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Meeting with Baroness (Lucy) Neville Rolfe, Parliamentary Under Secretary of State
Tuesday 26" January 2016, 9am to 9.30am
Purpose of meeting.
The main topic for discussion is Horizon and your review.
It is likely that BNR will also touch on the accounts restatement issue and she will be keen to hear
your wider reflections of Post Office a few months in.
Laura Thompson, Assistant Director at the Shareholder Executive, will also attend the meeting.
Background
BNR is still relatively new to the Post Office. We are a small part of her portfolio of responsibilities
which includes several live EU policy areas. She is also the Lords Minister responsible for taking both
the Enterprise Bill and Trade Union Bill through the House of Lords — the latter in particular will be
taking up much of her time.
Horizon
[see separate note from Jane MacLeod]
Interims and Accounts restatement issue
The Interims were signed off on 22 January following full analysis and resolution of the
postmasters compensation provision restatement.
e Our auditors and ARC have overseen the restatement process leading up to the signing of
the accounts.
e¢ Weare satisfied that this is an accounting timing provision issue related to the handling of
records in one particular programme.
¢ There are no other implications. Payments to postmasters, EBITDAS, bonuses and total cost
of the programme will not change.
e Specific controls are being established to ensure no recurrence.
e Interim results are likely to be published on 29 January in the normal way (transparent but
low key).
e@ We have a clear statement and reactive Q and As in place upon which we are liaising with
BIS officials.
FURTHER BACKGROUND BRIEFING
Crown announcement
On 19" January we announced our intention to advertise franchise opportunities for 39 Crowns
branches, and to close 3. BIS and BNR were briefed on our plans and branch locations in advance
and are broadly supportive. National press coverage has been limited but officials will have flagged
in their briefing to BNR. Pieces in the Guardian and the Sun are at Annex A.
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All MPs with affected branches in their constituency been briefed, with some expressing early
opposition. While there will be noise in the weeks ahead we will continue to engage with all to
minimise as far as we can.
Banking framework update
Post Office has been in negotiation with the high street banks to secure the continuation of basic
bank counter services to their customers.
Following Board approval, Notice of Termination letters were sent to all banks on 23rd December to
kick start negotiations. Pre-briefing with banks has ensured largely positive feedback.
Headline confirmation has been received from Lloyds, Santander, HSBC, Danske, Nationwide, First
Trust, Bank of Ireland, TSB, Metro and Virgin that they intend to join the framework. RBS have
requested clarification around termination dates covering their most recent contracts — this is in
hand. We are awaiting feedback from others.
The next step (via the British Bankers Association) is to finalise the Service Level Agreement.
Our expectation is that all banks will have entered their own internal governance phases by the end
of January, and movement to sign the new standard terms for service continuity will happen
thereafter.
SGEI consultation
As discussed with the Board in October, BIS are proposing to launch a consultation on the Post
Office, which was initially being considered for early 2016.
The specific driver for this is the European Commission’s request to see updated evidence on the
public need for our ‘Services of General Economic Interest’ (SGEls) as part of the state aid approval
process for funding beyond 2017/18.
The latest draft, which is broadly aligned with the policy position discussed with the GE and Board in
October, is with Ministers/ Special Advisors and no date for publication has yet been determined.
We believe there may be some views within BIS to now slim down the document focussing just the
SGEls — i.e. no more than is necessary for state aid approval - rather than posing questions about the
wider policy environment and the future role of the Post Office.
Our current view is that we are not seeking to engender any significant change to size of the
network, nor the main access criteria, although there may be merit in the developments of a more
flexible environment for branch and service provision within those broad parameters.
Redundancy payment cap and clawback
The Enterprise Bill, currently before Parliament (on which BNR has led for the Government during its
House of Lords stages) contains provisions to limit public sector redundancy payments to £95,000.
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Certain bodies are exempt — eg state-owned banks, broadcasters, museums and FRES. Post Office is
not currently on the exemptions list (nor is POMS). While recognising the need to avoid unjustifiably
large redundancy payments we would welcome being treated in a similar way to other bodies that
are exempt.
The same legislation is also seeking to extend existing provisions that recover exit payments from an
individual returning to the same part of the public sector. The Government is updating these rules
so that recovery would take place on an individual’s return to any part of the public sector. Again,
the Post Office would be captured by these proposals.
We are in discussion with BIS officials about both measures.
Post Office Visits
BNR has visited 5 branches since she took over responsibility for Post Offices.
4 June 2015 Ipswich (Main)
3Aug2015 Cardiff (Castle Mall, Local)
6Nov 2015 Norwich (Crown)
20 Nov 2015 Liverpool (Monument Place, Local)
3 Dec 2015 Horsham (Caterways, 5000" modernised branch, Local)
BIOGRAPHY
Baroness Neville-Rolfe, Parliamentary Under Secretary of State and Minister for Intellectual
Property (BIS and DCMS)
Political
¢ Joined the Government in July 2014 when she became Parliamentary Under Secretary of
State at BIS.
Was re-appointed Parliamentary Under Secretary of State at BIS (jointly with the
Department of Culture, Media and Sport), and Minister for Intellectual Property on 13 May
2015. At this point she became Minister with responsibility for Post Offices.
@ She is the UK Representative on the European Union Competitiveness Council
Her BIS Responsibilities include:
e intellectual property
* EU/single market: single market in goods and services; digital single market (Lords lead);
Competitiveness Council
corporate governance, company law and Companies House
postal affairs and Post Offices
BIS better regulation
BIS Lords business
eee
Non-Political
* Studied philosophy, politics and economics (PPE) at Somerville College Oxford.
¢ Worked at Tesco Plc from 1997 to 2013 and was an executive director on the main Board
from 2006.
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Also served on the boards of ITV, PwC and Metro AG and the China Britain Business Council
and was Chairman of Dobbies Garden Centres Plc. She was also President of EuroCommerce,
the EU trade association, between 2012 and 2014.
Until 1997 she was a senior civil servant in the Cabinet Office, the Prime Minister’s Policy
Unit and the Ministry of Agriculture, Fisheries and Food.
She was awarded her CMG for her time on the FCO Board and her DBE for services to
industry and the voluntary sector.
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ANNEX A
Press cuts attached:
© Guardian 20" January 2016
© Sun 20" January 2016
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