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Minutes of the Strategic Executive Group (“SEG”) meeting held at
100 Wood Street, London, EC2V 7ER on Wednesday 13 March 2024 at 11:00 am
Present:
. Nick Read (Chair) ° Kathryn Sherratt — deputising for Alisdair Cameron
° Owen Woodley ° Karen McEwan
. Chris Brocklesby ° Chrysanthy Pispinis
° Ben Foat
Other Attendees: Alison Hoyland (Deputy Company Secretary)
Other attendees as shown against agenda items.
Apologies: Al Cameron
Action
Pre-discussion and Review of SEG actions
© CP noted the need for better discipline and time-keeping at SEG, particularly the monthly
meetings where there was a great deal of business to get through.
e NR added that the quality of papers and presentations also needed to be improved paper
quality needed to be improved and better use of SEG time — new discipline needed — on time
keeping and paper quality/presentations etc
e KMcE added that the SEG should view this from a cultural perspective too, and be mindful of
people’s time and how they will have prepared to attend SEG.
e —cultural too — and respect of people’s time
e SEG reviewed the actions and updates and agreed the actions marked for closure.
Payzone and Finance
Kathryn Sherratt/ Asha Patel/ Tim MclInnes/Martin Edwards/Barbara Brannon/ Christian Spelzini/
Tom Lee
Payzone Integration
Barbara Brannon & Christian Spelzini
BB spoke to the paper and reminded SEG of the context and business rationale agreed by the
Board in January 2023, which largely centred on the simplification of the business model and
how integration would:
— enable technology transformation (specifically in relation to the de-risking of NBIT);
— support the network strategy and the acceleration of Drop & Collect rollout; and
— help mitigate and regularise known risks.
SEG discussed the timelines, and noted that as far any restructuring was concerned, this would
follow in later phases, but for now colleagues would transfer over top new reporting lines.
e KS note the pre-Board NED engagement with SJ, in his capacity as ARC Chair.
SEG RESOLVED to APPROVE the submission of the Payzone Integration request to the Board for
approval.
Payzone Letter of Support
Tom Lee
© TLspoke to the paper which set out that the Letter of Support from POL was required to
allow Payzone to sign its ARA on a going concern basis.
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SEG RESOLVED to APPROVE the submission of the Payzone Letter of Support request to the
Board for approval.
Short Term Facility Amendment
Tom Lee
e TL spoke to the paper which set out that DBT provided a £50m Short Term Facility as an
emergency same day facility for unexpected events in client settlements. The facility was due
to end on 1 April 2024 and it was proposed to extend the term by one year, to 31 March 2025,
when it would be renegotiated with DBT, alongside the terms of the Working Capital Facility.
SEG RESOLVED to APPROVE the submission of the Short-Term Facility Amendment request to
the Board for approval.
Financial Performance Report
Asha Patel
e AP spoke to the P11 report
— P11 total revenue was:
‘ahead of budget, largely driven by th
hich was recognised in the accounts in P11.
= P11 trading profit was above budget). The trading profit had
surpassed the 9+3 forecast, however, the full year outturn remained subject to potential
year-end adjustments.
SEG RESOLVED to APPROVE the submission of the P11 Financial Report to the Board.
2024/25 Business Plan
Asha Patel/Tim MclInnes/Martin Edwards
e KS spoke to the paper and noted that the 2024/25 plan reflected discussions to date. Of
particular note was the inclusion of an overview of the Postmaster Proposition, which provided
a view across two priorities — to reduce Postmaster costs and grow Postmaster income. This
had been a feature of discussions at the early March Board meeting where it was agreed that
while not all Postmaster upsides would be realised in FY24/25, it would be helpful to
understand and signal the trajectory and intent.
e The discussions to date had included those at the Board, at the Investment Committee and in
1:1 discussions with NEDs. In the case of the latter, ME noted his discussions in particular with
the PM NEDS on Operational Excellence (OE) incentives and the broader Postmaster
proposition.
