Memorandum submitted by North Yorkshire
County Council
1. INTRODUCTION
1.1 North Yorkshire County Council is pleased
to provide evidence to the BERR Inquiry: Post Offices—Securing
Their Future.
1.2 North Yorkshire County Council is constantly
striving to tackle social exclusion, in particular social isolation
through rural isolation and difficulties faced in accessing services.
Last year's Network Change Programme conflicted with these policy
objectives as it saw a down-grading of the network in areas proposed
for significantly high levels of housing development or in villages
where the post office outlet was the only remaining essential
service. Our efforts are focused now upon trying to establish
how we can help sustain the remaining network, be that a "bricks
and mortar" post office or an outreach service.
1.3 The Authority serves England's largest
county geographically. It is responsible for delivering strategic
local government functions and services to the county's residents
including education, social care, highways, passenger transport,
strategic planning, waste management, trading standards, and libraries.
2. EXECUTIVE
SUMMARY
2.1 Government departments should make their
services available through post offices to provide the opportunity
for post offices to become a one-stop shop for advice on government
services.
2.2 Local authorities could use post offices
as payment collection facilities for an extended range of bill
payment services. Local authorities could also make greater use
of the new business partnership opportunities being developed
by Post Office Ltd. for local authorities.
2.3 Post offices need to provide a greater
array of services. Income generation for sub-postmasters should
be a key consideration in determining the services to be provided—whether
they are delivered by the Royal Mail group or by competitors.
There are new opportunities for Post Office Ltd. to build its
financial services business and more banks should be encouraged
to offer a comprehensive service for their current, basic and
business account holders at post offices. Post offices should
forge links with the growing credit union movement, to the benefit
of both. Mail/parcel delivery operators and on-line retailers
could use the post office network to deliver and sell their products
and services to customers.
2.4 The introduction of a wider range of
banking services in post offices would help to increase the network's
commercial viability in the longer term. Government de-regulation
of the services that post offices can and cannot offer and flexibility
in opening hours would allow post offices to compete on a more
level playing field with other competitors. The up-front costs
of introducing new financial services would need to be subsidised.
On going financial support should be provided to the parts of
the post office network that are not commercially viable. Local
authorities subsidise the post office network by providing rate
relief for rural post offices but sub-postmasters in England have
to apply each year to receive rate relief. Automatic rate relief
reductions for all eligible post offices should be considered
by government.
2.5 Residents and businesses place a high
value on the retention of post office services and recognise the
need for subsidising the network. However, value for money for
the taxpayer needs to be assured. This would be assisted by having
a more coherent government policy on post offices and for crown
post offices to become more commercially viable. Greater transparency
of Post Office Ltd's costs is required in order to retain public
confidence in the Post Office.
2.6 Consumer preference for alternative
channels is easy to overestimate: there will always be a need
for face-to-face services. However Post Office Ltd. should be
looking at developing new services to replace core post office
business lost in recent years. New services should be designed
to either compete with alternative providers or offer a unique
service.
2.7 If post offices were to expand the range
of services that they provide it would help to ensure that more
consumers were attracted to using their local outlet. The trusted
post office brand is attractive to many consumers and could be
exploited by the Post Office in terms of rolling out new products.
2.8 In a rural county like ours the
availability of post office facilities for businesses, and local
residents in North Yorkshire is essential. Post offices help to
sustain local economies and promote social and financial inclusion—particularly
rural post offices and post offices in urban deprived areas. The
role of post offices in promoting social and financial inclusion
will become even more relevant in light of the economic downturn.
2.9 Rural post offices and post offices
in urban deprived areas should attract the highest level of subsidy
for their significance in terms of aiding social and financial
inclusion. All post offices providing non-commercial services
should receive a higher than normal subsidy. Other costs such
as training and refurbishment should be included in the equation.
