Examination of Witnesses (Questions 100-119)
JONATHAN EVANS, MOELWYN JONES, DAVID MILLER AND DAVID MILLS
WEDNESDAY 1 MAY 2002
100. So how do you handle such closures, how would this have been handled by yourselves in Llandudno, a major town in North Wales, as you will know?
(Mr Miller) I do. We have a Code of Practice, and that Code of Practice was followed in the case of the office you talk about. The circumstances around that were that we had a post office in a chemist that was run by (Connors ?), a company; that company was taken over by Boots, Boots decided to shut that chemist, locally, and basically Boots said, "We don't want to run this post office." What we did, in response to that, was to increase the capacity of the local branch office, but in the particular circumstances you have talked about we had little alternative, in terms of, we were told by Boots, "We're not going to run the post office and want to cease the franchise."
101. So, not to be too parochial, Mr Chairman, could you tell the Committee what are the main differences between the Code of Practice you use for the closure of an urban post office and a rural one?
(Mr Miller) I think, essentially, the urban post offices, it is a similar process; the question is, have we got the capacity to relocate an office in an urban area, it is often easier to relocate in a rural area, there are more people, there are more premises available than there are, for instance, in the centre of a large town. So possibly it is easier, from a rural point of view, to relocate.
102. I am not understanding you properly; what are the main differences between the two Codes of Practice?
(Mr Miller) Depending on the sort of office, but if we were going to franchise an office, one of our main post offices, we would have a longer consultation period, so we would have an eight-week consultation period. But the basics of having to inform a list of interested parties and get the response from those parties and take consideration of what they say, that is all similar, whether it is a rural post office or an urban post office.
Mrs Williams: May I suggest, Mr Chairman, that it would be useful if the Committee had a copy of the Codes of Practice for the urban and the rural situations.
103. Is that possible, Mr Miller?
(Mr Miller) We can provide it for you, certainly; yes, we can.
104. Have you got one with you? Amazing.
(Mr Miller) Yes, indeed.
105. Perhaps you can pass it over in a moment?
(Mr Miller) Yes.
(Mr Evans) Would you like it in Welsh or in English, Chairman?
Chairman: Personally, in English, but Betty would like it in Welsh as well, and several other members of the Committee, no doubt.
Mrs Williams: Both. I am bilingual.
106. Just to go back, Mr Evans, if I may, to your six reasons for why Post Office finances are not as healthy as you would like. A price increase, you have asked for only a penny, which, on a generous estimation, is £200 million, but we are looking at £1.5 million a day loss, and a saving of £1.2 billion; so that is regulation, handling of mail abroad, the amount of money you have invested and the loss of PNL and Post Office Counters, and Horizon. The numbers you came out with were just £200 million or £300 million, in each example, so somewhere, in there, there is a much bigger hole; where should I be looking?
(Mr Evans) The change in profitability though, if you think of it, is about £half a billion, we were making profits, three or four years ago, of about £400 million a year, it fluctuated, but round about there. Now, in terms of operating profit, we will be announcing our results pretty soon, but it will be one or two hundred, in terms of operating profit; so the turn-round in the real operating profit of the business is about £half a billion, and I think that is covered by the elements I have outlined.
107. Thank you very much for that. The other issue is that post offices in Wales serve, on average, a much smaller population, somewhere in the region of 2,095, I think the National Federation of SubPostmasters estimate; does this mean that they are particularly vulnerable to closure?
(Mr Miller) No. Seventy per cent of those branches are actually rural, and therefore come under the umbrella, if you like, of rural protection. So I think it is important to make that point. However, if a branch has got, on average, only 2,000 customers, as opposed to the national average of 3,000 customers, there is something there about the difficulty not just of operating a post office with that lower number of customers, but also the difficulty of operating the adjacent business, which is obviously very important in a number of post offices. So I think, whilst we will strive, and the fact that it is 2,095 is an historical accident, we have got no plans, as it were, to level out on the basis of quotas, so everybody has got to have the same, we recognise that has grown up in Wales, for very good reasons; but I am making the point that, with that fewer number of customers, both the post office and the business is going to find life just that bit more difficult.
108. Okay; because, obviously, in my constituency, there has been a large number of closures, and I am finding that pensioners are having to spend quite a lot of their pension on getting a taxi to get to a post office, because, obviously, their local one has gone. So I just wonder what assessment is made of the needs of the local community, and in particular the elderly and disabled people, who are financially excluded when decisions are made whether to keep a branch open or not?
(Mr Miller) We do everything we can to take that into account, and, as I say, with the Rural Transfer Advisers particularly now in place, because most of the closures are still in the rural area, we would intend to keep that number as low as possible. So we really do recognise that closing post offices does have an impact on the more vulnerable people in society.
109. Can I apologise to you, Chairman, and the rest of the Committee, and indeed to the witnesses, for not being prompt for this particular session. Can I ask just a very short question, do you have any further plans for closures, or do you envisage that there will be no further closures for the foreseeable future?
