Examination of Witnesses (Question Numbers
200-219)
FEDERATION OF
SMALL BUSINESSES
31 MARCH 2009
Q200 Mr Hoyle: Just to move you on,
obviously we have got the Postal Services Bill that is sat in
the Lords at the moment. It is a strange place to starts it, especially
as I think the Commons is still the democratic House, but allowing
for its start in the Lords (and I think it is an absolutely ridiculous
Bill) and allowing for my own prejudices against the Bill, do
you see that there is a benefit in separating Royal Mail and Post
Office Ltd and how important is it that we look after small businesses,
and what effect do you think separating the Post Office Ltd mail
business is going to have?
Mr Davenport: It is a difficult
one for small businesses because the decision to sell off part
of the postal service is a decision of the Government and there
is not a lot that we can do about it.
Q201 Mr Hoyle: They have not quite
done it yet but if it rolls through?
Mr Davenport: There is nothing
we can really do about it. All we are looking for is a consistent,
efficient service. If we have to hive off part of it to do that
then so be it. As was said by the previous people, I think there
are many other ways of doing it other than selling it off. One
of the things we have to consider from a more global point of
view is that, as the Chairman said, email is becoming more and
more prevalent and we are getting more and more of our bills being
able to be done on-line and so therefore large postal deliveries
for statements and so on are going to be reduced, and TNT are
going to see their part of the business starting to contract because
of that. It may be in their own interests to move into that market.
Q202 Mr Hoyle: And taking some of
the competition away that you have got a stake in? We always talk
about competition but in fact it does not do anything for competition.
Mr Davenport: Exactly.
Q203 Mr Hoyle: Just finally on that,
obviously you have members that you represent, would you advise
them to sell a business at a time like this?
Mr Davenport: Not at all.
Mr Hoyle: So why on earth do we think
that the Government should be trying to sell off something that
we own? I will leave it at that, Chairman, thank you for that.
Chairman: That is another inquiry we
have completed actually. Mark Oaten and Mike Clapham will ask
you some questions about small businesses.
Q204 Mr Oaten: In your submission,
you said that you felt there was a need to streamline the network
and I want to try and tease out of you in a bit more detail what
you had in mind there. Do you want to see fewer post offices or
fewer services?
Mr Davenport: No, streamline and
make it more efficient in the way that it operates. We have got
to remember that this whole ethos of changing the postal regime
was supposed to give us a more efficient postal service and it
was supposed to make it cheaper to use. Small businesses have
not found that at all. The big winners on this contract have been
the banks on their invoicing and statements. The big mailers are
the ones that have made substantial savings because TNT collect
10,000 pieces of mail in one hit. Small businesses have not had
any of those advantages.
Q205 Mr Oaten: I am still not clear
what you mean by streamlining. You just want a cheaper service?
Mr Davenport: No, we want a more
efficient and flexible service.
Q206 Mr Oaten: Give me some examples
of what that would include?
Mr Davenport: The American system
is just one example of collection and delivery at one point. You
have got a Royal Mail van which goes out and delivers a parcel
in rural areas and then goes back empty.
Ms Diallo: We have to be very
clear that the FSB does not want to see any more post office closures
at all. The continuation of the network as it is at the moment
is absolutely essential for the running of small business. However,
as was mentioned in the previous session, the fact that different
post offices, for reasons of size, et cetera, offer different
services can sometimes be a bit confusing. As you were asking
for previously, a list of essential services that are offered
in every post office might be one way forward just to bring some
clarity to what is actually offered. In an ideal world, for every
post office to offer every service is what we would want, even
if we may not be able to achieve that.
Mr Davenport: To give you an example
of my local post office, I can get my passport photograph done
in my local post office, but I cannot get a passport; it is ludicrous.
Q207 Mr Oaten: If you were to score
it out of 10 would you say that the Post Office is delivering
a good service for small businesses in this country? What would
your mark be out of 10?
Mr Davenport: Ten is good you
mean?
Q208 Mr Oaten: Normally 10 is good.
Mr Davenport: Five or six, middle
of the range.
Ms Diallo: The waiting times and
the consequences of the last closure programme is what our members
are most upset about from this survey that we have just carried
out was the access to the post office, because with the closure
rounds the nearest one might have closed and they have to travel
a bit further to get to the next nearest one. Then of course there
are a lot of suggestions in the survey as to what the Post Office
might offer in the future so we feel that there is room for improvement
certainly.
Q209 Mr Oaten: So about five or six
out of 10 as things currently stand, but you would like to see
perhaps some specific services for business put in place, picking
up on some of the ideas that have been talked about?
Mr Davenport: I think what was
said in the previous session says it all really. The sub-postmaster
was saying, "I could employ people and we would not have
queues," or, "We don't want to do this because it is
not very efficient to do it and I do not make very much money
out of it." What we are saying is what we want is a consistent
service throughout the organisation so that we can go into post
offices and get any service that we want. Every post office, in
our view, should have every service. If that means that as a society
we have to provide funding for that, then so be it. As I said
earlier, you have got to relate this to policemen, nurses, everyone
else. It is a community service and we are a part of the community
and we feel that we should be listened to a little more than we
are.
