Supplementary memorandum submitted by
National Federation of SubPostmasters
SUBPOSTMASTER INCOME SURVEY 2009
1. SURVEY
1.1 The National Federation of SubPostmasters
(NFSP) undertook in-house research into subpostmasters' income
to inform our knowledge on current pay, pay trends and subpostmasters'
views and attitudes on pay issues. This represents an up-date
on previous research on subpostmaster income, carried out by Ipsos
MORI in 2006.
1.2 A sample of 3,000 randomly selected
NFSP members were sent a postal questionnaire. The questionnaires
were received and returned in April 2009, and focused on subpostmasters'
Post Office payslips for March 2009. The payslips covered transactions
from 29/1/09 to 25/2/09.
1.3 A total of 755 questionnaires were
returned—a huge response rate of 25%.
2. INCOME
2.1 Subpostmasters' income is largely made
up of two elements. Firstly, a fixed 'core tier' payment, which
can be varied annually according to the amount of overall business
an individual transacts. Secondly, subpostmasters also receive
payments which depend directly on the products and services sold
or transacted over the post office counter during that period.
Subpostmasters are paid different amounts for different types
of transactions.
3. NET PAY
3.1 From his or her net pay, the subpostmaster
must pay for the running of the post office, including overheads
and staff wages, as well as taking their own personal drawings.
In March 2009 subpostmasters received an average of £2,882 net
pay.
4. FINANCIAL
SERVICES
4.1 Post Office Ltd (POL) groups a very
broad definition of 'financial services' together on a payslip—including
Post Office Financial Services (POFS) products, banking services
and the Post Office card account. Together, in March 2009, these
products and transactions gave subpostmasters an average of £600 or
21% of their net income.
5. POST OFFICE
FINANCIAL SERVICES
PRODUCTS
5.1 A more indepth analysis of pay under
POL's broad financial services categories reveals that the vast
majority of subpostmasters earn nothing at all from many of POL's
own financial services products.
5.2 For example in March 2009, our survey
found:
— 92% of subpostmasters earned £0 for
PO Credit Cards.
— 92% of subpostmasters earned £0 for
PO Home Insurance.
— 86% of subpostmasters earned £0 for
PO Vehicle Insurance.
— 99% of subpostmasters earned £0 for
PO Life Assurance.
5.3 Those that did earn something for POFS
products generally received very little. For example, only 1%
of those surveyed earned more than £50 for vehicle insurance.
5.4 The NFSP has welcomed the introduction
of POFS and we believe that in time this could develop into a
significant income stream for many subpostmasters. However, we
are concerned that whilst POFS are frequently held up as an important
new income stream for POL, in fact they currently provide minimal
income for subpostmasters themselves. Many of the subpostmasters
we surveyed commented that they are unable to make an ongoing
income from these financial services as they have a very finite
customer group, such as the residents of the village in which
they are based.
6. BANKING
6.1 The survey found 81% of subpostmasters
make some income from bank account withdrawals. An average of
£32 was earned from Link card and Alliance & Leicester
card withdrawals. The maximum earned was £598 in March
2009.
6.2 POL's Instant Saver account earned 83%
of those surveyed some income. This averaged at £25 for
March 2009.
6.3 Of the subpostmasters surveyed 19% had
a POL ATM. Subpostmasters with these cash machines earned an average
of £170 in fixed monthly payments and an average of
£166 in transaction payments for March 2009.
6.4 The income survey indicates that customers
do want to use post offices for banking and that regular repeat
banking transactions benefit subpostmasters, and more so than
most of the POFS products. Whilst banking is not currently bringing
subpostmasters a large income, the NFSP believes the introduction
of a Postbank and comprehensive access for all major high street
accounts over the post office would significantly boost this income
stream.
7. POST OFFICE
CARD ACCOUNT
7.1 The Post Office card account (POCA)
remains a significant source of income for many subpostmasters.
