BEIS0000974
BEIS0000974
From: Permanent Secretary[/O=EXCHANGELABS/OU=EXCHANGE
ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=3109B3DC828545FFBF265AAB4
BEC9017-SECRETARY,]
Sent:
To: i Submissions Distribution
Ce: Creswell, 4; Brooks-White
(Jobshare), Beal, Eleanor (Services
Directorat ; Patel, Amisha
ath, Daniel
ai Richards, Nigel
3; Wones, Eleri
Fidgeon. Kyla -
Barnett, David -
Subject: RE: OFF-SEN COMMERCIAL: Post Office Limited (POL) - funding delay from
BEIS to POL
Hi Meet,
Sarah is happy with the approach and the submission.
Best Wishes,
Johanna
aes johanna Greco (she/her)
rivate Secretary to the Permanent Secretary
Department for Victoria Street, London, SW1H OET
Business, Energy (~~
& Industrial Strategy;-
From: Desai, Meet - UKGI
Sent: 27 September 2021
To: Permanent Secretary Submissions Distribution List
I; Brooks-White (Jobshare)
atel,
Amisha (BEIS) <
Richards, Nigel (Finance
Tom - UKGI
Barnett,
Fidgeon. Kyla - UKGI <_
; Emerson, Edward - UKGI {
David - UKGI
Subject: OFF-SEN COMMERCIAL: Post Office Limited (POL) - funding delay from BEIS to POL
Hi Johanna,
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 POL’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
BEIS0000974
BEIS0000974
BEIS0000974
BEIS0000974
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.
Meet Desai
UK Government Investments
1
ondon, SW1H OET
M:
www.ukgi. a.
Follow on
This email and any files transmitted with it are intended solely for the use of the individual(s) to whom they are
addressed. If you are not the intended recipient and have received this email in error, please notify the sender
and delete the email. This footnote also confirms that our email communications may be monitored to ensure
the secure and effective operation of our systems and for other lawful purposes, and that this email has been
swept for malware and viruses.