3. QUESTION 1:
WHAT SERVICES
SHOULD THE
POST OFFICE
NETWORK OFFER
3.1 FROM
GOVERNMENT
3.1.1 Government should actively encourage
its departments to make their services available through post
offices. The DirectGov website provides a virtual one-stop shop
for Government information but there remains a need for a complementary
face-to-face service. Post Office services could provide a one-stop
shop for advice on government services. Trained sub-postmasters
could provide information and basic advice on government issues
(tax returns, pension entitlements etc.), and help the public
carry out routine transactions. This could also include processing
driving licenses and passports.
3.1.2 In order to do this a more coherent
approach to post offices across government departments is required.
Policy from some Government departments has promoted access to
village services, for example the accessibility planning required
as part of Local Transport Plans. Other Government policies have
served to undermine the sustainability of post office services
by removing core business from the post office network.
3.1.3 More generally we would like to see
the Government remove restrictions on the services that sub-postmasters
can and cannot offer. This would offer the best way to secure
the long-term future of the network.
3.2 From local authorities
3.2.1 Post offices, in general, provide
a suitable venue for providing additional payment collection facilities
for local authorities, supplementing local authorities' "in-house"
public access points. Where local authorities do not already have
local public access points they could consider opening "council
counters" in post offices.
3.2.2 Many local authorities offer some
payment facilities at post offices eg for travel and leisure passes,
council tax and rent payments, parking fines, and payment for
social services. However not all local authorities provide swipe
cards for customers, resulting in customers being charged at their
post office outlet for processing these payments. For the vast
majority of residents direct debit provides the most efficient
way to make local authority payments. Some people though do not
have access to bank accounts, and many people may be simply unaware
that they can make local authority payments, in particular council
tax payments, at their post office. Local authorities could raise
public awareness by including the post office logo on council
tax bills and related to this should consider providing swipe
cards, (assuming the logistics make sense), so that council tax
and other payments could be forwarded to the collecting local
authority through the Post Office Giro system.
3.2.3 Post offices could distribute bus
passes where there are no council offices located nearby.
3.2.4 Leeds City Council is using post offices
to administer school uniform clothing allowance vouchers via Post
Office Ltd's new "Post Office Payout" facility (a new
way of paying out cash or postal orders based on presentation
of a letter & I.D. verification). This could be an option
for other larger metropolitan authorities. For smaller authorities,
or for those located in less deprived areas, the economies of
scale are likely to be insufficient to contract out this service
to the Post Office. The "Post Office Payout" facility
could provide other opportunities though for smaller local authorities.
3.2.5 The Post Office's application checking
service could be extended to include local authority services
(eg benefits forms). Pilots undertaken by Post Office Ltd. with
local authorities such as "Validate" (the post office
branch data collection service (aimed at helping local authorities
to reduce Housing Benefit overpayments, assist fraud detection
and increase change in circumstance declarations) should now be
promoted to all local authorities. Assuming that the Post Office
could offer a value for money service such links with local authorities
would help create much needed revenue for Post Office Ltd., which
in turn would help to sustain individual post offices.
3.2.6 The Post Office has carried out a
number of pilots with local authorities for its multi-channel
consultation and communication service (targeted local authority
advertising or promotions in post office outlets, direct mail,
consultations using kiosks, and survey work). This service should
be promoted to all local authorities.
3.2.7 Obviously, financial costs will be
one of the key factors in determining whether local authorities
choose to direct more business to post offices. However local
authorities also recognise the wider social and economic benefits
that post offices provide to their local communities and so will
balance this against a cost-centric approach.
3.3 From other sources, including services
in competition with Royal Mail Group
3.3.1 Post offices—including small
post offices—should be allowed to provide a greater array
of services other than relying on the declining letters service.
The Royal Mail Group should not hinder this development. However,
whilst such services should not necessarily be tied to the Royal
Mail Group, it is necessary to give the Group (in particular Post
Office Ltd.) greater commercial freedom by ending the lengthy
regulatory approvals process required for product development.
