lose the freshness that you brought at the beginning of the process? I speak as someone whose consultation would be right at the very end. Mr Webber: I think not. Given that much of our work in this respect is focussed regionally, we have six English regions and offices in each of the three nations. Although each of them is kept very busy, it tends not to be continuous. For our central teams that is certainly so; but so far they are looking remarkably fresh even so. For the regional offices there is variation of pressure. Q66 Mr Bailey: The 11-week pre-consultation process, private consultation with POL, is not your involvement unnecessarily opaque? In your opening remarks you said you do not have a cosy relationship, but do you not think the privacy of this and lack of transparency conveys a public impression that there is a certain cosiness? Mr Webber: I can see there is a presentational problem but I think it is actually necessarily opaque. What we can do, will be doing and probably in our next report, we will give details of this, is indicate in general terms, without naming individual branches, what has happened in each area plan, the number of proposals which might have been changed and so on as a result of our intervention. For the sort of reasons that George Thomson was pointing out, there is a need for confidentiality at that stage. It is important to be able to substitute post offices, to discuss why a particular post office should not close without the glare of publicity being on it. Although it is difficult to explain and demonstrate to the public why that should be so, I think it is fairly clear that those sorts of "without prejudice" discussions, which I accept are behind close doors, are a necessary part of the process. Q67 Mr Bailey: If there was not this private pre-consultation period, in effect the length of time for public consultation could be extended and you could be involved in that. The results of your participation would be rather more visible. Do you not think that is a better way of doing it? Mr Webber: If it were an either/or then I would agree with you. The decision to have a six-week public consultation was taken regardless of the pre-consultation period, and it was a Government decision; not our decision; and not the decision of Post Office Limited. It is something possibly to take up with the Minister. Given that there is only a six-week public consultation period, it becomes all the more important to have a very substantial pre-consultation period for two reasons at least: one, so that the plan which reaches the public is as good as it can be without that direct public input; and, secondly, so that we at Postwatch, local authorities and MPs are as fully informed as we can be at the start of that public consultation period; so we can ensure that the public input is as high quality as possible. Q68 Mr Bailey: Taking up the issue of commercial confidentiality which I believe Postwatch feels could be more open certainly in terms of the POL position, and certainly I can see the argument why individual sub-post offices would not want this detail being publicly conveyed, however those elements of the funding package that are POL and can be stated in general terms to give a greater understanding to the public of the level of cost involved, why have they not really conveyed that? What is your feeling? Mr Webber: I do not know is the answer to that. It possibly is one of the symptoms of what I was saying is the major concern from our point of view, that Post Office Limited are not as happy on the issues of communicating with their customers so far as they have been on the mechanics of the process. There is scope for more openness. As you say, in general terms there is no reason why those sorts of general matters should not be made public. I think some of them have been but they are pretty complicated - there is no doubt about that. There is a large variety of contractual arrangements with sub-postmasters. That said, there is scope I think to educate the public on this in a way that is not necessarily happening at the moment. Q69 Mr Bailey: Certainly on the basis of the publicity surrounding the closure of some post offices shall we say the broad details of those extra costs, which I am sure could have been conveyed by POL, have not been conveyed? Mr Webber: I would hope that their attitude would be that everything, there is no reason to keep secret, should be disclosed. Q70 Roger Berry: Local authorities have complained that they are not sufficiently involved in the pre-consultation process. Do you believe that is correct? Mr Webber: At the start that was absolutely the case, and we pushed hard with POL to be more open with local authorities. Obviously local authorities need to respect the confidentiality of the information they are given; but provided they are willing to do that (and in some cases they are not, and if they say explicitly they do not want to keep confidences that is fine, but they then cannot expect to be given confidential information) and provided they agree before the public consultation matters should be kept confidential, they should be fully involved and we have no argument about when that should happen. We are quite happy for that to happen early on in the pre-consultation process. Certainly the situation is better now than it was at the start of the programme, even if it is not yet quite as good as it might be. Q71 Roger Berry: There are some local authorities passing resolutions proposing closures contrary to the view of the National Federation, contrary to the views of Postwatch and so on. Are these local authorities doing that publicly? Are they privately engaged in serious discussion about the way forward, or are they opting out of providing information? What is the response that you are getting? Mr Webber: I think there is a