BEIS0001158
BEISO001158
OFFICIAL SENSITIVE: COMMERCIAL oe
Department for
Business, Energy
& Industrial Strategy
Meeting with Nick Read, CEO of Post Office Limited
4.30 — 5.15pm, Thursday 12° March
Attendees
POL:
o Nick Read, CEO
o Richard Taylor, Group Corporate Affairs and Communications Director
BEIS:
o Carl Creswell, Director, Professional Business Services, Retail & Post
UKGI:
o Tom Cooper, Director
Purpose of meeting and Handling:
The objectives of this meeting are to:
1. Discuss live issues— seek an update from Nick on the implementation of POL
commitments made in the Horizon settlement including progress on
engagement of postmasters, historic shortfall scheme, and share developments
on the independent review
2. Qutline your expectations on how POL, BEIS and UKGI work together to deliver
against the Framework Document (which iswith Minister Scully for approval)
3. Seek an update ahead of the Spending Reviewfrom Nick on POL’s 4YP and
Purpose, Strategy and Growth work and progress on Spending Review case
working with BEIS and UKGI, and press the need for POL to move forward
quickly and be responsive
4. Discuss latest developments on POCA
You may also wish to touch on future payments of GE bonuses though a separate
discussion on this including Tim Parkerwould be useful
To be aware POL Board on 10 March discussed the possibility of Al Cameroris
departure and replacement in various scenarios.
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Department for
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AGENDA AND KEY POINTS TO MAKE
1. Live issues
Seek an update from Nick onPOL’s implementation of commitments
following Horizon settlementand note that these points will be raised
at the BEIS Select Committee hearing on Horizon on 24 March
Share developments on Independent Review
Welcome POL’s input on Coronavirus planning
2. Framework
document and
expectations on
how POL, BEIS and
UKGI work together
to deliver against
this
State that you are pleased that POL, BEIS and UKGI now have an
agreed Framework Document in place.
Welcome the offer by POL to increase the frequency of Shareholder
Meetings to quarterly and [if you agree] your wish to attend should
diaries allow.
3. POL’s 4YP,
Purpose, Strategy
and Growth and
progress on
Spending Review
case
Seek an update from Nick onbringing its Purpose, Strategy and
Growth (PSG) work that has been supported by McKinsey into a
detailed 4 Year Plan (4YP) to March 2024
You may also wish to push Nick on clarifying the POL ask as a part
of the Spending Review work.
4. The Post Office
Card Account
(POca)
Ask Nick for his views about where things stand orPOca, following
his recent meeting with the DWPSoS.
Bonuses [to raise as AOB]
State that POL’s remuneration proposal for FY 2019/20 is currently
working its way through HMG approval and that you understand Tom
Cooper has already discussed BEIS ani UKGI's thoughts on the
structure for this year.
ADDITIONAL BRIEFING
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BEIS0001158
BEISO001158
OFFICIAL SENSITIVE: COMMERCIAL oe
Department for
Business, Energy
& Industrial Strategy
Points to make:
1. Live Issues
POL’s implementation of commitments fdlowing Horizon settlement
e Acknowledge Nick spoke to Minister Scully on 4 Marchand they touched on
steps POL were taking following the settlementSay that— whilst it is positive
that POL has taken operational steps following the judgments to increase
postmaster support, improve processes and bolster training it is important that
Nick continues the drive to re-establish a more productive relationship with
postmasters.
o Acknowledge the high level of Parliamentary interest in the Post Officeat
the moment
o Note that it was discussed at the POL Board on 10 March that the
Historic Shortfall Scheme will be announced before 24thAsk Nick about
progress on this and otherthe actions.
o Thank Nick for being proactive and engaging withthe CCRC and ask
about POL’s progress on assessing previous prosecutions, his views on
next steps and potential implications
o Ask Nick about POL’ plans to prioritise culture change anddemonstrate
how they will communicate the lessons theyhave learnt with
postmasters and the public
BEIS Select Committee hearing on Horizon on 24 March
e Note that the previous points will be raised at thehearing, with a strong focus
on the lessons POLand Governmenthave learnt from the Horizon scandal.
o For your background Nick is due to attend a preparatory session on
Wednesday11"" with BEIS, UKGI and POL colleagues. Ask Nick about
the key points he plans to make at the hearing and any areas of concern
that he has.
Developments on Independent Review
e Nick may seek an update from you.As you know, he was concerned about the
idea of a forward-looking inquiry‘marking his homework so early in his tenure.