© The FY 24/25 Business Plan was based
An end of year trading loss of jr
earlier in the month.
which was unchanged from the version discussed
earlier iterations, largely driven by. “scttional i unallocated pot. UKGI had
confirmed that should the additiona e funded from the Working Capital Facility, it
he additional budget would be available to fund a range of ‘change/investment’
IRRELEVANT
udget allocation would be subject to an agreed
business case and other considerations such as capacity and practicalities of delivery. KS
noted that budget and spend were not the same thing, and that while the associated
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benefits could not be quantified at this stage (as this would depend on the initiatives
agreed for funding), incremental upsides were expected to be realised, which would
mitigate against the: trading loss.
— Pay assumptions of 3.75% for CWU and Unite employees, 2.75% for POL colleagues at
grades 3A and 4 grades and 0% for SLP colleagues (though in thew case of the latter, these
colleagues were able to participate in the LTIP).
— The expectation that there would likely be other savings realised, although these still
needed to be worked through — for example, in relation to travel and subsistence and
contractor cost savings.
© SEG agreed that the FY25/26 outlook should be covered orally, and not included in the
papers at this stage as the position continued to be finessed.
Action
~ Slide to be added on the initiatives that won’t be undertaken in 2024/25.
— OEls to be included for Board approval as part of the 2024/25 Business Plan.
~ Discussion on one-off payment to Postmasters in recognition of 2023/24 revenue upsides to
be brought to SEG on 20/03/2024.
SEG RESOLVED to APPROVE the submission of the 2024/25 Business Plan to the Board for
approval.
People
Karen McEwan/Nicola Marriott/ Simon Recaldin
Past Roles
¢ SRand NM spoke to the paper which set out a recommendation on the approach to be taken
in relation to the Past Roles Review and staffing in the RU in the light of the change in
operational context and political environment.
e Asareminder, the Past Roles Review had been commissioned to look at the roles and activities
of current employees who may have previously undertaken a role related to the subject of the
POHIT Inquiry, to examine whether any conflicts, or perception of conflict, arose.
It had been agreed that an independent panel would be established to validate the approach
to the activity and while it had decision making authority it was able to recommend potential
outcomes, as follows:
— No further action.
— Reallocation of workload or activities
— Redeployment
— Additional assistance for employee wellbeing.
— A formal employment process in limited circumstances, eg, where an individual in a high
risk role unreasonably refuses to accept redeployment or cooperate with the business.
@ NM noted that public perception aside, no direct conflicts had been found and none of the
risks outlined within the ToR of the Past Roles Review had materialised and that ongoing
uncertainty was causing upset (with mental health absence as a result in some cases).
e Colleagues were rated ‘RED’, however, if they were identified as giving rise to a perceived risk
in terms of undermining the integrity and independence of remediation and redress work
being done and in those cases, redeployment had been recommended.
e Since the review had been undertaken, there had been a significant increase in late
applications and RU work driven by current external scrutiny and the heightened awareness
that was generating, organisational design delays had meant an increase in colleagues who
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were deemed as ‘RED’ and there no clarity yet on the Government's role in relation to redress
going forward and associated processes and procedures.
SR and NM noted the implications arising from a reduction in headcount and the risks posed
to redress claim processing times.
The recommendation to the SEG, therefore, was to take a ‘many to few’ approach to
redesigning the organisational structure within the RU. The approach would see the number
of ‘RED’ employees reduce and the appointment of new recruits to undertake work at a
different (lower) grade, albeit the transition would need to be done over time to help mitigate
the risks to redress claim processing times.
It was recommended that the creation of a separate independent function should continue to
be explored and initially in discussion with Government, as the make-up of any such function
would depend on final decisions on the Government's role in relation to redress going forward.
NM noted that while she stood behind the recommendation, she would wish to emphasise
that no conflicts had been found, nor had any risks materialised; the issue was one of
perception. On this basis, NM would personally advocate for ‘no further action’.
SR and NM left the meeting so that SEG could discuss the recommendations.
The SEG discussed the difficult trade-offs at play, with the majority voting for the ‘many to few’
recommendation’. The inevitability of delays to redress claim processing times was not,
however, accepted and SEG noted a number of different resourcing approaches and models,
including those adopted in other industries, such as insurance and claims processing.