3.3.2 The Government should examine the
ways in which post offices can provide a wider range of financial
products, including the introduction of a Post Office current
acccount.
3.3.3 The recent banking crisis has highlighted
the fact that the Post Office is a brand that people trust. The
post office network is the largest retail and financial services
chain in the country and this should be exploited—and not
necessarily just by the Royal Mail group.
3.3.4 We would encourage the Government
to work with the financial services industry to secure the use
of free-to-use cash machines, particularly for post offices located
in settlements which would otherwise not have access to such services.
3.3.5 The Government could intervene to
encourage more high street banks to offer a comprehensive service
for their current, basic and business account holders at post
offices. Currently the majority of basic bank account holders
with post office access cannot make cash or cheque deposits at
post offices.
3.3.6 Credit unions provide safe, ethical
and accessible savings and borrowing; and have seen their membership
triple and their loan portfolios increase five-fold in the past
decade. Post Office Ltd. should tap into the growing credit union
movement by developing partnership links with credit unions: both
are concerned with promoting social and financial inclusion. In
North Yorkshire, the County Council is supporting the creation
of a credit union for North Yorkshire and York. The rollout and
consolidation of the credit union here, and for credit unions
elsewhere in the country, would be enhanced greatly by the post
office network providing customer saving access points for credit
unions and allowing customers to cash cheques for withdrawals
or loans. The Post Office Basic Account would be useful if it
had standing order facilities and could be used to transact money
with credit unions.
3.3.7 Passport photo booths could be extended
to more post offices: this will be particularly relevant if the
one-stop shop idea for government services is rolled out.
3.3.8 The growth of e-commerce (internet
purchases) has led to a growing market in parcel delivery. This
provides an opportunity for parcel carriers (Parcelforce and its
competitors) to use post offices to deliver customers' parcels
to their local post office rather than providing a narrow time
slot to customers (often at inconvenient times) to deliver parcels
to their home address.
3.3.9 Internet terminals could be introduced
in post offices with access to a range of approved retailers'
sites. Arrangements could be put in place to allow post offices
to charge a commission to retailers when customers make purchases
on the retailers' website after being directed through the Post
Office's internet terminal. These retailers could also make arrangements
with post offices so that orders could be purchased and collected
at a post office counter. This would provide a captive market
for the Post Office in relation to customers who do not have credit
cards or who do not feel comfortable providing their financial
details on-line.
3.3.10 Contractual arrangements with the
Royal Mail group may limit the scope of sub-postmasters to innovate
and enter into contracts with competitors. There is a strong case
for Post Office Ltd. to retain network wide agreements, particularly
in those cases where alternative operators are being invited to
offer a service. This would safeguard against alternative operators
picking and choosing which post offices to deal with: a scenario
which would undermine the network as a whole. That said, a balance
is required in order to allow individual post offices to innovate.
Income generation for sub-postmasters geared towards ensuring
the long-term sustainability of the post office should be a key
consideration in determining the services to be provided—whether
they are delivered by the Royal Mail group or by competitors.
Income levels remain a major concern for sub-postmasters.
3.4 To what extent would these increase the
network's commercial viability? Is there a case for any service
to be subsidised, and if so, to what extent
3.4.1 Banking services, in particular the
introduction of a current account would help to increase the network's
commercial viability—exploiting the public's trust in the
post office brand.
3.4.2 Enabling post offices to become one-stop
shops for government services would undoubtedly help to increase
customer footfall.
3.4.3 The results of the second round of
pilots being carried out by Post Office relating to partnership
working between local authorities and post offices will show how
commercially viable these services are for the network.
3.4.4 Government de-regulation of the services
that post offices can and cannot offer and flexibility in opening
hours (currently, postmasters cannot be paid for evening opening)
would allow post offices to compete on a more level playing field
with other competitors. This could increase the profitability
of post offices and perhaps reduce the reliance on government
subsidy in maintaining the post office network.
