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Third Report, Post Office Closure Programme
This is available in html and pdf formats, lots and lots of info, I've only posted the conclusions here.
"Conclusions and recommendations
Role of Government and the future of the network
1. In answer to a Parliamentary Question, the Government said a network of around 7,500 offices would suffice to meet the national criteria. We do not think it is satisfactory simply to accept that the network may continue to shrink in an unplanned way between now and 2011; Post Office Ltd should be obliged to use its best endeavours to keep the network at a minimum of 11,500 fixed outlets. (Paragraph 7)
The Consultation Process
2. We urge the new National Consumer Council to place continued monitoring of the post office network among its highest priorities. (Paragraph 8)
3. Post Office Ltd should be far clearer about the basis on which the public is being consulted. All its literature should make it clear that there will be reductions in Post Office provision, and that the question being asked is simply whether the right branches have been identified for closure. (Paragraph 12)
Confidentiality
4. If people are to respond sensibly to proposals to close a particular sub-post office, they need to know why that branch has been put forward for closure. There may be some details which need to be kept confidential, but this should be strictly limited, given the substantial public investment in the network and the keen public interest in the outcome. We welcome the fact that Post Office Ltd has been prepared to share more information as the process has evolved; it should give such information at the outset of the consultation process. (Paragraph 14)
5. Area Plan Proposals and their associated publicity should make it clear that closure, although likely, is not inevitable, and that the status of post offices scheduled to remain open may change. The notification that an office, is to remain open should be far more clearly worded. (Paragraph 16)
6. The Chief Executive of Post Office Ltd told us that the proposals in Local Area Plans were refined through the pre-consultation process and that this preparation is some compensation for the limited time allowed for public consultation. If this is so, commercial confidentiality should not prevent Post Office Ltd from holding the discussions necessary to make sensible proposals. (Paragraph 17)
Local Authority and MP involvement
7. We also note that although Postwatch appears to be doing a good job in influencing proposals in the pre-consultation period, several of the MPs who responded to our request felt that Postwatch could have been more closely involved in discussions with them. Postwatch is the only organisation able to take proposals to review; it would be helpful if it always discussed its position with interested MPs. (Paragraph 20)
Profitability
8. Local authorities and local MPs should be more closely involved in the pre-consultation process. Postwatch appears to be doing a good job, but it simply does not have the wider responsibilities of local government, or the representative role of MPs. The Chief Executive of Post Office Ltd told us that local authorities were involved in drawing up local area plans before they went out to public consultation; clearly, some local authorities do not feel they have been properly involved. Local Area Plans would be improved if local authorities and Post Office Ltd worked together. (Paragraph 21)
9. Postwatch should scrutinise proposals to close post offices which are commercially viable for Post Office Ltd particularly closely and, if necessary, have powers to block them. (Paragraph 22)
Alternative support for Post Offices
10. We welcome Post Office Ltd's apparent willingness to contemplate introducing locally supported post offices. (Paragraph 24)
Management style
11. The Post Office's future is a matter of public debate. As we have said, Post Office Ltd is not solely a commercial enterprise. Its network provides access to essential services, and has a greater reach than any other. The Government is the sole shareholder, and the public has a right to expect Government-controlled enterprises to behave in an exemplary way. After the experience of this inexcusable lapse, we expect Post Office Ltd to do so in future. (Paragraph 28)
The Government Access Criteria
12. The evidence we have received from local authorities suggests the detailed information required to implement the access criteria properly has not always been taken fully into account. We are particularly concerned that in some cases the local area plan has failed to reflect arrangements to transfer Crown Offices to franchised premises in a different location. If Post Office Ltd cannot take into account information about matters that it controls, confidence in the wider information underlying these plans is undermined. Post Office Ltd must do more to demonstrate that local area plans are accurate and based on current information. (Paragraph 31)
13. We underline the fact that the geographic access criteria are national, and can be met even if coverage in certain local areas falls well below the national standard. We do not know the extent to which the national criteria are met in each local area plan. We expect Post Office Ltd, as far as possible, to take the geographic access criteria into account at local area plan level, not just meet them nationally. (Paragraph 32)
Accessibility
14. We welcome the fact that Postwatch surveys proposed franchises for accessibility. We trust it also considers accessibility when it considers proposals for sub-post office closure made as part of the Network Change Programme. However, we are far from convinced that Post Office Ltd itself is fully engaged with the need to ensure that services are accessible to all. This needs to be given much higher priority. (Paragraph 34)
