FOR USE OF COUNCIL MEMBERS ONLY
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NATIONAL FEDERATION OF SUBPOSTMASTERS
REPORT OF A
MEETING OF THE
COUNCIL
held on
19 & 20 JUNE 2017
at
HOLIDAY INN CAMDEN LOCK
LONDON
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Report of a Meeting of the Council
held on Monday & Tuesday, 19 & 20 June 2017
at Holiday Inn Camden Lock,
London
Those present: Mr Nilesh Joshi Chairman
In attendance: Mr Troy Gardner Director of Commercial & Retail
Mr Keith Richards Security & Network Transformation
Mr George Thomson _ Chief Executive Officer
Mr Tim Boothman
Ms Wendy Burke
Mrs Susan Edgar
Mr Calum Greenhow
Mr Saj Hussain
Mr Peter Montgomery
Mr Jim Nott
Mr lan Park
Mr lan Sanders
Mr David Sanghera
Mr Bharat Visani
Mr Paul Simmonds Director of Operations
Apologies: None
The Chairman welcomed everyone to the meeting, particularly Sue Edgar, lan Sanders
and David Sanghera as it was their first meeting. There had been a change in style with
written reports being submitted in advance of the meeting so Council Members had the
opportunity to pose their questions on the reports.
(a)
(b)
(c)
(d)
(e)
(f)
(9)
REPORTS & RESOLUTIONS OF COUNCIL MEETINGS
The Report of the Council meeting of 20 & 21 March 2017 was
signed as a true record.
The Resolutions passed at the Council meeting of 20 & 21 March
2017 were signed as a true record.
There were no matters arising.
The Report of the Special Council meeting of 23 April 2017 was
signed as a true record.
The resolutions passed at the Special Council meeting of 23 April
2017 were signed as a true record.
There were no matters arising.
The Report of the Special Council meeting of 26 April 2017 was
challenged. Following discussion, a vote was taken as to whether
the report was a true record with 5 voting in favour and 3 against.
The Report of the Special Council meeting of 26 April 2017 was
therefore signed as a true record.
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DECISION,
CISION
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CISION
ECISIO
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DECISION
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The Resolutions passed at the Special Council meeting of 26 April
2017 were signed as a true record.
There were no matters arising.
CHIEF EXECUTIVE’S REPORT
CEO was delighted that the Council had a_ significant
presence from the multiples for the first time with
Hendersons of Northern Ireland, WH Smith and Ryman now
represented. All were major players in the post office
industry.
The NFSP’s job had always been to look after the interests
of members and to plough a new furrow. Important to
encourage members to be more innovative and run better
businesses. Members needed to consider best practice and
be proactive to improve their business. An integral part of
the NFSP’s role had to be to try to retain fair commission
rates for all subpostmasters. PO claimed the NFSP behaved
like an old fashioned trade union. NFSP did not agree, it
was a trade association and members needed to make a
decent return for the work they were doing, which was
fundamental for any business model.
Equalisation
This issue had not gone away. It began some time ago
when Kevin Sellers said the company could not afford to pay
enhanced variable rates to Mains. That would have taken
approx. £50 million per annum out of subpostmasters
pockets and was totally unacceptable.
PO fallback was for 2,000 large Mains to keep their
enhanced pay but 1,600 small Mains would lose theirs.
NFSP made it clear that was not acceptable either.
PO came back saying the agent could keep the enhanced
rates but if they sold the branch it would be on Local rates for
the incoming subpostmaster.
Latest situation is that the 2,000 large Mains could keep their
enhanced rates and sell on the same. However, for the
4,600 small Mains they could keep their enhanced rates but
could only sell on the Local contract. The NFSP again made
it clear the situation was not acceptable, and were prepared
to use court action if necessary.
Felt that it had been put on the back burner for now, but PO
knew the CEO was leaving and concern PO would come
back after then.
PO believed too many Mains did not have enough work as
the government had not delivered on their front office of
government plans. PO wanted to make £100 million profit
from flat trading.
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¢ The issue was up in the air but PO had not given up on their
ambition for the 1,600 smaller Mains to be sold on as Locals
with no compensation for the change whatsoever.
e — The Council expressed their grave concerns at the ongoing
viability of many branches if this took place. The NFSP
would never give up the fight on the issue.
