Examination of Witnesses (Questions 100
TUESDAY 20 MARCH 2001
100. When an imminent closure is announced,
do I take it that there will be an immediate publicity campaign
of some kind?
(Mr Sweetman) We will follow the procedure set down
in the Code, which does include contacting all the local interest
groups and actually putting out into the marketplace the availability
of that sub-post office. Primarily it will be in the interests
of the retiring sub-postmasters to do that because it is their
business that is being sold. I think it is a combined interest
that we have with them. The prime responsibility to initiate that,
if they are selling it as a going concern, would be for them.
If we see that there is a potential problem, then this code of
practice kicks in.
101. When you discover there is a potential
problem, are we then going to have delays and things hitting the
buffers because of a time delay? I want to sell my business: at
what stage do you say to me, "You have a problem. Can we
help you?" and what do you do?
(Mr Sweetman) Normally a sub-postmaster will give
us three months' notice. It is our objective from that point on
to ensure that there is continuation of service. We will then
have an interview and discussion to find out what their plans
are for putting the sub-post office on the market. It could be
that they decided that, no, they are turning their premises into
private accommodation, and then we have a real problem because
we have to find an alternative site. That is when, once we know
whether they are selling it as a going concern or are taking the
site off the market, we decide whether to kick in with our local
102. Do you agree, and you have the Code of
Practice in your hand, that, because of the complaints we have
already discussed with you this morning, that Code of Practice
which has now been issued by Government was long overdue?
(Mr Sweetman) Yes, I think you are right. We did not
have a consistently applied Code of Practice. I think from my
point of view this is an important step forward and, while the
PIU report last summer did recognise we had done a lot in rural
areas, it did recognise we had to ensure that we were consistent
with the document. I go away with the firm message that in the
past we have lacked consistency. We have not demonstrated our
commitment and for that I apologise. I think, now that we have
this in the public arena, we will be measured publicly and systematically
on that by PostCom. I think that is where the regime has been
toughened up by Government. I will do all I can, certainly after
this morning, to ensure that we do not let the people of Wales
Chairman: Thank you very much. It is very nice
to hear that.
103. As we have already said, one of the aims
of the initiative is for a new Government fund to help support
volunteers and community groups to maintain or re-open post offices.
I think the Government thinks that this could possibly help in
establishing 200 community post offices throughout the UK. Do
you think that this type of non-profit post office is going to
play a significant part in the development of the post office
(Mr Sweetman) My hope is that it might be more than
200. That will be the minimum level in my expectation because
there are solutions which would literally cost a few hundred pounds,
which is a lot of money at parish level. I think this is one of
our tools to maintain the network. It is an important move. All
our other initiatives are primarily about building up but we are
actually talking here about a successful business. We have not
spent much time this morning perhaps on what are the underlying
services that people want from a post office. I think at the heart
of my job at national level is actually getting people like Basil
Larkins here generating new products and services which will keep
post offices open. What we have seen are lots of attacks across
many different channels so that people can now get the services
they traditionally received from post offices elsewhere. What
I am planning to do is to grow the scale of the business going
through post offices and make it much more varied, more diverse,
and improve that long-term prospect if we can land all the deals.
Our big move into banking, government information services, stakeholder
pensions and smart card ticketing are all things which will revitalise
the post office and hopefully will move back the economic pressures
which have caused closures. That is how I would like to look at
the future of the post offices. It is because we are providing
relevant, modern services and leaving behind a lot of the moribund
services which proved expensive to our clients and that is really
what I would like to spend time on because that to me is where
the real security and sustainability is going to come from.
104. So the help to voluntary groups and community
groups is only a small part of it?
(Mr Sweetman) It is only a small part but I think
it will make a difference in several hundred communities up and
down the country. If the Government decides to give a specific
sum of money to local communities, I hope there will be several
hundred communities which will have their post office sustained
for the foreseeable future because we have just overcome one of
the difficulties that in the past we have encountered.
105. I am glad you say that you think the figure
will be more than 200. Obviously if there are 50 closures per
annum in Wales, it will not make that much difference, will it?
(Mr Sweetman) No, but 200 would imply £10,000
each. I think you could do a lot in a local community with £10,000
but you would get a lot more communities affected at £1,000
or £2,000. I think we will make the money go a long way and
be very effective.
106. Can I return you to page 6 of your memorandum,
the second paragraph in 4.2.1 where you refer to using more creative
ways of offering services? You go on to mention the use of pubs,
garages, local authority offices et cetera. Have any of these
been piloted as yet?
(Mr Sweetman) I do not have the figure for Wales.
We have a couple of dozen post offices that have now gone into
pubs. I have had meetings with representatives of publicans and
letters from breweries saying that they would like to open up
certain pubs for post office business. Certainly that is for real
and we have taken that forward. We have a number of post offices
in garages, if that is right for the community. Not all filling
station sites are ideal but some are. I think we do have to be
more inventive to find business partners who can incorporate post
office services within their offering. That is certainly the challenge
that we have picked up.