Local economies
15. We believe that there should be a presumption against closing a post office where this is the last shop in the village, or in a deprived urban area. (Paragraph 35)
16. Post Office Ltd must take great care to ensure that any reduction in compensation to a sub-post office that closes, but where the remaining business intends to offer new and competing services, is not excessive. The purpose of reducing compensation is to limit competition with, and encourage business to migrate to, remaining post offices nearby. The argument for this reduction is weaker in areas where there is no ready access to such offices. Because of the importance of such facilities to the local communities, Post Office Ltd should always be realistic in its assessment of the degree to which alternative services would really displace business for the Post Office Network. When reaching its decisions it should give the benefit of the doubt to the business and so to the people it serves. (Paragraph 38)
17. The timetable for the Network Change Programme is extremely compressed. We would be concerned if postmasters had to decide whether to accept the cut in compensation before they had the time to establish whether they could attract bill payment or other services, or explore the terms of such contracts. Postmasters should be given adequate time to explore these factors before deciding what compensation to accept. (Paragraph 39)
Outreach
18. We agree that open-ended questions about the type of Outreach which may be appropriate are not helpful but welcome the fact that in recent consultations Post Office Ltd suggests what Outreach arrangements could be provided. We also welcome the assurance that Outreach services will continue until at least 2011. In addition we welcome the statement from Post Office Ltd that they are prepared to consider Outreach services in areas which had previously lost their postal services but are within the new national criteria. (Paragraph 42)
19. We believe a single outreach session of two hours a week is generally unacceptable; there should normally be at least two sessions per week. (Paragraph 43)
20. We welcome the proposals to introduce Post Office provision to remote areas. If this cannot be done by voluntary Outreach arrangements, we expect the Post Office to provide the necessary services itself. (Paragraph 44)
Proportionality
21. We welcome the fact that Post Office Ltd appears to be taking a flexible and pragmatic approach to the requirement that the closures should not fall disproportionately in particular areas, and that its programme takes some account of the varying levels of current provision. (Paragraph 45)
22. The Network Change Programme has a difficult balancing act to perform between responding to local needs and concerns and ensuring that the necessary reduction in the network is achieved. We welcome the Minister's assurance that areas which are considered late in the process will not be disadvantaged. We intend to keep this, and other aspects of the programme, under review. (Paragraph 46)
Conclusion
23. Post Office Ltd has been given the task of reducing the network by a fixed number of branches in a fixed period. The Network Change Programme began in July 2007 and the final consultation is scheduled to end in October 2008. That is a very challenging timetable. As we always feared, this has meant that consultation has been curtailed, and the whole process has been rushed. The failure to realise at the outset that the consultation timetable should take account of the "purdah" for local elections, and the failure to allow properly for the effects of holidays on consultation periods, are symptoms of this. The process has been improving as more experience is gained, but problems remain. There is not enough clarity about the basis of the consultation; we are concerned that accessibility is not always taken into account; commercial confidentiality has prevented sensible discussion. We hope that all those involved will use this Report as a prompt to make further improvements. (Paragraph 47)"
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BERRC Third Report, Post Office Closure Programme
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Memorandum submitted by Communication Workers Union
Examination of Witnesses
Witnesses: Mr Billy Hayes, General Secretary, and Mr Andy Furey, Assistant Secretary, Communication Workers Union, gave evidence.
Q140 Chairman: Gentlemen, thank you very much indeed for coming in today. I am glad that, contrary to my earlier indications, we are able to squeeze you into the programme. We are trying to do this as rapidly as possible because we want to be able, if there are things to influence, to influence the process and not come in afterwards when everything is done and dusted. We are adding you in as very valuable witnesses this morning. We are grateful to you for coming, for the constructive relationship we always enjoy with the CWU and for your excellent written evidence, thank you very much indeed. Please introduce yourselves.
Mr Hayes: My name is Billy Hayes. Andy Furey is the national officer responsible for post office counters. First of all, Chairman, thank you for this opportunity. It is good to see that MPs can reflect on things, which has caught us a little bit unawares in terms of this opportunity to give evidence, but we understand that it is a tight timeframe. We have not had the time to give as much evidence as we would have liked. Obviously the whole question of post office closures is a big issue and it is a big political issue and I think MPs should reflect on that. It is the whole of the network that concerns us, not just where CWU members are affected.
