Examination of Witnesses (Questions 40
TUESDAY 20 MARCH 2001
40. Is that a new idea?
(Mr Sweetman) There have been one or two examples
of it on local initiative. We have picked up those local ideas
which have worked in a number of communities and now put it on
to our list of solutions which can work right across the country.
We are now asking all our retail network managers, as they look
at their own areas, if this would work in their community. Are
there sub-postmasters who would provide this roving service? We
have developed a mobile computer version of Horizon which will
allow people to move out into that community and operate the service,
rather than having a fixed-base Horizon solution. We are putting
all the infrastructure in to allow this to happen. I think you
will see many more solutions like this. It is like a hub and spoke
41. I asked if this was a new idea. Can you
tell us how new it is? The last time you came in July 2000 we
discussed this. Is it a fairly new idea? Can you be more specific?
(Mr Sweetman) There have probably been examples over
the last couple of years where it has happened locally. There
might well have been examples earlier but I am not familiar with
42. Could I go on to the reasons for post office
closures? Between 43 and 46 per cent of post office closures are
due to the retirement of the sub-postmaster or sub-postmistress,
either because of age or ill health. Do you have separate figures
for the proportion of sub-postmasters or sub-postmistresses who
retire due to ill health?
(Mr Sweetman) No, we do not. The statistics that we
shared with you are the categories into which retirements are
placed. We do not have a separate category for age or ill health.
43. Do you think it would be a good idea to
have separate figures for that?
(Mr Sweetman) Yes, that might make us more informed.
As they are not employees, they do not have a retirement age.
It is difficult to predict when people will decide age is the
factor. Often the age and the ill health factors do come together.
There is often a combined reason why people decide to retire.
Up to now we thought this was a reasonable categorisation.
44. When a person retires due to age, is that
not an event which is predictable months or even years in advance?
They do give you notice. We know of particular instances we have
discussed previously. What advance preparation do you make to
replace those people?
(Mr Sweetman) They are not employees and therefore
they do not have a retirement age.
45. But they give you an indication?
(Mr Sweetman) They do and some people might say, "I
am going to retire in a year's time", but under their contract
they can do that with three months' notice. Clearly those people
who have indicated that they will be retiring a year in advance
give us a greater opportunity to look for alternatives. If they
give us just the three months' contractual notice, then that is
a much more limited time. In both cases we think it is sufficient
time to find a replacement.
46. Would you agree that in some instances,
although a long notice is given, you have done nothing about it?
(Mr Sweetman) I cannot accept that that is our policy.
If you have examples, then I will certainly follow up on those.
47. They are not new examples.
(Mr Sweetman) If people give notice, then that is
the key for the recruitment process to kick in. We do have and
we have recently revised our recruitment process so that it does
kick off immediately we are told.
Mrs Williams: I find that astounding but I will
come back to it later.
48. It is probably appropriate at this point
for me to mention the Bwlchgwyn case in my constituency. You were
given a whole year's advance notice that the postmaster wanted
to retire. He put the small general shop up for sale. Every person
interested in purchasing the shop with the sub-post office attached
apparently, although my constituent did not know about it at the
time, inquired of the Post Office how much that would bring in
and was told precisely half of what my constituent had been telling
the prospective purchasers. This is because of the policy which
you say has now been changed, and I hope that is true. The worrying
aspect of this was that they did not tell the existing sub-postmaster
that that had changed. My constituent was trying to sell his property
as a going concern, which would have been good for the village,
and at no stage had anyone told him that the hours had been cut
by 50 per cent, which meant that he could not sell the property
for a whole year. He has now given up on that. He has decided
to convert the house back into a dwelling and the village looks
as though it is going to lose a permanent sub-post office because
of this policy of cutting back the hours and, worse still, not
telling the existing sub-postmaster? I think that is a deplorable
situation and he does as well. I am sure everybody will object
in view of what happened.
(Mr Sweetman) We did not handle that well. I would
not like to defend what we did there. I think more openness was
needed in that case. I would not want to defend what happened.
49. It is good of you to say that but it does
not help that Bwlchgwyn postmaster, unfortunately.
(Mr Sweetman) It does not.
Chairman: I would be interested to know what
is going to happen to villages like that in the future.