mixture. In some cases there is a genuine opposition in principle to the whole idea of post office closures, and they are not having anything very much to do with the programme at all. In other cases they are public positions being taken which might not necessarily be 100% backed by the private position. I can understand both approaches - they are both understandable. Q72 Roger Berry: Do you think there is an argument that as an unelected quango, and I say that in the nicest possible way, Postwatch has far more active involvement in this process than elected representatives, both locally and nationally elected representatives? Mr Webber: Probably that is true. Whether that is a good thing or bad thing is not for me to say. Q73 Roger Berry: Oh, go on! Mr Webber: I hope we are discharging responsibility ably and with expertise and with genuine concern for the interests of consumers; in which case I hope we are acting on behalf of the community as much as any elected organisation or authority would do. Q74 Roger Berry: The pre-consultation involvement of local councillors, is it about anything more than providing information; or is it about do they have the opportunity of making serious input into the options available for local communities? Mr Webber: The very early invitation for information is just that. Local authorities are being invited to provide information about planning issues, if there are developments afoot et cetera. As the pre-consultation period proceeds more and more local authorities are being invited to give qualitative views on what is proposed; and obviously when it reaches the public consultation phase then local authorities are full participants. Q75 Mr Hoyle: Just to follow on from that, this is about local representation because we are the elected members yet somehow you are the overseer, and some people say you are very, very cosy. The fact that you seemed to have rolled over and accepted in my area five closures, three of which want to go and two that do not, the two that do not were the post offices that should have remained open after the last event we went through. I saw closures previously and the justification was that these two post offices were the post offices people had got to use. Now what we are saying is, "Ah, well, we didn't really mean that because we're going to close them now". Do you find that acceptable, because you went along with it in both cases? Mr Webber: It is a different programme is the first point, Mr Hoyle. Q76 Mr Hoyle: So we have changed the rules so it does not count? Mr Webber: The Government have said that 2,500 post offices are to close. We could either have said, "That's wrong in principle" and stayed on the sidelines and sulked, or just shouted; or we could have said, "We're going to work hard with Post Office Limited", but as an entirely separate organisation. Q77 Mr Hoyle: What have you done for Chorley and the people of Chorley? Mr Webber: I am afraid I cannot answer about an individual constituency. Q78 Mr Hoyle: If you could let us know I would be grateful. Mr Webber: I will write to the Chairman. I will be very happy to do so. Q79 Mr Hoyle: I would like you to write to me as well as the elected member. We do have some thoughts and opinions on it. Mr Webber: Certainly I shall do that as well. We are only in week two of the public consultation for the area your constituency is part of, I believe. Obviously all bets are still on in terms of that. Q80 Mr Hoyle: That is good. I just wonder if I can pose this little question to you: I have got Councillors Malpas and Smith at the moment getting people to sign a petition on the streets of Chorley to keep the post offices open. Both councillors are on the borough council and yet you are not allowed to pay your council tax at the post office, you need a Paypoint. Do you think there is a whiff of hypocrisy there at the moment on the streets of Chorley? Mr Webber: I think we all have a responsibility to use our post offices, and that includes local government. Q81 Mr Hoyle: Putting work into them? Mr Webber: Yes. Q82 Mr Hoyle: So typical naked opportunism! What I am concerned about is we have profitable post offices out there and they are now down for closure. How many profitable branches of Post Office Limited are earmarked for closure? Mr Webber: Does your question refer to profitable to the sub-postmaster, or profitable to Post Office Limited? Q83 Mr Hoyle: Sub-postmasters. How many of those are profitable that are down for closure? Mr Webber: The answer to that is: I do not know. The answer to the numbers that are profitable to Post Office Limited, I would hope would be zero. There would have to be some exceptional reason why they would choose to close a post office that was profitable to them. Q84 Mr Hoyle: So we do not know the answer! Mr Webber: I do not know the answer to the numbers which are profitable to sub-postmasters. Q85 Mr Hoyle: Because I think that is part of it. Does Postwatch think that the Post Office's approach to community proposals to save braches proposed for closure has been sufficient? Has it got better? You are trying to tell me it has got better; but my experience is that I am not convinced. Mr Webber: I am sorry - do you mean community proposals in the sense of the community running the post office? Q86 Mr Hoyle: Does Postwatch think regarding the Post Office's approach to community proposals to save braches, in other words the branches that are down for closure, that there has been a better overseeing of support for the community view? Mr Webber: Yes, is the answer to that, it is getting better. We are certainly seeing an improved account by Post Office Limited of the representations that have been made to it, not just the number but the quality of them; the key issues that have arisen which have helped us a lot to determine whether they have taken full