Q141 Chairman: I was going to ask you about that. How does this issue concern you, both franchising and network closures?
Mr Hayes: It reduces the universal service. What people often forget is that a lot of these sub-post offices will sometimes have very small delivery offices at the back. It reduces the footprint of the network and that is of concern to us. Any network that is reduced obviously affects the whole of the service. The fact that there is a reduction in the universal service and provision is a big part of our concern. We think it is a funny consultation process that says there are going to be 2,500 post office counters closed at the beginning and at the end of the local consultation process says there are going to be 2,500 post offices closed. We do not think that the consultation process is as good as we would like.
Q142 Chairman: We were told by the National Federation last week that they accepted, reluctantly, that these cuts were needed to sustain the viability of the overall business. Do you agree it is necessary to make cost savings in the system, and is this the right way to do it?
Mr Hayes: In terms of the National Federation of Sub-postmasters and Mistresses, they are coming at it from a different perspective. In a minute we will touch on the whole question of how that is being dealt with in terms of the money some of their members stand to gain from a closure. They are looking at their own individual circumstances and their own individual sub-post offices, so they are coming at it from a different perspective. We are coming at it from the universal service aspect of it. There were 21,000 post office counters a few years ago and now there are 12,000. We are concerned that there is being a continuing running down of the network.
Q143 Chairman: You do not accept there is a need to make cost savings at all?
Mr Hayes: We are not saying that. We need to look at what is causing some of those problems in terms of what the Government is doing. Obviously we have to deal with cost savings year-on-year. The amount of subsidy that the networks get is £150 million a year until 2011. That is a pittance compared with what other institutions are currently getting. No one is suggesting that Post Office Counters be given £25 billion or £50 billion, as other institutions seem to be getting at the moment.
Q144 Chairman: You mean Northern Rock?
Mr Hayes: You said it!
Q145 Mr Bailey: The Government has said that a network of around about 12,000 is adequate. Do you think that is so?
Mr Furey: No, we do not. Our view is that the network as it currently stands is sustainable. There should be investment in that network. Only a few years ago there was a network reinvention programme by Post Office Limited which closed nearly another 3,000. Our concern is, once this 2,500 goes, what is going to happen next? The view is that the current plans could leave a network of between 6,000 and 7,000. In a previous Select Committee Adam Crozier said that the optimum for the network to be profitable is about 4,500. It is a question of this being never ending and it is a managed decline. If you are offering 28 months-worth of compensation, it is quite lucrative for some sub-postmasters and mistresses that are maybe relatively elderly to take that money and go. What it does not do is it does not take account of the public and the service to the public.
Q146 Mr Wright: In your memorandum you say that "no post office network in the world makes a profit on its network operations". What information do you have as far as European countries are concerned as to what the state payment would be in those areas, if there is any?
Mr Hayes: In terms of the general problem, Elmar Toime, the Deputy Chair of Royal Mail, said to me - and he had experience of post offices in New Zealand where it was in a liberalised environment - that there is no postal network in the world that is sustainable without some kind of Government subvention. Our experience at a European level is that there are similar problems in terms of post office networks across Europe. I know Ireland has similar problems in terms of sustaining the post office network. I think the plain fact is, if you look across the whole of the world, Government has to play its part in sustaining the post office network. In terms of the exact amounts of money, I do not have that information to hand. We could probably provide that to the Committee.
Mr Furey: La Poste and Deutsche Post are very, very successful because there has been investment. What happened with the British Post Office is that Girobank was supposed to be the people's bank and it was sold to Alliance & Leicester for £1. The reality is that the Post Office should be the people's bank. That is what other European nations have done with their post offices and with big success.
Q147 Mr Wright: What you are saying is, rather than direct state intervention, it was the creation of the banking system within the post office network that has given it that support, but we got rid of our one and that means it has lost one element of business which could have created that level of subsidy. So it was not a direct subsidy as such, it is a subsidy based on good business practice.
Mr Furey: Absolutely.
Q148 Mr Wright: Could you provide us with other figures in terms of the subsidies, either indirect intervention in terms of providing them with services or perhaps other areas?
Mr Furey: Yes.
