Conclusions and recommendations
What is the post office for?
1. The
importance of post offices to poor, elderly or otherwise disadvantaged
people is frequently mentioned, but what comes through very clearly
is the sense that the post office is important because it provides
services to the total community, not just to disadvantaged people.
It is an instrument of social cohesion or, to put it differently,
it preserves the fabric of our society. (Paragraph 14)
Is the network still necessary?
2. In
setting the access criteria, and in asking us to undertake this
inquiry, the Government has accepted that while the truly national
retail and government network that post offices provide may be
an accident of history, it offers a complex of services which
cannot be replicated by other institutions, even though most individual
services are available elsewhere. One of the most important features
of that network is that post offices are found throughout the
country. And although there is some variation in the services
on offer, there is an irreducible core that people have come to
expect will be provided across the country: access to post, access
to cash, and, at the least, access to government information.
Also, the public expects that, where appropriate, that core will
support associated private sector services. (Paragraph 30)
3. By chance rather
than design, the Government has ended up supporting local economies
and providing information and services to its citizens through
the post office network, in which a publicly-owned company works
with a variety of private enterprises. It is unlikely that anyone
would have invented this system; nonetheless, it exists and it
is effective. It is possible that the network can be sustained
in a way which generates revenue rather than consumes it. However,
any decisions on the company's operations or the services it offers
must recognize that the nationwide post office network needs to
be sustained, and sustaining it will meet the wider objectives
of any government.(Paragraph 32)
The network and its services
4. Post
Office Ltd's current profitability depends on the Network Subsidy
Payment, which runs until 2011. Further payments would depend
on clearance under European Union State Aid rules. We believe
that such payment, if necessary, would be justified, but clearly,
it would be better if the network could be self sustaining. (Paragraph
41)
Subpostmasters and other providers
5. We
recognise that subpostmasters are self-employed; nevertheless,
when the state provides services directly, it pays its workers
at least the minimum wage. Post Office Ltd, a state-owned company,
should ensure it treats its subpostmasters and Outreach operators
no less fairly. (Paragraph 55)
6. Post Office Ltd
has done a great deal to improve its financial situation. It is
to be congratulated for facing up to difficulties, and introducing
new services. Centrally provided services, such as insurance or
financial services, are welcome in so far as they increase the
financial viability of the network as a whole. However, we need
to be absolutely clear that the health of Post Office Ltd matters
primarily not because it can provide a profit to the Government,
its shareholder, but because it sustains the post office network.
We believe that it is time for Post Office Ltd to pay more attention
to the viability of its commercial retail partners, who are essential
to providing that network. This does not simply mean negotiating
more with the NFSP, important though that may be. It means recognising
the legitimate interests of all its retail partners. (Paragraph
61)
7. Post Office Ltd
must consider the impact of its decisions on its sub-post offices
and other network providers as it seeks to secure the sustainability
of the network. There is no doubt that the company has a very
difficult balancing act to perform in ensuring that the company
as a whole is as profitable and efficient as possible, while acknowledging
the needs of its partners to make a profit. We are not convinced
that balance is currently correct; there is a danger that a drive
for efficiency could result in a rise in unplanned, voluntary
closures because the needs of subpostmasters and other providers
are not adequately met. (Paragraph 62)
Technology and infrastructure
8. It
is clear that Post Office Ltd has, in the past, not been as innovative
in information technology as it should have been. The Committee
welcomes the Horizon technology upgrade, but views it as only
a critical first step. Post Office Ltd should continue to seek
technological innovations that make it more competitive at bidding
for contracts, and simplify and speed up transactions in post
offices. (Paragraph 65)
9. Post office branches
are housed in a wide variety of locations and buildings —
a legacy of the evolution of the network. This has inevitably
meant that not all post office branches are ideally sited or arranged.
There is, however, no excuse for poor access either in relocated
or new branches. The Committee expects Post Office Ltd's new Code
of Practice to ensure that any future branch developments provide
full access, particularly for those with mobility concerns. Post
Office Ltd must actively improve all branches, not just Crown
post offices, as necessary, to take into account technological
change and new services. In some cases, it will be reasonable
to expect Post Office Ltd's retail partners to bear part of the
costs, but this depends on a proper share in the associated revenue.
(Paragraph 67)
Postal services
10. The
largest single source of Post Office Ltd income is Royal Mail
Group. As we have noted, there is little clarity about how this
is calculated, and we welcome the Government's proposals to introduce
more transparency into this. Given the wider social role of post
offices, we believe that it is appropriate to allow any mail operator
who wishes to negotiate with Post Office Ltd to use the network.
Post Office Ltd should do everything it can to secure contracts
with Royal Mail's competitors. However, such contracts should
be properly priced; any such arrangements should "pay their
way" for Post Office Ltd and its partners. (Paragraph 74)
Central government services
11. Government
departments should always consider what is the most effective
way to reach those who prefer to deal with matters face-to-face.
