Examination of Witnesses (Question Numbers
260-279)
CWU, UNITE
21 APRIL 2009
Q260 Mr Bailey: Brian, do you want
to add to that?
Mr Scott: Yes, just to say that
Royal Mail (Letters), which actually I spend most of my time dealing
with, is a network business, it is fully integrated, and it needs
the outlets and the inlets of post offices of all sizes to get
the traffic in and sometimes out as well. There are 640 million
items transacted over a post office counter for Royal Mail delivery
and there is £1.4 billion revenue it creates. It is, therefore,
a lot of money, it needs to be together, and it is also the shop-front
for Royal Mail. The Post Office is Royal Mail's shop-front and
of course most of the public interlink them, call them the same
name, different names and they mean the same thing. When you hear
people talking about the "post office, they are talking about
Royal Mail and they are talking about Post Office Counters and
they get mixed up, which is great, but they see it as fully integrated.
The business depends on that financially and for being to able
to achieve the targets which are set for mail delivery, et
cetera, and it is vitally important that they stay together.
Q261 Mr Bailey: Could I just follow
up a point Andy made. He, I think, emphasised that a privatised
Royal Mail, in effect, could cause difficulties, but, even in
the event of Royal Mail not being privatised, but Post Office
Limited being separated, do you think the same problems could
exist?
Mr Furey: No, I think that, if
a private company owns a significant chunk of Royal Mail, our
fear would be that, once they had got a foot in the door, then
it would become a greater chunk in time and total privatisation
in due course. I think that is the biggest threat. If the Royal
Mail Group remains a wholly owned public entity, including Post
Office Limited, then I do not see the threat, and I think that
what needs to happen is that both Post Office Limited and Royal
Mail need to work together better to provide better services to
the public and ensure that both have got a prosperous and sustainable
future, which I think can only happen with an integrated Royal
Mail/Post Office Limited.
Q262 Mr Bailey: Do you have anything
to add?
Mr Scott: Well, I would not disagree
with Andy's point. I would be less critical of Royal Mail (Letters)
not doing a deal with somebody else, if it suited them at that
time, with a supermarket chain or whatever, which may save them
a few pounds, but the overall Group impact it would have would
be immense, but that is my cynical head about the letters business
itself. It is integrated and it should stay together because they
depend on each other and it is absolutely key to it happening,
and I am actually not sure that privatisation will happen these
days, fingers crossed, but, even in the Royal Mail Holdings Group
as it stands at the minute, somebody may come up with some daft
idea which will save them a few bob which would just blow another
part of the Group out of the water. That should not, and cannot,
be allowed to happen and the Government needs to make sure it
does not happen.
Q263 Mr Bailey: Basically, what I
am trying to tease out is that, notwithstanding the issue about
privatisation or part-privatisation, if the two companies, in
effect, were separated so that Post Office Limited could, if you
like, be freer in its operations from Royal Mail, do you see a
potential threat there?
Mr Scott: I think that is a different
question, if I may say. A bit more freedom for Post Office Limited
to introduce new services, to act more commercially, and it is
acting commercially already, but to act more commercially and
to take up the initiatives that are available to it, I think that
degree of freedom should be available. I suspect that Post Office
Limited is not always as high on Royal Mail Holdings' agenda as
others, but, if you talk about giving them some freedom to increase
revenue, therefore, ultimately reduce the subsidy, that may be
a positive step, but I think that could happen without any separation
whatsoever.
Mr Furey: We must not underestimate
the importance of the volumes of traffic and revenue and the social
activity link for the public at large and businesses that Post
Office Limited does as the shop window for Royal Mail. A significant
part of its revenue and its customer base comes through Mail's
work and, if that were threatened in any way, that would be very,
very damaging for the long-term sustainability of post offices
in general, so I think that we need to ensure, the Government
needs to ensure, that both parts of the Royal Mail Group complement
one another and work together to ensure the better provision of
services for the public at large and that the bigger part of the
Royal Mail Group does not forget about the smaller part, which
is vitally important.
Q264 Mr Bailey: Do you agree with
the submission from the National Federation of Sub-Postmasters
that, if you separate them, then any contractual agreement between
the Royal Mail and Post Office Limited might then become subject
to anti-competitive challenges in legislation? I am a bit surprised
that you have not raised this as an issue.
Mr Furey: We would be very concerned
about the long-term sustainability of an inter-business agreement
if Royal Mail were partially privatised. I think it is important
that Royal Mail and Post Office Limited do reach an agreement
that is commercially binding or contractually binding and that
that agreement ensures that the well-being of both Royal Mail
and POL is catered for. Whether it would be open to challenge,
I am not so sure, to be perfectly honest, and I do not pretend
to be an expert on the legalities of that, but certainly I think
that the possibilities of privatisation or the part-privatisation
of Royal Mail will bring into question absolutely every part of
the relationship between Post Office Limited and Royal Mail, and
I do not think that can be good. Possibly, the National Federation
of Sub-Postmasters might have got it right.
