172. The post office network is valued by the public,
and our evidence demonstrates that people's expectations of what
it can provide are extremely high probably higher than
their willingness to pay for those services directly would suggest.
Moreover, their aspirations for the network do not necessarily
reflect the reality: that a wide range of services are provided
across a heterogeneous network of premises of different sizes
run on many different business models. Conversely, the network
has been underused and underappreciated by the Government, which
has recognized the role of the post office network in sustaining
communities, but has frequently failed to link that to the actions
of individual departments.
173. The Government's own access criteria could be
met by a network of 7,500;
on this basis, the network could in theory be decreased by 4,500 branches.
The Government has said that it does not wish the network to decrease
from its current size, but there is little clarity about why it
wants a network (of 12,000 outlets) so much larger than the access
criteria require. We share the Government's view that the network
should not be diminished, but remain concerned by the lack of
justification for the network's current size. Indeed, to meet
the principles we set out below, it may even be necessary to re-establish
post offices in communities that have lost them.
174. Postcomm has been asked to carry out a review
of the social benefits of the network. The value the public sets
on post offices convinces us that there should be no further closure
programmes, but it is inevitable that there will be some change
in the network as Post Office Ltd's arrangements with individual
retail partners change. The more those changes can be guided by
knowledge about where post office facilities are most valuable,
the better; the possibility of increasing the size of the network
should not be excluded.
175. We acknowledge that the Government has consistently
recognized the value of the post office network. However, it has
not translated that recognition into action, either through making
sure that the policies of individual departments do not undermine
the network, or through articulating a clear policy for the network.
Post Office Ltd operates as a commercial company, and we do not
wish to change that. However, it is a government-owned company,
and the Government has a legitimate right to set it other tasks
than simply maximising profits (or minimising losses). We believe
it is time the Government set out clear principles for the network.
176. Our principles would be as follows:
- The post office network provides
a well-established way of fulfilling existing government responsibilities:
- for the social and economic
well-being of local communities;
- to ensure that public services are accessible
throughout the country; and
- for the provision, wherever appropriate, of face-to-face
access to information and services.
- Although the Government has
a responsibility for general social and economic wellbeing, this
depends on the availability of private facilities, as well as
public ones; the partnership between Post Office Ltd and private
providers is tried, tested and appropriate.
- Although the post office network is valuable,
in the past its management had become complacent and inefficient.
It must not be allowed to become so again.
- Wherever appropriate, government services should
be provided through the post office network, and through as wide
a range of outlets as possible. The post office network should
offer services throughout the country, and balance the needs of
customers and partners with the need for efficiency.
- We believe that although Post Office Ltd should
be left to run its own business, the Government has a right and
duty to be clearer about articulating the services it should provide,
and the standards to which those services should be provided.
177. Those submitting evidence to us wanted to have
as many services as possible available at every office in the
network. There are difficulties in this. The evolution of the
network over the centuries has resulted in a complex array of
premises and service providers: a subpostmaster in a small village
may have some call for foreign currency on demand, but it may
not be economic to supply it, given that it can be arranged at
short notice anyway. Sometimes difficulties are caused by new
services offered by Post Office Ltd itself. For example, Post
Office Essentials and Partner Outreach branches cannot accept
cheques. If these service models expand further, it may restrict
the extent to which services can be offered throughout the network.
178. There is a huge demand for the universal
provision of services throughout the network. However, there are
substantial barriers to providing all services everywhere: variation
in post office premises; the need for specialist training for
some services; and the complex array of service providers in the
post office network. Customers may have to accept that uniform
service provision may not be possible if services expand. At the
same time, the more services that are offered through the network,
the more attractive and useful the network becomes. Post Office
Ltd should by default provide a service in a branch unless there
is a compelling reason against it.
179. It is possible that if the right actions
are taken, the post office network will come to be both an important
social resource, and a profitable organisation. However, it is
also possible that the Network Subsidy Payment, or some successor
arrangement, will be needed for the foreseeable future. We
recognize that if Post Office Ltd is assured of government support
either through being the favoured route for supplying government
services, or through direct subsidy, there is a danger the company
may become inefficient and unresponsive. Similarly, Post Office
Ltd's retail partners may succumb to the vices of incumbency,
and become complacent and inefficient.
180. This is not an academic fear. Post Office Ltd
has, in the past, been a remarkably inefficient organisation.
