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POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
MINUTES OF A STRATEGY SESSION OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON
WEDNESDAY 12 JULY 2023 AT 100 WOOD STREET, LONDON, EC2V 7ER AT 09:00 AM
Present: Henry Staunton Chairman (Chairman)
Lorna Gratton Non-Executive Director (LG)
Saf Ismail Non-Executive Director (SI)
Elliot Jacobs Non-Executive Director (EJ)
Ben Tidswell Senior Independent Director (BT)
Brian Gaunt Non-Executive Director (BG)
Simon Jeffreys Non-Executive Director (SJ)
Amanda Burton Non-Executive Director (AB)
Andrew Darfoor Non-Executive Director (AD)
Nick Read Group Chief Executive Officer (NR)
In attendance: Rachel Scarrabelotti Company Secretary (RS)
Martin Roberts Group Chief Retail Officer (MR)
Martin Edwards Network Strategy & Delivery Director (ME)
Owen Woodley Group Chief Commercial Officer (OW)
Chrysanthy Pispinis Commercial Strategy & Planning Director (CP)
Tim McInnes Strategy and Transformation Director (TM)
Kevin Hollinrake MP Minister for Enterprise, Markets and Small Business
(Minister)
Richard Taylor Group Corporate Affairs Director (RT)
Carl Creswell Director, DBT (CC)
Apologies: Alisdair Cameron Group Chief Finance Officer (AC)
Action
1 Welcome and Conflicts of Interest
A quorum being present, the Chairman opened the meeting. The Chairman called for the
Directors to disclose any conflicts of interest. The Directors declared that they had no
conflicts of interest in the matters to be considered at the meeting in accordance with the
requirements of section 177 of the Companies Act 2006 and the Company’s Articles of
Association.
2 Session 2: Scene-setter to 2028
CP spoke to 4 key trends being automation/ digitisation, exclusion, localism and
environmental sustainability and the potential implications of these trends for the
Company. Discussion followed in relation to the divide between main-stream and
excluded customers becoming more pronounced, the need to invest in automation and
digitisation to continue to serve mainstream customers, the lack of financial reward for
Postmasters in relation to the social services they provided for digitally excluded
customers and the current difficulty of catering for both mainstream and excluded
customers which was not sustainable from a commercial perspective.
3 Ministerial Visit (including pre-/post-discussion)
Pre-discussion
TM outlined the number of branches in the Minister’s constituency, the Minister’s
background and suggested that Postmaster remuneration, commercial sustainability and
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DBT policy could be areas for Board members to engage the Minister on. SI advised that
he would raise a query with the Minister in relation to deposit limits. ACTION OW advised
that the Commercial team were exploring with Natwest whether digital identity could be
used to assist an increase in deposit limits. SI queried whether this approach could be
applied to Western Union and Moneygram. OW advised that the team could look into ow
this.
TM spoke to the shifting focus of HMG policy. The use of the Post Office to supply
government services had declined significantly over the last 8-10 years, with the result that
we had a network that had been established to deliver the previous policy rather than the
current one. 90% of revenue came from circa 6500 branches and 50% of revenue came
from 2000 branches. The Shareholder policy review due to be undertaken was staring to
surface some of these issues. If the Shareholder did not initiate a policy review then we
could consider undertaking this.
CP, ME and OW left the meeting at 10:37.
Ministerial Visit
The Minister joined the meeting at 10:50, with RT and CC.
The Chairman welcomed the Minister and outlined the focus for the Board Strategy days.
Key discussion points were as follows:
The Minister referenced the Company’s recent funding request and advised that
public finances would likely remain under pressure for a number of years. The
challenge back to the Company was how the funding request could be reduced, for
example in relation to NBIT as well as central costs;
¢ The Minister noted the Company’s diversified revenue streams, the importance of
access to cash, and the need to be realistic about the size of the network for the
future;
@ EJ spoke to Postmaster remuneration, sharing his view that the current level of
churn was a lagging indicator of the status of the network. The Minister noted
that the RMG pay dispute had been resolved so was hopeful that this could assist
with branch performance. In the meantime the government was working within a
tight funding envelope however was keen to work with the Post Office to find
solutions to improving Postmaster remuneration and the Minister was agreeable
to having conversations across government in relation to this. EJ advised that
proper remuneration for government services would assist;
* Sl advised that the Board was in agreement in relation to central cost savings and
noted the plans to franchise a limited number of DMBs as soon as possible in order
to deliver savings. With the cost challenge for NBIT, the system needed however
to be fit for purpose and fit for the future. SI raised the issue of deposit limits;
Postmaster were waiting for a response. The Minister replied, noting the central
cost savings that would be delivered via franchising DMBs and that with NBIT the
appetite remained to deliver this however it was about delivering what we could
and when we could. On deposit levels, the Minister was aware that this was still
an issue and was committed to finding a resolution. CC noted that the issue with
deposit levels could be improved by individuals in appropriate circumstances
opening business accounts as opposed to depositing into their personal accounts.
The Minister queried whether the Company could raise deposit levels directly with
Santander. NR advised that he had met with Santander to discuss this issue.
ACTION The Minister asked that details of cases be shared with the Minister; ow
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BT noted the trend of digitalisation and the switch to sales online and the impact
on Postmaster remuneration, as against the social purpose the government
wished the Post Office to continue to maintain. In terms of policy, BT queried how
these issues could be put forward for the Minister to consider. The Minister
replied that the Post Office continuing to provide a social purpose very important
and if there was not a social purpose to the Post Office then HMT may not wish to
support it. Treasury needed to see that this was a really important network in
terms of social inclusion and this should be something that was emphasized to
HMT in our funding requests;
SJ advised that he was Chair of the Company’s ARC. In order to finalise the Annual
Report and Accounts FY22/23 and have these filed on time we needed additional
funding to have been secured. SJ shared his view that it was important to have the
Annual Report and Accounts finalised on time to provide confidence, and we did
not want an adverse external audit report to be issued in relation to the Company.
The Minister took the point;
TM queried where the Minister saw the social value of the Post Office; was this
about providing the last shop in the village, or supporting the last shop in the
village, or in relation to providing banking services for example. The Minister
replied that any policy review would need to be driven by consumer behaviour
and that the network would need to both available and sustainable.
The Chairman thanked the Minister for attending. The Minister, RT and CC left the
meeting at 11:21.
Post Discussion
The Board noted the more liberal view of the Minister in relation to the size of the
network and the steer provided by the Minister on linking the fulfilment of the Company's
social purpose with funding requests.
Session 3: How Could Our Business Evolve by 2028?
OW, MR, CP and ME re-joined the meeting at 11:26.
Key discussion points were as follows:
Bench-marking of the central costs of the Company had been undertaken
previously however this was not an easy exercise given the inherent differences
between the Company and other retail franchises. Costs in relation to changing
processes was discussed, as well as the appetite of the Shareholder to invest in
this area given the lead period before payback. NR noted the significant
simplification of operations and
be announced on 24 July and NR confirmed that the Minister had been advised;
SI shared his view that the DMBs were over-staffed. ME advised that there was an
ongoing programme to reduce staffing in DBs however this was constrained by
trade union agreements with specified hours, alth
engagements with the unions on this. ACTION
MR advised that he would look
into this;
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