. NFSP had a strong legal case on this issue, as the spms
could have left with compensation but chose to stay in the
network. It would be on the basis of misrepresentation as
they gave up their fixed pay and it was ‘salami sliced’ into the
enhanced rates. Removing the enhanced rates was never
part of the deal.
« Clarified that the changes were only proposed on a
commercial transfer, not on renewal of the current contract.
° Felt the NFSP had to fight the changes on the basis that if
PO got away with it for the 1,600 smaller Mains, they would
come back at a later date for the 2,000 larger Mains.
Simplification
. NFSP want PO to simplify products as many were way too
complicated and took far too long. However, there were
concerns. If PO simplified products too much they took the
value out of the product and anyone could do it.
« Concern that if PO took a new member of staff or
subpostmaster who did not know much about PO or their
products and let them trial new transactions rather than an
experienced member of staff or subpostmaster who knew all
the shortcuts, it would appear that more time was being
saved than was reality.
. Around 5,500 post offices were in new locations as off site
Mains and Locals, so there were many new agents. If
outreaches were included there were more new sites than
old sites.
° PO example was a Special Delivery accept by 1pm. PO
claimed to have saved 53% of the time. PO initial
proposition was due to be introduced in July 2017 with pay
rates cut the month after. PO wanted to take 100% of the
time savings they achieved. If the transaction was 60p and it
now took half the time, PO only wanted to pay 30p straight
away, regardless of what RM were paying PO.
. NFSP told PO it was unacceptable if PO took all the saving,
there was no benefit to spms. The changes needed to be
tried to ensure they worked properly (as that had not always
been the case previously).
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« PO position changed. The changes would come into play .
September/October 2017 but there would be no change to ¢
payments until 1 April 2018. They were prepared to split the
savings with spms, so for the 60p transaction it would be
45p, rather than the 30p originally proposed.
« POclaim spms can use their staff better when the extra time
is taken into account. NFSP made it clear that did not tally
up in a small office often run by a husband and wife with no
staff.
e No agreement had been reached. NFSP had consulted
lawyers.
e¢ PO would not back down.
e There followed lengthy discussion on the issue as advice
was required from the Council on their preferred stance.
Points raised had already been raised by the NC in their
discussions with PO. Overall, feeling seemed to be that the
proposition should be fought hard as customer service levels .
would become worse, and some offices may become ¢€
unviable.
«PO tactics had become much more ‘strong arm’ and they
only seemed to respond to threats of legal action. This was
not where the NFSP wanted to be, the plan was for working
together but there was precious little evidence of that.
. There was discussion on PO’s ambition for £100 million profit
when trading was flat, and feeling was that it was
unattainable without fundamentally damaging the business
as a whole.
* The customer had to remain king, if the customer could be
retained there was an opportunity to sell other products.
e Enquiry made if 100% of the savings was not achievable,
what figure was achievable. One suggestion was that a
75:25 split with 75 to the agent was more acceptable, but
that split was not acceptable to PO.
e There followed some discussion on possible legal routes and ¢
strategy. >
Network Extension
e 3 years ago, lan Kennedy and Neil Hayward wanted to
extend the network by 8,000 using a Basic model, taking the
number of outlets from 11,500 to 20,000. NFSP told them it
was unacceptable and it was withdrawn on the basis it was
cannibalistic by nature. PO now want 2,000 extra branches,
and it had not been a major issue until now.
e Over the last 2 years, PO had created around 20 branches a
year and were careful where they were sited, with only 2
within a mile of an existing branch.
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e — It had now become an issue. PO wanted to open around
150 branches a year for the next 3-4 years. Felt that some
of these branches would be required to keep the network
numbers stable as around 100 branches a year were ‘going
under’ of all types. Believed that an unofficial strategy was to
site close to Crown offices to make it easier to move that
Crown office to a WH Smith with 4 counters instead of 8.
NFSP had no issue with that strategy.
e Too many branches closed under previous programmes and
PO were now filling in the ‘holes’. When a new branch was 3
or 4 miles from an existing branch there was no problem.
However the numbers were increasing to 150 a year from
20, with 50% planned to be in urban locations.
e 3cases already where a new office is in close proximity (less
than a mile) away from an existing office. Clearly network
extension was becoming a bigger issue. Major belief that a
‘sweetheart’ deal had been done with some multiples but
denied by PO.