BEIS officials have explained our rationale.
o Mention that, following No.10s steer, we are committed to establishing
an independent review to ensure that the Post Office has learned the
necessary lessons and to provide an external assessment of its work to
rebuild its relationship with its postmasters.
o Say that we will need to secure Collective Cabinet Agreement before
any further details are announced
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Department for
Business, Energy
& Industrial Strategy
o Emphasise that we will obviously want to ensure that any review does
not undermine the CCRC’s work, the separate Director of Public
Prosecution's consideration or the BEIS Select Committeés Inquiry on
issues emerging from the Horizon IT Court cases
Coronavirus planning
« At the Board discussion on 10 March, POL discussed the need to seek some
guidance on what services they would need to provide in specific scenarios e.g.
cash distribution in a lock-down scenario.Welcome the POL’s input into the
departments assessment of COVID readiness and mcourage them to continue
discussions with the BEIS policy teamand wider OGDs to keep abreast of the
latest guidance.
2. Framework document and expectations on how POL, BEIS and UKGI
work together to deliver against this
e State that you are pleased that POL, BEIS, UKGI now have an agreed Framework
Document in place. Mention that you have increased the resourcing of the BEIS
policy team to ensure that Post Office policy is prioritised and Ministers are
supported effectively. This has been particularly important where parliamentary
pressure has mounted on the Governments role in holding POL to account
following the Horizon litigation.
e Welcome the offer by POL to increase the frequency of Shareholder Meetings to
quarterly and [if you agree]your wish to attend should diaries allow.
3. POL’s 4YP, Purpose, Strategy and Growth and progress on Spending
Review case
e Acknowledge that POL is still in the process of bringing its Purpose, Strategy and
Growth (PSG) work that has been supported by McKinsey into a detailed 4 Year
Plan (4YP) to March 2024.
o Note that the POL Board on 10 March discussed the issues with putting
together a budget given the uncertainties this yearAsk Nick's views on this.
o Ask Nick to also update you the obstacles to overcome before approval at
the 24 March POL Board.
o Remind Nick of the need to improve central cost control, particularly in staff
and IT costs.
o Remind Nick that, to sign off the 4YP, BEIS and UKGI need detailed
consideration of different scenarios and investment plans.
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BEIS0001158
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Department for
Business, Energy
& Industrial Strategy
e Say that you are pleased that POL are working closely with BHS and UKGI on
developing a robust Spending Review case. Noting POL’s key requests (as
discussed with you during your catch-up with UKGI and BEIS recently you may
wish to push Nick further on clarifying the POL ask, particularlyin relation to the
following:
o Ask Nick to ensure that future funding papers have far more detail on the
impacts of a zero/reduced subsidy scenario because there will be clear
pushback from HMT on a continued £50m subsidy for POL.
o Reiterate to Nick that the POL data received so far has been very helpful
but to develop a persuasive SR case for the subsidy we will need more on
both SGEls and the changes in market conditions since POts last funding
was agreed. POL's Finance team are working on delivering this.
o You could ask Nick to set out his thinking on splitting outcore SGEls to
have separate criteria for mails and cash and plans to ensure that needs of
vulnerable customers are not impacted
o Remind Nick that BEIS will require a highly persuasive case supported by
detailed proposals of investment business cases, governance and
repayment before coming to a view on theirrequest for a £100m investment
loan.
o Reiterate to Nick that a private sector company with a c.15% EBITDA
margin would return significant funds to its shareholder via a dividend and
this is expected from POL in the future
4. The Post Office Card Account (POca)
e Ask Nick for his views about where things stand on POca, following his recent
meeting with the DWP SoS. You could say that it will be important in the upcoming
months for DWP, HMT and BEIS to work together with POL to explore possible
ways forward with the banking industry and ensure a seamless migration away from
POca
e Background; On Thursday 5 March a meeting was held between DWPSoS and
Nick Read to discuss the future of the POca. The meeting was positive, and Nick
clarified that POL will not bid for a voucher scheme and would not welcome an
extension of POca upon contract end in November 2021. However, the Company is
determined to continue being the channel for people- including the most vulnerable
— to access cash. DWP SoS understood POL's position and expressed her desire
for officials to work with HMT to find means of providing basic bank accounts to as
many POca claimants as possible, so that only the most vulnerable and the uA
bankable will be left on the replacement scheme.
Bonuses
e State that POL’s remuneration proposal for FY 2019/20 is currently working its
way through HMG approval and that you understand Tom Cooper has already
discussed BEIS and UKGIs thoughts on the structure for this year.
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BEIS0001158
BEISO001158
OFFICIAL SENSITIVE: COMMERCIAL oe
Department for
Business, Energy
& Industrial Strategy
e Thank Nick and POL’s RemCo for taking on board our feedback on the Change
Benefits element of the package and moving back to the 80/20% split between
EBITDAS and Change Benefits.
e Reiterate that it is important that for subsequent years the metrics better reflect
the organisational and culture change we want to see in POL and that they
align with the new 4YP.
Welcome Nicks thoughts on this and suggest a separate discussion between you,
Nick, Tom and Tim should diaries allow.
Relevant context:
Nick Read and Tim Parker are due to have an introductory meeting with Minister
Scully on 16 March at 11.30am. Nick had a phone call with Minister Scullyon 4 March,
ahead of the Westminster Hall debate on 5 March.
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