Memorandum submitted by Norfolk Rural
Community Council (RCC)
SECTION 1—INTRODUCTION
1. This report has been prepared by the
Norfolk RCC a member of the ACRE RCAN network. Because of our
role in supporting rural communities throughout Norfolk, our focus
in this document is towards provision of Post Office services
in Rural areas.
2. Over the last two years, we have been
closely involved in the recent Post Office Network change programme,
working with local councils and communities to help minimise the
effect of Post Office closures and also to ensure that best practice
was adopted by POL.
3. As a result of this, we have also linked
ourselves with Post Office Management at a senior level in order
to gain a greater understanding of how the current set up is organised
and run.
4. This has led us to become involved in
a number of community projects that are directly linked to the
supply of post office services to rural districts and to also
consider a practical view regarding provision that is more cost
efficient, offers greater social inclusion and improved economic
benefit.
5. Our practical suggestions are outlined
in this submission and we are more than willing to provide Oral
evidence to the committee should this be requested.
SECTION 2—EXECUTIVE
SUMMARY
6. Post Office provision is seen to be an
important element of social inclusion especially in Rural and
remote areas, but alternative provision can result in strengthening
of inclusion.
7. The product offering of POL is increasingly
becoming available from alternative sources viz: on line
(a) Access to internet is limited amongst older
people:
This can be overcome with central access
and training.
(b) Broadband access is erratic in many rural
areas:
A need for Government intervention to
improve services.
Improved local economic benefits.
8. There is an opportunity to provide facilities
for payment to and information from—local authorities. Also
other amenities that improve access to services.
9. Offering Post Office products has a beneficial
effect on the footfall of local businesses—especially village
shops:
(a) Many village shops under threat as a result
of PO closures.
10. Does the provision of essential
Post Office services require the physical presence of a Post Master
and all the hardware associated with this?
11. Essential services are:
(b) Pension & other Social.
12. Postal and Financial structures are
serviced by a national support network which serves the current
post office network:
(a) Supporting other outlets would add little
to costs:
The infrastructure is already in place.
Simply adds to drop off & pick up
points.
(b) No cost of Post Master salaries in new outlets.
(c) Opportunity for wider income than possible
from current set up.
(d) More economic than the current "outreach
services".
13. Consideration to be given to provision
of Post Office products by independent outlets, with payment made
on a sales basis (either commission or unit sales):
(a) Technology support required.
(b) AMT & Banking facility:
Can be handled mechanically.
14. Outlets do not have to be restricted
to existing retail shops. Other central points exist within communities
that could offer services—Village Halls, Social Clubs, Pubs,
Filling stations etc etc.
15. The current system subsidises provision
of all services when only are few are used.
16. We recommend that a number of test pilots
be set up across the country to be run for a minimum of 12 months:
(a) Important that sufficient time is allowed
in order to change attitudes and build awareness.
(b) Current system is entrenched in history,
so change and acceptance will take time.
SECTION 3—WHAT
SERVICES SHOULD
THE POST
OFFICE OFFER?
From Government, Local Authorities & Other
Sources
17. The current products on offer from Post
Office Ltd are as follows:
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| Foreign currency | Friendly Eyes & Ears*
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| Credit card | Phonecards |
| Personal loans | Gift vouchers
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| Money transfers | Postal Services
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| Bill payments | Benefits |
| Banking services | Licences and Permissions
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| Insurance | Passports |
| Savings | Driving licence |
| Savings stamps | Vehicle tax
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| National Savings and Investments | International driving permits
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| HomePhone | Medical care abroad—EHIC
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| Social Focal Point* | Rod fishing licences
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| Community Information* | Broadband
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| * Social inclusion community benefits.
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The use of Post Office traditional products has been in considerable
decline over recent years and this is primarily due to increased
availability of products direct from the internet. In addition
Government policy to encourage social welfare and pension payments
directly into private bank accounts, has resulted in a lesser
need for access to banking services from Post Offices.
(a) This decline has resulted in POL expanding their product
lines such as insurance and foreign currency, which have proved
to be important income providers to the organisation, but these
products have an Urban bias and little relevance as essential
products in rural communities
18. The vast majority of products offered by POL can
be purchased "on line", it is even possible to purchase
postage costs direct from the internet—very simple to access
and no queues to suffer; all that is required is internet access,
a credit card ,a pair of scales and a printer
19. The only products which are difficult to access and
have a consumer demand are;
Pension/Welfare Provision.