* There were members who could have taken compensation to
leave, decided to stay, but the figures they used to calculate
their business were getting blown out of the water with a new
branch opening too close. NFSP had made it clear that if PO
opened a new branch under a mile from an existing branch
that efforts would be made to stop it.
« Again discussed with lawyers and awaiting report. Felt PO
would struggle to achieve their targets anyway and that
much of it was PR spin. PO were aware of NFSP concerns,
but were much more aggressive in their stance on many
issues.
. There followed discussion, with the Council airing their
concerns and going into detail on a couple of individual
cases. However, there was no doubt that there were ‘holes’
in the network that needed to be filled but not to the
detriment of an existing subpostmaster.
Stranded Branches
° PO did back down on this particular issue. Any office that
had completed a conditional resignation pack (CRP) and
wanted to leave but no replacement outlet could be found,
would keep their fixed pay until March 2021 and would
receive compensation if a potential new operator (PNO)
could be identified. This was a major win for both the NFSP
and the branches affected.
° Felt that in some areas, the criteria for a PNO needed to
change, but that had been NFSP policy from the start.
e If a change of circumstances or decision was made by the
spm, they could possibly convert to a new model rather than
leave, but would be considered on an individual basis. Once
a PNO was identified the decision was irrevocable though.
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Worsening of Service Provision
PO were addressing their central costs by reducing staffing
levels and awarding service contracts to cheaper suppliers
among other things. Concer was that they were going too
far in some areas and ending up with situations where the
service was no longer fit for purpose.
An example was the alarm contract which was awarded to a
new company saving £4 million a year. However Kings did
not have the right accreditation to be awarded the contract.
NFSP had no issue with making savings or cheaper service
providers, but almost without exception everything that PO
had done had led to a degradation of the service being
offered. Any cheaper replacement had to be fit for purpose.
Previous alarm contract allowed for an agent to be talked
through a fix by phone. !f an alarm failed now, the agent was
expected to sit in their premises all night if necessary. It was
ridiculous to expect anyone to do that and many refused.
PO were switching liability in those cases from themselves
back to the agent.
Pointed out that the break-up of the Security department had
led to some fragmentation on information flow, with no one
person being in charge of the function. It had caused
problems for some branches when an issue arose.
When a false alarm occurred now, there had to be an
engineer visit to reset it. Agents could no longer be talked
through by phone.
Audit Shortages
NFSP recognised that PO only had one pot of money and
self-insured their cash, therefore robberies and thefts come
out of that pot.
Audit team had been cut back massively. Agents finding life
tough and should never ‘use’ PO money. However many
realised there were less audits and were taking a chance.
There were small cases but in the last few weeks, 6 audits
resulted in a loss of over £1 million combined.
NFSP very concemed at the scale of the losses. The audit
function had to be fit for purpose as every honest agent
ended up paying for the dishonest ones.
NFSP driving a workshop to look at the whole security
function.
Mini audits used to take place which were just a check on the
cash in the safe if cash declarations were not completed.
NFSP put a toe in the water with PO suggesting a field team
to do mini audits. Every agent had a vested interest in
protecting PO cash. To be discussed at the workshop.
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There was some discussion, with the major question being
how the figures were allowed to get so large before an audit,
and they needed to take place more quickly. Comment that
some people felt the training received by new spms was not
sufficient, and that perhaps an existing spm could help.
Again, to be discussed at the workshop.
It was claimed at 3,500 agents were not preparing proper
cash declarations but that figure could not be substantiated
and was felt to be way too high.
Felt the NFSP should stress at all opportunities the need to
provide proper cash declarations, however it would have to
be in conjunction with PO to ensure it was correct.
REPORT OF THE NEGOTIATING COMMITTEE
Report circulated. In the absence of the Chair
the rest of the Committee would address any questions.
On Mailwork, rental space value. Some spms did very little
whilst others undertook the whole role with supervision of
staff 12 hours a day and ensured everything was correct.
Mailwork was no longer directly represented on the Board.
Mailwork not directly represented however it was not difficult
to speak to a mailwork subpostmaster. Around £7.5-8 million
a year paid for mailwork.
Argument put that mailwork was 500 offices mostly in rural
locations with mailwork underpinning the viability of their
business.
No decision was made as to whether there should or should
not be a mailwork member of the Council.
Council members raised in depth questions as to the
reasoning behind PO figures. Despite NC continually asking,
PO had never detailed how they arrived at the figures.