account of the representations made. One of our key responsibilities is to make sure that Post Office Limited have taken proper account of all the representations made. In general, yes, and it is getting better as it goes along. In some ways that is unfortunate because it would be good if it were of high quality from the start. Something that has been getting better indicates it was not so good early on. It is now, I think, pretty good. Q87 Mr Hoyle: I do worry. I will just give you an example that does concern me, that somebody really wants to stay who has got a good post office, doing good business and is marked for closure; yet somebody else who is doing bad business could remain open. I think there is a bit of a worry there. With a village with only one post office and that is going, what happens now? The bus service is so erratic there is one every four hours, and you do not really go to the post office, you go to the town; what do you say to those people in that village that has a post office marked down for closure without any alternative? Mr Webber: The closure programme has two main sets of issues that need to be taken into account. There are the access criteria, which are the distance things; that is purely mechanical and you can do it with a ruler, or walk the streets and work out that the access criteria have been met; and in every case so far they have been. There are then additional factors: like transport links; like the terrain; like the population demographics - is it a population of elderly people etc; like the effect on the local economy. Those are less quantifiable, and those are the ones we take account of very seriously indeed. We will look very closely at whether this is the last shop in the village; whether there is another free cash point available, for instance, if that post office closes. We will take up the cause of post offices where it seems those issues have not been properly addressed. Q88 Mr Hoyle: Or would you be coming forward to say we do need a mobile post office entering into those areas? Mr Webber: That is one way forward. Outreach, mobile or otherwise, can be one solution. Q89 Mr Hoyle: So there is an alternative? Mr Webber: Yes, Q90 Chairman: Before I pass on the questioning, can I just try and clear my head on my issue, which is this question of profitability of sub-post offices for the Post Office. To what extent are those central costs capable of being reduced when a post office closes? To what extent are they fixed costs, which mean the cost to the network is spread over a smaller number of sub-offices, meaning more sub-offices become unprofitable to the Post Office, and we are locked into a permanent cycle of decline? Mr Webber: These are obviously issues for you to take up with Post Office Limited. Q91 Chairman: I am inviting you to answer. Mr Webber: Our concern is with the outputs really, the effect on consumers. However, clearly there must be an element of the latter. There must be an element of overheads which need to be spread among a smaller network. Alongside that I know Post Office Limited is making great strides in becoming more efficient centrally anyway in thinning out its core management costs. At the very least that should counterbalance the effect that you mention. Q92 Chairman: When the Committee raises these questions next week with the Post Office and with the Minister, are we right that Postwatch is concerned about the central costs and whether or not we might be finding ourselves in this vicious circle? Mr Webber: Yes, although the bottom line as far as we are concerned is that there should remain a network of 11,500 post offices once this is over. As I say, that is something we might talk about later. How that is achieved, from our point of view, is secondary. Q93 Mr Weir: You mentioned in your first report on the programme that the specific reference to the proportionality rule, that no one place should be significantly worse affected than another, threatens to "exacerbate existing levels of disadvantage" by ensuring similar levels of closure everywhere. Is there an alternative to this, in your view? Mr Webber: There are two alternatives and one is not happening; that would be to say, that certain areas are over-provided in relation to others, and so the aim would be a network that is actually equal for all across the UK. The other though is to say that there is on average something like 17% or 18% closures. If there are to be 2,500 closures out of the network that averages 17% or 18%. Each area plan would be around that level, but there can be plus or minus some per cent closures in each area, and that is the one Post Office Limited have chosen. They have said they would see closures ranging from 13% of the network to 23% of the network in a particular area, averaging around that 18%. So far it has worked that way, but the aim would be that relatively under-provided areas would then not be further disadvantaged through applying that sort of system; and relatively over-provided areas would not be further advantaged. Q94 Mr Weir: How does that work in a network which, in many areas, is possibly imbalanced already because of past programmes which have not had an overall look at the network? I can think of areas in my own constituency where you have two post offices close together and nothing for miles round about. Under this programme the chances are that one of those post offices will close. In effect you are not looking at the overall balance of a network, you are merely having more closures of the programme. Is that not just making matters worse? Is it not necessary to go to your first alternative and look at the overall balance so that everybody has the same access to a post office? Mr Webber: Ideally, yes. It would be, I suspect, almost impossible to do that. I think the compromise position Post Office Limited have