3.4.5 That said, the introduction of a wider
range of financial services to be offered by post offices, such
as the introduction of the current account, would require large
investment to set up the service eg in terms of technology and
training of staff.
3.4.6 The social and economic role that
post offices in their community play means that it is important
that on going financial support is provided to the parts of the
post office network that are not commercially viable. This would
include the one-stop shop for government advice and information.
3.4.7 More generally, there is a strong
case for providing government funding for improving and modernising
post offices, particularly in relation to improving disabled access.
3.4.8 Local authorities can and do help
subsidise the post office network by providing rate relief for
rural post offices. Local authorities can use their discretionary
powers to grant discretionary rate relief to rural general stores
and post offices to bring the total relief to any amount up to
100%. Automatic rate relief reductions for all eligible post offices
should be considered by government in order to increase take-up.
At present sub-postmasters in England must apply to local councils
each year in order to receive their relief. In Scotland, sub-postmasters
on the lowest band of rates relief receive their reduction automatically.
4 QUESTION 2:
HOW MUCH
ACCOUNT SHOULD
BE TAKEN
OF:
4.1 (a) costs to the taxpayer in providing
services through the Post Office rather than through cheaper channels
4.1.1 Residents and businesses place a high
value on the retention of post office services: this was clearly
evident at the public meetings that we held last year during Post
Office Ltd's consultation on its proposed Area Plans. The public
recognise that post offices provide essential services and help
local economies and should therefore in part be retained by government
subsidy.
4.1.2 The public's support for a subsidised
network should not be taken for granted and ways should be looked
at to secure greater value for money for taxpayers. Having a coherent
cross-departmental Government policy on post offices would help
here. This would reduce the need for the Department of Business
Enterprise and Regulatory Reform (and its predecessor the DTI)
having to subsequently put money in to keep the network going
as a result of policy developed by other government departments
leading to the withdrawal of services from post office counters.
If the Post Office had lost the Post Office Card Account, for
instance, this could have resulted in taxpayers paying higher
subsidies to maintain the network.
4.1.3 Government research shows that crown
post offices (branch offices) cost more to run than a sub-post
office and almost all branch offices are loss-making ("Counter
Revolution: Modernising the Post Office Network", (2000),
Cabinet Office Performance & Innovation Unit). To ensure
value for money for the taxpayer, branch offices should be encouraged
to offer more services to increase footfall (as outlined in the
response to Question 1 above); relocate branch offices into
other retail stores, if the square footage allows; or, where a
business case could be made, convert Crown post offices into privately
run sub-post offices.
4.1.4 To retain public confidence in the
Post Office service greater transparency of Post Office Ltd's
costs is required. It was apparent during the consultation period
of the Network Change Programme that people were frustrated by
the fact that the entire losses of Post Office Ltd. were used
as the rationale for sub-post office closures, leading to the
closure of busy and profitable businesses in our county. The central
overheads apportioned to individual sub-post offices by Post Office
Ltd. are outside the control of individual sub-postmasters. Consequently
Post Office Ltd. should be looking at how to separate its own
overheads (including those attributed to Crown post offices) from
those of the sub-postmasters'.
4.2 (b) consumer preference for alternative
channels
4.2.1 Notwithstanding direct debit transactions
and the use of the internet, consumer preference for alternative
channels is easy to overestimate. There will always be a need
for face-to-face service. The withdrawal of some services from
post office counters in recent years has meant that consumers
have had no choice but to seek alternative channels. This in large
part has contributed towards the reduction in customer footfall.
4.2.2 Post Office Ltd. should be looking
at developing new services through the post office network to
either compete with alternative providers (eg by introducing a
comprehensive banking service) or by offering a unique service
(eg using post offices as one-stop shops for government services
and information).
5 QUESTION 3:
TO WHAT
EXTENT WOULD
A DESIRE
FOR THE
PRESENCE OF
A POST
OFFICE OR
POST OFFICE
SERVICES TRANSLATE
INTO ACTUAL
USE OF
THOSE SERVICES?