We have already noted that the network's computerisation was completed
only this decade. One of the reasons why some bill payment services
were lost to the network was that Post Office Ltd could not compete.
For example, the contract for the TV licence service was lost
in 2006. Mr Cook assured us that changes had been made and Post
Office Ltd is now in a much better position to secure such contracts:
We have lost very, very few tenders over the
last three years. We are pricing much more competitively, so we
are not making as much money on those contracts but we are forcing
our way into most of those bill payment contracts now
As I say, I think we have got a robust story on costs, we have
an okay story on revenue and now that we have done a lot of the
tough stuff it is time to up the ante on winning more revenue.
181. We welcome the improvements in Post Office Ltd's
efficiency, but there is a danger that if the company comes to
consider that the extensiveness of its network gives it a right
to supply all services, these improvements will not be sustained.
We would like to see the widest possible range of bill payment
services offered at post offices, but the network has to earn
them. For that reason, we welcome the presence of PayPoint in
182. The Government should support the post office
network, but it has a right to expect that the network will be
as efficient as possible. Under current regulatory arrangements,
while Postcomm reports and advises on the post office network,
it has no direct responsibility for it. Broadly speaking, this
will continue if regulatory responsibility passes to Ofcom. Whatever
happens to the Postal Services Bill, the Government is, and will
remain, Post Office Ltd's only shareholder. It cannot duck responsibility
for the efficiency of the network. In a situation where there
is no competition and there are sound reasons for making government
services available through post offices, the Government may have
to be more involved than a shareholder might traditionally be.
183. Just as the Government has the right to expect
that Post Office Ltd will be efficient, so it has a right to expect
that individual offices will provide excellent service. It is
also clear from our evidence that although the network is trusted
and valued, many people consider services poor, and the length
of the queues is a real issue. Postwatch research has suggested
that, in many respects, franchises offered better service than
Crown offices. Subpost offices are also likely to have smaller
queues than Crown offices. Post Office Ltd is taking steps to
refurbish Crown post offices to ensure that they offer a modern,
welcoming retail environment.
184. Postcomm's Eighth Annual Report on the Network
of Post Offices suggested that Post Office Ltd must ensure
that businesses which gained custom as the result of closure of
another post office had the staff resources needed to ensure that
quality of service does not suffer.
That may require additional funds.
185. Post Office Ltd must ensure that all post
offices offer good customer service. This may require more financial
support. It may require setting service standards, and monitoring
to make sure they are achieved. Otherwise, post offices will attract
only those who have no alternative but to use them, and the network's
role in promoting social inclusion will be diminished.
186. As services expand, there is likely to be a
need for more investment in staff training, particularly if post
offices become a source of advice services. Post Office Ltd trains
subpostmasters for two weeks on site when they are appointed.
Thereafter, the subpostmasters are responsible for training their
assistants. The expansion of the range of services offered
through the Post Office is likely to lead to a need for more training
of subpostmasters, and possibly a need for Post Office Ltd to
provide some training directly to staff in sub-post offices or
187. As this report shows, the Government takes the
post office network seriously; indeed it provides £150 million
each year to support it. Some local authorities are also taking
commendable steps to support their post office network directly.
But financial support is not enough. Post offices have to provide
the services their communities need; whether these are central
or local government services, or fundamentally private services,
such as banking, or even access to retail, much more attention
needs to be paid to the potential of the post office in helping
the Government deliver its aims. The post office network depends
on very many private providers; their needs must also be considered.
It is a difficult balancing act, but it is one that has been performed
for nearly 400 years. Having looked in depth at the issues confronting
the post office network we are convinced that, given sufficient
political will from both central and local government and a real
determination to sustain and develop a priceless national asset,
there is no reason why the network cannot flourish again, serving
the whole nation in a uniquely valuable way. The passions the
Network Change programme provoked showed that communities value
their post offices now it is time for politicians to step
up to the mark and give post offices their wholehearted practical
support. We conclude that post offices can flourish again
and must be allowed to do so. Our report shows what needs to be
227 National Audit Office, Department for Business,
Enterprise and Regulatory Reform: Oversight of the Post Office
Network Change Programme, Report by the Comptroller and Auditor
General, HC 558 Session 2008-2009, 5 June 2009, p 7 Back
Mail revenues include retail and lottery. Source: Postcomm, Annual
Report on the Network of post offices 2007/08, 2008, p 59 Back