Post offices - securing their future - Business and Enterprise Committee Contents

Memorandum submitted by Post Office Ltd

  Further to the attendance of Alan Cook and Paula Vennells at the Business and Enterprise Select Committee on 21 April, please find below additional material for your information.

1. A revised version of the table of Products and Services currently available from Post Office Ltd which was originally included in the paper which we sent to you on 16 April. The revisions to this paper are to further explain the banking services we provide for various banks. This was an issue referred to by Peter Luff MP at the 21 April Hearing.

(See attached file: Product & Services table 6 May.doc)

2. A note on sub-postmaster's pay systems related to Post Office Financial Service products that are transacted via internet/call centres on the basis of a referral from a Post Office branch. This is in response to a request from Adrian Bailey MP at the 21 April Hearing.

A note on the numbers of local authorities that use the Post Office network in their locality for Council Tax/Rent/Other payments. This is in response to a request from Peter Luff MP at the 21 April Hearing.

(See attached file: responses to the select committee 6 May.doc)

3. A note giving further information on the potential for further areas of use of Post Offices by Government Departments and Local Authorities. This is a draft internal document which is commercially confidential and it isn't therefore for publishing.

(See attached file: Potential Areas.ppt) (not printed here)

  I trust that this package of information is helpful to you.

7 May 2009

Annex 1

PRODUCTS/SERVICES AVAILABLE FROM POST OFFICE LTD

 (Information is available on Post Office Ltd website—www.postoffice.co.uk)

