Post Offices - Securing their Future - Business and Enterprise Committee Contents


Conclusions and recommendations


What is the post office for?

1.  The importance of post offices to poor, elderly or otherwise disadvantaged people is frequently mentioned, but what comes through very clearly is the sense that the post office is important because it provides services to the total community, not just to disadvantaged people. It is an instrument of social cohesion or, to put it differently, it preserves the fabric of our society. (Paragraph 14)

Is the network still necessary?

2.  In setting the access criteria, and in asking us to undertake this inquiry, the Government has accepted that while the truly national retail and government network that post offices provide may be an accident of history, it offers a complex of services which cannot be replicated by other institutions, even though most individual services are available elsewhere. One of the most important features of that network is that post offices are found throughout the country. And although there is some variation in the services on offer, there is an irreducible core that people have come to expect will be provided across the country: access to post, access to cash, and, at the least, access to government information. Also, the public expects that, where appropriate, that core will support associated private sector services. (Paragraph 30)

3.  By chance rather than design, the Government has ended up supporting local economies and providing information and services to its citizens through the post office network, in which a publicly-owned company works with a variety of private enterprises. It is unlikely that anyone would have invented this system; nonetheless, it exists and it is effective. It is possible that the network can be sustained in a way which generates revenue rather than consumes it. However, any decisions on the company's operations or the services it offers must recognize that the nationwide post office network needs to be sustained, and sustaining it will meet the wider objectives of any government.(Paragraph 32)

The network and its services

4.  Post Office Ltd's current profitability depends on the Network Subsidy Payment, which runs until 2011. Further payments would depend on clearance under European Union State Aid rules. We believe that such payment, if necessary, would be justified, but clearly, it would be better if the network could be self sustaining. (Paragraph 41)

Subpostmasters and other providers

5.  We recognise that subpostmasters are self-employed; nevertheless, when the state provides services directly, it pays its workers at least the minimum wage. Post Office Ltd, a state-owned company, should ensure it treats its subpostmasters and Outreach operators no less fairly. (Paragraph 55)

6.  Post Office Ltd has done a great deal to improve its financial situation. It is to be congratulated for facing up to difficulties, and introducing new services. Centrally provided services, such as insurance or financial services, are welcome in so far as they increase the financial viability of the network as a whole. However, we need to be absolutely clear that the health of Post Office Ltd matters primarily not because it can provide a profit to the Government, its shareholder, but because it sustains the post office network. We believe that it is time for Post Office Ltd to pay more attention to the viability of its commercial retail partners, who are essential to providing that network. This does not simply mean negotiating more with the NFSP, important though that may be. It means recognising the legitimate interests of all its retail partners. (Paragraph 61)

7.  Post Office Ltd must consider the impact of its decisions on its sub-post offices and other network providers as it seeks to secure the sustainability of the network. There is no doubt that the company has a very difficult balancing act to perform in ensuring that the company as a whole is as profitable and efficient as possible, while acknowledging the needs of its partners to make a profit. We are not convinced that balance is currently correct; there is a danger that a drive for efficiency could result in a rise in unplanned, voluntary closures because the needs of subpostmasters and other providers are not adequately met. (Paragraph 62)

Technology and infrastructure

8.  It is clear that Post Office Ltd has, in the past, not been as innovative in information technology as it should have been. The Committee welcomes the Horizon technology upgrade, but views it as only a critical first step. Post Office Ltd should continue to seek technological innovations that make it more competitive at bidding for contracts, and simplify and speed up transactions in post offices. (Paragraph 65)

9.  Post office branches are housed in a wide variety of locations and buildings — a legacy of the evolution of the network. This has inevitably meant that not all post office branches are ideally sited or arranged. There is, however, no excuse for poor access either in relocated or new branches. The Committee expects Post Office Ltd's new Code of Practice to ensure that any future branch developments provide full access, particularly for those with mobility concerns. Post Office Ltd must actively improve all branches, not just Crown post offices, as necessary, to take into account technological change and new services. In some cases, it will be reasonable to expect Post Office Ltd's retail partners to bear part of the costs, but this depends on a proper share in the associated revenue. (Paragraph 67)

