Postal Services Bill

Memorandum submitted by The Co-operative Group (PS 11)

Introduction

1. This submission is made by The Co-operative Group on behalf of the Co-operative Retail Trading Group (CRTG) and The Co-operative Financial Services (CFS).

2. Consumer-owned retail Co-operative Societies have a significant commercial interest in the future shape of the Post Office network. Collectively, we operate more than 500 Post Offices, making us the largest operator of Post Offices in the UK .

3. In the UK the consumer co-operative movement includes 23 retail Co-operative Societies operating some 4000 food stores throughout the UK. These aim to create value for our members by providing them with the best possible services and to invest in the communities in which they trade. The Co-operative Group, the UK’s largest mutual retail business with over five million members, more than £14 billion turnover and core business interests in food, financial services, travel, pharmacy and funeral care. The Co-operative Group, overall, has more than 5,000 trading outlets.

4. Through CRTG, an organisation of Co-operative Societies, The Co-operative Group provides the buying and marketing functions for all these UK consumer-owned co-operatives. The CRTG Post Office Group enables Societies to share best practice in the delivery of Post Office services.

5. The Co-operative Financial Services offers transactional banking through the Post Office, and the Post Office network is recognised as a valuable channel for their customers.

6. This submission to the Postal Services Bill Committee focuses on the elements of the Postal Services Bill which relate to the future of the Post Office network, including the separation of Royal Mail from Post Office Limited and the consideration of future ownership models including mutualisation of Post Office Limited. In this submission we provide evidence on:

§ Our commercial interests in Post Offices

§ The opportunity presented by the separation of Post Office Limited from Royal Mail

§ How The Co-operative Group’s multi-stakeholder mutual ownership model operates

7. Given our co-operative identity and desire to see a community-focused and sustainable post office network, The Co-operative Group looks forward to engaging in further discussion to help shape the future of the UK 's Post Office network.

The Post Office Network and Co-operative Societies

8. With over 500 Post Offices, Co-operative retailers are the largest operator of Post Offices in the UK

9. Our customers value the service and convenience of their Post Office being co-located within their community food store. The combined Post Office and retail store drives mutual footfall, and in turn enhances the sustainability of both the Post Office and food stores.

10. Our extensive Post Office network operates at the heart of communities, be they rural, urban or suburban, throughout the UK (including 49 Post Offices in Scotland , 15 in Wales and 8 in Northern Ireland )

11. The growth and success of The Co-operative Group, now with an annual turnover of £14 billion, proves that it is possible to combine mutual ownership and accountability to consumer members at the heart of a large and dynamic business.

12. Multiple Post Office operators such as co-operative retailers are a steadily growing proportion of the Post Office network. We are able to draw on our retail expertise and customer focus to ensure that we deliver great customer service and great standards throughout our Post Office operations.

13. The Co-operative Group’s banking division, The Co-operative Bank, has, for many years, enabled customers to transact at the Post Office counter:

§ Our personal current and saving account customers, annually, make more than 8 million deposits and withdrawals at the Post Office counter

§ Every year, 50,000 business and corporate customers make more than £1bn worth of deposits at Post Offices and the Post Office provides more than £0.75bn worth of change for our small business customers.

§ The Co-operative Bank provides the back-office functionality for the Credit Union Current Account and account holders can make cash deposits at the Post Office counter

§ The Co-operative Bank also provides the ‘clearing’ service for the Post Office Postal Order.

Separation of Post Office Limited and Royal Mail

14. If Post Office Limited is separated from the Royal Mail mails and parcels business, we do not see a reason why Post Office Limited could not offer collection and dispatch services for other mails and parcels operators. This could result in more commercial opportunities for the Post Office as a provider with an unparalleled reputation.

15. In addition, we believe that the separation of Post Office Limited from Royal Mail mails and parcels also offers an opportunity to review the range of services offered at the Post Office counter. Post Office Limited currently operates a restrictions policy, which restricts the ability of partners to offer services such as mails, bill payments, national lottery, financial services and foreign exchange other than over the Post Office counter. We believe that these are restrictive covenants on our retail and business and we consider many of these services to be part of our own core consumer offering. We believe that the Post Office Limited restrictions policy reduces competition and is against the consumer interest.

16. We believe that, in order to support consumer choice, where there has been a decision to offer services through the Post Office network, these are offered on an unrestricted basis and in parallel to those being offered by the ‘host’ retailer.

The Co-operative Group’s mutual ownership structure

17. The Co-operative Group is owned by over five million members and a number of other regional co-operative societies all of whom, in addition to receiving a twice yearly share of the profits, also have a right to a say in how our business is run.

18. To ensure members can properly control our business and that all our stakeholders are represented we operate a democratic structure with several tiers across all regions of the United Kingdom .

19. Members are elected by other members to serve within the democratic structure.

20. The lowest tier is made up of Area Committees which ensure the views of consumer members are represented in decisions that will impact the operation of the business in their area.

21. The mid tier is made up of Regional Boards who have delegated authority from the Group Board and make decisions regarding the operation of the business within their region.

22. The Group Board maintains overall control of the organisation and its businesses determining the vision and strategy. Under the direction of the Group Board the organisation is run by a team of professional executive managers.

23. The democratic structure is supported by a professional secretariat and membership team.

Conclusion

24. As the UK’s largest Post Office operator we welcome the opportunity to provide written evidence to the Postal Services Bill Committee and would welcome the opportunity to give oral evidence.

25. Given our co-operative identity and desire to see a community-focused and sustainable post office network, The Co-operative Group looks forward to engaging in further discussion to help shape the future of the UK 's Post Office network.

November 2010