adopted, which is to have that range from 13%-23% of post offices closed within any single area, is probably going to have a similar effect; and can, at any rate, ensure that an area which suffered badly in the so-called urban reinvention does not suffer significantly further. Q95 Mr Weir: How does that mesh in with the overall 2,500 closures, where the Government seems to be intent on having that figure with very little variation from that? If there is a variation between each area plan of that percentage, then logically are some areas (and the Chairman has already mentioned his own area coming near the end of it - mine is not much further forward then his so I share his concern slightly) going to be worse hit to make up the balance, do you feel? Or is there any leeway to reduce the numbers of closures to take this into account? Mr Webber: It is for the Government to say whether there is leeway not to hit that 2,500 figure, and I hope there will be flexibility about that. What is important I think is that no area should suffer because of its place in the sequence. The Chairman's constituency, I hope, will not suffer ----- Q96 Chairman: And Mr Bailey's. Mr Webber: Indeed. ----- because it is in one of the very last area plans. I think that will happen. The Chairman did cite a figure of 14% so far. That is actually not a figure I recognise. If I am wrong about this I will write to correct the matter. Our figure is something more like 17% of offices on average in the area plans so far where there have been announcements which are down for closure, which is pretty well the target figure, and I think that is right. Chairman: The Highlands of Scotland have the lowest level so far with 9%. Q97 Mr Weir: We could argue about that! The Highlands of Scotland have, as already been mentioned by George Thomson, many of the accepted areas, with less closures proposed because of the accepted areas. Could I put the point I put to George on this. He mentioned postmasters phoning up and saying, "Why are we not on the closure programme", because they want out. Some would say that is hardly surprising given the history of closure programmes. Given you talked about the overall level about not exacerbating existing levels of disadvantage, are you confident that when we get to the end of this programme we will be left with a sustainable network? Will we not get a lot of unplanned closures with people who say, "I'm not getting compensated but I can't go on?" If that happens is the Post Office in a position to plug the gaps in the network? Mr Webber: Could I answer that in two ways. Chairman: I am going to rule that question out of order because someone else wants to ask that later on in more detail. Q98 Mr Clapham: Mr Webber, could I ask about the post-consultation process and the review scheme. It does appear that Postwatch is the only body that can trigger a review at this stage. Would that be correct? Mr Webber: Yes. Q99 Mr Clapham: Looking at the number of reviews there have been and the stages, there are four stages within the process, yet by January 2008 we had only had two cases at stage two, plus of course the two from the Merseyside plan. Does that suggest that the review procedure just is not robust enough? Mr Webber: It is certainly not something we enter lightly, because we will already have had the 11-week period before it goes public; there is the six-week period of public consultation. Post Office Limited have changed on average more than 10% of their proposals during the pre-consultation phase. It has changed, on average, another 5% or so during the public consultation phase; so most of the key concerns should have been addressed by the end of the public consultation phase. That said, we certainly do not hesitate to use the process when we need to. Indeed last week, and this is purely coincidence, there were seven cases being escalated to stage two; and indeed some have now gone on to the stage three process, and that is the first time that has been used. The stage four process, which involves the Chair of Royal Mail, has yet to be used. That was the new addition to the process announced by the Government before Christmas. Q100 Mr Clapham: Given that there is a great deal of community involvement and community controversy, as we have heard, do you think that there ought to be other bodies that can actually trigger the review process such as, for example, MPs? Mr Webber: It sounds as though we are trying to call power to ourselves, which is certainly not my aim. MPs will certainly let us know of the concerns they have. That is just the sort of thing that we would take into account in deciding whether to escalate a case: the weight of opinion; the strength of argument and so on. There are a number of keys to this, but what will particularly trigger our concern is evidence that Post Office Limited have not followed their own rules, or have not taken proper account of the representations they have received. That is the first thing we always look at. Where we are in doubt that that has happened, that they have not taken proper account of representations made, we will not hesitate to escalate. Certainly it is absolutely right and proper for MPs to raise concerns on behalf of their constituents, and one would expect them to do so. Q101 Chairman: The final decision documents from Post Office Limited mentioned the fact of reviews but not the grounds for them. Would it not be helpful if the grounds were also there in the interests of openness and transparency? Mr Webber: I cannot, on the face of it, see any reason why not. There may be an argument against it but I do not see one myself. Q102 Chairman: For example, in your very helpful submission you gave us an account of why you reviewed a couple of decisions, but you did not mention the two Merseyside issues. The third and fourth stage reviews, you