BEIS0000611
BEIS0000611
From:
Sent:
To:
Subject:
Guy — for clarity, the bold point under the heading of postmaster compensation was made in the context of GLO
disclosures.
Rob
ae Rob Brightwell
Deputy Director, Business Resilience
Department for Dep: siness, Energy and Industrial Strategy
Business, Energy
& Industrial Strategy Spur 2, 4th floor
1 Victoria Street, London, SW1H OET
K
Wwww.gov.uk/beis I https://twitter.com/beisgovuk
From: Hollinrake, Minister (BEIS) I
Sent: 21 November 2022 22:03
To: Brooks-White (Jobshare) <_ Creswell, Carl
(Business Sectors - Services Directorate) <. 4>; Bickerton, David (Business Sectors DG Office)
< ; Permanent Secretaries <
Subject: Readout: Minister Hollinrake meeting with Nick Read 21/11/2022
Hi all,
Thank you for the briefing and for supporting the Minister during the meeting this afternoon. Overall, the Minister
took a firm line with Nick but he felt it was a good introductory meeting.
Please shout if any questions!
Guy
Attendees:
Minister Hollinrake (KH)
Nick Read, CEO Post Office (NR)
Richard Taylor, Post Office
Carl Creswell, BEIS (CC)
Eleanor Brooks, BEIS
Rob Brightwell, BEIS
Guy Brindle, Senior Private Secretary, BEIS
MEETING STARTS
* NR: slightly subdued trading week. Deposits over the last few weeks have been markedly down. Trying to
figure out whether this is a change in consumer behaviour or something less significant. Footfall reasonably
robust as we are doing a lot of the work on energy vouchers/pay-outs. Feels pretty representative of other
colleagues in running retail businesses. Planning on having 11,700 branches by the end of the month which is
200 more than the requirement. Noise from postmasters on the specifics of trade is relatively balanced - recent
BEIS0000611
BEIS0000611
postmaster conference was well attended and received. 6 weeks to go till Xmas, it's the time of year where it's
all to play for.
* KH: Agreed the Golden Quarter is a crucial period as always. Post Offices are always of high importance to
MPs constituents and as community hubs, so very keen to see where we can help you meet challenges.
KH asked NR about the 3 year plan
* NR: committed to the board that by 6th December they will produce a 3 year plan, a series of
recommendations and options.
© Realistically, we this be within the parameters of the spending review? No. Settlement last year was more
than some way off the request which itself was fairly heavily managed down. World has changed markedly in
last 6 months so this is now even harder.
* Royal Mail industrial action is very worrying to watch, and fears that this will have a marked impact on POL.
40% of business is driven by RMG, so any erosion in consumer confidence will affect POL. Postmasters are very
uncertain at the moment, and little profit to go around. Big job to rebuild the profitability of the postmaster
network, or review the suitability of the 11,500 service requirement.
* Compensation - hard work but vital this is dealt with quickly and effectively. Giving evidence on the 8th
December and though good progress is being made there is always anxiety from within the business as the
inquiry is ongoing, and it continues to be a distraction from the running of the business. Need proper funding
for a replacement Horizon system, training, support and governance to roll out a system of this size and scale.
* Good news is that Post Office is £20m ahead at the end of this month from where predicted -
insurance/banking/bill payments and other parts of business are going well and supporting the Mail side of the
business.
KH probed on figures and savings currently factored in by POL
© KH: what is the scale of the likely deficit, have you used all your headroom and how much more will you be
using?
* NR: will be speaking to the board in a few weeks' time for a more detailed discussion - instinct is probably no
less than £160m in best case scenario, but likely to be more. Extension of inquiry timelines have increased
spend, think somewhere between £60-70m after initial planning for £22m. Expected £40-50m on Horizon
replacement and probably £100m + for Mail shortfall.
© KH: what have you already done in terms of cost mitigations?
* NR: Reduction on budget of up to 60-70%. Need to test risk appetite with the board. Reducing change
management budget of £160m to £80m. All in all - costs/functions are being challenged and reviewed to see
more where savings can be made.
KH raised the subject of Postmaster Compensation
* KH: View on how compensation is going and how it will go from here?
* NR: HSS has been a huge success. Looking like we will get to 97% by end of year. Overturned historical
convictions has been slow and ponderous (with bigger anticipated cost) but we are getting there. GLO - making
sure we have a consistent and fair approach across all offers and other schemes
* KH: A key thing from our perspective is getting Legal resource/admin etc from POL teams - so can we get
your continued commitment on this?
* NR: Of course POL will continue to get on with this and support BEIS where needed .
KH raised the BEIS Policy Review
© NR: I feel this is taking too long. No ToRs or chair etc. Genuine opportunity for a clear evidence-based
decision making. If we can support with the appropriate level of ambition then there is a chance. There is an
ignition session on 13 December planned to kick things off. Have to balance social, commercial, and political
aspects and align on exactly what we want to achieve.
* CC: There is a lot of work ongoing to set this up, and getting a better sense of the facts of Post Office
consumer usage. There is a question about whether we need a chair to progress this work and we will be
speaking this through with the Minister imminently.
BEIS0000611
BEIS0000611
© NR: Honestly there isn't really a need for a chair, and I worry that this will hold the process up if we continue
down this route.
Miscellaneous
© KH: Limiting cash deposits and Post Office branches. I know you have taken this up with the FCA and I am very
minded to do this as well. I have also been speaking with HMT and am not convinced by the FCAs judgement on
this as it has affected numerous small businesses.
© NR: This is very frustrating. We are pushing hard with the FCA and the banks. Some banks are ignoring it
anyway. I had a note from the Chair of the FCA who promised he was looking at this earnestly.
* NR: We would welcome any support on EBRS [classifying Post Offices as vulnerable businesses so they receive
support beyond March 2023]. We are mobilising postmasters to write to their MPs. Appreciate this is a CX issue
but would welcome your support.
* KH: We will look into it.
MEETING ENDS
a , Guy Brindle
Senior Private Secretary to Kevin Hollinrake MP.
Department for Minister for Enterprise, Markets and Small Business
Tel:{
Business, Energy minister. hollinrake@
Department for Business, Energy and Industrial Strategy
www.gov.uk/beis I https://twitter.com/beisgovuk
& Industrial Strategy