SEG set SR the objective of mitigating the risks of delays to redress claim processing times.
Action:
OD plans to be devised to safeguard the pace at which compensation is being paid.
STIP Options
lan Rudkin
IR spoke to the paper which set out a proposal to buy-out the STIP bonus for middle manager
grades (3b, 2a and 2b) with effect from 2024/25.
SEG discussed the pros and cons of the proposal, with OW noting more broadly that the
proposal should not be the mechanism whereby the longer-term sustainability of the STIP
arrangement was addressed — and moreover, only at the lower grades.
NR agreed and said any such change should, be done as part of a wholesale reward strategy
approach.
SEG RESOLVED to DECLINE the proposal.
Contract and Sourcing Strategy Matters
DXC EUC contract extension
Liam Carroll/ Chris Brocklesby
SEG RESOLVED to APPROVE the submission of the EUC contract extension request to the Board
for approval.
1 NR, CB and KS voted for Option 3, “many to few”; OW voted for Option 2, “no further action”, KMcE abstained on
the basis Option 3 had the majority vote. Although non-voting members of SEG, BF and CP noted they supported
Option 2.
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Optima Health Contract
Liam Carroll/ Karen McEwan/ Martin Hopcroft
SEG RESOLVED to APPROVE the submission of the Optima Health contract request to the Board
for approval.
Customer personal loans
Liam Carroll/ Barbara Brannon/ Ed Dutton
@ ED and BB spoke to the paper which set out plans to source
who was the current provide
a IRRELEVANT
ee
° A key part of the sourcing strategy would be to identify partners that, amongst other
capabilities, had the required risk appetite and underwriting technology to offer personal loans
to UK market as a whole, where Post Office customers would not be excluded.
e SEG noted colleagues were confident that POL had the internal capability to source the
provider.
¢ CB sought assurance that there no implications for NBIT; the team confirmed there weren’t.
The SEG RESOLVED to APPROVE the sourcing strategy process for a replacement loan provider,
including for onward submission to the Board for approval, subject to advice on whether that was
necessary.
[It was subsequently agreed in an exchange with CP and Co Sec that the sourcing strategy request
did not need to be submitted for approval to the Board at this stage].
Network consumables
Liam Carrol/ Pete Marsh
SEG RESOLVED to APPROVE the submission of the Network Consumables contract request to the
Board for approval.
Transforming Technology
SPMP DBT Business Case Update
Tim Mcinnes
TMcl spoke to the paper which set out an update on the SPMP business case, due to be
submitted to DBT on 18 March 2023.
e Asareminder, the SPMP funding business case covered the costs of:
— Developing NBIT to replace Horizon.
— Sustaining Horizon while NBIT was being developed (anticipated to be by way of an
extension of POL’s contract with Fujitsu and which included investment in the core
software, infrastructure and branch hardware).
— Developing the next generation of Self-Service Kiosks, the rollout of new ‘2nd devices’ as
a new mobile platform for Postmasters and a new Identity and Access Management
application.
e The Investment Committee was due to review the business case on 14 March, in time for any
final amendments before submission to DBT.
SEG RESOLVED to APPROVE the submission of the SPMP Business Case update to the Board.
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Second Device — Interim Business Case and Drawdown request
Zdravko Mladenov
ZM spoke to the paper which set out that as part of the universal service offering, POL was
obliged provide for a pre-paid bill payment facility for public utility services and that the
current legacy solution, Paystation, was being discontinued by the supplier at the end of the
contract in March 2025. To continue providing the service, POL planned to deploy a handheld
“Second Device”.
The funding drawdown request at this stage would allow for “Second Device” hardware to be
procured, while the technical solution was developed under the SPMP.
The drawdown was dependent on DBT approving the reallocation of funds within the current
interim funding envelope; should DBT not approve the reallocation, the project would have to
delay the hardware purchase until the next SPMP business case was approved.
SEG RESOLVED to APPROVE the submission of the Second Device Drawdown funding request to
the Board for approval.
SPMP Drawdown request
Kelly Goodwin
The paper was not discussed as the drawdown request had not been reviewed by IADG; subject to
IADG review, SEG agreed the request should come back the following week before submission to
the Board.