5.1 If post offices were to expand the range
of services that they provide it would help to ensure that more
consumers were attracted to using their local outlet. The trusted
post office brand is attractive to many consumers and could be
exploited by the Post Office in terms of rolling out new products.
5.2 The development of banking services,
in particular the introduction of a Post Office current account,
could help restore the loss of footfall caused by the introduction
of the direct payment programme in 2003 (the electronic payment
of benefits into bank accounts).
5.3 On a practical level the extension of
opening hours could increase the customer base of post offices;
disabled access at post office outlets would help here too.
6 QUESTION 4:
WHAT ARE
THE IMPACTS
OF THE
AVAILABILITY OF
POST OFFICE
FACILITIES FOR
BUSINESSES, AND
LOCAL RESIDENTS;
AND IN
PARTICULAR HOW
SIGNIFICANT IS
THE NETWORK
IN AIDING
SOCIAL AND
FINANCIAL INCLUSION
6.1 Like many rural areas North Yorkshire
has a high level of small businesses. These small businesses are
spread across the county and rely on access to post offices for
the effective and efficient operation of their businesses, especially
for cash and deposit facilities, stamps and mailing.
6.2 Post offices provide an important function
in supporting local retail as the majority of post offices have
a shop or other business attached to the post office.
6.3 Research undertaken by the Commission
for Rural Communities demonstrates the crucial role that post
offices play in rural communities in terms of service delivery.
Post offices help to retain the adjoining village shop or neighbouring
retail facilities; they support vulnerable people who would otherwise
have limited or no access to local services and they act as a
central point for the community in terms of providing advice and
information. ("Commission for Rural Communities Post Office
Network Consultation", (2007), CRC). Post offices can
be seen as having the same role for people living in deprived
urban communities ("Serving the Community II, evidence
of the community value of post offices urban deprived areas",
(2001), Postcomm). There is a scarcity of quality shopping
facilities in deprived urban areas; many retail chains have left
and the remaining shops sell a limited range of goods at relatively
high prices. The presence of a Post Office helps to ensure that
any adjoining shop attached to the business is kept from going
out of business. Both in rural and urban deprived areas the local
post office is usually the only place that provides a free to
use ATM.
6.4 The role of post offices in promoting
social and financial inclusion will become even more essential
in light of the economic downturn.
7 QUESTION 5:
WHAT LEVEL
OF SUBSIDY-IF
ANY-PER
POST OFFICE
WOULD BE
REASONABLE IN
THE LONG
TERM; FOR
EXAMPLE, SHOULD
IT BE
£20,000 OR
£200,000?
7.1 Account needs to be taken of whether
the post office is located in a rural area, in an urban area or
in an urban deprived area; and the types of services that the
post office offers when determining the level of subsidy to be
provided to individual post offices.
7.2 Rural post offices and post offices
in urban deprived areas should attract the highest level of subsidy
for their significance in terms of aiding social and financial
inclusion as outlined above. These social benefits come at a commercial
cost in view of the fact that many rural post offices are loss-making
for Post Office Ltd. (Counter Revolution: Modernising the Post
Office Network (2000) Cabinet Office Performance & Innovation
Unit).
7.3 All post offices providing non-commercial
services such as the one-stop shop for advice and information
on government services would need to receive a higher than normal
subsidy.
7.4 Post office subsidies should also include
an element for training—especially if post offices take
on the additional products and services suggested above in the
response to Question 1.
7.5 The level of subsidy for all post offices
should be no lower than £20,000 if the present situation
is to be avoided of some sub-postmasters being unable to cover
their post office staff costs and overheads.
7.6 In terms of the overall subsidy given
to the network overall, the Government should be mindful of the
fact that the withdrawal of more services from post office counters
could put the Government's current level of annual subsidy to
Post Office Ltd. in jeopardy under EU state aid rules.
January 2009
| 