talk about them and you talk about the fourth stage being implemented by the Government. In practice do you think that is going to be used? Mr Webber: It has not been used so far but it is better to have a system available and not need to use it than to have the need and no way of fulfilling it. Q103 Chairman: You did not actually say why you reviewed the Merseyside plans? Mr Webber: There were two central Liverpool post offices where customers from the two post offices would have migrated to a post office which at the moment is a Crown post office in the centre of Liverpool, which is to change into a W H Smith. We do not yet know what sort of facilities are to be available at that W H Smith. There has not yet been a public consultation begun at that W H Smith. We have argued that until a) we know exactly what is proposed for that W H Smith; and b) we have some idea whether the public around them, local Members of Parliament and so on are satisfied with what is proposed, we could not sign off on the two closures. Chairman: I wish I had had a chance to ask the National Federation about their view of the interrelationship of the closure programme with the franchising programme. Q104 Mr Weir: Your submission criticises Post Office Limited for its approach to the substitute closures that have emerged from reprieves from final decisions so far. First of all, do you think it is a sensible way to deal with closures, to substitute one for another? Mr Webber: It is not sensible to have an automatic substitution; that is entirely wrong; that the local community feel, "If we save this post office then, without a doubt, another community is going to suffer". That is inhibiting and I think it is wrong in principle. Nonetheless, it is perfectly reasonable for Post Office Limited to consider whether there is a substitute which does make more sense for closure, than the one that has been saved. What is bad is that that should be automatic. What is equally bad is if that substitute is also withdrawn at the end of a public consultation period and there is yet another substitute brought in. That simply could extend the period of uncertainty indefinitely. It is something you might, with respect, want to take up with the Minister next week, but as I understand it the Government has now taken that point. I believe the Government will probably not be expecting substitute substitutes to be introduced. Post Office Limited will have the chance to come up with a substitute if they think there is a good case for it. If that falls as well then that will be the end of the matter. Q105 Chairman: Of course in that context the target is up to 2,500 closures, with some flexibility around that? Mr Webber: Yes, exactly. Certainly if it were an absolutely dead-set figure then we would be in trouble, but that flexibility does enable people to say, "Enough is enough". Q106 Mr Weir: So the one substitute but no more? Mr Webber: Yes, and that substitute should not be automatic. Q107 Mr Weir: You also criticise the process that went through. Have the Post Office changed the approach for these substitutes so they are the same as for the initial local planning consultations? Mr Webber: There was a six-week consultation period for the substitutes. That works as far as the public consultation is concerned. Q108 Mr Weir: This is what interests me. We have heard a lot about the pre-consultation process, before we get to the public consultation process. If a post office is reprieved and a substitute is put in, presumably there has not been the pre-consultation process for the public process. Is it being treated in the same way? Mr Webber: That was the point I was coming to. From the public point of view it is the same - there is the six-week period. From the point of view of Postwatch, pre-eminently of the sub-postmaster concerned and of the local authority and Member of Parliament, or MSP, it is not the same. I can understand why, because to add another 17 weeks, 11 weeks of pre-consultation and six weeks of public consultation, would be unrealistic. A brief period, however, of pre-consultation is, I think, a very useful thing to have in cases like that. Q109 Mr Weir: Do you feel therefore that the whole process of the substitute is not receiving the same rigorous examination as the original decision? Mr Webber: In an area plan the whole area gets very thoroughly looked at. When a substitute is proposed it is proposed in the context of an area which Post Office Limited know pretty well and we know pretty well, so you would not need the whole process to be gone through again. Q110 Mr Weir: This is the same question I put to Mr Thomson on this. Presumably in the original consultation the substitute post office is deemed to be necessary, whatever the criteria, and customers have been told, "Your post office is not closing". It does seem a strange process to then say, "Okay, this one is saved and in six weeks we'll decide the fate of the next one"? Mr Webber: I think there are two different points. On the one hand, yes, people have been told, "Your post office is safe"; but they have not been told, "Your post office is vibrant" necessarily. What they have been told is that it is not in this top list of closure. Q111 Mr Weir: If you do not mind me saying, that is evading the point slightly because presumably the pre-consultation process decided this was a post office either necessary or not for the community. However the decision was made, that was not the closed one - it was to be another one. After going through that lengthy process you have a six-week period, that is overturned and then only six weeks to look again at this one and come to a different decision. It seems odd. Mr Webber: Again I think what is being said by a post office not being in the area plan to begin with is that Post Office Limited think they can meet their target