Mr Scott: I think the right to
raise the debate is a question which needs to be asked and answered
at some stage, but I think the regulatory regime which was developed
would cover that off and I do not think it should be seen as anti-competitive.
Q265 Mr Bailey: Basically, what do
you think of the Hooper proposals?
Mr Furey: How long have we got!
Q266 Chairman: Not in relation to
the privatisation of the Royal Mail Group; we have got the report
on that.
Mr Scott: I thought, in the words
of Richard Hooper, that Post Office Limited had nothing to do
with his report, but I do not want implications to be underlying
that. I think the Hooper Report was a good summary of what is
happening in Royal Mail.
Q267 Mr Bailey: I should have been
a bit more specific, that I mean the organisational changes between
Royal Mail and Post Office Limited as recommended in the report.
Mr Furey: Well, we are absolutely
convinced that Royal Mail Group, as an entity, should be wholly
owned by the Government for the people and that there should not
be a separation. We do have significant concerns with setting
up Post Office Limited as a sister organisation or a sister company
to Royal Mail. Having then to have separate pension arrangements
and a potential for TUPE-ing people out of the Royal Mail Group
and into Post Office Limited, that does raise a lot of concerns
for us. As I understood it, the Hooper Report did not look at
Post Office Limited, but certainly its recommendations do have
ramifications and implications for Post Office Limited and its
workforce, and that worries us no end. Everybody in the Royal
Mail Group is an employee of the Royal Mail Group at the moment
and, if I have read the Bill correctly, it is suggesting that
Post Office Limited people will be TUPE-ed out of the Royal Mail
Group and into Post Office Limited and will have a separate pension
fund, and I think that there are threats there, particularly with
the sustainability of a brand-new pension fund, of Post Office
Limited being separated away from Royal Mail.
Chairman: We will need to check that
point about the employment status, as I had not realised that,
of the staff transferred.
Q268 Mr Bailey: Brian, do you want
to add anything?
Mr Scott: Only that at Post Office
Limited and Royal Mail Group management grades, separation into
a separate organisation could result in a loss of talent, a loss
of diversity and development moving across the Group to new skills
and to develop skills, therefore, losing expertise. The question
of whether or not they would not have to resign from Post Office
Limited and move into Royal Mail (Letters) seems a bit of a nonsense
when it is part of the same Group, so we are concerned about that.
Q269 Chairman: I would just like
to check one thing before I put my devil's advocate question.
Actually, to me, it is very unclear what the status of POL will
be in the new arrangements. For example, I think the Bill permits
that the Chairman of the overall Royal Mail Holdings Company should
be Chairman of POL as well. The extent of the relationship is,
to me, very, very opaque. Have I misunderstood that and do you
have information I do not have?
Mr Scott: I think it suggests
that Post Office Limited will have a separate Chair. It could
be the same individual, I suppose, and I suppose they would have
an influence on how they approach issues, so I do not think it
is necessarily someone separate, but perhaps later on Alan Cook
will answer that question for you.
Q270 Chairman: I am just wondering
to what extent the changes will be just on paper and to what extent
they are real changes. Can I put a devil's advocate question to
you about this issue about the separation. We have been told by
Royal Mail that the big growth is going to be in parcel volume
and there is possibly, and they are going to say this, but possibly
a catastrophic collapse in letter volume because of e-substitution
primarily, and certainly for the Royal Mail Group a large proportion
of their profits come from parcel operations. That is where all
the competition exists, not all, but a large part of the competition,
and is there not a risk that actually Royal Mail could put such
restrictive arrangements in place on POL in terms of ownership
that actually it cannot take advantage in the growth of competitive
parcel services, and actually we will see the Post Office network
lose a large proportion of its mail volumes to competitors who
are delivering parcels and cannot use post offices because of
the anti-competitive arrangements between Royal Mail and POL?
Is there not a danger that, if you do not separate, it could have
precisely the risk that you foresee?
Mr Scott: I think it depends what
you classify as a parcel. I think e-substitution, the impact of
Internet shopping, et cetera, is on packages, so small
items which can be dealt with through a post office counter and
get into the system that way. In fact, many of these items which
appear on eBay, for example, are small enough to be used on the
new "weigh and-pay-as-you-go" scales—that is not
the correct title for it—which are available at post office
counters now, the crown offices, where you weigh it yourself and
you post it and never need to go to the counter; you weigh it,
you stamp it and you post it. You will have seen them on your
travels to Devon and wherever else it is. I think that the items
are not what we would call "large" parcels or heavy
or near the 20-kilo limit, nowhere near that, but a lot of the
items are much smaller and they can get into the network quite
easily. The volume of that is still unknown, but certainly the
trend is going that way.
