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MEETING WITH DEREK HODGSON, COMMUNICATION WORKERS’
UNION - 4 MAY 1999
Pur pose
Mr Hodgson requested the meeting to discuss progress on the White Paper on Post
Office Reform.
DTI Objectives
1. To reassure the CWU that its concerns will be taken into account in the reform
package.
2. To seek CWU’s acceptance of the reform package as a whole (even though it may
have reservations about some aspects).
3. To seek CWU’s agreement to co-operate with the Post Office in achieving
efficiency and productivity gains needed to enable the Post Office to compete in a
more liberalised market.
Those Attending
Derek Hodgson General Secretary, CWU
Roger Darlington CWU
Judy Britton Post Office Reform Team
David Sibbick Posts
Last Meeting with CWU
Mr Hodgson met Mr Byers on 26 February to discuss the CWU’s response to the 7
December statement. The brief covers the issues raised at that meeting.
Future Meetings
Mr Hodgson will be meeting Mr Byers on 5 May and Gordon Brown on 10 May.
Conferences
The CWU’s conference starts on 24 May; the Communications Managers
Association’s conference starts on 17 May; and the National Federation of
Subpostmasters conference is from 17-19 May.
PORT
4 May 1999
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White Paper Timing & Liaison with CWU
Line to take
Aiming for publication before 19 May (the start of the purdah period for the European
Elections).
The White Paper is one of the three pillars that we intend to put in place in the first half
of the year - along with implementing the EU Directive on Postal Services and
agreeing the Strategic Plan with the PO Board.
Can CWU see a copy of the draft?
Agree CWU should be aware of the contents of the White Paper before it is published.
Doubt very much if you will be surprised as it simply fleshes out the Government
policy set out in the statement on 7 December.
Will arrange to brief you prior to publication.
Conversion of Post Office to a PLC
Line to take
a) No need to convert to a ple
Converting the Post Office to a plc is the best way to underline the accountability of
the PO Board and the new commercial status of the public sector organisation.
The legal framework for “Post Office plc” will be more transparent than that for a
national corporation which is very opaque.
Post Office plc would be governed by the full range of company law as appropriate to
its new status.
b) If plc, then no share sale without further primary legislation
Intend to leave the door open for further reform that might benefit the Post Office.
Primary legislation will enable a future share sale or transfer as Government wishes to
maintain maximum flexibility. For example, to allow the transfer of shares to cement
partnerships in joint ventures.
Cannot give you assurances at this stage that the legislation places limitations on the
sale of shares.
Future Pay Arrangements
Line to take
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Understand that you have been working with the PO management on future pay
arrangements, in particular the rewarding of success. The Treasury is still considering
the PO’s proposals.
The Government does not wish to place undue constraints in this area but will wish to
ensure that the new arrangements remain consistent with public sector pay policy.
Hope that the CWU can be relied upon to co-operate fully with the Post Office
management in achieving “hard” productivity and efficiency gains if staff are to benefit
from enhanced levels of reward.
The White Paper is likely to record some progress rather than firm up detail.
Liberalisation - timing of reduction to 50p monopoly
Line t
Liberalisation is a key and integral part of the reform package. The Government is
committed to competitiveness through competition.
To give a clear signal for the future, we propose to reduce the monopoly from £1 to
50p (or expressed in weight 150g whichever is the less). This represents a sensible
first step - sufficiently low to attract some competition yet high enough to allow the
PO to be assured of sufficient volume to allow it to provide profitably the Universal
Service Obligation.
Will be announcing the move to 50p in the White Paper.
Timing of the reduction will be announced in the White Paper. There are arguments
both for and against an early introduction. These are being considered carefully. The
main issue is to ensure that the correct balance is achieved between giving commercial
freedoms to the Post Office has demanded without stifling competition.
By exposing the Post Office to greater competition ahead of many of its EU
counterparts, it will be in a better competitive position to take advantage as markets
are liberalised across Europe.
Confident that the move to 50p will not cause any undue problems for the Post Office
whatever liberalisation proposals are subsequently issued by the European
Commission. Whatever the Commission proposes it is expected to it further
reductions in overall price and weight thresholds.
Horizon
Line to take
Ministers remain committed to the objectives of the Horizon project. But deciding
how best to reconcile these with our wider Government objectives on social/universal
banking, single Government account and the delivery of electronic commerce has
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raised difficult issues, particularly against the background of the serious delays and cost
overruns which the project has suffered.
Understand the difficulties which the continuing uncertainty about the future of the
project is causing but it is important that we reach decisions that will best safeguard the
interests of POCL, its staff and subpostmasters and offer the prospect of a secure and
viable commercial future for the business.
Crown Conversions
Line to take
Believe that the strategy of maintaining a significant core of Crown Offices strikes a
sensible balance by recognising that some further conversions will be beneficial to
customers and to POCL’s business while ensuring that POCL continue to maintain
direct experience of operating a significant network of post offices.
Believe that it is important that there is proper consultation on any conversions.
Pleased to see that POCL, in consultation with POUNC, intends to make changes to
the public consultation process to enable interested parties to better evaluate any
proposals. This will include specific details of the services to be offered. A Code of
Practice on the Counters’ Network will be agreed between the Post Office and
POUNC.
Procedures for Approving Post Office Investments/Borrowing
Line to take
Government recognises that the Post Office needs to invest in acquisitions and joint
ventures with prudent borrowing to grow successfully with new products, partners and
markets. Such investments need to be strategic and commercially robust.
The Government has already demonstrated with the acquisition of German Parcel that
it is prepared to approve large strategic investments by the Post Office.
Details of the freedom to be given to the Post Office to retain profits for investment
and the procedures for considering borrowing to fund the larger strategic investments
will be included in the White Paper.
If pressed
Borrowing by the Post Office will be counted against the PSNCR. Again a balance
needs to be achieved to ensure that the Government does not stifle the PO Board’s
commercial freedom to make strategic investments.