Service	Availability	Description of service
Pensions and Benefits
Cash Cheques	All branches	Encashment of benefit payments, pensions and allowances, even if they are paid into a bank account or POCA, or if they receive the exceptions service (a cheque). Alliance & Leicester has an agreement with DWP to produce the green giro/cash cheques and they pay these cheques over Post Office Counters.
Post Office Card Account	All branches	A basic account for the receipt of pensions, benefits & tax credits
Postal Services
Standard 1st and 2nd class post	All branches	Packets and letters accepted for standard 1st class, 2nd class delivery
Overseas postage	All branches	Parcels and letters accepted
Additional postage services	All branches	Recorded Signed For, Articles for the blind, etc
Express postal services	All branches	Variety of express delivery services, including next day, for letters and parcels inland and overseas—Special delivery, international signed, Airsure etc.
Philatelic	All branches (stocked based on demand)	Royal Mail special issue stamps and associated products, such as presentation packs and first day covers
Local Collect	10800 branches	Undelivered postal items are taken to the nearest participating Post Office by the postal delivery staff for later collection or customer has opted for the collection at their local Post Office branch
Redirection	All branches	Mail redirection service when you move home
Parcels	All branches	Range of parcel delivery services within the UK to meet customers needs. Delivery speeds range from a fast same day courier service to a 2 day parcel delivery service—More details are available on Post Office website.
Licences
Vehicle Licences	4,600	Issuing of Tax discs for vehicles
Statutory Off Road Notification (SORN)	4,600	SORN notification services provided
Vehicle & driving licence applications	All branches	Application forms for a range of vehicles
Photo licence application checking	743	Photo licence applications are checked and sent to DVLA
Fishing licences and Game licences	All branches based on demand	Range of rod licences available for angling in England and Wales and Game licences to hunt game—stocked in branches where there is local demand. Fishing licences in England & Wales only. Game licences in Scotland and N. Ireland only.
Borrow & pay
Credit Card	All branches	A range of Post Office Credit Cards are available info is available in all branches but only 5000 can accept application forms. Customers can apply online and by phone.
Personal Loans	Online/phone	Post Office personal loan offering a competitive rate by online and phone
Moneygram	All branches	International money transfer of up to £6,000 to over 150 countries
Automated bill payments	All branches	Acceptance of payment and pre-payment towards a variety of bills including gas, electricity, water, phone, council rent, mail order and insurance (some schemes available on an area basis as agreed with Local Authorities)
Electricity Meter Tokens	Selected branches based on local schemes	Stock of tokens for meters
Electricity Smart cards	All branches	Charging of customer smart cards for meters
Personal Banking	All branches	Current Accounts—Alliance & Leicester, Bank of Ireland, Bank of Scotland, Barclays (in England & Wales), cahoot, Clydesdale Bank, Halifax, Lloyds TSB, Nationwide Building Society, Northern Bank, smile, The Co-Operative Bank (Further info—Annex 1a) Basic bank Accounts—Abbey, Alliance & Leicester, Bank of Ireland, Bank of Scotland, Barclays, Clydesdale Bank, First Trust Bank, Halifax, HSBC, Lloyds TSB, Nationwide Building Society, NatWest, Northern Bank, The Co-operative Bank, The Royal Bank of Scotland, Ulster Bank, Yorkshire Bank (Further info—Annex 1a)
Business Banking	All branches	Business banking services and the clients are: Alliance & Leicester, Bank of Ireland, Clydesdale, HSBC (Only in Scotland & Northern Ireland and only for cheque deposit service)
Paystation	All branches	To charge electric keys, Quantum Gas Cards, E-pay Transactions. Aim to have paystations(except Home service) in all branches by April 09
Cash Machines	Different Locations	1,653 free to use ATMs at branches
Travel
Travel Insurance	All branches	All branches and available on demand in 9,000 branches and via phone. POL website accepts secure payment for Visa, Mastercard, Maestro or delta cards.
Bureau de Change	All branches	A wide range of commission free currencies and American Express travellers cheques 1,629 branches offer a range of currencies on demand An additional 2,555 branches offer Euro and Dollars on demand An additional 3,436 offer Euros on demand Currencies can be pre-ordered for collection at any branch
Travel Money Card	at Selected branches	The new Post Office Travel Money Card offers the security of travellers cheques with the convenience of plastic making it a secure, convenient way to carry foreign currency. Available in three currencies, euro, US Dollar and it is a pre-paid card that customers can load with currency. It can be top up at selected branches or over the phone.
Passport Check and Send	2,500	Checking passport applications and sending it for priority processing
Passport Application packs	2,500	Passport application forms stocked
EHIC Check and Send	2,500	Completion of form entitles people to free or discounted medical treatment abroad.
EHIC Application packs	2,500	Application forms stocked in the selected branches
Save & Invest
Post Office Instant Saver	All branches	Instant access savings account launched April 2006: Instant access to funds at all Post Office branches, by phone, online, by post or @ 60,000 Link ATMs six free Cash withdrawals per year;