Q271 Mr Wright: On the services,
you have suggested that it is important to maintain a "consistent
and acceptable level of service across the country", and
I think everybody would agree that that should be the norm, but
what would you consider is the minimum acceptable product line
and hours of opening that customers should expect, irrespective
of the size of the post office itself and where it is?
Mr Furey: Well, CWU, first and
foremost, is very supportive of extending opening hours and providing
the services to the public when the public want them. I think
that, if we are going to develop and grow, then we need to ensure
that, when the major high street shops are open, the crown post
office is open as well in those major high street areas. In terms
of services, there is a whole range of services, and there is
some good news of the Driving Licence activity that has just recently
been announced which is very good news in terms of the photographs
being taken at the post offices, so that is a good arrangement,
and I think there is the need to have a further link-up with the
Passport Agency and more work can be done there. I think that,
generally speaking, the Government should ensure that post offices
can provide a General Practitioner Scheme. There was a pilot of
it and it was looked at a number of years ago, but it was rejected
by the Government on cost grounds, but I think that was short-sighted
because I think the public are crying out for somewhere where
they can go and do their business where there is trust and integrity,
and there is all manner of things, things like registering for
postal votes and for people to be able to have their identification
checked at a post office because of potential fraud through postal
voting, so there is a whole range of things. If there is a will
from the Government to be innovative and put national, devolved
and local government services into post offices, then I think
that certainly is the way forward. I would like to see the TV
Licence, for the BBC to give back the contract to Post Office
Limited and take it away from Capita when that is up for renewal;
I think that was a very, very disappointing move that the BBC
made. I think there is great potential there and I genuinely believe
that the employees of Post Office Limited have got the skill base,
the commitment and the dedication to provide an excellent service,
and I think there needs to be an expansion of financial services
products, and you know our position on a state-owned Post Bank.
Q272 Mr Wright: Did you want to comment
on that?
Mr Scott: Simply to say that it
would depend what the demand for the services was. There is no
point opening until seven o'clock at night if there are no customers
coming through the door, but, if there were signs that there could
well be a footfall available to make it work, serving the customers,
meeting the customers' needs, but also making a contribution to
the bottom line of the organisation, I think that is important.
Q273 Mr Wright: I have lost post
offices in the last cuts which were open for two or three days
a week and I am sure that my constituents there would rather have
them open for two or three days a week than not at all, which
is the current procedure. I am interested in terms of the service
that you are looking at, the passports and obviously the Driving
Licence, but of course a lot of the post offices have not got
that technology. When you are talking about a network of 12,000,
it would be ideal for every single one of those post offices to
have the technology to actually provide the service to their customers.
Who, do you consider, would have to pay for that technology to
be put in? Should it be the customers, should it be the Government
or should it be the Post Office?
Mr Furey: First and foremost,
we must remember that 12,000 post offices are linked to the Horizon
system and, as I understand it, that is the single biggest computer
system which is linked across Western Europe. Every single counter
position has a Horizon terminal and there is currently work being
undertaken to upgrade that in a project called Horizon Online,
which we are supportive of, so the technology is there for a fully
integrated service, so it is about developing further automation,
which, I believe, Post Office Limited have an aspiration for and
certainly we are very supportive of new technology and automation.
I am pleased to see that the new contract for the Driving Licence
is going to mean investment in automation and new technology.
I do not think it would be practical from a logistical point of
view to have every post office being identical in the services
that they provide because there just simply would not be the space
in some of the sub-post offices, but certainly crown offices need
to provide a Rolls-Royce service with all products and services.
Unfortunately, some of the crowns at the moment are in old Victorian
buildings and could do with a significant facelift and being moved
to more user-friendly premises, but certainly automation and new
technology are vitally important for the long-term sustainability
of the Post Office.
Q274 Mr Wright: So, basically, you
would accept that, in some of the post offices, it may not be
feasible to have the new technology in those areas. Brian, did
you want to add?
Mr Scott: Consistency is the key.
Customers want to know when they can go, maybe which two days
of the week they can go, for example, and, when they get there,
that they can get that particular service. If you limit it to
a number of office outlets or the number of offices that you can
get the passport service, the Driving Licence service, or any
other service for that matter, as long as the customers know that,
when they go to that office, it will be available or not, they
need to know, and consistency is the key, to make sure that the
services are advertised. There will be a point when the technology
will become too expensive for every office, and I do not know
what that stage is, but as long as people know, if they want that
particular service, that they can get it in that particular office
at that particular time and they can rely on it.