NC would be having discussions with PO on various banking
scenarios.
NETWORK TRANSFORMATION & SECURITY
Report circulated
Issues had arisen where a PNO had gone through the
process but was not signing the contract to try and drive
down the cost of the retail. Should be signed and returned in
14 days but one case had been 4 months then given another
month extension.
Some Council members felt that robberies were on the
increase and that Locals were not well protected. Trying to
get alarms put in accommodation but PO not interested in
funding any change.
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. NT team winding down and speed of response was down to
individuals. KR now had contact details for the Crown Office
Development Team who were willing to work with KR. Retail
Team needed to get involved very early in the process. PO
had hidden behind an NDA, however KR had negotiated
some co-operation.
¢ Question raised as to whether TUPE always applied, with the
response being that it did.
. Head of Retail & Commercial had met with the Community
Fund and Business as Usual (BAU) team. Information about
the support available from the NFSP would be passed on.
5. COMMNUNICATIONS
. Lynn Eccles, our new Director of Communications starts
work on 10 July and would therefore attend the workshop
and next Council meeting.
. She would be recruiting a Communications Manager and an
apprentice to look after social media mostly.
« Against express instructions, in the last issue of The
Subpostmaster, LBM had taken an advert from
Freeths/Justice for Subpostmasters. PO understandably
went ballistic. Emergency meeting held with LBM with PO in
attendance. It was made crystal clear that their actions were
totally unacceptable. It made it look like the NFSP were
inciting subpostmasters to take the company to court. May
need to beef up resources and bring the magazine in house
in the future. That mistake could have cost the NFSP the
payments from PO and ultimately finished the organisation.
It was really very serious.
° Since 2015 our Parliamentary contacts had dropped off with
many changes. Crucial to rebuild our political contacts.
Lynn Eccles and Calum Greenhow would undertake this
task.
¢ Again reiterated that conversations within the Council were
confidential. .NFSP would go public on the departure of
George Thomson and the arrival of Calum Greenhow as
CEO designate in August. It was important for the CEO to
be an ex subpostmaster with skin in the game to look after
subpostmasters’ interests. The news should be kept under
wraps until the first week of August.
« Need to rebuild and re-establish the All Party Group on Post
Offices. Lynn and Calum would be doing that.
. Important that proper succession planning took place.
. PO had agreed as a Project Specific Grant to fund 4 events a
year in Westminster, Edinburgh, Belfast and Cardiff. The
plan currently is to make each an event with maybe some
kind of ‘do’ in the evening. MP's could be invited.
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Big change would take place with Lynn Eccles arrived and
had her input to the NFSP as a whole, something which
would be very much welcomed.
Thanks to Paul Simmonds for holding the fort after Jenna
Khalfan left.
For the first time in many, many years, the resources at HQ
were being increased.
Forum
Forum cost around £20,000 a year to operate including the
Moderator. Though not a fortune, membership and usage
figures were disappointing. Attempt made to increase both
with the offer of 10 Mr Mobile stands to be randomly won, but
the figures remained low.
Felt that many were put off by the level of vitriolic responses
when someone did post. This was limited to one or two
members (mostly onel), but was very offputting to those
wishing to contribute.
Council members should encourage use of the Forum at
branch and regional meetings, and try to use it more often
themselves.
6. DIRECTOR OF RETAIL AND COMMERCIAL REPORT
The Director of Retail and Commercial, Troy Gardner's,
report had been previously circulated.
Troy Gardner talked the Council through the report in detail.
The team had settled in well.
Visiting mostly small Mains offices at present, due to them
having a lack of or no retail offer.
The team will endeavour to work with potential operators
before they take over a post office. POL will provide
information to the team.
Reported there is still approximately £14 million in the
Community Fund. Working with POL on if the
Subpostmasters works with the “Concept to Conclusion
Programme” they will only need to put in one quote. The
Retail Team will assist with the application process.
There has been an upsurge of enquiries recently regarding
the fund.
Believed the Post Office application form needs revision to
include emphasis on the retail element of the business.
Become apparent that some operators had made bad
business decisions. The team ask Barry Frost to get
involved and assist in resolving problems they have be it
financial, lease or supplier issues.
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. Introducing “Buy a Post Office” which will be an on-line
service helping people apply for a post office and assist with
putting a retail offer together. Propose to charge for this
service. Will stay with the person for a yearly and do
quarterly action plans (project plans) for them. Will prepare
them for the interview and running a business.