Post Office Cash ISA (fixed—Five year saver)	All branches	The Five year Saver is a fixed-term deposit Bond: Competitive Interest rates, No withdrawal charges, Tax-free, Easy access to account; Apply at all Post Office branches or by post, Payments can be made at any Post Office branch or by post. Withdrawals can be made via post.
Post Office Cash ISA (Variable)	All branches	Competitive Interest rates, No withdrawal charges, Tax-free, Easy access to account; Apply at all Post Office branches or by post Payments can be made at any Post Office branch or by post. Withdrawals can be made via post.
National Savings & Investments—Easy Access Savings Account	All branches	Flexible savings, Instant access, Cash card for easy deposits and withdrawals, Tiered Interest rates, Interest taxable—paid gross. Apply by phone, at a post office or by post. Withdrawals can be made at any Post Office branch or Link cash machine.
National Savings & Investments—Investment Account	All branches	Easy access (no notice of penalty), passbook savings account, Tiered Interest rates, Interest taxable—paid gross, Apply by phone, online or at a post office or by post. Withdrawals can be made by applying to NS&I.
National Savings & Investments—Income Bonds	All branches	Easy access (no notice of penalty), Regular monthly income, competitive interest rate, higher rate of interest on investments of over £25k+, Interest taxable—paid gross. Apply by phone, online or at a post office or by post.
National Savings & Investments—Premium Bonds	All branches	All prizes tax free, anyone 16 yrs old and above can invest, Apply by post and at all branches or by phone, online.
National Savings & Investments—Childrens Bonds	All branches	Tax free, anyone 16 yrs old and above can invest, apply at all Post Office branches or by post.
Post Office Child Trust Fund	All branches	Apply, at all post office branches or by post.
Savings stamps	All branches	For use against payment of bills, Post Office transactions or as gifts. Buy and redeem at Post Office branches.
Insure
Car Insurance	All branches	Competitive car insurance (*introductory Information), Can be applied online, over the phone, and at selected Post Office branches.
Home Insurance	All branches	Competitive Home insurance (*introductory Information), Can be applied online, over the phone, and at selected Post Office branches.
Van Insurance	All branches	Competitive Van insurance (*introductory Information), Can be applied online, over the phone, and at selected Post Office branches.
Motorcycle Insurance	All branches	Competitive Motorcycle insurance (*introductory Information), Can be applied online, over the phone, and at selected Post Office branches.
Pet Insurance	All branches	Applied by phone or online.
Over 50's life cover	All branches	Competitive Over 50's life cover—available at over 12,000 Post Office branches.
Life Insurance	All branches	Competitive Life insurance (*introductory Information), Can be applied online, over the phone and at selected Post Office branches.
Broadband & phone
Home Phone	All branches	The Post Office phone service, available as standalone product, Simple sign-up to suit customers. Apply at Post Office branches, on-line or by phone
Broadband Standard	All branches	Fastest speed for emails/downloads. Min 12mnth contract. Available at Post Office branches, online and by phone
Broadband Extra	All branches	Same as Broadband standard plus unlimited monthly downloads. Available at Post Office branches, online and by phone
Phone cards	All branches	International calling card offering cheap indirect access calls. Available online & in branch
Mobile E top ups	All branches	Mobile top-up service for all pre-pay providers through Horizon and paystation. Available at every branch.
Directory Enquiries		One flat free rate, number texted to mobiles for free.
Other
Lottery	4,849	Main Lottery draw terminals selling all draw based games
Postal Orders	All branches	Purchase or encashment
Local Schemes	at Selected branches	There are various schemes depends on the local councils—ie Home Care & Meals on wheels etc. The payments can be made to the customers on a magnetic swipe card, accepting a barcoded invoice or in the form of vouchers issued by the local councils.
Travel tickets	Selected branches as agreed with local authority	Local availability as agreed with Local Authority: Concessionary Bus Travel & Commercial Ticket sales (Check & Send service for 1st time eligible applications when reaching 60) National Concessionary Application Check & Send, eg SW Wales Integrated transport, Scotland. Local check & send—eg West Yorkshire, Merseytravel London Councils (29/33 boroughs)—Freedom Pass issuing in 800+ branches in London for 29 of 33 boroughs. Elderly and disabled passes given in branch. Other Concessionary Services Transport for London—Bus & Tram Discount Scheme—photo/pass issued in branch to eligible people on income support Coventry/Cardiff (local leisure pass applications), North Wiltshire District Council/West Lindsey District Council (Local travel token scheme)
Gift Vouchers	All branches	A range of vouchers are available to purchase at each branch, however there are no "sign up" requirements
		—  Retail vouchers —  Experience vouchers —  Enjoyment vouchers
Christmas Club	All branches	To save towards Post Office Gift Vouchers or use at selected retail stores. Customers are required to complete a simple application form which is taken to branch with an initial load (minimum £5)
* where reference made to introductory information available, the transaction would be finalised over the phone, by internet or by correspondence with a central unit.