It is legitimate to encourage people to use cheaper communications
channels, but not to deny them choice. (Paragraph 82)
12. We accept that
not all government services can be provided across the network,
but as a minimum, wherever a service can be provided by post then
the associated material should be available at post offices. For
example, passport application forms should be universally available.
The Government must think of post offices not just as a collection
of private businesses, but as a public service. (Paragraph 83)
13. The responses
from government departments to the Committee's inquiry were, as
a whole, inadequate. Most departments failed to suggest any way
in which they might use the post office network. It is easy to
think of government facilities which might usefully be available
through the network, simply because of its near universal reach:
payment of fines, and proof of such payment; provision of simplified
consultation documents; leaflets about departmental services and
initiatives; application forms for energy saving schemes; and
provision of popular government forms. (Paragraph 84)
14. The Committee
is profoundly disappointed by the narrow focus on departmental
concerns and the lack of attention to citizens' needs displayed
in many of the answers to our questions about departments' use
of the post office network. Government is in the business of providing
services, and the post office network represents an unparalleled
facility to deliver those services to local communities. It is
bizarre that government policy recognises the value of the network,
but that individual departments do not see that they have a role
in making sure that everybody, not just the web enabled, has access
to their services, and that taking this seriously by using the
post office network more could contribute to wider policy aims.
(Paragraph 85)
15. We recognise that
providing services through the post office network may be more
expensive than providing those services online. However, we consider
the public's expectation that there should be a choice of ways
to access government services and information is legitimate. The
question should not be "is it cheaper to provide this service
entirely on-line or remotely?" but "given that there
needs to be a choice of delivery methods, what is the most effective
way to reach those who prefer to deal with matters face to face?".
(Paragraph 90)
16. Many or even most
identity services may well be too sophisticated to provide across
the network. However, even limited use of the post office network
will allow these services to be offered across a wider geographical
area than would otherwise be possible. There is potential to use
the post office network to offer such services at a range of locations
across the UK, which will both benefit those who need new driving
licences or identity documents and provide income for Post Office
Ltd. (Paragraph 95)
17. The biggest barrier
to the expansion of government services offered through the network
is the attitude and lack of imagination of most government departments.
History has given government an unparalleled and highly valued
portal in the post office network. Departments must try harder
to provide their services through post offices. At the very least,
individuals must be able to get important government forms in
all post offices. It surely cannot be beyond the Government's
technological ability to provide a means to supply such material
electronically so that the most up-to-date version of the form
in question can simply be printed. Some of the proposals which
have been made to us are impractical at first glance, but contain
good ideas. Departments should not simply dismiss the provision
of services through the network; they should assess whether offering
services through post offices would make life easier for their
customers, and if so, whether it is at all practicable. (Paragraph
108)
18. In asking us to
undertake the task force role, BERR showed its commitment to a
coordinated effort to provide more services through post offices.
The new Department for Business, Innovation and Skills should
continue this work. There should be a government-wide leader to
coordinate and implement as soon as possible a programme of expanded
government services in post offices. There should be a new presumption
that, in addition to any other delivery methods, all government
departments should seek to deliver their services through the
post office network in the interest of social inclusion. They
should also be obliged to promote these delivery methods on an
equal footing with other methods. The example of the Pensions
Agency, constantly seeking to obscure the availability of its
services through post offices, stands as a warning as to what
will happen if this policy is not enforced properly. (Paragraph
109)
Local government services
19. Local
authorities use post office services even less, and less consistently,
than central government. Many are quick to say they support post
offices, but then are slow to offer their services through them
— the support that really matters. They should try harder
to provide their services through post offices — those who
have piloted such services have been enthusiastic about the results.
The Local Government Association should lead efforts to expand
the availability of local government services through the post
office network. (Paragraph 118)
20. It is not appropriate
for the Government to dictate to local authorities the extent
to which they provide services through the post office network.
However, we believe more could be done to raise awareness of the
potential of the network. Post Office Ltd should take the lead
in developing services that can be easily accessed by local authorities.
It should then work with the Local Government Association to ensure
that every local authority is provided with information about
the services post offices can offer. (Paragraph 120)
21. Relying on local
authorities' funding to maintain the network would result in poorer
local authorities providing fewer or poorer services. This would
undoubtedly undermine the uniformity of service, which we have
heard is a desirable — some might say necessary —
characteristic of a sustainable post office network. (Paragraph
122)
22. Post offices are
community assets, and we welcome the approaches to support them
that we have seen. Essex, Devon and Wales are showing commendable
initiative. Undoubtedly there will be many other examples throughout
the United Kingdom. In providing services through the post office
network, Essex is giving an example of a local authority using
post offices as a resource. We were particularly impressed by
the effort that the Welsh Assembly Government and Devon County
Council have made to improve the underlying businesses associated
with sub-post offices. Helping businesses in this way not only
supports the network, but safeguards other facilities for the
local community. (Paragraph 125)
Financial services
23. It
is clear that there is huge demand for wider availability of banking
services through post offices, and this Committee strongly endorses
the widely held view that banking is essential to the network.
