BEIS0000918
BEIS0000918
ATTACHMENT 1: Henry Staunton’s Note of Meeting with Sarah Munby
From: Henry Staunton
Sent: Friday, January 6, 2023 10:49 AM
To: Nick Read
Subject: Fwd: Note of meeting with Sarah Mumby on 5 Jan 2023
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Nick ,
My file note as promised . I have not copied to anymore but will cover with Board colleagues at
the Board orally .
Henry
Sarah asked for first impressions , i said i had been on over a dozen public company Boards and
not seen one with so many challenges .
I focussed on the financing and Network challenges :
- On Financing we had identified in Sept a deficit of £210m . After much effort we had identified
savings of £170m (mainly out of the change budget , cap exp and exceptionals ) . However
since then extra costs of £120m have arisen : from Horizon £60 m( training needs esp with
Inquiry ) ; Inquiry £30 m ( taking longer ) ; and telephony/Internet £30m . In total we have a
shortfall therefore of £160 m.....and this before the deficit arising from the material downturn in
the parcels business , and to a lesser extent from the implications for our cash business of the
FCA Money Laundering regs on deposits .
- there was a likelihood of a significant reduction in post offices if more funding was not
required . Last year half of all Post Offices were either loss making or earning less than £5,000
profit . The position would have deteriorated substantially because of increase in Minimum
Wage and fuel /electricity prices .A recent survey indicated that one third of PMs would hand
back their keys over the next 5 years and that figure would now be higher because of extra costs
. The reputational consequences for PO and for Government were fraught .
Sarah was sympathetic to all of the above . She understood the” huge commercial challenge “
and the “ seriousness “ of the financial position . She described “ all the options as unattractive
“ However, “ politicians do not necessarily like to confront reality “. This particularly applied
when there was no obvious “ route to profitability “ .
She said we needed to know that in the run up to the election there was no appetite to “ rip off
the band aid “ . “ Now was not the time for dealing with long term issues “ .. We needed a plan to
“hobble “ up to the election .
Having said that we and BEIS needed to do the long term thinking for a new Government of
whichever colour . This would include what is politically acceptable wrt the size of the network .
. She also referred to “ operational “ issues colouring HMT’s thinking. ( “Trust” in the PO Board
and management has not been high .) They could see this as another “ begging bowl “ request
from the PO . I said the funding issues revolved around poor decisions made many years ago
wrt Horizon and related legal issues .
With regard to the forthcoming meeting with the SoS she gave some advice . He is nice and easy
but not interested in meetings . He prefers the written form . We should expect him to be “
pushy and demanding “ as he was with the train operators whilst SoS for Transport . He would “
hold us to account “ . He will take a hard line on pay . So far Sarah’s efforts on pay have fallen
on deaf ears .