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Brief for meeting with George Thomson/Mervyn Jones on 11/12/2014
Arrangements
* Meeting with Paula at 13.00 for 45 mins in Paula’s room.
Purpose of the meeting
* Purpose of meeting is to discuss current/emerging strategic relationship with NFSP senior
members.
Key points / messages / outputs for Post Office Ltd at the meeting
+ We should acknowledge the recent challenges we have encountered relating to the Network
Development/Expansion discussions and reiterate that this is a business critical programme of
work that is a priority for us, both in terms of gathering data from pilots and getting the subsequent
network design right.
* Our rapid launch of access points reflects the desire of both organisations to assert a position in
the Mails market which puts us on the front foot.
+ We should acknowledge their desire to seek comfort that existing postmasters' interests are
taken account of - in terms of the range of products available at access points, where these access
points are located and how many we have. We want to work together to establish an agreement
between us on how this will function. We have shared our plans in a collaborative manner.
* Our assumption continues that NFSP are best-placed to represent postmasters, albeit in a
rapidly changing environment that will inevitably influence our relationship.
* Our recent meetings discussing the MOU and Network Development have been helpful to
clarify the issues and find potential solutions.
Further Background
Grant Agreement (MOU)/Network Development
NFSP have now returned their marked up version of the MOU/Grant Agreement (GA) and there are a
number of key elements within their proposed changes to take account of. Critically, as expected, they
are asserting a position that they will not engage in any detailed discussions related to Network
Development until the GA is signed and that the GA sets out clear parameters that do not provide their
support for any Network Development beyond that defined in the current NT plan — i.e. excludes Network
Extension (NE).
We have been meeting regularly (every 2 weeks) to discuss the GA and NE and in reality the meetings,
which have been constructive in nature and tone, have discussed all these issues and enabled us to gain
clarity on the NFSP’s position. Signals from George privately are that he understands the reality of the
market and uncertainty in the business around signing an agreement binding PO to make payments to
NFSP without prior agreement on Network Extension, albeit he is formally asserting a position that the GA
is part of NT2 and a dependency on them supporting compulsion in NT.
Whilst it feels that we are pulling the NFSP towards a position that is acceptable for us, this remains finely
balanced and gaining an agreement at zero cost/risk to PO is unlikely.
For the GA, the key decision for PO is likely to be around a balance of risk of pushing NFSP too far
towards a fall-out versus recognition that agreement is a preferred outcome. The emerging option for PO
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is to sign the GA ensuring it includes a termination clause that was underpinned by a termination payment
from PO, thus enabling exit from the agreement in the event of future non-agreements, this in effect
becoming a termination event. NFSP themselves are seeking a termination payment to protect them
against the consequence of having no membership subscriptions, albeit tied to termination events as
currently defined rather than additional.
NOTE - this aspect has been discussed tentatively with George in private but not yet shared with
his team — this is anticipated to be discussed at the next meeting on 18/12. As yet, he has not
agreed or dismissed such a concept.
For NE, critical is their desire to seek comfort that existing postmasters' interests are taken account of - in
terms of the range of products available at access points, where these access points are located and how
many we have, as well as seeking to represent these operators. George’s financial demands here are
reducing and we may be able to satisfy this through the provision of additional discretionary funding for
cannibalisation protection (from existing NT budgets) driven by actual implementation of access points.
What we have made very clear (and seems to be accepted by George) is that there is no more additional
money (internally or from Government) and that defining explicit parameters in advance (as we have done
in the past with defined compensation payments and absolute conversion numbers) is not realistic in the
emerging and changing environment.
George has now confirmed that he does not expect 2 special conferences — one for NT, one for NE — and
that the latter would be covered by an Executive Council decision. This should be seen as a positive — an
indication that he wants to gain an understanding of NE prior to signing the GA. Likely timescale for the
Special Conference is now end January/early February.
Opinion remains that NFSP’s preferred outcome to their organisational future is an agreement with PO —
but it is finely balanced and the recent emergence of a more challenging environment relating to Network
Extension has definitely increased the possibility of them merging with CWU. NFSP acknowledge that this
would not be a good outcome for subpostmasters — their influence in CWU would be minimal, membership
numbers would decline and most of the senior leadership would find it very difficult to remain in post,
primarily from an ideological basis.
Other Potential Issues
POCA
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George is aware that we are expecting the POCA announcement next week and he will be briefed on the
detail as soon as we have final confirmation. This is obviously a good outcome for all parties.
ATM business rates
Mervyn was advised (directly by the VOA) of the decision not to proceed with the charging of business
rates to branches with ATMs.
Both parties agree this was a good outcome and we will be discussing with Mervyn what further, if any,
action is required.
(Please note - The meeting with Mervyn to discuss this is on 11/12 so if anything emerges at this meeting,
it will be covered in the pre-meet to the George meeting).
Mails advisory council
Terms of reference have now been agreed with RM and NFSP and we are now scoping dates (in January)
for the initial session with the working group — anticipated to be 5 reps each from PO, NFSP and RM. In
this first session RM and POL will provide an update on key challenges (e.g. view of parcels market, and
response to competition) with NFSP presenting feedback from the frontline including some of their key
challenges and experiences of selling RM products.
We are aiming for 4 sessions per year, to feed into the sessions proposed for Paula, Moya and George.
Horizon Mediation Scheme
George is looking to avoid making any public statement relating to the Arbuthnot press release, though
has been contacted by the press.
He has always maintained a strong position that Horizon is robust and, as we know, was not in favour of
the Second Sight investigation or mediation scheme. This was sensitive to him as he felt the report and
scheme was inconsistent with the robust position he maintained.
We have not asked for his public support on this subject but should not discount this as an option if the
situation demands it. His reaction to this could be tentatively tested at the meeting.
VAT recovery/NI issue — conversion to new status
NFSP have been advised that we have gained clarity from HMRC on the status of Mains operators and
that 600 operators will be informed of this shortly.
We have yet to discuss with them the prospect of the voluntary transfer of all remaining traditional
subpostmasters and seeking their support to implement this.
The latter issue will be discussed shortly once we have a final position established.
It should not be raised at this meeting.
Nick Beal 9/12/14