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From: Scully, Minister (Private Office)[//O=EXCHANGELABS/OU=EXCHANGE
ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=C12DC569FA38413B860DAFED8
C4A56DF-SCULLY, MIN]
Sent: Tue 28/09/2021 3:58:10 PM (UTC)
To: Permanent SecretaryI 7
Ce: Scully, Minister (Private Office)
Subject: FW: OFF-SEN COMMERCIAL: Post Office Limited (POL) - funding delay from
BEIS to POL
Attachment: 2021.09.27 POL funding due 1 October.docx
Hi Johanna,
Just so you’re aware, Minister Scully has reviewed the sub and did not raise any concerns with the
proposed approach.
Best wishes,
Cora
Pod Cora Sweet
Private Secretary to the Minister for Small
Department for usiness, Consumers & Labour Markets, and
0 inister for London
Business, Energy Department for Business, Energy and Industrial
& Industrial Strategy Strategy
From: Desai, Meet - UKGI ¢
Sent: 27 September 2021 18:55
Submissions Distribution List
i Brooks-White (Jobshare)
“kp; Patel,
Fidgeon. Kyla - UKGI
merson, Edward - UKGI
Cooper, Tom - UKGI
‘>; Barnett,
Subject: OFF-SEN COMMERCIAL: Post Office Limited (POL) - funding delay from BEIS to POL
Hi Johanna,
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As trailed last week, please see attached a short submission recommending withholding funding to
Post Office (POL) which is due on 1 October as it is still working through getting control on its litigation
costs which feeds in to BEIS approving POL’s annual budget. To be clear, POL are not expecting
funding given funding was already withheld so the recommended decision should not come as a
surprise to POL.
Please see below headlines from the submission and feel free to give me a call if youd like further
background.
Best,
Meet
Summary
1. As part of the Funding Agreement agreed to fund POL for 2021/22, Network Investment and
Network Subsidy payments are due to be paid periodically in-year from BEIS to POL.
2. However, in the view of UKGI officials, there have not been adequate controls over PO's
litigation costs and as a result, we have not recommended BEIS approve POL's annual 2021/22
budget. Consequently, BEIS withheld payment of the Network Subsidy (£12.5m) which was due
to be paid on 1 July with Minister Scully informing POL (see Annex A).
3. Officials and POL have been working together to improve POL’s litigation cost controls and
forecasting for POL to present an improved 2021/22 budget that could be approved by POL's
Board and BEIS. However, POL’s progress in this matter is still ongoing and, on 1 October, a
Network Investment payment of £64m and a further Network Subsidy payment of £12.5m are
due.
4. It is recommended that you (Permanent Secretary) write to Nick Read (POL’s CEO) to ask
for a meeting to discuss POL’s legal costs and what progress POL is making in managing and
controlling them. A draft letter is in Annex B.
Recommendation
5. As POL have not presented a budget for review and approval, officials recommend that the
payments due on 1 October are delayed indefinitely until BEIS are content with POL's litigation
cost controls.
6. There are no immediate consequences to POL's service provision by withholding payment
because POL currently have c.£200m of security headroom under the BEIS working capital
facility. This means POL should be able to continue operating while this issue is resolved.
7. POL are looking to provide an improved budget as soon as possible and have been working
hard with officials to improve litigation cost forecasting. Though POL are aiming to present an
updated budget for Board and shareholder review in the coming weeks, as outlined in paragraph
4, officials recommend asking to meet Nick Read and issuing the letter.
Timing
8. By close Wednesday 29 September requested.
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Meet Desai
UK Government Investments
1 Vi W1H OET
T.
London.
M: #
“GRO
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