In March 2009, subpostmasters earned an average of £202,
or 7% of average net pay for POCA transactions. Around 5% of subpostmasters
earned over £600 from this source.
8. BILL PAYMENT
8.1 Subpostmasters earned an average of
£49 in March 2009 from bill payment transactions
(via Paystation machines and over the counter). This represents
less than 2% of net pay, and is a considerable reduction on previous
years. In January 2006, bill payment represented 5% of net pay
on average (or £132 per month).
8.2 This major reduction in bill payment
income is largely due to two factors: POL holding fewer bill payment
contracts, and the fact that most contracts now pay POL and subpostmasters
less. We believe the number of bill payment contracts at post
offices should be increased so that post offices are able to offer
a comprehensive range of bill payment services to the public.
9. MAILS
9.1 In March 2009, subpostmasters earned
an average of £652 for mails services, this represents
an average of 28% of net pay. The maximum earned from mails by
an individual subpostmaster was £5,746.
9.2 Mails work is clearly a major source
of income for subpostmasters and the majority of the income is
derived from postage sales. In addition, to these transaction-related
figures, £95 million a year for mails work is paid to
subpostmasters via their core tier/assigned office fixed payments.
This is paid by Royal Mail through the inter business agreement
with POL, for providing Royal Mail with bricks and mortar access
points.
9.3 Home shopping related transactions were
found to provide subpostmasters with little income. For instance,
home shopping returns earned subpostmasters an average of £24 (£112 was
the maximum any subpostmaster earned). Local Collect (collected
undelivered parcels from a post office) subpostmasters an average
of £2, and 58% of subpostmasters earned £0 from
this service.
9.4 Whilst the NFSP is delighted that subpostmasters
can offer a service to assist with the recent growth in mail order
and internet shopping, we caution that current and potential future
income gains from this source should not be overstated.
10. TELEPHONY
10.1 Post Office telephony includes the
Post Office HomePhone and Broadband services, e-top ups, prepay
and phonecards. In March 2009, this brought subpostmasters an
average of £48 (less than 2% of average net pay).
11. GOVERNMENT
SERVICES
11.1 POL groups a broad range of Government
services together on a payslip, including UK Passport Check and
Send, DVLA services, game and fishing licences, National Lottery
and European Health Insurance Card Check and Send. In March 2009,
subpostmasters earned an average of £171 for government
services (6% of average net pay). However, 41% of subpostmasters
earned £0 and 8% earned over £600.
11.2 The UK Passport Check and Send service
is only available through a limited number of post offices. In
our survey 84% of subpostmasters earned £0 through this
service. However, 5% of subpostmasters earned over £100 for
providing the service.
12. INCOME TRENDS
12.1 Average net pay for March 2009 is
£2,882. This represents a slight increase in net pay since
our last survey in January 2006, which found net pay averaging
at £2,596. However, since this date 2,500 post offices
closed under the Network Change programme and these are likely
to have been those with lower incomes, thus raising the average
net pay figure. In addition, some of the remaining offices have
received an increase in business as they are now used by former
customers of the now closed post offices.
12.2 Whilst 36% of subpostmasters said their
Post Office pay has increased over the last 12 months, 38%
said it is the same and 26% said it has decreased.
13. PERSONAL
DRAWINGS
13.1 Subpostmasters were asked about their
personal drawings from their Post Office pay for March 2009. This
is the money they take as a salary, but excludes money paid to
staff, overheads or money which was reinvested in the post office
business. Average personal drawings were £866. But a significant
number of subpostmasters took nothing at all, stating that they
were drawing income instead from pensions, savings or income from
their retail business.
— 14% of subpostmasters took £0 in
personal drawings.
— 54% of subpostmasters took £1-£1,000 in
personal drawings.
— 26% of subpostmasters took £1,001-£2,000 in
personal drawings.
— 5% of subpostmasters took over £2,000 in
personal drawings.
