Select Committee on Welsh Affairs Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



Mr Llwyd

  60. Mr Sweetman, I fully appreciate what you say about the need for this basic amount of pay to ensure that there is viability. We all have examples of new contracts being offered at lower rates.
  (Mr Sweetman) I think that will depend on the hours of opening, especially in the very small offices. That will be a driver. When a sub-postmaster continues, we do not alter the level of payment. The only time we do that is when a new sub-postmaster is appointed. If we did it during the lifetime of service of a sub-postmaster it would be unfair, so we do not change levels of remuneration in situ. Clearly, where there are very significant changes in the levels of business and we come up with an alternative offering more appropriate to the community, like moving from an office open 35 hours a week to 15 hours a week, then there will be a remuneration change, but not directly related to the number of hours. It will be a step down on to the next lower scale.

  61. It does mean that the all"-important subsidy, to use that word, being offered to new entrants is less than previously offered to the existing ones. That is the bottom line, is it not?
  (Mr Sweetman) Yes.

  62. That is a great disincentive, is it not, for anyone to go in there obviously.
  (Mr Sweetman) But it is a move to a new and we believe rational basis. We recognise that this might not be the best way to support rural communities. The PIU report proposed, and the DTI and government agreed, that they would ask PostCom to review what the best method of financially supporting the rural network is. They recognise that the Post Office loses a lot of money in rural post offices but for social reasons we need to support the network. We understand that in the autumn, the tail end of this year, PostCom will be making recommendations to the Government on the best way of financially supporting rural post offices. We have made a submission to PostCom, along with many other organisations, and we eagerly await their recommendations and then what the Government decision will be. I think the issues will be how appropriate the remuneration system is and what the level of support should be. The social reason should be over and above an economic decision. That is what we are grappling with internally. My business loses a lot of money which is supported by Government but I think everybody, and clearly you especially, want there to be a much more secure funding of the social network. It applies to urban deprived areas as well, of which there is a number in Wales. I think again measures have been put into place specifically to support communities which have real social deprivation. We are eagerly awaiting decisions at the end of the year.

Ms Morgan

  63. It does seem to me that this low level of income is a major problem for a postmaster or postmistress in Wales.
  (Mr Sweetman) Yes, and we recognise that many of our sub-postmasters and sub-postmistresses do not run post offices for economic reasons. Many of them do it because of their individual commitment to their communities. I admit that I am not in a position to throw a lot of money, whatever money it takes, into supporting post offices.

  64. Surely you would agree that that sort of individual commitment should be rewarded reasonably?
  (Mr Sweetman) Yes, and this is the big question that PIU set down. They recognise the efforts that we currently put into maintaining this and they basically concluded that we do a good job. There is a fundamental question at the heart of government social policy which has yet to be answered. We are expecting the answer at the end of the year. At the end of the day, we are running a business. I would regard providing a social service as a commercial proposition. I would like to have a very clear remit from Government on what they would like us to provide by way of social service. I think that is the question which has to be answered.

  65. Going back to the funding for the standard that you impose on the post offices, I think you were saying earlier on that you do try to fund those standards with infrastructure, although we all have examples of where that has not happened. Your general policy is to do that.
  (Mr Sweetman) Yes. Our commitment is to provide the Horizon equipment and all the security equipment—the safes, alarms and screens—but the provision of premises and the payment of utility bills are the responsibility of the sub-postmaster. Those are generally shared overheads with their private business. It is very clear what the split is and what we pay for, but we have made exceptions where the community is best served by a different solution and a different level of funding. Each community is different, as you are well aware.

  66. Will you be having a meeting about this particular example of Houghton and the fitting of the Horizon equipment that was not funded?
  (Mr Sweetman) Yes. We will take that point away to make sure that is clear. If our policy has not been followed, then we will make sure that it is.

Mr Livsey

  67. I apologise, Mr Sweetman, that I have not been here for the whole time. I was attending a meeting about the foot and mouth outbreak. I am particulary interested in the social agenda for post offices. Presumably you will be making recommendations of your own to the Government as to what you feel about that. Would it be possible for the Committee to have sight of that when you actually submit it to the Government?
  (Mr Sweetman) We have submitted to PostCom our views and I can certainly give the Committee a copy of our submissions to PostCom.

  68. You mentioned, in answer to a question by Mr Llwyd, about the number of hours that some of these post offices are open. You quoted an example of 15 hours. It has certainly been my experience in the past that some post offices, on a new tenant coming in, have been restricted to only six hours and it has been practically impossible for anyone to take over a post office of that kind because it is totally unviable and in many cases sadly the post office has actually closed as a result of that decision. Do you have any guidance for the Committee on what you would regard as a sensible minimum number of hours for a social post office, if you like, to be open in terms of viability?
  (Mr Sweetman) I think it very much depends on the community being served. There are communities where the weekly transaction volumes are literally measured in dozens and there are very few transactions. If people in a community see their post office open an hour each morning and they know that is when they have access to it, when they can get their benefit, buy their stamps and use all the other services, then that is an absolutely perfect solution. It can be for one hour a day or two hours on a Tuesday and two hours on a Thursday, and that is, if we can find somebody to provide that. We are talking about communities with very small volumes of transactions. I think that is what pushes us to some of these very restrictive hours of opening. It can almost be a question of: if we can find five hours, that is a lot better than nothing. We are talking literally about just a few dozen transactions a week.