(Paragraph 143)
24. The Committee
strongly supports greater provision of banking services through
the network. However, it is not obvious how a new post office
bank would be funded and secured, whether it would entail ending
existing arrangements with the Bank of Ireland, and if so, what
would be the financial consequences of terminating these arrangements.
At this stage, the priority should be to extend financial services
as quickly as possible. The existing agreement with the Bank of
Ireland may be the best way to do that. Alternatively, it may
be appropriate to seek a new arrangement with a UK bank. If neither
of these courses works, a post office bank may be appropriate.
(Paragraph 147)
25. The Government
should review urgently the effectiveness of Post Office Ltd's
strategy for expanding banking services, but it is the outcome
that matters (more access to banking through post offices) and
not the means. Post Office Ltd must prove that its current model,
involving the gradual expansion of financial services, is, as
it contends, the best way to improve banking services. It must
do so by providing more banking services through the network and
substantially broadening access arrangements with high street
banks. The Government should use its influence to ensure that
the banks in which the public is a shareholder provide services
through post offices. We appreciate that the Government wishes
to leave the banks to run themselves, but there is currently a
unique opportunity for the public to gain a specific and valuable
benefit from its shareholding. (Paragraph 148)
26. The Committee
whole-heartedly supports the rapid expansion of fee-free cash
machines throughout the post office network, and urges the Government
to consider providing more innovative tools to enable financially
excluded individuals to take advantage of direct debit bill payment
discounts. The Government should also use the post office network
to promote savings programmes for children and to deliver the
Savings Account Gateway programme. (Paragraph 153)
Community services
27. Our
witnesses suggested a wide range of community services which could
be offered through post offices. The extent to which each is practicable
depends on local circumstances. There may be scope for a rural
post office to double as a tourist information office. There may
be circumstances where it would be possible for a post office
to be combined with business premises. There may be circumstances
in which a prescription collection service could be offered on
a commercial basis. We do not believe such things can be mandated;
they depend on the drive of the individual who runs a particular
post office, and indeed, on the community surrounding the post
office. However, they demonstrate the potential strength and flexibility
of a system where services are provided through a partnership
between the central company (Post Office Ltd) and other partners.
There is a role for Post Office Ltd in making these arrangements
easier; for example, by helping with technology, arranging template
agreements and articulating best practice. (Paragraph 171)
Conclusion
28. Postcomm
has been asked to carry out a review of the social benefits of
the network. The value the public sets on post offices convinces
us that there should be no further closure programmes, but it
is inevitable that there will be some change in the network as
Post Office Ltd's arrangements with individual retail partners
change. The more those changes can be guided by knowledge about
where post office facilities are most valuable, the better; the
possibility of increasing the size of the network should not be
excluded. (Paragraph 174)
29. There is a huge
demand for the universal provision of services throughout the
network. However, there are substantial barriers to providing
all services everywhere: variation in post office premises; the
need for specialist training for some services; and the complex
array of service providers in the post office network. Customers
may have to accept that uniform service provision may not be possible
if services expand. At the same time, the more services that are
offered through the network, the more attractive and useful the
network becomes. Post Office Ltd should by default provide a service
in a branch unless there is a compelling reason against it. (Paragraph
178)
30. It is possible
that if the right actions are taken, the post office network will
come to be both an important social resource, and a profitable
organisation. However, it is also possible that the Network Subsidy
Payment, or some successor arrangement, will be needed for the
foreseeable future. (Paragraph 179)
31. The Government
should support the post office network, but it has a right to
expect that the network will be as efficient as possible. Under
current regulatory arrangements, while Postcomm reports and advises
on the post office network, it has no direct responsibility for
it. Broadly speaking, this will continue if regulatory responsibility
passes to Ofcom. Whatever happens to the Postal Services Bill,
the Government is, and will remain, Post Office Ltd's only shareholder.
It cannot duck responsibility for the efficiency of the network.
In a situation where there is no competition and there are sound
reasons for making government services available through post
offices, the Government may have to be more involved than a shareholder
might traditionally be. (Paragraph 182)
32. Post Office Ltd
must ensure that all post offices offer good customer service.
This may require more financial support. It may require setting
service standards, and monitoring to make sure they are achieved.
Otherwise, post offices will attract only those who have no alternative
but to use them, and the network's role in promoting social inclusion
will be diminished. (Paragraph 185)
33. The expansion
of the range of services offered through the Post Office is likely
to lead to a need for more training of subpostmasters, and possibly
a need for Post Office Ltd to provide some training directly to
staff in sub-post offices or franchises. (Paragraph 186)
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