Mr Llwyd: I am interested because the example
I referred to earlier on of Mallwyd was a very successful garage.
Obviously at first glance it was not good enough but now it is.
107. I have a couple of points in this respect.
I have a community post office sited in what was a shop in a little
village called LLangunllo. My constituency is the largest geographical
area of England and Wales. There is also a community in Llanbadarn
Fynydd which has received awards. Many of these offices are part
of a network. Last summer Presteigne post office in my constituency
had a relationship with the Llangunllo community office, which
was sited in an old shop. I asked the Ministerthere were
difficulties in fact in continuing this serviceand he agreed
to do something about it and I was given the reassurance that
with new the IT this was going to be all right. Yet, your PR department
was saying it was going to close down and there were all kinds
of difficulties. There seemed to be a complete breakdown in communication
on that occasion between Bangor, your PR people, who I think were
sited somewhere in the Midlands, and the DTI. Have you improved
your communication system since then? We actually saved the situation
after being very vociferous about the whole thing.
(Mr Sweetman) That is an example where clearly we
were not joined up. I would hope that we have improved from lessons
like that. I can assure you that it is our intention to be joined
up. Unfortunately, there are examples which we have heard about
this morning where clearly we are not. I apologise for that.
108. It was a very serious situation because
I was sending letters from the Minister to the local post office
and your PR people were saying precisely the opposite of what
the Minister was telling me.
(Mr Sweetman) That is clearly an unacceptable position
to get into.
109. They believed me rather than your PR person,
(Mr Sweetman) I apologise for that.
110. You say that the proposal to pay benefits
through bank accounts from 2003 is a significant threat to the
Post Office network. We found during our inquiry into social exclusion
that there are nearly half a million adults in Wales with no bank
account of their own. Is it possible that the decision will cause
people to open accounts with the new Universal Bank, thereby increasing
the Post Office's business?
(Mr Sweetman) Yes, certainly we are responding very
vigorously to this challenge or threat. As you are well aware,
some 35 per cent of Post Office business going across Post Office
Counters is to do with the payment of benefits. I will ask Basil
Larkins, who is leading the development of our Banking Services,
to respond in more detail.
(Mr Larkins) I think this will be the single, most
fundamental change to our business over the next few years. The
bedrock of what has been going on in Post Offices for as long
as anyone can remember is distributing Government services and
the contract has been the payment of benefits. We have really
been in the payment of benefits business and other things. By
2005 we will not any longer be in the payment of benefits business;
we will be in the access to bank account business, which is a
different business. That is going to be a major challenge for
us as a management team and for our network of sub-postmasters
to deal with. You mentioned the new Universal Bank; it is actually
the new Universal Banking Services. The agreement that was reached
between Government, major banks and ourselves in December was
that on the one hand the banks will open up through their computer
systems access to basic bank accounts at Post Office Counters
for free. We think that a large number of the people who are currently
"unbanked" may well choose that option to open up one
of these accounts with one of the well-known banks or building
societies. Secondly, in addition, there may well be people who
either will not or cannot open that account and they will instead
choose to open up what we are going to call the Post Office Card
Account, which is referred to as the Universal Bank. The Post
Office Card Account is going to be the name we use. That will
be for a very large number of people we think, although of course
we are two or three years away from the launch and who knows exactly
how many. Of course, the vast majority of people who are in receipt
of a pension or a benefit already do have bank accounts. We expect
that their option will be by and large to choose to put that money
into an in existing bank account. For our purposes from a commercial
point of view, I have to ensure that they will still go into the
post office to access that bank account. That is particulary the
case for example in rural areas where there are very few bank
branches anyway. Unless we get those deals put in place, then
the person will have to travel further to get their money and
that is obviously not a good idea. The good news is that we have
made some of those arrangements already with several major banks.
I am very optimistic that, since the banking community has committed
to access to the basic bank account, there is no reason why we
should not provide commercial-based operations for ordinary customers
111. So you would agree that, rather than pose
a threat to the Post Office network, it could be a benefit?
(Mr Larkins) It certainly does pose a threat and there
is no doubt about that, but in every threat there is an opportunity
as well. When change takes place, that is both a threat and an
opportunity. Certainly the removal of the payment of benefits
by the traditional method is a threat. That is exactly why, for
example, the second-hand market in post offices has been reduced
because there is a lack of confidence there. We have to find this
new business. Once those contracts are in place and once we have
a total watertight agreement both with the Government and the
banks, then with a very high degree of certainty we will get that
confidence back into the marketplace again and our consumers and
our sub-postmasters will feel reassured that there is a long-term
future, but we have not got there yet. We are making extremely
strong progress but we are not here yet.
112. But if removing traditional methods does
happen, people can still, if they wish, have their pensions and
benefits paid in cash at the post office?
(Mr Larkins) At the moment, but that will not be the
case after 2005, unless through one of the very mechanisms I have
described to you.