Q210 Mr Oaten: A final question before
I go to Mike, is there not a danger, though, that if you were
to get this kind of service agreement with the Post Office for
the moment in two, three or four years' time the figure of small
businesses that are starting to do things on-line is going to
increase from 11% to 50% or 60%, so the long-term viability of
post offices improving their service and investing for you is
not really worth it because small businesses are going to change
their patterns and they are going to be doing much more electronically
in two or three years' time than they currently are?
Mr Davenport: We are not capable
yet of electronically moving a parcel so we still have to go through
that system. I agree with you perfectly, in my view and certainly
some of our members' views, the idea of drastically improving
the efficiency of the postal service (when I say that I mean the
envelope) is a little misguided because that service is going
to decline, so why invest in it now, it is too late to do that.
What we should be doing is investing in parcel services so that
we get a much more efficient service. We are in the eBay age and
what we need is fast-moving services in both directions. I believe
that the Post Office and Royal Mail have missed a trick in not
responding more quickly than they did.
Ms Diallo: I would like to add
to that, please. You are right in saying that, yes, some small
businesses will probably go for the electronic options that are
out there, but an awful lot of them will not. In 2006 we carried
out a similar survey to the one that we just carried out and then
88% of respondents said that they sent post every day so that
pattern clearly has not changed. It is only three years but a
lot will have happened, maybe, which indicates that there is a
big section of the small business community that will carry on
using the post office.
Q211 Mr Oaten: The amounts that they
send may have changed in three years. You can send one letter
and still tick that box whereas three years ago you may have been
sending 100. There is an issue there in terms of the capacity,
the amount.
Ms Diallo: That is true, I take
that point, but also we want to put on record the usage of the
post office is something that is very, very important to small
business.
Q212 Mr Clapham: What you are saying,
Mr Davenport, is that the post office network is essential to
small business and you cannot really at this point in time envisage
another business coming in to provide the kind of service that
the Post Office does for small business?
Mr Davenport: No, the cost of
the infrastructure construction would be enormous and it would
be uneconomic.
Q213 Mr Clapham: A little earlier
in answering one of Mark's questions you said that POL or the
Post Office network had missed a trick. Given that a great number
of your members actually use the postal services both daily and
weekly, do you feel that the queuing that has occurred as a result
of the trimming of the post office network is likely to result
in a less efficient service and therefore to perhaps motivate
some of your members to look elsewhere?
Mr Davenport: We have not seen
that in the survey. We asked that specific question in fact, did
we not, I cannot remember what the figures were, but very few
of them were likely to look in other areas, quite surprisingly
so, because I would have thought that they would have done that.
I think it is faith in a service and that is the important thing.
There are so few things nowadays that we can have faith in and
that faith remains that the one that is working let us try and
keep it.
Q214 Mr Clapham: So really underpinning
that faith is a feeling of trust in the network?
Mr Davenport: Yes. Can I just
put a little rider on there. One of the things that we have found
in the last survey is that more people are going to the post office
to register mail because of mail being lost. That is an interesting
point. I do not know why that is but it is happening and therefore
more of our members are actually going into post offices to record
mail, which is slightly concerning.
Q215 Mr Clapham: But I suppose given
that in a rural community many of the small businesses are run
from home, there is a necessity to ensure that any communication
that is sent from the post office is registered, particularly
if you are running something that is a part-essential service?
Mr Davenport: Yes, it is quite
possible that that could be the reason. We just asked the question
and this was the result we had. We have not examined the reasons
why there is that increase in registered mail compared to what
it was three years ago.
Q216 Mr Clapham: Given the convenience
of the postal network, particularly in rural areas, for small
businesses, would your members possibly consider paying a premium
to ensure that the service remained locally?
Mr Davenport: We have percentages
on that. I think it was almost 50% who said that the price that
is being paid at the moment is as much as they could pay and the
other 40 something per cent said that they were prepared to see
a 5% increase. Have you got the figures exactly? As with all surveys,
you have got to find the piece of information.
Ms Diallo: 48% said they were
at the limit already and they would not really want an increase
at all in charges. We asked people the question specifically,
"Would you pay more for the postal service in order to keep
the post office from closing?" and we asked them to tick
every option and then a 5% to 10% increase, 45% of respondents
ticked, so there is room there for a small increase in charges.
Q217 Mr Clapham: There is a little
bit of headroom there?
Ms Diallo: Yes.
Q218 Mr Clapham: Which is quite interesting
and that seems to, as you say, line up very much with what you
were saying about trust on the one hand and of course the convenience
of the post office being based locally on the other.
Mr Davenport: There is the frustration,
pricing it in proportion is a slower process when you take your
parcel or whatever to the post office and at virtually the same
time that PIP was coming in, there were post office closures,
so you got a double whammy, you got longer time in processing
mail and then at the same time you are closing post offices, so
you are bound to have longer queues in some sub-post offices,
but those queues, as can always be said, it is always the frustrating
time that you remember. You do not remember the 10 times you went
in and walked straight to the front of the queue, but those are
the times that are remembered and those are the times that our
members have made quite vociferous comments about.
Chairman: I would like to say how much
we appreciate the survey you have done. It is a very, very useful
tool and gives hard evidence which this Committee greatly values.
We are very grateful to you for that work, thank you very much
indeed for that. Adrian?
Q219 Mr Bailey: I want to explore
the issue of banking and your members' needs. What minimum banking
service do you think the Post Office should provide for them?
Mr Davenport: It needs to provide
a full banking service really. If we are going to have a then
we should have a Post Bank and not a half-hearted Post Bank.
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