NFSP00001177
NFSP00001177
All Party Parliamentary Group for Post Offices
Meeting — Tuesday 24 February 2015, Committee Room O, House of Commons
Present: Therese Coffey MP Sir Roger Gale MP
Richard Graham MP (Secretary) Sir Gerald Kaufman MP.
Alan Reid MP (Treasurer) Margaret Ritchie MP
Several apologies were received, including from Russell Brown MP (Chair) and Jason
McCartney MP (Vice Chair).
Guests: Jo Swinson MP (Minister for Postal Services)
Paula Vennells (Chief Executive, Post Office Ltd)
George Thomson (General Secretary, National Federation of
SubPostmasters)
e Richard Graham welcomed those present and asked Paula Vennells to open the
meeting by addressing the APPG on recent developments.
e Ms Vennells said the Post Office was in the midst of the Network Transformation
programme, which was using government funding to transform the post office
network. She added that the programme would reduce the need for ongoing public
subsidy and aim to achieve commercial sustainability, while also protecting the Post
Office's public purpose. Losses had been halved and half the available network had
been transformed, with 5,000 post offices signed up and 3,800 having already
converted to new models, she said.
e The new models’ increased opening hours were equivalent to 2,000 extra traditional
post offices, Ms Vennells told the APPG.
¢ Turning to products, she said that the Post Office Money brand had just been
launched. Mortgages were proving very successful; and with Vince Cable's help,
constructive discussions were underway with the major banks about offering a
consistent service through post offices. However, she couldn't allow post offices to
step in to provide services where banks were pulling out, without being paid properly
for providing the service.
e Ms Vennells reported that Post Office Ltd (POL) was working well with Royal Mail.
POL had encouraged Royal Mail to reduce its prices; and while the mails market
was opening up hugely, POL expected to maintain its current levels of business.
e Regarding the Horizon enquiry, Ms Vennells said that POL had now completed
investigating all applicants to the mediation scheme. The investigation had
demonstrated that the Horizon system works, and has been proved to be robust and
reliable. Any shortcomings in training and support which were identified have been
addressed, she added.
« Richard Graham thanked Ms Vennells and asked Postal Services Minister Jo
Swinson to update the APPG.
¢ The minister said that the Post Office was a much-loved institution which was mid-
way through a huge period of change to make it fit for purpose in the 21° century.
e Network Transformation involved different types of post offices, she said. These
included the 3,500 Community offices which operate as traditional post offices, and
receive significant subsidy in recognition of their social value; they can apply to a
£20m community branch fund to modernise their business, and there have been
300 applicants to the fund so far.
NFSP00001177
NFSP00001177
Other models include Mains, which are busy stand-alone branches offering the
widest range of services; and Locals, which make up a large part of the network and
are attached to another retail premises, the minister explained. Locals offer a wide
range but not all services. Meanwhile, the Crown network is decreasing in size due
to its losses, which were so significant as to not be sustainable. These losses have
now been brought down.
The minister stated that government services work was a challenge for the network,
as the way people access benefits and pay their bills is changing. However, POL is
well-placed to win government work, with new opportunities in ID assurance. The
other big challenge is the mails and delivery market, which is changing very quickly.
However, Click and Collect was a huge opportunity for post offices. Co-location with
a successful retail business was vital, she added.
Alan Reid said there were 100 small post offices in his constituency. Some are
allocated as Community branches, others as Locals but many don’t want to be. He
asked if the designation criteria could be reviewed? The minister replied that there
was an appeal process and in the past this has resulted in some designations being
changed. She encouraged all members to let her know if they felt designations
needed to be looked at again.
Margaret Ritchie acknowledged that the way many people carried out their banking
had changed over the last few years; but added that for older people, there should
be additional forms of banking available at post offices. The minister replied that
there were huge opportunities for POL in banking and financial services, both
through offering services for partner banks and through its own current account and
financial products. Paula Vennells added that financial inclusion was very important
for the Post Office — for example several credit unions could be accessed at post
offices but not all, and work was ongoing to address this. She said she was keen to
hear any suggestions from members.
Therese Coffey said that HMRC doesn’t put barcodes on its tax returns, and as a
result they can’t be paid at post offices. Could this be resolved? The minister said
this was the first time this issue had been raised with her, but she was happy to look
into it
Sir Roger Gale asked how POL could act on changing demographics and consumer
need, citing a village in his constituency which was set to grow by a third and would
benefit from having a post office. The minister replied that POL was currently
conducting a trial of new outlets operating basic parcel drop-off services, and felt
that this could be extended to other basic mail services.
The minister then left the meeting and Richard Graham thanked her for attending.
Sir Gerald Kaufman cited proposals to move a post office in his constituency from
its current very popular location to premises in a nearby business, in the face of
strong opposition from residents. Paula Vennells said she would come back to him
on this.
Paula Vennells then returned to Sir Roger Gale’s earlier question, saying POL had
opened a few post offices in these kind of locations. POL had stopped post office
closures, found a commercially viable model and the next step was to identify where
to put new outlets, without cannibalising the existing network. Richard Graham
suggested that POL should start a conversation with the Department for
Communities and Local Government about Section 106 funding which could be
used to set up branches in new locations.
Therese Coffey said that a post office in her constituency had closed and the local
village store was happy to take on the service as a Local, but could not offer it on
NFSP00001177
NFSP00001177
Sundays. The Post Office Local model was so inflexible that POL would rather see
a two hour a week outreach service instead of what the local store is happy to
provide six days a week, from 8am-8pm, she said. Paula Vennells said she would
take this issue away to look at it.
Richard Graham asked Paula Vennells about the future structure of the Post Office
into the next parliament, and if mutualisation would work. She replied that
mutualisation was predicated upon the business being commercially sustainable;
and until that happened, POL had put in place new ways of working and had set up
a Stakeholder Forum and a Post Office Advisory Council. George Thomson added
that the NFSP had always been supportive of mutualisation, but this support had
been predicated on the delivery of far more government services at post offices.
Achieving mutualisation was always likely to be challenging due to PL’s finances, he
added.
Richard Graham suggested that banking and financial services could be an
alternative source of revenue for post offices in the future. Paula Vennells said that
income was challenging —- POL had been supposed to gain an additional £200m in
new government income but the opposite had happened. While this was good from
the taxpayers’ perspective, it left a hole in POL’s income which financial services
could only partially fill.
Richard Graham thanked Paula Vennells and all those present for attending what
would be the last meeting of this parliament, and closed the meeting.