Examination of Witnesses (Questions 1
TUESDAY 20 MARCH 2001
1. Good morning and welcome to the Committee
again. I think it was 4 July you were here last time talking to
us about social exclusion in Wales. In the light of the answers
to some of our questions, we thought we ought to invite you back
to explore the issues of post office closures in Wales a little
bit more deeply, and possibly also some broader issues relating
to social exclusion in Wales. Could you begin by introducing yourselves?
I think we have seen two of you previously.
(Mr Sweetman) Yes. I am Stuart Sweetman,
Group Managing Director, Customer and Banking Services, in the
Post Office. Basil Larkins is Managing Director of Network Banking.
Mike Granville is Head of Network Policy in the Post Office Network.
2. Before we begin, could I clarify one small
matter? In section 2 of your memorandum you refer in several places
to "the first three-quarters of this year". Since it
is only March, is that the first three-quarters of last year,
2000, or is it the first three-quarters of the financial year?
(Mr Sweetman) It is our financial year, so the nine-month
period is up to the end of December 2000.
3. In your memorandum you state there have been
50 net closures in the first three-quarters of the year. Could
you possibly tell me how many net closures there have been in
the last three years?
(Mr Sweetman) It is of that order per annum. I do
not actually have the figures for the last three years for Wales.
(Mr Granville) Equally, I do not have those figures
to hand readily.
(Mr Sweetman) This is a bad start but we can certainly
provide the Committee with those figures.
4. Would it be right to say that it is somewhere
of the order of one in eight of the existing post offices?
(Mr Sweetman) I think it would be less than that per
annum. It would be probably of the order of 50 in each of the
last three years, about 1400 to 1500 offices, so that would be
about 8 per cent.
5. What is your latest figure for the total
number of post offices in Wales?
(Mr Sweetman) 1409 at the end of December; we have
not updated these figures yet but we will be doing so for our
year-end, which is the end of this month.
6. On the same point, and you do not have the
up-to-date figures, are they going down or going up?
(Mr Sweetman) They do move up and down. At the moment
they are probably very slightly up on the long-term average. We
are finding that this is a net fall in the turnover of offices.
We have had a lot more closures for which we have found replacement
sub-postmasters. We have found that in the last year the rate
of turnover has decreased, unfortunately principally because sub-postmasters,
who probably would like to sell the business, are unable to find
a replacement sub-postmaster but are sticking with the office.
The important thing for us at the moment is that the rate of turnover
is down because there is lower confidence in the marketplace for
sub-post offices. That is a long answer to your question.
7. There is this fluctuation, you say?
(Mr Sweetman) Yes, there is.
8. So you cannot be precise at any given time
as to how many offices you have got?
(Mr Sweetman) We know how many we have got locally.
We bring the figures together once every three months on a national
basis and the next figures that we will collate will be effectively
after next week, which is our year-end date. That will be available
when we publish our annual accounts, which I believe is in June.
9. On this question of fluctuation, I do not
think I am any different from any other member of this Committee
in my experience, in that all I have found in my constituency
is closures. I do not know about this word "fluctuate".
I know off-hand of perhaps one new post office in the whole of
my constituency; all the rest have been closures. It is really
closures, not fluctuations, is it not?
(Mr Sweetman) Unfortunately, over the last few years,
we have been experiencing net closures, yes. We have also re-opened
a number of offices throughout the country and we are finding
replacements for many sub-post offices where we have resignations,
for whatever reason. There is a churn in the numbers but unfortunately
the numbers are reducing.
10. Can I refer you to an example in my constituency,
and I will name it, a place called Mallwyd, where there was an
elderly lady who ran a sub-post office. She gave notice in January
of last year that she would not be running that post office from
her home six months after that date. Some constituents of mine
have a very successful garage business with a turnover of just
over £1 million per annum, having been in business for nearly
ten years. They are very highly regarded and respectable people.
They approached the Post Office locally through Bangor before
the end of January, then in March and then at the beginning of
April. At some time in April the Post Office took them seriously
and put them through the hoops. In August they said, "I am
sorry, but you are not people whom we can trust to run the post
office". I intervened and said that I could not understand
why this was and the decision a month later was reversed. I am
extremely unhappy about that kind of thing. Firstly, why should
they have to ask three times before any kind of response comes
forward from the Post Office Counters? Secondly, if they were
unfit in August, how come they are fit in late September?
(Mr Sweetman) Unfortunately, I do not know the details
of the office.
(Mr Granville) I do not have the details to hand.
(Mr Sweetman) I think we are going to have to pick
that up and deal directly with you on it. From the information
you have given us, I cannot excuse the lack of a response three
11. I picked up that you said you would find
replacements . I have never seen any replacements that have been
found locally in my patch. It may be that in theory it happens
but I have not seen it.
(Mr Sweetman) Again, these are national numbers: in
the nine months up to the end of December for the whole of the
country I think some 900 replacement sub-postmasters were found
where people had resigned. Our annual turnover for post offices
is probably about 8 per cent per annum where sub-postmasters resign
and we find replacements. It is unfortunate that we cannot always
find replacements. The replacement process is handled locally
by the people who know the community and know the alternatives.
I am afraid, I cannot respond to the particular example that you
have given but I will follow that up.
12. I can understand why you cannot respond
to specific cases, Mr Sweetman. I think we all have, and certainly
those of us representing rural areas, similar cases. It does seem
to us on the ground that it is almost a policy of Post Office
Counters not to make a great deal of effort to re-open and look
for other sites. I do not wish to touch on things we are going
to be discussing later. Perhaps you could address your mind to
that fact as we go on.