* Intend to encourage people to get involved with their
communities regardless what type of office they are. Will be
holding workshops on this.
« Will be encouraging people via all social media options and
the Subpostmaster magazine to get involved with things such
as “Thinking of you week” and “Small Business Saturday”.
« Working closely with the CEO of The Greeting Card
Association and will have access to various tools to include
templates for posters.
. Also working with “Not in the High Street” who promote using
the local high street.
. Need to appreciate that some key categories that were
successful in the past such as Lottery over the counter,
cigarettes, pensions and news bills are now in significant
decline.
. Areas of growth are food to go, instore bakeries, using more
regional and local products. Space, effort and planning are
required to succeed in these areas.
7. DIRECTOR OF OPERATIONS REPORT
e The Director of Operations’, Paul Simmonds, report had
been circulated. Paul Simmonds talked the Council through
the report.
e Additional update on Mails Segregation recruitment - now
have 8 out of the 10 Mails Segregation advisors. Still need
to recruit in London and North Thames and East Anglia
Regions.
« There will be a three day induction programme at HQ from
18 to 20 July.
e — The intention of bringing in the team is to protect a sum of
£6.2 million in pay bonuses to members.
e Will be an extremely difficult task as POL agreed targets with
Royal Mail that were far too optimistic to attain.
° Data will be provided by POL to enable identification of poor
performing branches.
Data will be analysed at HQ.
Data will indicate problem offices and areas.
Will need to ensure that members have all the tools needed
to be complaint with Mails Segregation.
e I Members need to let the helpline and HQ know if they have
difficulty in getting bags and tags as this would make them
non-compliant through no fault of their own. We need to
inform POL if this happens in order for any checks that result
in failures to be disallowed.
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( ¢ The Team will attend Branch and Regional meetings.
. Important that there is consistency throughout all Royal Mail
depots.
e Need to ensure there is collaborative working with POL.
° With regard to NFSP policies will need to investigate how
much data the NFSP has and who is using the data before
making any decisions on administration of data and its
protection.
e Part of the Digital Project will allow members to agree, if they
so wish, as to how their data could be used and how they
and the NFSP will manage it.
e Systems need to be robust in the storing of personal data.
. Legal advice had been taken on data protection.
° POL have agreed that all members of NFSP staff can have
access to the membership data that is provided by them.
Also been agreed that for membership purposes regions and
branches can have access to the data.
. Look to encourage branches and regions to use social media
to communicate with one and other. Trial is taking place in
London Region.
° Will look at how members can communicate through social
media with their customers.
° Nilesh Joshi reported that he was pleased with a system put
in place by Paul Simmonds, “Eventbright”. This is a system
where people can book on line if they wish to attend an event
and can be accessed by the organiser. You will also be able
to register that you have actually attended. This will also be
recorded on the new CRM system in the future.
8. FINANCE REPORT
. NFSP six-monthly accounts to 31 March 2017 had previously
been circulated. Guy Butterworth, Auditor for the NFSP,
( distributed a revised set along with a report as there was a
change to the management recharge in respect of the
Trading Company.
e He talked through the accounts and gave a comprehensive
explanation as to what they meant in financial and layman’s
terms.
* Guy Butterworth will attend the Council meetings twice yearly
to answer any questions on the six-month and annual
accounts.
e The six-months accounts to 31 March 2017, showed there
was a surplus of £115 thousand. Part of which is in stock and
shares.
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9. CHAIR OF THE TRUSTEES TO THE BOARD OF ¢
BENEVOLENCE REPORT
e The Chair of the Benevolent Fund, Wendy Burke’s report had I
previously been circulated. '
e Wendy Burke gave a verbal update to the written report. ;
e The Fund stood at £1.2 million. :
. Had received three new applications’ and had awarded
grants to them.
e The en bloc list stood at £14,690 for the next quarter.
* If POL were to demerge from the Royal Mail Rowland Hill
fund, there may well be an opportunity for the POL portion of
the fund to merge with the Benevolent Fund. Will then be
able to assist anyone that has worked in the post office
industry.
10. I AOB (IN WRITING) ¢€
e Nothing in writing had been received.
e Jim Nott thanked the Chair for the way he had conducted the
meeting.
Sharon Merryweather & Lynda Willoughby
June 201
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