of 2,500 closures overall without closing that post office. They then decide that that is not the case. I am not here to defend Post Office Limited and you will want to ask them about this, but they are not necessarily making any statement about a particular post office that is not slated for closure originally, other than it is not slated for closure at the moment. If they find they are not meeting their target because post offices are being saved then they obviously do need to look again to see whether it is both necessary and right to close another one. Q112 Mr Weir: It is target-driven more than anything? Mr Webber: It is target-driven to some extent inevitably. Chairman: We have never got to the bottom of why 2,500 either. It seems a very arbitrary figure. Q113 Mr Wright: I have three areas I want to cover and the first one is on the impact on business and communities. When we went through the urban programme of closures there was one of the issues I was raising within that context of the effect on local shops. This is obviously more important within a rural community. Is the impact on sub-postmasters' connected retail businesses taken into account in this process of the rural closure programme and do you think it should be? Mr Webber: The impact on the local economy is one of the factors that Post Office Limited are now required to take into account. Initially I think I am right in saying that the original Government consultation only talked about these mechanic access criteria in terms of distance from the nearest branch and so on. In their decision document following representations from the Committee and from Postwatch and others, Post Office Limited do have to take account of the effect on the local economy and a whole range of other matters. It is not in the mechanistic way; it is going to vary from case to case. Yes, certainly if a post office is the last shop in the village, if there are a lot of local small businesses that need to use that post office for business purposes, those are the sorts of matters that will be taken into account, and the Federation of Small Businesses will take into account no doubt, and members and local authorities will take into account, and are just the sorts of things that are likely to trigger our support for that branch. Q114 Mr Wright: Do you think that there should be, as the Commission for Rural Communities have suggested, a presumption against the closure in a case where the outlet is the only one in the village? Where the post office is the only one in the village? Mr Webber: Certainly I would hope it is possible to meet, or pretty well meet, the Government target for closures with none or very few such cases happening. I suppose it depends how you define "presumption against". Certainly it is something that is undesirable and there needs to be a good reason why that post office rather than one which does not leave a community totally without a shop would be chosen. Q115 Mr Wright: With reservations, you agree with the CRC's point of view? Mr Webber: With reservations, yes. Q116 Mr Wright: You would be supportive of a community where the proposal to close was the only one outlet in the area? Mr Webber: We would expect to see some strong arguments why a post office should close in such a community. Q117 Mr Wright: Do you think Post Office Limited should model the impact of closures
on local economies and on retail outlet-owning sub-postmasters? Q118 Mr Wright: Just moving on to Outreach and I asked the Federation a similar question: do you consider that two hours a week is judged sufficient for an Outreach branch? Mr Webber: Generally, indeed almost invariably, no. We think that is not good enough. We argued for at least three sessions of two hours a day as a minimum. There are some very remote rural communities where, at the moment, there may be no post office services at all in the exempted post code areas, for instance where that two hours a week would represent a significant improvement, and we would not necessarily argue with it, but those ought to be the exception. We think there ought to be a basis of at least three days a week of services of at least two hours a day Q119 Mr Wright: Would that be your view in general. I understand from the ones that have gone through around about 20% of the Outreach areas have been agreed already that have got these two hours. Would your view generally be in those circumstances to put a recommendation forward that there should be at least three sessions of two hours? My concern, as I said before, was that one two-hour slot may not be convenient for that person who has to wait an extra week? Mr Webber: I agree entirely and we had a lot of concern actually early on with Outreach proposals in that, where they were proposed to replace an existing post office, Post Office Limited did not have the details of what they proposed; did not have the details of how that would be housed; did not have the details of the hours; did not details of the services that would be provided. We have reached agreement with them now that every new consultation on an Outreach proposal must have those details otherwise it is not a real consultation. Q120 Mr Wright: Going on to that particular consultation, you alluded to that just now where you said that Post Office Limited have agreed that from January 2008 all Outreach proposals going to consultation would include operational service details? Mr Webber: Yes. Q121 Mr Webber: I am not too sure about that. Could I write to you on that? If it is not sufficient then there needs to be a separate six-week consultation period for Outreach, subsequent to the main public consultation. Q122 Mr Wright: It does not affect me. It is the wrong end of the country to me but it may well do in the future. Moving on to the Crown offices, the CWU believe you have reneged on your responsibility