20. Whilst alternative provision for these services is
possible, it is not ideal and indeed is unlikely to have to customer
appeal that will deliver an attractive proposition eg Banking
is possible through the provision of local credit unions, Pension
provision can be provided by persuasion to use direct banking
services and Postal services can be delivered by alternative providers,
but this may not be as flexible with other providers in Rural
locations
21. The importance of these services regarding local
business and residents is set out in section 6. We do however
believe that there is a strong economic argument that if you can
offer consumers a selection of products for which a market exists,
by combining as many of these together in the same place will
increase the likely traffic to the location of the products on
offer. In other words, there exists an opportunity to build increased
traffic which will have wider benefits to both consumers and outlets.
We are convinced that there is a market for some or even all of
the following:
(a) Local authorities; bill payment and information provision.
(b) Utility Services; bill payment and information provision.
(d) PCT; prescription collection and delivery plus delivery
of some health services (dependent on location and venue).
(e) Police consultation and advice.
(g) Community Transport information provision.
This provides a real opportunity to deliver even greater
social inclusion, which is seen to be an important element of
Post Office provision (Section 6)
SECTION 4—STATED
DESIRE FOR
PRESENCE OF
POST OFFICE
SERVICES AND
ACTUAL USE
22. The recent Network Change Programme caused considerable
outrage amongst a raft of groups. Primarily this was about the
effect it would have on social exclusion, hitting those sections
of society that would be less able to cope without this provision.
23. Human nature resists major change and it is natural
for consumer groups, politicians and citizens with a social conscience
to protest when a public service such as the Post Office is seen
to be under threat:
(a) POL has estimated that as a result of the closure programme,
85% of those whose branch is closed will use alternative branches.
What is not clear is the level of business that will migrate elsewhere.
In our judgement this will be far greater
(b) Communities that have lost their Post Office are in most
cases managing to adapt either by using alternative branches,
adapting to the new situation or in some cases setting up alternative
provision
Brockweir & Hewelsfield is a community shop in
Gloucestershire where they have set up a successful independent
Post Office offering http://www.plunkett.co.uk/whatwedo/rcs/shopdirectory.cfm/shop/238.
(c) Recently (November 2008) with the assistance of NorfolkRCC,
the Norfolk village of Methwold reopened its Post Office following
nearly 8 months of closure. This was a community project
run by local residents and had huge support in the village and
surrounding areas. Subsequently, uptake of the re opened service
has been relatively slow, as many local residents had already
made alternative provision:
The community is now investigating combining the Post
Office provision with a community shop and if the two ventures
can prove to be financially viable.
The current feeling is that the sum of the two parts
will be greater than their individual situation.
24. It is our strong belief that should the Post Office
continue in its current format it has a very bleak future as demand
will continue to decline as technology, personal preferences and
changes in society overtake the need for a large number of the
products on offer.
There is an urgent need for a radical change in the way that
Post Office Ltd markets its products to consumers. In simple terms,
provide people with what they want and they will come running—provide
them with what they do not want and they will run away
SECTION 5—PROVIDING
SERVICES THROUGH
THE POST
OFFICE & CONSUMER
PREFERENCE FOR
ALTERNATIVE CHANNELS
25. We question why it is necessary to provide some of
the essential services needed in communities together with the
cost burden that the current Post Office structure demands:
(a) We believe that an opportunity exists to offer the services
connected with the Post Office to a wider selection of outlets,
without incurring the salary and some hardware overheads:
This will require close co-operation with Post Office
ltd to provide internet connections to their Horizon system and
also link in with their local area financial and postal support.
The extra cost involved to support most new locations
with these support systems would be minimal as the current PO
Network already has an area infrastructure in place.
26. Outlets offering Post Office facilities could receive
their income on a transaction basis (Either % or per item).
27. By offering these additional services, benefit is
generated to the local facility by increasing footfall and therefore
improving the opportunity to provide other products or services
28. Whilst there will be some set up costs involved,
it is unrealistic to expect alternative outlets to absorb these
costs. It is worth noting that the current system that exists,
where the Post Master is expected to carry the majority of set
up costs (circa £12,000), is both prohibitive and a key reason
why there is major resistance to re opening branches, as the return
is not consistent with the investment:
(a) We would recommend that any set up costs should be heavily
subsidised from within the current investment.