Postal services

10.  The largest single source of Post Office Ltd income is Royal Mail Group. As we have noted, there is little clarity about how this is calculated, and we welcome the Government's proposals to introduce more transparency into this. Given the wider social role of post offices, we believe that it is appropriate to allow any mail operator who wishes to negotiate with Post Office Ltd to use the network. Post Office Ltd should do everything it can to secure contracts with Royal Mail's competitors. However, such contracts should be properly priced; any such arrangements should "pay their way" for Post Office Ltd and its partners. (Paragraph 74)

Central government services

11.  Government departments should always consider what is the most effective way to reach those who prefer to deal with matters face-to-face. It is legitimate to encourage people to use cheaper communications channels, but not to deny them choice. (Paragraph 82)

12.  We accept that not all government services can be provided across the network, but as a minimum, wherever a service can be provided by post then the associated material should be available at post offices. For example, passport application forms should be universally available. The Government must think of post offices not just as a collection of private businesses, but as a public service. (Paragraph 83)

13.  The responses from government departments to the Committee's inquiry were, as a whole, inadequate. Most departments failed to suggest any way in which they might use the post office network. It is easy to think of government facilities which might usefully be available through the network, simply because of its near universal reach: payment of fines, and proof of such payment; provision of simplified consultation documents; leaflets about departmental services and initiatives; application forms for energy saving schemes; and provision of popular government forms. (Paragraph 84)

14.  The Committee is profoundly disappointed by the narrow focus on departmental concerns and the lack of attention to citizens' needs displayed in many of the answers to our questions about departments' use of the post office network. Government is in the business of providing services, and the post office network represents an unparalleled facility to deliver those services to local communities. It is bizarre that government policy recognises the value of the network, but that individual departments do not see that they have a role in making sure that everybody, not just the web enabled, has access to their services, and that taking this seriously by using the post office network more could contribute to wider policy aims. (Paragraph 85)

15.  We recognise that providing services through the post office network may be more expensive than providing those services online. However, we consider the public's expectation that there should be a choice of ways to access government services and information is legitimate. The question should not be "is it cheaper to provide this service entirely on-line or remotely?" but "given that there needs to be a choice of delivery methods, what is the most effective way to reach those who prefer to deal with matters face to face?". (Paragraph 90)

16.  Many or even most identity services may well be too sophisticated to provide across the network. However, even limited use of the post office network will allow these services to be offered across a wider geographical area than would otherwise be possible. There is potential to use the post office network to offer such services at a range of locations across the UK, which will both benefit those who need new driving licences or identity documents and provide income for Post Office Ltd. (Paragraph 95)

17.  The biggest barrier to the expansion of government services offered through the network is the attitude and lack of imagination of most government departments. History has given government an unparalleled and highly valued portal in the post office network. Departments must try harder to provide their services through post offices. At the very least, individuals must be able to get important government forms in all post offices. It surely cannot be beyond the Government's technological ability to provide a means to supply such material electronically so that the most up-to-date version of the form in question can simply be printed. Some of the proposals which have been made to us are impractical at first glance, but contain good ideas. Departments should not simply dismiss the provision of services through the network; they should assess whether offering services through post offices would make life easier for their customers, and if so, whether it is at all practicable. (Paragraph 108)

18.  In asking us to undertake the task force role, BERR showed its commitment to a coordinated effort to provide more services through post offices. The new Department for Business, Innovation and Skills should continue this work. There should be a government-wide leader to coordinate and implement as soon as possible a programme of expanded government services in post offices. There should be a new presumption that, in addition to any other delivery methods, all government departments should seek to deliver their services through the post office network in the interest of social inclusion. They should also be obliged to promote these delivery methods on an equal footing with other methods. The example of the Pensions Agency, constantly seeking to obscure the availability of its services through post offices, stands as a warning as to what will happen if this policy is not enforced properly. (Paragraph 109)