to represent users by accepting the principle of franchising of Crown offices. Why did you do this? Do you believe that subsequent consultations have been effective? Mr Webber: The principle we have is to ensure that customers have proper and effective access to post office services. We are not doctrinaire about whether that is provided by a sub-post office, a franchised office or a Crown office, provided it is adequate; provided that there is proper access for disabled people et cetera and that it is open the right hours within the right place. The evidence we have got so far, and we have done some research on this, is that the W H Smith franchises are, in general, offering services at least as good as and, in some respects, better than those offered by Crown offices. Certainly the range of services is at least as good; queuing time seems to be less in W H Smith offices than in Crown offices. Although we are very much in favour of a flagship network for the post office, we are not so committed to that that we are going to object in principle to the franchising, if the franchising provides a service of at least as high quality. Q123 Mr Wright: So you have already done the comparison work on that particular model? Mr Webber: Of those that have opened so far. Obviously we are still in the middle of the process, but so far it looks fairly good. I know, for instance, one of the objections to many of the W H Smith franchises is that they generally tend to have the post office sited either in the basement or on the first floor. Obviously it is then important that you have a lift available or, at the very least, that for customers with mobility difficulties services can be provided on the ground floor. In all cases one or other of those options is available - either a lift, or services available on the ground floor. That is one of the things we would certainly look for in any W H Smith or any franchise proposal. Q124 Mr Wright: Surely the decision to move franchises to W H Smith - and I have got one in my town centre, which is probably only 200 yards away from the original post office - would have taken into account the place it was going to be in? For instance, if it is in the basement or if it is on the first floor, surely part of that process should have been that the first thing you have to do is to give general access; and not say, "Well, it's going to go in W H Smith. You determine where it's going to go, and therefore we'll deal with it afterwards"? Mr Webber: I agree. We would certainly oppose greatly any proposal that did not have that. So far we have not needed to oppose on those sorts of grounds. Q125 Mr Wright: You mentioned the fact that there are one or two in the basement? Mr Webber: They are basement or first floor but there are always facilities for people with mobility difficulties to receive a good level of service. That is indeed a bottom line requirement for us. Q126 Chairman: Are you happy that you have enough information about the plans for Crown offices to inform your decisions in relation to the closure programme of sub-offices? Mr Webber: Yes, in general; and where we do not that is a reason for escalating the sub-post office proposed closure, as in the Liverpool cases we were talking about. Q127 Chairman: I think the CWU and National Federation both have concerns about the impact of those changes. You could move the location of a Crown office very significantly in a town with an impact beneficial or otherwise for sub-offices? Mr Webber: Absolutely, but in general we do have the information that is necessary and if we do not that is a very clear reason for escalating a case. Q128 Chairman: Criteria for choosing which Crown offices were transferred to W H Smith, are you happy that process is sufficiently transparent? Quite honestly, the town I live in, the city I live in (and I am not the Member of Parliament for it), I live in Worcester, I am quite clear there the reason that particular Crown office was closed was a huge site ripe for redevelopment rather than a rational decision about the needs of the city and the post office services it was to receive? Mr Webber: Obviously I cannot comment on the individual case. To argue on the other side, as has been pointed out, the Crown post office network is losing £70 million a year; it is possible that those losses could be cut very significantly by the sort of redevelopment you are talking about. One has to take that into account as well. Q129 Roger Berry: Reference has been almost exclusively in terms of franchises to W H Smith but obviously there have been transfers from Crown offices elsewhere. My local post office used to be a Crown post office and it is now residing in the local branch of the Co-op. There are a number of organisations providing helpful services. Have those been appraised as rigorously as has happened in terms of W H Smith franchises? Mr Webber: Yes, there has been a standard six-week consultation period and discussion with us. Q130 Roger Berry: I mean the outcome of the shift in provision? Mr Webber: Yes, we would certainly check what has happened to queuing times and so on in cases like that. Q131 Roger Berry: This information is on your website, is it? Mr Webber: I have to say I do not know whether it is on the website. I will write to you about that. Roger Berry: One question that has frequently been raised, and it is raised at the time of any consultation on a change in the status in Crown offices of course, is whether franchising threatens instability in terms of the future. What, if any, guarantee that the franchisee will continue to provide those services? In my case if the local Co-op decided tomorrow, "That's the end of this arrangement", does that not create a degree of a problem? Q132 Chairman: In my case that is precisely what happened - the Co-op did decide to stop providing post office