50. Can I pin you down again, going back to
the question about when people tell you that they intend to retire
and give you notice, in some instances many months? Have you ever
thought as an organisation of being proactive in this area rather
than waiting for complaints from people like ourselves?
(Mr Sweetman) We do maintain a national list of people
who are interested in becoming sub-postmasters. We maintain a
mailing list so that when opportunities do come up, we send that
list out. We have close relationships with property agencies that
specialise in this area and we make sure that they are informed
about the opportunities which are coming up. We keep close links
with parish councils, especially when we know of a retirement
coming up where contact is made. I think we have some very close
relationships with parish councils. We work in co-operation with
the Welsh Development Agency in helping new sub-postmasters come
in and invest in new premises. I think there are good examples
but, from what you are saying, we are nowhere near consistent
51. Can you tell us who actually sits down and
compiles this list that you have mentioned?
(Mr Sweetman) I will ask Mike Granville to take you
through the detail of that.
(Mr Granville) We have recently reiterated the process
to our field managers who look after the offices in the field
on a local basis. If a sub-postmaster either resigns his appointment
or, taking your point, we understand that he is thinking of doing
so, the process that should take place is that firstly there may
well be the opportunity for that office to transfer commercially.
In the majority of cases when a sub-postmaster resigns he is able
effectively to sell his business on to an incoming sub-postmaster.
There is an infrastructure that does that and transfer agencies
that specialise in this area. In the majority of cases that happens.
The difficulties occur where that does not happen, either because
the sub-postmaster has not got anything to sell on or, for example,
wants to convert the premises back to a houseand the Llansilin
case was an example of thator he is unable to sell his
business. In those cases there is a problem and that is where
the potential arises that the post office might not be able to
continue. In those cases we talk to the local authorities and
the parish council and tell them there is an issue. We canvass
other areas of the local community to see if there are any other
people in that community who could operate the service, another
shop, for example. We would advertise and see if there are any
interested parties. We would look at the hours of the post office,
taking account of the point made earlier about the reduction in
hours having an economic impact. There are cases where changes
in hours can make the opportunity more flexible and therefore
attract applicants who would otherwise not wish to run the post
office full-time but may wish to run it part-time. We would look
at those opportunities and at the potential, as Stuart Sweetman
mentioned, and take the advice of the postmaster, for example,
to provide a service, if we could find nothing fixed locally.
As a final position, we would seek to go back to the local community
and say, "Are there any other options?" There are examples
around the country of voluntary groups coming together and operating
the post office. We would look at those opportunities. Our aim
is to go through this process and make sure we maintain the post
office service. It is only if we come out at the bottom of that
process with no clear solution that we are into this position
of force majeure and closure. You have quoted cases where
that process clearly has not gone through to the depth that I
have talked about. Clearly there are issues we need to look at,
but that is the process we seek to follow to try and do everything
we can to ensure that rural post office do not close and that
we are able to take the service forward.
52. It is clear to me and I am sure to my colleagues
that that is not the practice on the ground. Can you give us genuine
reassurance this morning that those steps will be taken in future
because that certainly has not been done in the past.
(Mr Sweetman) I can certainly give you that assurance.
It is a procedure that we have discussed with Postwatch, the consumer
body which looks at the whole of the Post Office. It is a procedure
we have shared with the regulator, PostCom, and it is a procedure
that we will follow.
53. I am interested in what Mr Granville said
earlier on about most cases when the sale goes on and it is all
well and good and everybody is happy and the purchaser buys, but
I am afraid things are not all that happy there either. I have
an example of a sub-post office in (Dynefor) in my own constituency.
It was such a bad example that I took it directly to the Minister,
Mr Alan Johnson, who was aghast at the story. All the red tape
and delay involved in the vetting of the proposed purchasers meant
that in the end they said, "I am sorry, six months have gone
by and we are not going to bother". When a second purchaser
came in, the same rigmarole, and this time I think it lasted for
seven or eight months in all, even asking them what blood group
they were, and this kind of nonsense. Eventually they said, "Right,
we are off as well". The Minister said he hoped that would
never happen again. I do not think, with the advent of the PIU
report, that things are going to change all that much. I have
to say that I think there is a culture in your department that
is about rationalisation and nothing else. Why is it, for example,
that two separate purchaser there in Dynefor were scared off because
of the delay?