Fujitsu Extension
Simon Oldnall/ Patrick Bell/ Liam Carroll
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SO spoke to the paper which set out the current position on the discussions to date (including
with Government) on the continuation of support services for the Horizon platform by Fujitsu
beyond March 2025, when the current contract was due to end.
The extension was proposed to cover the intervening period, before the roll out of NBIT.
While discussions were ongoing, Fujitsu had not yet made any commitment to continuing the
support and against the context of the current external scrutiny, was unlikely to do so without
the express support of Government.
Subject to the position being settled, funding the contract extension formed part of the SPMP
business case.
In relation to a ‘buy’ alternative and procurement risks, SEG noted the high probability of
challenge to a decision to further extend the agreement with Fujitsu and that external
independent legal and commercial advice was being sought to further inform and quantify the
risk.
In the event that Fujitsu did not agree to an extension, or there was some other barrier to
awarding an extension, SEG agreed that a plan B timeline should be drawn up.
Actions:
Milestone plan with key dates to be developed for a ‘Plan B’ alternative to a Fujitsu extension.
LG to be engaged on the various considerations and dependencies, ahead of discussion at
march Board.
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Improving branch profitability
Pete Marsh
Delivering Change into the Post Office Network and plans for developing a central branch
repository
* PM spoke to the paper which provided an update on the current processes for delivering
change into the Post Office network, the challenges encountered, and the opportunities to
improve the processes and land change more effectively.
© While SEG appreciated the update, it noted that the request from the Board was narrower,
and focused on the expectation that there was, or would be, a central repository which
documented Post Office branch information, including in relation to branch layout and to
house contact numbers and emails etc.
* The Board was keen to know that lessons from previous initiatives, for example, ATM
replacement and CSS were being picked up and that inefficiencies and other barriers to
effective roll outs could be minimised/avoided, not least with NBIT roll out in mind.
® While SEG understood the competing priorities at play, it nevertheless thought more could be
done to harness the contact and engagement within branches currently.
Action:
¢ Paper for the Board to be re-written, with a focus on plans for a central repository. PM
Rebuilding Trust
Inquiry Update
Diane Wills/ Neil Davey/ Dan O’Mahoney
Ben Foat left the meeting.
@ DWspoke to the paper which provided an update on a number of key issues, including:
— Engagement with the Inquiry.
— POL's closing submissions for Phase 4.
— The release of Deloitte from their confidentiality obligations to POL.
— The current position in relation to legal advisers’ costs related to disclosure remediation
work.
« DWnoted the constructive engagement with the Inquiry’s legal counsel on disclosure and how
the teams could best work together to meet the Inquiry’s upcoming hearing schedule.
® On POL’s written closing submissions for Phase 4, and the position the Inquiry Chairman had
taken in relation to the inclusion of references to a Prosecution Expert’s report, POL was of the
view that the Inquiry Chairman’s position was based on a misunderstanding and stemmed
from a miscommunication on the part of the Inquiry’s legal counsel.
* The next Phases of the Inquiry were due to recommence on 9 April 2024.
SEG RESOLVED to APPROVE the submission of Inquiry Update to the Board.
Inquiry FY24/25 Budget & Drawdown request
Diane Wills/ Neil Davey
e The paper was taken as read and set out a drawdown funding request for the Inquiry Unit to
cover costs to the end of September 2024.
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¢ On the matter of legal advisers’ costs related to disclosure remediation work, SEG agreed
that B Brannon would be a helpful addition to the negotiation team.
Action:
— B Brannon to join the team and support the HSF cost negotiations.
SEG RESOLVED to APPROVE the submission of Inquiry funding drawdown request to the Board
for approval.
Sensitive Issues request and Inquiry SteerCo ToR
Diane Wills
SEG RESOLVED to APPROVE the submission of (i) the Inquiry SteerCo ToR changes and (ii) the
revised process for making decisions on Speak-Up matters and the release of information to the
Inquiry, to the Board for approval.
Remediation Unit (RU) Update
Simon Recaldin
Ben Foat re-joined the meeting.
