Examination of Witnesses (Question Numbers
189-199)
FEDERATION OF
SMALL BUSINESSES
31 MARCH 2009
Q189 Chairman: Lady and gentleman, thank
you very much indeed for being patient and waiting. We are running
slightly late but I think you would understand we had important
evidence to take there and some useful discussion, and I hope
you found it interesting, too. We are very grateful to you for
your written evidence. You come to us as partners in the Post
Bank Coalition. Of course, I have worked closely with the Federation
recently on rate relief and I am grateful for the support that
I had from the Federation there as well. Can I ask you to quickly
introduce who you are and I have one opening question before I
hand over to Lindsay Hoyle.
Mr Davenport: My name is Clive
Davenport and I am the Policy Chairman for Trade and Industry
for the Federation of Small Businesses.
Ms Diallo: I am Ulrika Diallo
and I work as a policy advisor for the trade and industry brief.
Q190 Chairman: We have to say we
like the trade and industry phraseology on this Committee! Just
before we move to more specific questions, can I ask you to explain
why the Federation takes an interest in the future of sub-post
offices?
Mr Davenport: It is essential
to small businesses and it is also essential that small businesses
do not see any more post office closures. We are having a hard
enough time as it stands. The last round of closures has created
a substantial problem for small businesses. To give you an idea,
on average 19% of small businesses use the post office every day.
If you project that up, that is 817,000 businesses every day which
use post offices. That is how crucial small business is to the
Post Office and the Post Office is to small business. It is a
two-way street and that is why we have been involved in the Coalition
and every other means at our hands to protect post offices. One
of the things we do find is that there is plenty of debate about
electronic communication, but our recent survey has shown that
that is not the case. 88% of the recipients of the survey use
post offices to do their accounts, to send their invoices, and
they do it manually, they do not do electronic transfer, and only
11% use the electronic metered mail, so it flies slightly in the
face of what is perceived with regard to the general public and
the Government.
Chairman: I think that will do by way
of introduction. I am very grateful for that. If I ask anything
I am likely to tread on my colleagues' toes so I will go straight
to my colleagues. Lindsay?
Q191 Mr Hoyle: It is an interesting
point you make and I am sure Lord Mandelson and Pat McFadden will
take that on board because all they keep saying is that businesses
are just using metered mail and you are just proving the point.
I also know in the postal survey you did that 89% of respondents
use the Post Office to purchase stamps and send letters and 77%
of respondents use the Post Office to send parcels. That is your
survey and that just tells us how important the Post Office is.
I am really pleased with that.
Mr Davenport: That survey was
six weeks ago, something like that.
Q192 Mr Hoyle: So it is bang up-to-date.
In fact, it is probably more bang up-to-date than the evidence
we have heard from ministers, so that is good and I hope they
are listening and taking that on board. Can I move you on to some
of the questions. Is there anything inherent in what the Post
Office does that justifies its monopoly?
Mr Davenport: Guarantees their
monopoly. As a small businessman, guaranteeing monopolies makes
me uncomfortable, but what we have got to do is not look at just
the service they give, it is the community that they generate,
of which we are a part. We see the breakdown of that community.
When post offices were closed I think between 14% and 16%, around
that area, of local businesses were damaged, so they are an essential
cornerstone of community life, and it is essential that they remain
there, not only for our selfish reasons of wanting to have the
service that we require but because the communities that they
create give strength and therefore security as far as our own
businesses are concerned around them.
Q193 Mr Hoyle: So it would be fair
to say that what you are saying is that it is a vital service
they are providing that holds the community together. It is the
catalyst that keeps that community alive and of course it keeps
small businesses alive as well. Would that be fair to say?
Mr Davenport: Yes, I am just uncomfortable
with the word monopoly.
Q194 Mr Hoyle: That is right because
of the way that we do it, but what we are saying is that it is
a vital service and it is very hard to measure just how good a
service it is?
Mr Davenport: Yes, as a community
service, if you look at it as a community, you have to say to
yourself what other community services are there when we look
at the £150 million that has been mentioned. We could say
that policemen are a community service. Are they a liability?
Are nurses a liability? The Government has got to decide and society
has got to decide where it places the Post Office within that
whole structure of the services that are provided to its communities
and to its people.
Q195 Mr Hoyle: Absolutely right and
the monopoly they have been given is the USO which guarantees
that they deliver everywhere. Nobody else in competition wants
the USO. They could all take it up but not one of them wants to
step forward. It just proves that we really do have only one that
can provide the service. SMEs use the Post Office largely, as
was said, for mail services provided by the Royal Mail Group.
Are there any companies which could offer mail services which
could compete with Royal Mail—and this is the key part of
it—and be more convenient than Royal Mail?
Mr Davenport: I doubt it. The
problem we have with all small businesses is that most large conglomerates
like TNT and the like are not comfortable with volumes that small,
they are not interested, and so you cannot get a service from
them even if you wanted it. That is a common comment that is made
by most of the recipients of our surveys, not just this one, other
ones as well.
Q196 Mr Hoyle: So it would be fair
to say that it is profit before service where this is service
before profit, in a sense?
Mr Davenport: Indeed, and what
we are looking at is the Post Office creates an even, reliable
consistent service and that is what small businesses are desperate
for. You have got to remember that something like 89% in the last
survey work from home. It is quite substantial amounts.
Q197 Mr Hoyle: We are going into
the area that I just want to touch on and push a little bit more
towards it. How much does the location of a post office matter
and does business need them close by and, if so, why does it need
them?
Mr Davenport: It depends which
type of business you are in. If it is small shopkeeping for financial
services and so on, then they need them fairly local because they
need to not leave funds in their premises at night and they tend
to use the post office as a secure system to control that. A lot
of other businesses (and this is where we get this how many times
you visit the post office, on average twice a week) that are away
from the post office area come in and do their mailing en bloc,
both invoicing and sending out their goods. They do not do it
on a daily or half-daily basis. They do it once a week or twice
a week or more.
Ms Diallo: If I could just add
to that. It is about saving time as well because for a small business
who often are sole traders, the vast majority of members that
we represent have fewer than five employees or they are sole traders.
To take that amount of time out, if you are based at home for
example, and you can walk to your post office, that is a fairly
swift operation, whereas if you have to get in your car, go to
the nearest town and find a post office there, find parking, go
in, queue up, because one of the things that we have seen with
the last round of closures is that queuing times have increased
considerably, it is a matter of saving essential time really for
a small business.
Q198 Mr Hoyle: And it is helping
ensure that rural communities survive and it also helps save the
climate as well, because we do not have to do all the extra miles
and we do not have to all go to a town, and it is about the protection
of rural areas. Is that fair?
Ms Diallo: That is right.
Q199 Chairman: Is it also important
for your members, and I do not want the answer that sounds convenient,
I want the truth, is it also useful for your members who are living
in the internet age, many of whom are offering mail order business,
to be able to go to the post office daily rather than twice a
week to post packages to make sure their customers have their
orders fulfilled in good time? Is that also an issue for small
businesses?
Mr Davenport: It certainly is.
Ms Diallo: As Clive mentioned
initially, 19% of our members visit the post office every day,
probably because they want to respond to customers' demands quickly,
they want to send a parcel straight away. 47% say that they visit
the post office a couple of times per week, so it is certainly
a very frequent occurrence in the life of a small business to
go to the post office.
| 