Annex 1A

Personal current accounts

Bank	Cash Withdrawal (with card and PIN)	Balance enquiry (with card and PIN)	Cash deposit (with card or with personalised paying-in slip from your bank)	Cheque deposit (with personalised paying-in slip and deposit envelope from your bank)
Alliance & Leicester	Yes	Yes	Yes††	Yes
Bank of Ireland	Yes	Yes	Yes	Yes
Bank of Scotland	Yes	Yes	No	No
Barclays—in England and Wales	Yes†	No	Yes†††	Yes
cahoot	Yes (with chequebook and card)	No	Yes†††	Yes
Clydesdale Bank	Yes	Yes	Yes	Yes
Halifax	Yes	Yes	No	No
Lloyds TSB—in England, Wales and Scotland	Yes†	Yes	Yes†††	Yes
Nationwide Building Society	Yes	Yes	No	No
Northern Bank	Yes	Yes	No	No
smile	Yes	Yes	Yes††	Yes
The Co-operative Bank	Yes	Yes	Yes††	Yes
		Basic bank accounts
Abbey—Basic Account	Yes	Yes	No	No
Alliance & Leicester—Basic Cash Account	Yes	Yes	Yes††	Yes
Bank of Ireland—Basic Cash Account	Yes	Yes	Yes	Yes
Bank of Scotland—Easycash	Yes	Yes	No	No
Barclays—Cash Card Account	Yes	No	No	No
Clydesdale Bank—Readycash Account	Yes	Yes	Yes	Yes
First Trust Bank—Basic Bank Account	Yes	Yes	No	No
Halifax—Easycash	Yes	Yes	No	No
HSBC—Basic Bank Account	Yes	No	No	No
Lloyds TSB—Cash Account	Yes	Yes	Yes†††	Yes
Nationwide Building Society—FlexAccount (cash card only)	Yes	Yes	No	No
NatWest—Step Account	Yes	Yes	No	No
Northern Bank	Yes	Yes	No	No
The Co-operative Bank—Cashminder	Yes	Yes	Yes††	Yes
The Royal Bank of Scotland—Key Account	Yes	Yes	No	No
Ulster Bank—Basic Bank Account	Yes	Yes	No	No
Yorkshire Bank	Yes	Yes	No	No
† You can also withdraw cash from your personal current account using your chequebook and card. Card and PIN is quicker, easier and more secure.
†† With card only.
††† With personalised paying-in slip from your bank

SUB-POSTMASTER'S INCOME FROM FINANCIAL SERVICE PRODUCTS REFERRALS—REQUEST FROM ADRIAN BAILEY MP

  Payment arrangements for subpostmasters in the Post Office network are aimed at providing a sustainable nationwide presence. They range from simple, largely fixed remuneration packages to maintain small branches with a very small customer base in deep rural areas to fully variable sales based remuneration packages for the largest commercial branches in the heart of city centres. Most branches will have a combination of variable and fixed payments making up their overall remuneration package.

  Variable remuneration consists of payments made per transaction/sale that the subpostmaster conducts with the specific product payment amount based on the market value of the product sold and agreed with the National Federation of Subpostmasters.

  For certain Financial Service products, in order to provide the opportunity to reach customers in branches whilst meeting regulatory compliance obligations, the subpostmaster can provide a "referral" through explaining the features of a product and providing literature. The customer then completes the transaction via a call centre or the internet or, in some cases, hands a completed application form over the counter which the sub-postmaster sends off for processing. The sub-postmaster will be paid for the referral if it leads to a sale. The following products fall into this category—certain insurance products, Growth Bonds, ISAs, loans, Child Trust Fund, Instant Access Accounts and Credit Cards.

  These referrals have created a new and rapidly growing source of income to sub-postmasters in recent years. To give an indication, by 2008-09 pay related to these referrals—if averaged across the whole network—was worth around £870 per annum per branch. Of course, this is an average—payments to individual branches will vary according to the number of referrals made. For all branches there is the potential to grow this element of income as interest in these products grows. In addition to benefitting the branch network through such referral payments, sales from internet/call centres improve Post Office Ltd's overall revenue position and thereby enhance its ability to financially maintain the national infrastructure which in turn supports the branch network.