(Mr Granville) I cannot talk about that particular
case. I admit that I do not know the details. I can say that across
the UK historically about 10 to 12 per cent of post offices have
changed hands over the year. That turnover rate is down at the
moment and it is a function of the marketplace for buying and
selling sub-offices. That means that in a typical year about 1500
offices across the UK would be changing hands through the kinds
of commercial processes that I have talked about. There are transfer
agencies specialised in this area. We do have procedures that
in the vast majority of cases allow that transfer process to go
ahead smoothly. Clearly there have been issues in the case that
you talked about. Obviously there has been an analysis of those
particular cases. It is very much in our interests to ensure that
the process for applicants who are suitable coming forwardclearly
there is an issue about suitabilityand who can take over
and run the businesses effectively goes as smoothly as possible.
That is our aim, which is in the interests of ourselves, those
sub-postmasters who are selling and the community that those post
offices serve. That is our approach to the issue.
Mr Llwyd: But people feel let down. That person
in Dynefor has lost two potential purchasers. To the best of my
knowledge, and I have looked at it in detail, neither set of applicants
was unacceptable in any way. A delay of five to seven months is
totally unreasonable in a commercial conveyance transaction.
Chairman: Obviously that is a statement with
which we would all concur. We accept what you have just said,
Mr Sweetman, that this is not going to happen again and there
is going to be a huge culture change in Post Office Counters to
enable that to happen. I hope that will be the case.
54. Going back to Houghton near Milford Haven,
the sub-postmistress resigned after 25 years' service because
the income she received was only £4.5p per hour, which is
in fact five pence less than the national minimum wage will be
in October. I wondered if you could tell us what are the typical
hourly earnings of a sub-postmistress or postmaster in rural Wales.
(Mr Sweetman) Legally sub-postmasters are not employees.
Their remuneration is not by the hour. It is basically a two-part
remuneration system. One part is a fixed fee for the office, which
is not variable by the amount of business passing through that
office. The second part is based on the number of transactions
of each particular type which on a monthly annual basis pass through
that office. Typically, the smaller the office, the higher the
proportion of fixed fee. This we have designed into the remuneration
system and agreed with the National Federation of Sub-postmasters
to give a high degree of protection to the smaller end of the
sub-postmaster market so that they do not see the large fluctuations
in their pay. To scale it, if the remuneration level is, say,
£8,000 a year, typically probably just over £6,000 of
that will be fixed, irrespective of the amount of business that
they do. That is the sort of proportion. The larger the office,
the higher proportion is based on throughput. In the very small
offices, again we have agreed with the National Federation of
Sub-postmasters that there will be top-up payments to allow an
equivalent remuneration to the minimum wage. The minimum wage
requirements do not apply to sub-postmasters but we have agreed
that we would take note of that and, because the nature of the
contract is not for personal service, a sub-postmaster can, and
some do, employ somebody to look after an office one hundred per
cent of the time. We now give them a level of remuneration where
they can pay somebody at least the minimum wage to run that office
one hundred per cent of the time. That is a long answer to your
question but we do not pay people by the hour.
55. So the fixed fee varies according to the
size and business of each post office?
(Mr Sweetman) Yes.
56. But in the smaller ones it makes up a bigger
proportion; is that what you are saying?
(Mr Sweetman) That is absolutely right. That gives
them protection from the vagaries of the business. In three years'
time when the payment of benefits starts to cease, they will be
protected through that mechanism by reductions by quite a considerable
degree. That is one of the big challenges. In national terms,
to give you an overall feel, we pay sub-postmasters about £550
million a year, of which just over £200 million is this fixed
fee element. That is a form of support subsidy across the network,
which is an important mechanism for maintaining what are economically
57. Do you have those figures for Wales?
(Mr Sweetman) No, I do not but broadly it would be
about 8 per cent of those numbers.
58. That is at the same sort of level and you
do not have any separate figures for Wales, do you?
(Mr Sweetman) No, we do not.
59. It would have been helpful for the Committee
if we did have some of these figures for Wales.
(Mr Sweetman) I clearly recognise your interest but
Wales is not an organisational unit within the Post Office; it
is part of an area. We do not have the management information
to support absolute Welsh numbers. We have a different configuration,