Mr Furey: I think it is vitally
essential that the Government do provide a further funding package
beyond the current one and that, as part of that further funding
package, integral to that is the provision of automation and new
technology, where feasible, and better, brighter crown post offices.
The current funding arrangement runs out in 2011, the £1.7
billion, and I think that it is incumbent upon the Government
to start thinking about the five years beyond 2011 in terms of
what support it can give, so the direct answer to your question
is that I think the investment should come from the Government.
Q275 Mr Wright: Completely?
Mr Furey: Yes, or in partnership
with potential clients.
Q276 Mr Wright: But, clearly, at
the moment what you are saying is that there is not enough money
there to actually provide the new technology that is required?
Mr Furey: No.
Q277 Mr Wright: You mentioned the
provision of the TV Licence, for instance, and one of the issues
that has come back is how local authorities could also use post
offices for the payment of fines and the council bills themselves,
but of course there is an additional cost to that and councils
are saying that it is more expensive to do it through the Post
Office. If we try to push government services, whether it is local
or national government services, who should actually pay for that?
Should it be the user, the council taxpayer or perhaps the taxpayer?
Mr Scott: I think it would be
mixed actually because you cannot deal with each service at a
time and I think that you have to look at the range of services
that would be available and then develop a strategy that would
have a range of services, given the volume of transactions, therefore,
reducing the price of each single transaction to make it more
viable and bring the costs down. If you start picking one here
and one there and doing it very slowly without any clear strategy
to it, I do not think that would work, but, if you develop a basket
of measures, a basket of products that you could provide for local
and national government and for other organisations perhaps, then
you could bring the single transaction costs down. If you are
putting infrastructure in, as long as the technologies all talk
to each other, that is key and that is why you need a strategy,
so I think you could bring the costs down, and actually it is
not just about making it that bit cheaper for the local authority
perhaps, but it is about making the service available and the
offering available to the consumer locally instead of having to
travel miles to get to a library, if that is where it currently
is, or another local authority building, if that is where it is.
Q278 Mr Wright: In some cases, for
instance, some of the other utilities, BT, for instance, have
a charge on their bills being paid to get the money through, and
the water companies as well will put an extra £2 or £3
on to the bill. Those in the more-remote areas, if they have only
got a small post office there, they have got an extra service
charge on that. Is that fair on them and should it not be down
to perhaps the Government or indeed the business itself to take
into account across the board?
Mr Scott: Let us be clear, I was
not talking about an extra surcharge for people in very far-flung
communities; far from it. Your example of BT who charge an extra
£5 if you do not pay your bill by Direct Debit seems a bit
odd, but that is a debate for another day perhaps. It is not about
a surcharge because you are remote, it is about the same price
across the universal banking obligation, which we can talk about
elsewhere and which, no doubt, we will move on to.
Mr Furey: I do not think the cost
should be put to the customer or to society in general, but also
Post Office Limited is not a charity and they have got to get
paid for doing the work, so I would see that coming from a commercial
agreement with the local councils. What we would like to see is
negotiations through the Local Government Association, the LGA,
so that it can be done in a central way rather than on a piecemeal
basis for each separate county council or metropolitan council.
We think that what has happened is that each council has struck
up its own arrangements and its own methods for revenue-collection
and, if there were a UK-wide approach to that for all councils,
then there could be economies of scale and it could be done. Nobody
has proved that, by doing business via the Post Office, it is
more costly than it is for councils currently to collect money,
and indeed I think that, if there were a sensible approach to
this, the councils and, in turn, the council taxpayers could benefit.
Q279 Chairman: I have just one question
before we move on to the banking issue. I am just slightly concerned.
I am very grateful for the list of services you provided in your
written evidence, and I hope that this Committee will produce
a list of services that could be offered. I think your list is
one of the longest lists we have seen and I think there are things
you could add to this, but thank you for that, for the Government
to choose between and which, we will argue, should be part of
the core service of the main Post Office network. However, some
of these things in this list are a bit problematic. Tax self-assessment—in
what sense can a post office help in tax self-assessment? Also,
visas for foreign travel—we are not going to get foreign
embassies allowing visas to be issued by sub-postmasters in Upton
Snodsbury, are we? I think probably not now, but perhaps you want
to flesh out some of the more challenging ones, such as repeat
prescriptions because I think there would be quite big issues
there about pharmacies handing over the dispensing of medicines
over post office counters. They are interesting ideas, I welcome
them, but you might perhaps just tease out how you think they
actually might be practically offered and which ones you would
put the greatest emphasis on in this very helpful list.
Mr Furey: Thanks very much for
the invitation and we will flesh that out with a further submission
and put in some ideas as to how those could be done. Some of them
may not be practical ultimately, and we are not saying that our
list is perfect, by any means, but we have tried to come up with—
|