Local government services

19.  Local authorities use post office services even less, and less consistently, than central government. Many are quick to say they support post offices, but then are slow to offer their services through them — the support that really matters. They should try harder to provide their services through post offices — those who have piloted such services have been enthusiastic about the results. The Local Government Association should lead efforts to expand the availability of local government services through the post office network. (Paragraph 118)

20.  It is not appropriate for the Government to dictate to local authorities the extent to which they provide services through the post office network. However, we believe more could be done to raise awareness of the potential of the network. Post Office Ltd should take the lead in developing services that can be easily accessed by local authorities. It should then work with the Local Government Association to ensure that every local authority is provided with information about the services post offices can offer. (Paragraph 120)

21.  Relying on local authorities' funding to maintain the network would result in poorer local authorities providing fewer or poorer services. This would undoubtedly undermine the uniformity of service, which we have heard is a desirable — some might say necessary — characteristic of a sustainable post office network. (Paragraph 122)

22.  Post offices are community assets, and we welcome the approaches to support them that we have seen. Essex, Devon and Wales are showing commendable initiative. Undoubtedly there will be many other examples throughout the United Kingdom. In providing services through the post office network, Essex is giving an example of a local authority using post offices as a resource. We were particularly impressed by the effort that the Welsh Assembly Government and Devon County Council have made to improve the underlying businesses associated with sub-post offices. Helping businesses in this way not only supports the network, but safeguards other facilities for the local community. (Paragraph 125)

Financial services

23.  It is clear that there is huge demand for wider availability of banking services through post offices, and this Committee strongly endorses the widely held view that banking is essential to the network. (Paragraph 143)

24.  The Committee strongly supports greater provision of banking services through the network. However, it is not obvious how a new post office bank would be funded and secured, whether it would entail ending existing arrangements with the Bank of Ireland, and if so, what would be the financial consequences of terminating these arrangements. At this stage, the priority should be to extend financial services as quickly as possible. The existing agreement with the Bank of Ireland may be the best way to do that. Alternatively, it may be appropriate to seek a new arrangement with a UK bank. If neither of these courses works, a post office bank may be appropriate. (Paragraph 147)

25.  The Government should review urgently the effectiveness of Post Office Ltd's strategy for expanding banking services, but it is the outcome that matters (more access to banking through post offices) and not the means. Post Office Ltd must prove that its current model, involving the gradual expansion of financial services, is, as it contends, the best way to improve banking services. It must do so by providing more banking services through the network and substantially broadening access arrangements with high street banks. The Government should use its influence to ensure that the banks in which the public is a shareholder provide services through post offices. We appreciate that the Government wishes to leave the banks to run themselves, but there is currently a unique opportunity for the public to gain a specific and valuable benefit from its shareholding. (Paragraph 148)

26.  The Committee whole-heartedly supports the rapid expansion of fee-free cash machines throughout the post office network, and urges the Government to consider providing more innovative tools to enable financially excluded individuals to take advantage of direct debit bill payment discounts. The Government should also use the post office network to promote savings programmes for children and to deliver the Savings Account Gateway programme. (Paragraph 153)

Community services

27.  Our witnesses suggested a wide range of community services which could be offered through post offices. The extent to which each is practicable depends on local circumstances. There may be scope for a rural post office to double as a tourist information office. There may be circumstances where it would be possible for a post office to be combined with business premises. There may be circumstances in which a prescription collection service could be offered on a commercial basis. We do not believe such things can be mandated; they depend on the drive of the individual who runs a particular post office, and indeed, on the community surrounding the post office. However, they demonstrate the potential strength and flexibility of a system where services are provided through a partnership between the central company (Post Office Ltd) and other partners. There is a role for Post Office Ltd in making these arrangements easier; for example, by helping with technology, arranging template agreements and articulating best practice. (Paragraph 171)

Conclusion

28.  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. (Paragraph 174)

29.  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. (Paragraph 178)

30.  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. (Paragraph 179)

31.  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. (Paragraph 182)

32.  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. (Paragraph 185)

33.  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 franchises. (Paragraph 186)


 
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Prepared 7 July 2009