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NFSP00000951
GT/LW
21 May 2013
David Taylor
Operations Manager
Certification Office
22"4 Floor
Euston Tower
286 Euston Road
London
NW1 3JJ
Dear Mr Taylor
Re: National Federation of Subpostmasters — Certificate of Independance
Thank you for your letter of 9 May, notifying me of correspondence received by your office
that raises concerns about the NFSP’s status as an independent trade union within the
meaning of the Trade Union and Labour Relations (Consolidation) Act 1992. I am grateful
to you for extending the deadline for response until 7 June, given our Annual Conference
commitments and my subsequent annual leave.
I would respond to your queries as follows, dealing with each of your points in order.
1)
Firstly, I would comment that it is important to differentiate between direct union activity
funding provided by POL and payments received from POL derived from either
commercial transactions between the two parties or reimbursement of costs incurred
on POL’s behalf.
To assist you in your understanding of payments received from POL and its associated
companies I firstly outline the main account headings under which payments received
are analysed:
Union Facilities
The NFSP is currently in receipt of an annual grant of £175,000. The grant has been
maintained at this level since October 2002. The grant enables an official to pay for a
substitute post office clerk whilst they undertake union duties. It is akin to employee
rights to paid time off to carry out union duties.
The NFSP’s accounts and its annual return are analysed by activity undertaken rather
than income/expenditure type. Therefore the contributions from Union Facilities
towards the costs of officers undertaking duties are offset according to the particular
union activity being undertaken. Any amount not offset is shown as a general
deduction from administrative expenses and other outgoings.
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Commercial arrangements
Insurance commission income
The NFSP has for many years been in receipt of commission income from the sale of
insurance and other finance service products. A long-established arrangement had
been in place with Zurich Insurance. This agreement terminated in the latter part of
2009 and was replaced by a commercial arrangement with Post Office Financial
Services (POFS) in October 2009. POFS provide post office business insurance to
subpostmasters. NFSP’s initial agreement is for five years at a commission rate of
£80,000 per annum. This income is included in commission income in the NFSP’s
annual return, and is subject to corporation tax.
Advertisements in the Subpostmaster journal
The NFSP has a monthly members’ journal in which advertising space is sold on a
commercial basis. From time to time POL place advertisements and is invoiced under
normal commercial arrangements. Invoiced advertisements for the year ended 31
December 2011 total £12,905 and for the year ended 31 December 2012 totalled
£11,110. Income from publications is included in the other income section of the
annual return.
NFSP Conference
Representatives of POL regularly attend NFSP’s annual conference as visitors.
Additionally, in recent years they have taken a stand as part of a small exhibition held
for the benefit of members at conference, and have also sponsored the annual
conference gala dinner. The total amounts received from POL in relation to these
items was £7116 and £6529 for the years ended 2011 and 2012 respectively. The
amounts are offset against costs of conference, which are detailed in the analysis of
administrative expenses and outgoings in the annual return.
Tuming now to the specific amount of £341,850 for “Network Transformation and
support activities” referred to in your letter, I comment as follows:
I surmise that the figure referred to by POL is made up as follows:
Invoice raised by Invoice date Amount
NFSP 19 April 2012 £250,000
NFSP 11 July 2012 £ 22,000
NFSP Trading Limited [invoices raised between]
18 April 2012 - 15 Aug 2012 £ 69,850
Total: £341,850
£250,000 - a one off union facilities grant was received from POL. The union facilities
payment was a contribution towards NFSP’s union activities in support of Network
Transformation. The amount received was not a specific re-imbursement for expenses
but rather a contribution towards costs associated with disseminating information to
subpostmasters in relation to the transformation programme and campaigning
activities in relation to securing future work for subpostmasters to ensure the
sustainability of the network moving forward.
2)
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As the additional union facilities grant was approved by POL in the same financial year
as elements of the Network Transformation and future sustainability of the network
campaigns took place, namely 2012, the contribution from POL under union facilities
has been directly offset against the expense incurred. However, where the NFSP had
expended monies in relation to Network Transformation in 2011 then the gross cost
has been shown in the NFSP accounts for that financial year and the corresponding
additional union facilities funding received in 2012 is shown as a deduction from
expenditure on the NFSP’s 2012 annual return.