113. Is that your understanding?
(Mr Larkins) The DSS has made it quite clear that
the current method of paying benefit will be changed to ACT, which
means payment into a bank account, either a new bank account or
an existing bank account, by 2005. That is DSS policy.
114. Are you not aware that the Minister has
made it quite clear more than once that people will be able to
get their pensions and benefits in cash at post offices?
(Mr Larkins) Absolutely, but by access to the bank
account, not by access to the counterfoil system we have at the
115. After you gave evidence in July, you sent
us a note saying that you had approached the National Assembly
to make them aware of potential users of the Post Office network
for a range of Government business. What kind of services could
the Assembly offer through the Post Office network?
(Mr Sweetman) I think that is principally information
services. We have reached agreement with the Department of Trade
and Industry on an initial trial of such services for the whole
of the country. The trial is taking place in Leicestershire and
Rutland but the results of that will be made available to all
parts of the country. I think the main interests from the Assembly
point of view will be in information services that will be provided
and financial support that can be provided to communities. We
anticipate in many post offices there will be information kiosks
and leaflets. We will be training sub-postmasters to be able to
answer the simple inquiries about: where do I go for this and
where do I go for that? That is one of the skills that we recognise
sub-postmasters have got, being a trusted source of information
about financial support, social support, community support and
small business support.
116. I certainly agree with that. Could you
say, though, given that the Assembly is very e-conscious and conducts
most of its business through that medium, whether you have made
further progress in that area? Do you foresee facilities for getting
information, say through the internet, from the Assembly?
(Mr Sweetman) Certainly the model that we have on
trial in Leicestershire with the support of the DTI is a mixture
of face-to-face information support absolutely supported by technology.
This will be in various forms. It will be through the internet
with kiosk facilities on the public side of post offices and there
will be direct phone lines to inquiry centres with phones where
people can talk through web screens. It is quite an exciting proposition.
With something like the Assembly, which is very e-literate, it
will be a natural extension to provide those services through
many post offices up and down Wales. The great advantage is that
you know information can be updated overnight everywhere at the
same time and therefore the information available is totally up-to-date.
That has advantages over some of the more labour-intensive methods.
117. I think there are potential problems. I
am very pleased to hear you have a dual approach because in some
areas there is an ageing population and they are not familiar
with the new technology. I think it is absolutely vital that you
maintain that dual approach to people and give them access in
a way that they feel absolutely appropriate.
(Mr Sweetman) Certainly all our market research shows
that there are large numbers of people of the population that
we serve which are not personally confident about using new technology
but they would trust the sub-postmaster to talk them through it.
We have also found that, once that confidence has been builtthis
is how you do it, this is what you do and what you seethen
they take to it like ducks to water. We have found that with sub-postmasters
as we have introduced the Horizon system. People who were initially
worried about the technology, once they have been taken through
it and have been hand-held through the process, find their confidence
grows. I think that will happen with our customers as well. Our
strategy is to offer customer choice: you can have it this way
or that way. The uniqueness about the network of post offices
is that you have a fundamental core and face-to-face contact and
that is where the trust is built up but if people want pure technology,
then they will have pure technology available as well.
118. Finally, are you satisfied that your sub-postmasters
are up to scratch in terms of training? Do you provide training
for them? Given, for example, the age of the postmistress Mrs
Williams was mentioning, which is not untypical at 70 plus, are
these people actually going to be able to deliver that kind of
(Mr Sweetman) That is why we chose a single geographical
area like Leicestershire, which has a mixture of urban, market
down and deep rural within it, actually to test these products
and services for real. This trial starts in July and runs for
six months. Then we will make all the results available. The two
key things that we are looking at are: the response to customers
and what they like; and then our organisational ability to support
that. If our experiences on Horizon are anything to go by, age
is not a barrier when it comes to providing customer service with
technology. For some people it is an issue but the majority of
our sub-postmasters, irrespective of age, have taken to Horizon
and the technology involved incredibly well. Therefore, I have
confidence that when we do package up the final solution which
we can roll out right across the country, we will get something
which has been proven and will actually bring business and footfall
back into post offices.
119. That is a very good note to end our session
today. Thank you for coming and for acknowledging the failures.
It is important that you did that. Can I ask you one last question?
Would you update us in six months' time or so on the various individual
cases that we have raised today?
(Mr Sweetman) Yes. I think I have learnt a lesson
from coming this morning. We do run a devolved management system
and rely on many hundreds of people to keep everything together.
I have learnt the lesson that we are certainly not perfect. You
have given me strong evidence that that is the case. Our intent
absolutely, though, as is set down in the Code of Practice, is
to keep this network of rural post offices going. It is a tough
job but our lack of consistency has certainly come back and hit
us today. I leave with the bite marks showing, in the nicest possible
way! A personal lesson has been learnt and an organisational lesson,
too. I feel accountable to you to come back in six months' time
with evidence that the words are actually supported by action.
Chairman: We look forward to that. Thank you
very much indeed.