(Mr Miller) On post offices, in conjunction with the Government, we are currently reviewing the size of the urban network, and there are matters in hand to see if we can improve certainly the quality of some of those urban offices, and part of that may be also the closure of a number of urban offices. And this matter is under consideration, at this point in time, there has been an approach to the European Community, but before anything can be done along these lines the matter will have to come before Parliament.
110. When you say that you are looking to improve the quality, could you be slightly more specific?
(Mr Miller) Yes. I think that it is important that we make sure that we have got post offices in the right locations, and that we have the right quality of service, the right format, at those locations. And part of the process, in discussion with Government, is actually about identifying monies that we can invest in the post offices that remain, to ensure that we have got the right capacity, that gives the right quality of service, and they give the right format and customer service.
111. In making an assessment of what the appropriate locations are, within that portfolio, can you tell the Committee whether any consideration is included in that assessment of public bus services, and indeed routes, and are they specifically included in that process?
(Mr Miller) Yes, it is.
112. I am very pleased to hear about your rural protection policy, and I think your policy says that it is to prevent all avoidable closures in the rural network. Perhaps you could give us an example of what you believe are unavoidable closures, and, can I ask, do you have a similar policy in deprived urban areas?
(Mr Miller) Yes. Quite clearly, if a sub-postmaster resigns, either through ill-health or because they have reached an age where they wish to retire, then what we would aim to do would be to try to get a replacement; so it is not just a question that the post office would cease to exist, we would actively pursue other people actually to come and do that job, and we will go not just to individuals but we will go to the local communities. There are some examples where villages, and so on, are now saying, through to the village hall, they would like to run a post office. We will look at whether restricted hours could help, if somebody would be prepared to take it on, so at least we have got the post office. We look at mobile post offices. So those are alternatives. I have just to say, around the support for the rural network, that we are wanting and expecting to talk to Government fairly soon about what help the Government is prepared to give the Post Office, in terms of supporting those rural offices, because, quite clearly, a lot of them are loss-making. In terms of the urban deprived offices, we are in discussion nationally, with regard to England, but next week we have a meeting with a division of the Welsh Assembly, to talk quite specifically about monies that have been given to the devolved power, and we are going to talk to them about how those monies should be used to support urban deprived offices within Wales.
113. I was approached recently by a sub-post office and was told that there are grants available for improving the building, in order to comply with your requirements; is that the case?
(Mr Miller) Yes, it is. I think already we have made eight grants in Wales, not of huge sums of money, but offices can get up to £20,000 from a fund that has been set up by Government in order to invest in terms of improving an office, or if they want a counter built in a village hall, or whatever, or just a modification to somebody's house, so they can run a post office from a house. So we have got eight already in Wales, and there are a few more in the pipeline that we know about.
114. Just on that question, what criteria do you use, when you try to decide where you should locate, or use a mobile post office, and has it been used, and how many times?
(Mr Miller) Three times, in Cumbria, in Devon and in Hampshire.
115. Not in Wales yet?
(Mr Miller) Not in Wales, yet. But the criteria really are demand in a locality; if a number of post offices in a rural area appear to be under threat, is it possible to cover that threat by actually running a mobile post office. So it is not cheap but it is something that we expect to be doing more of in the future.
116. I think, Mr Miller, you have partly answered this question, but I will ask it anyway, in case you want to add to what you said. You will remember that last time representatives of the Post Office appeared before us, just over a year ago, we discussed the handling of closures caused by retirement or resignation of incumbent sub-postmasters. Can you tell us what steps you have taken since then to improve the arrangements for recruitment of new sub-postmasters, in order to keep offices open?
(Mr Miller) Yes. I think I have mentioned on a number of occasions that we have now got four Rural Transfer Advisers in Wales, and they are the main thrust of what we are doing, in terms of, as people resign or retire, it is wholly their job to find a replacement, of one sort or another. But that is the main thrust of what we are doing.
117. Have you any evidence to show that the appointment of these four people has actually managed to stop a closure in Wales, and, if so, where?
(Mr Miller) Yes. We have a number of examples, which, if it would help, I could certainly send a note to the Committee, to give you, but we have probably seven or eight examples.
118. PostWatch Wales have expressed a number of concerns about the consultation process when a closure is proposed. In particular, they say, the notice periods set out in the Code of Practice are not adhered to. Secondly, the notification letters fail to take account of important issues such as disabled access and which services are provided at other branches. And, thirdly, the lack of feedback on the effect of PostWatch's representations on the consultation process. You said that you are reforming your management, but it appears from evidence given to us that your attitude towards PostWatch is similar to the attitude towards the workforce in general. How do you respond to these criticisms?
(Mr Miller) The Code of Practice, which I will leave with you, was actually agreed by PostWatch, so the periods of notice and notification, and so on, are agreed by PostWatch.
119. But are they adhered to by you?
(Mr Miller) If there are examples of where they are not then certainly, personally, I would like to know that, because I would like to take action on that.
11 Not printed but see page 35. Back