  It is also important to recognise that these "referral products" are only one element in the wider portfolio of financial services that Post Office Ltd offers and from which subpostmasters derive income. The category of "financial services" in Post Office Ltd also covers products such as bill payments, banking services, national savings and investment work, postal orders, international money transfer, travel services and gift vouchers. All combined, the product payments from these areas make up around 38% of the variable payments made to sub-postmasters annually.

MORE DETAIL ON LOCAL AUTHORITY USE OF POST OFFICES—REQUESTED BY PETER LUFF MP

  Out of 526 analysed local authorities in the United Kingdom, 312 use the Post Office for at least one service. The services currently available to local authorities through the Post Office network can be grouped as follows:

— Acceptance of Council Tax Payments.

— Acceptance of Rent Payments.

— Acceptance of other payment types (Homecare/Social Service Payments, Housing Benefit payments, Insurance payments, Garage Rents, Parking Fines, Re-chargeable Repairs, other sundry items where an individual pays money to the Local Authority).

  At present:

— 181 Councils use the Post Office Network for at least Council Tax Payments.

— 253 Councils use the Post Office Network for at least Rent Payments.

— 83 Councils use the Post Office Network for at least other payments.

  Looking at the same information in a different way, we can see that:

— 137 Councils use the Post Office for both Rent and Council Tax Payments.

— 55 Councils use the Post Office for all three categories of payments—Council Tax, Rent and other.

  The following table summarises:

LOCAL AUTHORITIES IN UK USING POL

Description of Service	England	Wales	Scotland	NI	Total
Total number that provide a bill payment service at the Post Office (analysis by type of service given below)	266	19	26	1	312
At least Council Tax Payments	148	17	16	0	181
At least Rent Payments	213	15	24	1	253
At least "Other payments"	66	11	6	0	83
Both Rent and Council Tax payments	108	14	15	0	137
Council Tax, rent payment and other	41	8	6	0	55

LOCAL AUTHORITIES COVERED IN ANALYSIS ABOVE

Description of Service	England	Wales	Scotland	NI	Total
Number of local authorities	446	22	32	26	526

  Overall, it can be seen therefore that a majority of Councils see the use of the Post Office as valuable to them in delivering their services as they have at least some contractual arrangements. However, only a minority of Councils (55 out of 526) are using Post Office Services on a full basis across all the categories.

  There is therefore considerable potential for increased use of the network by local councils. The majority already see the channel as providing "value for money" to them by virtue of the fact that they already have at least one contract with the Post Office. Extending this approach and recognising the wider potential of the network to provide convenient value for money services for Councils and their customers is therefore a real opportunity.

  Furthermore, there are new services potentially available that further enhance this potential to use the local Post Office network as a convenient link point between citizens and their local Council.

  Post Office Payout—where the Council needs to make a specific targeted payment to a customer—they can send a letter with a barcode to the customer who can then take it into the Post Office to get a convenient payment in cash. Details of the "payout" service are detailed at Annex 1 to this note. This concept has been successfully trialled in Leeds for the rapid, convenient payment of School Uniform payments to eligible recipients

  Validate—where the Council asks customers to use the Post Office to check/verify documents and identification to support a process such as applications or updating information and confirming eligibility levels. Trials have been undertaken with a number of councils to validate the accuracy of housing benefit claims and to capture changes in customers circumstances that may have an impact on their claim. (Camden, Haringey, North Wilts and Wirral). In the pilots between 25% and 90% of those contacted reported a change in circumstances and claims could be adjusted accordingly.

  Consultations—a multi-channel approach designed to generate wider participation in consultation processes (particularly in gathering the views of traditionally "hard to reach" groups crossing cultural, economic and social divides, reaching the digitally excluded). The proposition involves interactive terminals in branch and postmaster support. Successful pilots have been run with local authorities (Blaneau Gwent, Lambeth, Sedgmoor, Islington) and Police Authorities (Cheshire, South Wales). Success can be measured in numbers of responses (Sedgmoor saw a hundrefold increase) and responses from communities that seldom respond (Lambeth received a greater spread of responses from all its communities than ever before).

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Prepared 7 July 2009