13.2 Although 36% of subpostmasters said
their Post Office pay increased in the last 12 months, a
far higher proportion report that their costs have increased (see
section 14). Only 14% said their personal drawings increased during
this period. 60% said their personal drawings have remained the
same, but 26% said their personal drawings have decreased.
14. OVERHEADS
14.1 Monthly staff costs associated solely
with the running of the post office average at £1729, and
64% say their monthly staff costs have increased over the last
12 months.
14.2 Monthly overheads (excluding staff
costs) associated solely with the running of the post office average
at £901, and 77% say their overheads have increased over
the last 12 months. This is corroborated by the 2006 research
which found average monthly overheads were £750.
15. LOCATION
OF POST
OFFICE
15.1 We know many sub post offices play
key roles in supporting local retail. Often a post office is the
sole retailer in the area; sometimes the post office is vital
as one of a small number of outlets in a community. The survey
confirmed this. Of the sub offices surveyed we found
— 24% of post offices are the only retail
outlet in the area.
— 45% of post offices are located in a
row of shops or in a village with one to three other shops.
— 9% of post offices are based in a high
street or shopping centre.
16. ATTACHED
BUSINESSES
16.1 Our survey confirmed that 80% of sub
post offices are run alongside another business. Of these 96%
sell stationery or greetings card; 68% confectionery; 44% groceries
and household goods; 31% fresh food; 29% bakery; 45% newspapers.
16.2 Subpostmasters were asked if the attached
business would remain open if the post office closed. 66% said
the attached business would "probably not" or "definitely
not" remain open if the post office closed. Only 10% agreed
that the attached business would definitely remain open if the
post office closed.
17. CURRENT ECONOMIC
DOWNTURN
17.1 We asked subpostmasters about the impact
of the current economic downturn on their business. 51% said their
post office was experiencing reduced business as a result, and
62% said their attached business was experiencing reduced business
as a result. 43% said both their post office and attached business
were experiencing reduced business.
18. RECENT CHANGES
TO PAY
SYSTEM
18.1 Since conducting this survey there
have been some changes to the subpostmaster payment system, resulting
in subpostmasters seeing a reduction in the fixed element ('core
tier') of their income and increase in the variablised (ie transaction-based)
element of pay. It remains to be seen whether consequential increases
in pay for certain transactions will balance out the reduction.
This coupled with declining business overall clearly presents
a worry for the future.
19. NFSP VIEW
19.1 Nearly two-thirds (64%) of subpostmasters
say their Post Office income, which they must use to run their
office, has reduced or remained the same over the past 12 months.
This is a major concern since at the same time most subpostmasters
have seen a rise in overheads and staff costs. A quarter (26%)
of subpostmasters are taking less from their Post Office pay as
a salary than they were a year ago, and 14% are taking nothing
at all, instead forced to live on their pensions or savings.
19.2 Many of subpostmasters' traditional
income streams are collapsing, for example income from bill payment
and payments from processing state pensions and benefits. A number
of new services have been introduced over recent years and these
have been much trumpeted as income generators for the future.
However, the research shows that many of these services—including
Post Office Financial Services, telephony, home shopping mails
transactions—are producing minimal levels of income for
subpostmasters, and in many cases nothing at all.
19.4 This situation is not sustainable.
The NFSP is seriously concerned that unless new sources of income
are urgently found for subpostmasters we will be facing mass post
office closures, depriving local communities of post office services
and much-needed local retail.
APPENDIX 1
SAMPLE
755 subpostmasters surveyed
|
| England | 529 | 70%
|
| Scotland | 114 | 15%
|
| Wales | 72 | 10%
|
| N Ireland | 34 | 5%
|
| Non-deprived urban | 183 |
|
| Deprived urban | 72 |
|
| Rural | 479 |
|
| Urban 34%, rural 63% | |
|
| |
|
Staff (excluding subpostmaster) working in post office and
attached business
|
| Average (mean) no. staff | 2.7
|
| Average no. full-time staff | 0.7
|
| Average part-time staff | 2
|
May 2009
|
|
| 