(Mr Sweetman) It is absolutely our policy in the rural
areas we are talking about, which are the most exposed communities
up and down the country, to look aggressively for new sub-postmasters.
In fact, the Department of Trade and Industry has very much a
requirement to maintain the rural network, with the exception
of force majeure closures. A number of issues come into
play as to why an individual sub-post office might come under
threat of closure. From my point of view, what I am trying to
do over the longer term is build up confidence in the network
of post offices so that individual sub-postmasters and respected
sub-postmasters have confidence that they are actually involved
in a business which is sustainable. That is why we are developing
new products and services. Ultimately the decisions are made by
individual sub-postmasters on whether their outlet is viable within
their own personal circumstances, and we have to respond. I think
the PIU report, which we discussed last year, did recognise the
lengths to which we actually went in trying to maintain the rural
post offices. We do try very hard and it is our policy and there
are laid down procedures which are followed locally by our retail
network managers. I do not accept what you have just said.
13. I will let my colleagues ask questions on
this shortly. What you are saying is actually not what is observed
on the ground. You say that you want to keep post offices open
but we have all had casesand I am sure you will hear this
from my colleagueswhere the amount of hours and therefore
the remuneration of post offices is cut down at the point when
somebody retires. That cannot be an encouragement to keep the
post offices open. I have two cases, and I am sure my colleagues
have others. We have had a survey from one of my other colleagues
which shows that this is the case. That cannot help to keep post
(Mr Sweetman) I think you are right. That has happened
on a number of occasions in the past where the volume of business
has not justified maintaining the hours which the post office
was open, that there was not the local demand. In the past we
have used the change of sub-postmaster to change the offer, which
is one of the ways that we are following our value-for-money principle
and trying to maintain a service but at a reasonably economic
cost. Recently, since the requirement from the DTI has been laid
on us, we have reviewed that policy and are no longer reducing
those hours. It is something which we are very conscious of, although
in the past we have done that.
Chairman: It is good to hear that.
14. I am aware of the most recent Code of Practice
which you have to follow, but what you are saying to us today
does not quite match what is happening in our communities. Mr
Llwyd has mentioned one and the Chairman another. I want to re-visit
another case in my constituency later. I reiterate my point to
you that what you are saying does not match up with what happens
in our communities.
(Mr Sweetman) If that is the case and you give me
the evidence, then I will follow that through because that is
not our intention. If the deployment of our policies on the ground
is patchy, then we will do something about it.
15. I think Mrs Williams is right. There is
an abundance of evidence to show that what we are facing day in
and day out are closures and nothing else. Can I add to that rather
disgraceful example I gave you earlier on that the representative
from Post Office Counters in Bangor, when he eventually came to
Mallwyd four or five months later, actually mentioned to the applicants,
"You don't really want this. There is not much money about,
so why are you bothering?" What do you say to that?
(Mr Sweetman) As a remark, that was not an appropriate
thing to say.
16. Exactly, and that colours our view as Members
of Parliament. Frankly, and I think I speak for us all, we think
the word "rationalisation" comes in and that there is
a Freudian slip in the letters from Post Office Counters. When
a place closes, they always refer in the final paragraph to where
the nearest one is. That is a Freudian slip in my view. You want
to close down half the net work, do you not?
(Mr Sweetman) No, we do not. That is not our policy.
Our policy is to maintain the rural network. The main way we have
to do that is to make the whole network sustainable by ensuring
that the threatened business that goes through post offices, which
in many of the rural areas will be the payment of benefits, is
replaced with new lines of business and those are firmly coded
into our plans over the next five years. We are going to roll
out banking services, government information services and a new
range of commercial services which, over the next five years,
will actually make the business as a whole much more sustainable,
but we have no plans for rationalising the rural network.
17. At the current time and five years from
now, if closures continue at the rate they are now proceeding,
we will have half the network anyway to play with, will we not?
(Mr Sweetman) I think the real issue here is the confidence
that individual sub-postmasters have in the future. That has taken
a number of real knocks over the last few years. They can see
their business declining. As individuals, they are making decisions
that say: "I am afraid, I am not going to continue with this
business." Then they are having difficulty in finding replacements
to take over the businesses. Many of the people we are talking
about are probably not providing the service as a business but
as a service to their individual communities. Many of them are
in their own homes or in village halls where they provide the
service. Some individuals say, "I am not prepared to provide
this any more" and then we have a real problem in finding
a replacement. The decisions on individual outlets are, firstly,
made by the individual sub-postmaster. Some of those are economic
reasons and some personal and then we respond as soon as we find
out. If you will provide me with evidence that we are being inconsistent,
then I will certainly take that away, because that is not our
Chairman: We will be touching on some anecdotal
18. How many of the remaining post offices in
Wales are likely to close in the next five years or so?
(Mr Sweetman) I really cannot answer that question
because it does depend on individual decisions by sub-postmasters.
19. If it goes along on the present trend?
(Mr Sweetman) I am trying to reverse that trend, so
I am not in the market for forecasting what will happen over the
next five years. I have produced a business plan for the whole
of the Post Office Counters' business which shows real growth
over five years. The business that we are planning to create,
Post Office Ltd., in five years' time will be 30 or 40 per cent
bigger than the business is at the moment. We have had a whole
series of road shows to sub-postmasters up and down the country
which have set out our plans and we hope that that will build
confidence. I hope then that the trend that we have been talking
about of closures will be reversed, but I really cannot answer