SR spoke to the paper which provided an update on a number of key issues, including:
e The current position in relation to remediation, including OC, HSS, SRR claims and GLO
disclosure.
¢ The ongoing uncertainty in respect of management and delivery of OC and HSS claims
and the associated negative publicity around the speed of redress payments and the
challenging environment within which RU is operating as a consequence.
e Plans to further accelerate the payment of redress.
e SR also noted the redress awarded in a fatality case, and the likelihood that this may attract
some public commentary.
@ On working with Government on future redress plans and processes, OW noted the need to
ensure that any role POL played, including in assisting Government in working up its plans, did
not interfere with the independence of any future arrangements.
SEG RESOLVED to APPROVE the submission of RU Update to the Board.
RU FY24/25 Budget & Drawdown request
Simon Recaldin
© The paper was taken as read and set out a drawdown funding request for the RU Unit to cover
costs to the end of September 2024.
SEG RESOLVED to APPROVE the submission of RU funding drawdown request to the Board for
approval.
Items for presentation
Project Darwin, next steps on business transfer
Russell Hancock/ Stephen Faulkner-Atkinson
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RH and SF-A spoke to the paper which set out the progress being made in relation to the
business transfer to iForce.
e The update included the latest TUPE position for Swindon staff and noted that it was now
proposed to proceed without an opt out option, as it was unlikely the necessary permissions
from DBT and HMT would be received in time.
In practice, this would mean that those staff who were not willing to move to iForce (it was
understood this would be the majority of the Swindon staff, based on distance) would take
redundancy instead.
¢ ~POLhad contractually Force for these! irReLevaNt and iForce had indicated that it
was happy that the consultation should proceed on th:
SEG agreed the consultation could proceed on this basis, and that it was not a matter requiring
Board approval.
SEG RESOLVED to APPROVE the submission of the update paper on Project Darwin and progress
in relation to the business transfer to the Board, indicating that, as a noting paper, it should be
tabled alongside the separate update paper on the Project Darwin: Lessons Learned.
Items to be taken as read, with no presentation
Health and Safety Report
SEG RESOLVED to APPROVE the submission of the Health and Safety Report to the Board.
Technology Dashboard
Action:
® Commentary to be updated to include the explanation for the increases and the ‘so what’s’
GE RESOLVED to APPROVE the submission of the Technology Dashboard to the Board, subject to
the amendment discussed.
Retail Performance Dashboard
SEG RESOLVED to APPROVE the submission of the Retail Dashboard to the Board.
Project Darwin, lessons learned
SEG RESOLVED to APPROVE the submission of the update paper on Project Darwin: Lessons
Learned to the Board, noting its earlier agreement to table the separate on the business transfer
alongside the Lessons Learned update.
Freedom of Information Tracker
SEG noted the update; BF provided an overview of the key themes and issues arising.
Action:
e Project Boland Report shared with UKGI to be circulated to SEG KS
Monthly Assurance and Complex Investigations MI Report
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SEG noted the update and discussed the competing demands for SEG and senior leadership
time which may impact the extent to which they are able to support investigations currently.
Governance Items
Draft Board Agenda — 25 March 2024
The draft Board Agenda was NOTED; changes to the final agenda would reflect the discussions at
SEG.
Monthly SEG meeting minutes for approval: 14 February 2024
The minutes of the meeting held on 14 February 2024 was APPROVED as a correct record of the
Meeting.
Any other Business
TB Cardew contract extension
* This would be added to the sourcing/contract requests to the Board; it was for additional
contract under Regulation 72(1)(b).
e Acompliant procurement exercise would be run in June to put a new contract in place from
September 2024.
Business and Trade Select Committee
¢ OW noted the Select Committee had sent a further request and had asked for Remuneration
Committee minutes since 2019.
e¢ Anyone named in the minutes would need to be advised of the disclosure.
Postmaster Engagement
¢ OW noted the upcoming evets, and that the team would be arranging them over April, May &
June to help mitigate against competing pressures.
Date of next scheduled meeting:
17 April 2024.
There being no further business the meeting closed at 18.00.
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