  69. I think you would find that many Members for rural constituencies feel very strongly that you should give us some guidance as to where you are going with this because I think we do need to know.
  (Mr Sweetman) Yes.


  70. This is the nub of what we hear. I am sure my colleagues will agree with me that we feel that Post Office Counters have actually been bleeding the system and that it has been rationalised, whatever term you use. Offices have been allowed to close and the service has diminished badly. Nobody from Post Office Counters has decided to engage in talks with the Government to try and find a way forward for social post offices, if you like. I am pleased to see that seems to be happening now. One of the measures that the DTI announced in February was a £2 million fund, which is supposed to help sub-postmasters in rural areas. Can you give us an indication of how you engage with Government to use that?
  (Mr Sweetman) I will ask Mike Granville to take you through the detail that has been worked on so far.
  (Mr Granville) At this present time we are talking with the DTI about how that fund could be best utilised to support cases where there is a bit of infrastructure cost that might open the door to the maintenance of an office. These might be issues like mending the village hall or making a small change to an outlet to make sure that it can take the premises. At the moment, we are in discussions with the Government about the precise nature of that scheme. The aim is clearly to get that scheme out as quickly as possible so that benefit on the ground can be felt. Yes, we are engaged in that at the moment.
  (Mr Sweetman) Our hope and that of the DTI is that many hundreds of responses will come back to parish councils. The letter is about to go out to all parish councils inviting submissions from them for the use of local facilities—village halls, churches, pubs or whatever it might be—to give plenty of solutions and during the next year £2 million will be available. In some circumstances £800 will be sufficient but in other circumstances £5,000 might be required. If you divide those numbers into £2 million, many hundreds of communities will benefit from this and that will be the catalyst to opening up. We were very pleased that the DTI has agreed to fund this.

Mr Llwyd

  71. But why are you hooked on parish halls and community council buildings and so on? Why are not the existing, albeit struggling, businesses being assisted? Three have been mentioned in my patch that have asked for more and have been slapped down, being told, "Although you are entitled to it, we cannot help you". Are they included in this new scheme?
  (Mr Sweetman) If the response to the letter comes back from the local communities, yes, they would be eligible. As for how many of them would be eligible, we have not yet got the evaluation rules out but we hope to have those up and running very early in the new financial year so that we can respond quickly.

Mrs Williams

  72. Can I refer you to page 2 of your memorandum to us dated 12 March, so it is fairly up-to-date, where Penrhynside is mentioned? Before asking you detailed questions about this case, can I ask: where is Penrhynside? That is not meant to be flippant.
  (Mr Sweetman) It is near Llandudno.

  73. It is misspelt and that is why I was wondering. I know there is a Penrynside in south Wales, spelt without the "h". I wanted to establish, first, that we are talking about the right post office, or ex-post office in this case. In your memorandum you refer to a sub-postmaster and you go on to say "although he kept the retail shop open". This applied to a sub-postmistress and her name was Mrs Kathleen Sumbland. That is why again I want to establish that we are talking about the correct sub-post office here and then I want to go on to what you are saying. That is not factually correct. Can I also say that the Committee asked you to come back to us initially at my request because I was not happy about the way you and your colleagues had answered questions about the Penrhynside issues. The letter was open to question as to the interpretation of the content of your subsequent letter. Can I quiz you first of all on the point I mentioned before going into it in greater detail? Are we talking about the same place, Penrhynside?
  (Mr Sweetman) Yes, we are. It is Mrs Sumbland.

  74. You acknowledge that your summary here in your memorandum is incorrect?
  (Mr Sweetman) We use the word "sub-postmaster" in a generic sense but the word "he" is wrong. It should be "she".

  75. You say: "The sub-postmaster retired from running the post office in July 2000 although she kept the retail shop open, therefore the premises were not available." Mrs Sumbland said that she was offering space in the shop for a very nominal weekly rent. The offer was there at a nominal rent. That does not quite tie up with the statement in your memorandum.
  (Mr Sweetman) Many sub-postmasters operate the post office alongside a retail offering. Their overall economic return is made from a combination of the two. When the two are separated, often they are then not sustainable. I think perhaps in this particular case, not offering the retail—

  76. Would you please not say "I think"; we would like you to be more positive because you knew that we were going to ask questions about Penrhynside. This time, Chairman, I would appreciate a straightforward answer so that we do not have to ask you to come back again at a later date.
  (Mr Sweetman) Certainly. I think running just the post office side is unlikely to be an economic proposition for the candidate.

  77. You are familiar with the background of this case?
  (Mr Sweetman) Not in a lot of detail, no.

  78. Chair, with respect, I would have expected Mr Sweetman to be familiar with this case because they have known that we were going to ask detailed questions about this post office.
  (Mr Sweetman) Can you ask the specific question and I will see if I can answer from my knowledge?

  79. I feel very sad that we have to give you these facts because I believe that you have already had them. We have received a submission from somebody who expressed an interest in stepping in to run the Penrhynside post office but discovered that the income from running the office would be about £10 a week less than the necessary outgoings. That goes back to other comments made by my colleagues. You say that the office was closed because the retiring sub-postmaster kept the premises open as a retail shop and therefore the premises were not available to be run as a post office. Can you give us some more detail about what actually happened in this case? We have some information already.
  (Mr Sweetman) I have an account here which I could read from but I do not know the case intimately myself.

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