UKGI00024480
UKGI00024480
OFFICIAL SENSITIVE Ed
Department for
Business, Energy
& Industrial Strategy
Meeting with Nick Read
17 October 2019
11:00 - 11:30
External attendees:
Nick Read, CEO, Post Office Limited (POL)
Internal attendees:
Kelly Tolhurst, Minister for Postal Services
Alex Chisholm, BEIS Permanent Secretary
Carl Creswell, Director, Professional Business Services, Retail and Post Directorate
Purpose of meeting and Handling:
This is your introductory meeting with the newly appointed CEO of Post Office Limited
(POL). The meeting will have three main objectives:
1. To welcome Nick and set out your expectations for him as CEO and your
ambitions for POL;
2. To hear his initial reflections and understand his thinking on the future direction
for the Post Office as well as discussing how best to align with BEIS’ long term
vision work:
a. Provide update on long term vision work; and
b. Highlight that determining case for subsidy post 2021 is key a
priority for the next few months.
3. Discussion on key live areas:
I. Latest update on litigation
ll. I An update on the information sharing agreement
lll. Agent pay
TV. Update on NED appointments
Points to make:
Expectations of POL
e Explain that you are the Minister responsible for postal services and it is your
objective to ensure a thriving Post Office network which serves the needs of
communities, is sustainable and delivers value for money to the taxpayer.
e Since taking on the role, your key areas of interest have been:
othe franchising programme — which gave rise to a great deal of
parliamentary scrutiny;
othe Horizon litigation;
o Agent Pay, on which you have set up the working group between POL,
National Federation of Sub Postmasters and other stakeholders. The next
meeting of the working group is scheduled for 4 November; and
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OFFICIAL SENSITIVE Ed
Department for
Business, Energy
& Industrial Strategy
o Wider governance improvements through a revised Framework document.
e Explain that as a part of your role you are required to promote and defend the Post
Office in parliament (the current hot topic being Barclays’ decision to opt out of the
Banking Framework 2 agreement).
Nick Read's initial reflections on POL’s operation and future aspirations
e You should ask Nick about his immediate reflections on the current operation of
POL including what is going well and what could work better.
* Seek his reflections on future vision for POL as well as his ambitions for what he
will achieve in his first 100-days and what he would like to achieve in POL’s 5-year
plan.
e You may wish to make the following points/ask questions:
o that you are aware of the strategic challenges facing POL and potential
impact of changing market conditions in the retail sector, financial services
and digitisation of government services on POL’s overall services and
products offer.
o Ask Nick what his thoughts are on the direction of the overall services
offer for the Post Office in the future to maximise opportunities and
deal with emerging risks?
o That you are aware of the Post Office’s interest in enhancing its digital
strategy to enhance its competitiveness.
o Ask Nick about his views on this and what other opportunities he sees
for the Post Office in the future?
o That you have observed that it’s important that there is a strong positive
culture from the top of the organisation, all the way down to the front-line
agents, working towards a shared goal.
o Ask Nick what he sees as the success criteria for the post office in the
longer term?’
e Explain the importance of aligning Nick’s future vision with the long-term vision that
BEIS is leading. Share your initial thoughts on the long-term vision:
o Explain that you have asked the policy team to address strategic questions
on the future role of the post office. Emphasise that the aim of this work is to
develop a clear aspiration for Government on the future post office. This
would include looking at how the future objectives, role in delivery of
Government priorities and leading to considerations on how Government
supports the Post Office.
o Explain that to champion the Post Office, you wrote to Government
departments recently to raise POL’s profile and emphasise that Post offices
can be the best route to deliver Government policy. You are keen for further
thinking on this to be done through the long-term vision work but welcome
any ideas.
o Officials have suggested to POL a series of strategy workshops at the end
of October/early November. We are aiming to use these workshops to
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OFFICIAL SENSITIVE ae
Department for
Business, Energy
& Industrial Strategy
structure joint working on the longer-term strategic issues, with further
discussion at the Shareholder Meeting in November.
o Ask Nick if he is content with this approach and has any other
suggestions for how we align this work?
o You should also emphasise the need for POL and BEIS to work together
particularly to understand POL’s planning assumptions for the next 5-years
so that BEIS, supported by UKGI, can consider a case for continued
subsidy and a robust business case can be submitted to HMT, as part of
next Spending Review.
o Impress on Nick that Government ambition is for the Post Office to become
more commercially sustainable and for it to reduce dependency on
Government funding.
o While the business increased profitability is to be praised, the success of
the Post Office transformation will ultimately rely upon the ability of the
Post Office to grow its customer base.
Key Areas of Concern (Background)
Litigation
Note that following the POL Board call on Thursday 3 October, POL have
communicated the disclosure issue to the Court and Claimants solicitors and that
there has been no response as yet. The Board also agreed to request an audit
from Fujitsu (FJ), checking that the representations made by FJ to the court are
accurate, which will help to ensure that something like this does not happen again.
UKGI colleagues expect to be able to give a further update for your box in week
commencing the 14 October.
¢ Emphasise the need to be kept abreast of the ongoing litigation trials - Sparrow
which will have important financial, operational and reputational
“consequences for Post Office.
o Updates on POL’s mediation strategy on Sparrow litigation to be shared
swiftly to enable us to consider any case for settlement
o BEIS and POL communications must be aligned in preparation for the
imminent Horizon judgment. POL should maximise this opportunity by
striking the right balance in its communications to signal a change in its
litigation approach since the failed recusal attempt.
o That action continues to be taken across the business to ensure the Judge’s
criticisms are taken on board and that Government is kept updates as to
how well the newly introduced measures to support postmasters are
working.
o Finally, you understand the judgement will be sent to the parties under an
embargo basis. You are grateful for the Post Office offer to provide a
summary and arrange an oral briefing immediately after the judgement is
handed down.
Framework agreement
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OFFICIAL SENSITIVE Ed
Department for
Business, Energy
& Industrial Strategy
e We have resolved the main outstanding issues on the framework document and
hope to be able to agree a final draft soon, prior to seeking ministerial approval. Both
sides have signed-off on the inclusion of robust information-sharing protocols.
Agent Pay
« Welcome the interim offer made in August. It is important to recognise that the
relationship with postmasters requires changes beyond pay, and link this to the
need for culture change at POL. You look forward to being updated regarding
further actions on agent’s remuneration following the next Board meeting on 28
October.
e Acknowledge the upcoming NFSP/POL working group meeting due to take place
on 4 November. You expect full engagement in this and future working group
meetings.
« You may wish to welcome the agent pay review and reiterate the importance of
building further a culture of engagement with staff, agents and customer
responsiveness.
Update on NED appointments
e UKGI have received formal request from POL to appoint two NEDs. UKGI are
preparing the supporting documentation and will submit this for ministerial approval
for your next box on 14 October.
Biographies:
_
ick Read — Chief Executive
Nick joined Post Office as Chief Executive Officer in September
2019. Nick was most recently Group CEO at Extra Energy and prior
to that CEO at Nisa Retail Limited where he led the stabilisation and
transformation of the business ahead of its sale to the Co-Op in 2018.
Nick has over 25 years of consumer and commercial experience and
H H has previously held senior roles at Tesco, Vodafone, HBOS, Lloyds
Banking Group and Thomas Cook. In his earlier career, Nick was a
Consumer and Retail Strategy Manager at Deloitte Consulting, a
Purchasing Director for Aldi UK and spent 4 years as Captain of the
4"/7" Royal Dragoon Guard, H.M. Forces.
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