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Briefing for Robert Swannell meeting with Sajid Javid - December 17° 2015
rs
Biography: https://www.gov.uk/government/people/sajid-javid
It would be useful if you could seek feedback from the Minister in terms of the relationship
with, and performance of ShEx.
Below is a summary of issues, and lines for you to take on a variety of matters which may be
of interest to SoS.
1. UKGI - Transfer of the Shareholder Executive to UK Government Investments
The Secretary of State might be interested in the UKGI project and the transfer from BIS to
HM Treasury, and specifically the forward relationship between UKGI and BIS.
Lines to take:
e ShEx provides support to BIS on various key assets/projects — including the Post
Office, I “¥ and will continue to do so as UKGI.
e BIS will continue to be a key customer of UKGI and officials are working together to
ensure the relationship continues on an efficient and productive basis.
e Work to facilitate the transition continues to progress, and we remain on track for
UKGI to be fully operational with staff transferred in to the new entity for the start of
the financial year on 1 April
e Itis likely that UKGI will be based in 1 Victoria street for the short term
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7. POL’s accounts for 2014/15 will have to be restated by c£86m.
This has been caused by an underprovision in the exceptional charges, related to
subpostmaster compensation as subpostmasters agree to exit the network. This is an
accounting error — payments to subpostmasters have not been affected, there is no loss to
the business, the estimated cost of the overall programme (£430m) has not changed, nor
has POL’s government funding position.
Lines to take:
e Weare taking this issue very seriously, but it it is an accounting error.
e ShEx has now met with the CFO a number of times on this matter, and he
appreciates how unacceptable it is.
e The CFO is relatively new, and is part of the solution here. He identified early in his
tenure that there should be better controls and is putting them in place (including a
new Financial Controller). This issue came out during that process.
8. POL General/privatisation
Sajid met new chair Tim Parker late last month, who gave him his initial views of the
business having been in place for just over six weeks. These included that it was likely its
public sector heritage meant it had a higher cost base than it should, and that if he was
approaching it from a private equity angle, or starting from scratch, the organisation could
look very different. SoS has subsequently asked ShEx for their views on privatisation and
any other options available to the shareholder.
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Lines to take:
e Since independence from Royal Mail, POL have already made significant progress in
the last three years on reducing costs.
e For example, subsidy has come down from a peak of £210m to £130m this year,
£40m of losses have been stripped out of their Crown Network, they will break even
(before subsidy) towards the end of the next financial year.
e Privatisation will not be simple commercially or politically (and it would need the
passing of legislation to allow it). Officials are putting together a slide deck for the
SoS to consider over recess.
© But we would be keen to discuss these face to face with the SoS in the new year
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