(b) This is seen to be justified, as it is indeed an investment
into the expansion of service provision and sales opportunities,
rather than the current system which is a subsidy of a declining
product.
SECTION 6—IMPACT
OF PROVISION
TO BUSINESSES
& LOCAL RESIDENTS
+ IMPORTANCE OF
SOCIAL INCLUSION
29. Our investigation amongst rural businesses during
the Network Change programme revealed two main areas of concern:
(a) Loss of banking provision.
(b) Loss of Postal provision.
Whilst the latter point can be overcome with franking and
local pick up, banking was seen to be an area of risk and also
cost inefficiency, as extra time (man hours) would be required
to visit either a bank branch in the local town or the nearest
available Post Office branch
(c) An unexpected concern was that in many instances the alternative
local Post Office remained because it served an area of greater
social exclusion. A number of businesses voiced concern about
the higher security risks of banking at such branches.
This has led some companies to cease their banking
with POL and therefore a further loss of business.
30. Better delivery of broadband services will mean
that more businesses can operate effectively from rural locations
and enjoy relatively lower overhead costs:
(a) This will mean that a greater proportion of the working
population will also be able to enjoy home working, with all the
energy savings and local economic benefits that this brings.
31. Strengthening of economies amongst rural neighbourhoods
is an important element in the fight to reduce the sharp increase
in deprivation amongst these communities.
32. Post Office and banking provision is a vital component
of economic infrastructure in rural areas:
(a) As local economies develop, so does social inclusion become
stronger and deprivation declines.
33. Equally the effect of local provision of these services
amongst residents is key to building greater inclusion, even more
so when included together with all or part of the other items
set out in paragraph 20:
(a) Our experience with Norfolk's communities demonstrates
that strengthening the focal point of villages results in greater
involvement from a complete cross section of residents both from
an age and social perspective:
Effectively this is seen as building "Hubs"
at the centre of community life
SECTION 7—WHAT
LEVEL OF
SUBSIDY?
34. One of the major problems we experienced in the Network
Change Programme was that Post Office Ltd at times appeared to
"hide" behind commercial confidentiality as a reason
for not providing details of financial information behind many
branch closures. This was particularly frustrating bearing in
mind that a number of closures did not seem to stand up to economic
comparison with some branches that remained open. Lack of available
data from POL to support their actions made it difficult to accept
that many closure decisions were based on true market economics.
35. Equally it is not known what the current subsidies
are by Post Office branch and indeed what are the set criteria
for subsidy levels:
(a) It is clear to us that most communities can make a strong
case for retaining their current Post Office.
(b) It is difficult to argue from an economic position without
any supporting data as to which branches should receive X and
which Y:
Clearly it is also vital to include social factors
that require even greater subsidy.
36. We are certain that within the network there exists
some opportunity to reduce operating overheads by adopting the
proposals that we are putting forward:
(a) It is however assumed that there could be limited opportunity
for change to the new structure if it is accepted that the "slimmed
down" version is already a more efficient network:
We obviously cannot back this latter point without
access to better financial detail.
(b) We believe that with careful examination of the profile
of business transactions at current branches, the type of service
required by communities becomes clearer:
It seems illogical to have a system that subsidises
provision for all services when only a few are being used.
37. There is a need for wider provision of services,
but this does not need to be done on a continuing subsidy basis
(a) Some investment will be needed for set up costs of new
outlets, but this could be a one off investment
There may be some extra cost involved in terms of
infrastructure support, but this should be minimal, given that
the system is already in place
(b) By basing delivery of current services on need, subsidy
can be redirected and ultimately radically reduced
38. Ultimately, we do not believe that we should be asking
"how much subsidy do we need". The key is how can we
strengthen the delivery of products based on a need basis—if
there is a market desire, then the requirement for subsidy will
reduce:
(a) Without access to detailed costs, it is our current judgement
that some subsidy will continue to be required to sustain the
support system for rural areas:
We do believe that Rural areas have long been under
supported financially compared on a per head basis with Urban.
It is clear to us that the economic growth opportunities
cannot be ignored.
January 2009
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