Examination of Witnesses (Questions 60
TUESDAY 20 MARCH 2001
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
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.
63. It does seem to me that this low level of
income is a major problem for a postmaster or postmistress in
(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
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 equipmentthe safes,
alarms and screensbut 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.
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
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 facilitiesvillage
halls, churches, pubs or whatever it might beto 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.
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.
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
(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
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
77. You are familiar with the background of
(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
(Mr Sweetman) I have an account here which I could
read from but I do not know the case intimately myself.