£22,000 - a contribution was received from POL in relation to costs associated with the
NFSP region and branch network arranging nationwide joint NFSP/POL meetings to
discuss network transformation with both members and non members. The monies
received were directly offset against the costs incurred in relation to the holding of the
meetings.
£69,850 was invoiced by the NFSP’s trading company, NFSP Trading Limited, to POL.
This is accounted for by an invoice for £62,850 in connection with research,
development and the delivery of a pilot training seminar held in Bristol and seven
invoices totalling £7,000 in relation to specific visits by financial consultants to
individual sub post offices. The amounts invoiced were reflected in NFSP Trading
Limited’s accounts and were subject to corporation tax. The amounts received are
shown under other income on the NFSP’s annual return for 2012. The training
programme, “Planning a profitable future”, was designed to promote and assist
subpostmasters in developing the profitability of the retail sides of their businesses
which indirectly would assist with the sustainability of the post office network.
I can confirm that the NFSP both historically and currently conducts annual pay
negotiations with POL. The outcome of these negotiations is notified to all
subpostmasters by POL, and to all NFSP members by myself as General Secretary.
Whether that collective bargaining is effective or ineffective is a question on which
every member will have their own subjective viewpoint. Subpostmasters’ remuneration
system is complex, being in the main a combination of an element of ‘fixed pay’ and an
element of ‘transactional pay’. Transactional pay is dependent on the volume of
transactions being undertaken at any particular office and therefore will fluctuate
according to how busy an office might be month on month or year on year.
Recessionary market conditions therefore will impact on transactional pay as would a
buoyant market for post office products. I have enclosed copies of our Branch
Secretaries Circulars over the last 20 year period, giving an indication of the outcome
of annual pay negotiations.
We understand that POL has responded to a request under the Freedom of Information
Act in relation to their recognition of the NFSP for collective bargaining purposes as
defined by the Trade Union and Labour Relations (Consolidation) Act 1992 stating that
they “cannot recognise the National Federation of Subpostmasters for collective
bargaining purposes”.
While this response is given specifically in relation to the 1992 TULRA, the response
does not, in our view, represent the reality of the relationship between us, nor reflects
what actually happens in practice.
We maintain that POL’s recognition of us as the sole body that represents
subpostmasters (both individually and collectively) in disputes and matters relating to
pay, contracts and operations is well established and long-standing. The traditional
subpostmasters’ contract makes several references to negotiation and dialogue with
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the NFSP and recognition of the NFSP was only recently clearly reiterated by POL in
their new contracts for new post office models known as ‘Main’ and ‘Local’:
“The NFSP is an independent members organisation supporting the operators of Post
Office branches across the UK and is solely acknowledged by Post Office Ltd as a
representative body of operators. The NFSP is the only body with which Post Office Ltd
will seek to consult on matters affecting operators, subject to any legal, regulatory or
political obligations. Such discussions will take place within the existing and developing
relationship framework.”
We therefore refute the assertions that have been made.
3) The Certification Officer has been informed that the membership of the NFSP is in
decline and it is asserted that this decline has been the result of, and will be further
exacerbated by, the implementation of the Network Transformation programme by
POL. This has the effect of making the NFSP more reliant on payments provided by
the employer, POL.
Over the last year our membership numbers have remained relatively static (February
2012 7,168, February 2013 6,903). This is a reduction of only 265 members and
includes nearly the first whole year of Network Transformation. However it is true that
Network Transformation will mean we have to work doubly hard to recruit the new
models into membership. We are having enormous success recruiting Post Office
Mains operators and fully expect to have the vast majority in union membership. We
are actively working on a specific package to recruit even more Post Office Local
operators.
If the recruitment of Post Office Local operators is not as successful as we hope, we do
not expect to be any more reliant on income from Post Office Limited and will just have
to cut our cloth accordingly by increasing membership fees, making savings and
downsizing to become a smaller organisation. Indeed, our colleagues in the Republic
of Ireland have a very strong union with just 1,000 members.
I trust my response is sufficiently clear but do not hesitate to contact me if any further
clarification is required. I would emphasise, in relation to point 1, that the examination of the
NFSP’s annual returns to your office clearly indicates the strength of our organisation’s
balance sheet, and consequently our independence.
I await your response.
Yours sincerely
George Thomson
General Secretary
Encl.