services. Mr Webber: From our point of view it creates a problem for Post Office Limited. It is their responsibility to ensure that there are adequate replacement facilities at least as good as those which have closed down. Obviously one cannot guarantee that a contract will last forever. Q133 Roger Berry: Has any progress been made on the arrangements for future monitoring of the network to meet the accessibility criteria? Decisions will be made over the next few months - to what extent will the monitoring situation in future years be rigorously undertaken to ensure that the accessibility criteria continue to be met? Mr Webber: There are two points to make on that. The first is, as you will know, Postwatch itself ceases to exist at the end of September as it is merged into the National Consumer Council. The new National Consumer Council will have the responsibility to ensure that the accessibility criteria are still met. It is a statutory responsibility which I am sure they will discharge. The other point, and it is one which I hope we will be getting onto, is the relatively newly revealed figure of 7,500 outlets, which apparently is all that is necessary to meet the access criteria. Frankly, it is going to be a rather easy job for the new National Consumer Council to check that those access criteria are met. What is going to be a more challenging task is to ensure that a network of around 1l,500 remains. Q134 Chairman: Can I test you on this question about what happens if the franchisee stops providing a service, say, the organisation goes bust. The Co-op in my town could not afford to carry on operating the Crown office. Fortunately, the old Crown office building stood empty and there is now technically a sub-office back in the old Crown office building offering what looks like a Crown office service, but actually is a sub-office. Thank God it stood unused for a year or two. The problem is, once you have shut the Crown office and flogged off the site and you have gone to the best partner in the town or city for a partnership and they say they cannot do it any more, there may not be another place that is good to take the operation to. The Post Office then have a huge problem in terms of expense in meeting its commitment? Mr Webber: I agree. I cannot really put it better myself, and it is a problem for the Post Office to resolve. Q135 Chairman: You have seen the written answer in answer to a question I asked, prompted by my able clerks, asking what was the Government's assessment of what number of outlets met the criteria, and the figure that came back was 7.500, substantially higher than the outcome of disclosure process of somewhere around 12,000. We were told that Post Office Limited is being tasked, in consultation with you, Postwatch, while you survive, to carry out "an updated study and analysis of the minimum number of post offices required to meet the access criteria". In other words, to review that 7,500 figure. Is that happening? Mr Webber: We were interested to read that ourselves because we had not been told that that was the case! It was nice to learn it. We have discussed this with the Department since, and it is something which we will be doing certainly. From our point of view, that figure of 7,500 is interesting but relatively academic; in that we do have a statement made by the previous secretary of state to you a year ago saying that around 12,000 post offices were necessary for appropriate national coverage. I specifically asked the Department whether they stood by that view after seeing the answer to your question, and they said the "Government's funding package and POL's business cases are both based on the network being sustained at around 11,500 post offices to 2011. The Government continues to view such a network as necessary to provide an appropriate level of national coverage". Q136 Chairman: That is 500 gone already! Mr Webber: It is 500 gone already admittedly, which is unfortunate. I think we can possibly live with that. It is actually quite a useful commitment that we are not looking at a network of 7,500. We are looking at a network of 11,500, and if the network fell significantly below that (and 7,500 is vastly below that) there would not be an appropriate level of national coverage. Q137 Chairman: What worries me about this are two things: first the Government's commitment financially only goes to 2011, which is not a very long-term commitment. I remember the earlier report of the Performance and Innovation Unit at Downing Street which came up with some alarmingly low figures for what number of offices you could keep and meet the reasonable access criteria; and that is why we abandoned the idea of access criteria. I am concerned. As individual sub-postmasters decide to leave the network for whatever reason, retirement for example, those access criteria can still be met for a very long time. If that financial link dries up we will see a very substantial shrinkage in the network? Mr Webber: Absolutely. That is why we think the access criteria are of secondary interest. What is important is what the Government agrees is necessary for appropriate national coverage, which is a much higher figure. Q138 Chairman: It is the political commitment to the network that you think is important? Mr Webber: Yes, absolutely. Q139 Chairman: We have finished almost bang on time. I do not think my colleagues have anything else they particularly want to press you on. Have we covered all the things you hoped we would cover? Mr Webber: Yes, certainly. Chairman: If on reflection you find that is not the case, please feel free to give us any further information in writing, but very quickly, preferably next week as we have the Post Office. There is some information we will seek in writing afterwards. I am very grateful.
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