Q149 Chairman: Have you seen the speculation in the media that the French postal bank is going to buy Société Générale? That is the bank that took the hit from the rogue trader. The French postal bank is being helped by the French state to buy Société Générale to get out of its difficulties.
Mr Hayes: I have not seen that, no.
Chairman: It might be something worth watching.
Q150 Mr Clapham: I want to turn to franchising and accessibility as well as the continuity of service standards. In your memorandum you refer to franchising services to WH Smith and you are somewhat critical of that because you say that it has worsened access and the service. When we had Postwatch before us last week they took a different view. Have you any survey evidence that the services has worsened?
Mr Furey: I think it is easy to identify that the service has worsened because effectively Post Office Limited in cahoots with WH Smith have avoided TUPE. The reality is that in the new WH Smith post offices the staff have no experience and no expertise and they have not had years of serving the public and the community like my members have in the Crown post offices. If you look at any Crown post office that is being franchised, there will be hundreds of years of combined public service that cannot be replicated overnight by people working in the WH Smith on significantly inferior wages.
Q151 Mr Clapham: Could you tell us the kind of training that people get in the Crown post offices?
Mr Furey: Crown post office staff get two weeks of intensive training away from the counter and then they have training directly on the counter in a live environment where they are overseen. They are constantly monitored, they have trial reports and performance development reviews. They are trained to a high standard. I suspect that the WH Smith staff will be trained to a similar standard, but the reality is that you cannot replace overnight years of experience and expertise. My members want to serve the public; that is why they joined the Post Office. What is happening is it is an inferior, poor replacement of an excellent service.
Q152 Mr Clapham: In one sense there is almost a kind of community culture in the way in which the post office staff approach matters and are trained whereas it is purely the business culture of some of the franchising, is it, that causes you some concern?
Mr Furey: WH Smith might beg to differ. Our view is that WH Smith wants the footfall from the post office into their shops so that money can be spent on their products and goods. Their primary concern is to sell newspapers and soft drinks. The primary concern of my members working in post offices is to provide a service to the public. They know the public, they know them by name and they meet them every single week of every single year. There is a relationship that has been built up there. That certainly will not be replicated in WH Smith.
Q153 Mr Clapham: Within that service provision that has been built up, that community orientation, there is consideration given to disabled people and access. Is there any evidence that some of the franchising is given to people that do not have access in their properties for the disabled?
Mr Furey: Firstly, the Crown post offices all have disabled access. Most of them are on the ground level. Where they are not on ground level there are resistance sand built ramps. There are also counters for people in wheelchairs, et cetera. I think post offices overall do a good job in providing facilities for the disabled to get their postal services. In WH Smith I think they are passing all the necessary legal requirements, but I think the concern that is being expressed by the community at large is that many of the post offices are being put either in the basement where you have to get a lift down to get the postal services or on the first floor where you might have to get a lift or escalators up. I have seen at first-hand evidence of that where people less sure on their feet might struggle in those circumstances. They are meeting the minimum requirements of health and safety legislation with accessibility, but the minimum is the minimum, whereas in post offices I think it is significantly better.
Q154 Chairman: Whose fault was it that lengths of queues were so appallingly long in Crown post offices? They have got better. Even now in franchised offices queuing lengths and times are shorter than in Crown offices. That is the one reason I do not use the Crown office very much, the queues have been so long. Whose fault was that, your members or the management?
Mr Furey: One of the problems is that the Regulator and Post Office Limited have no agreements to monitor or measure queue lengths in Crown offices. PostCom effectively agreed to do away with any monitoring and service obligation in terms of length of queues and time spent in queues and that is a regret. I think PostCom made a mistake there. I think it suited Post Office Limited for that to stop. Our view is that there have been cost-efficiency savings ongoing in Post Office Limited to make the Crowns more profitable or turn them back into profit. That has put pressure on the remaining staff because there have been job cuts. The reality is the public love the Crown post offices because they know they get excellent service in terms of the quality and the expertise and the accuracy and the information that is needed to be imparted to customers to make choices on what they are doing with mail services, et cetera.
Q155 Chairman: You have seen the Postwatch survey. It endorses what you say about disabled access. Seven of the eight post offices where wheelchair access was deemed impossible were franchised offices. There was one Crown office that was deemed impossible too. The queue tends to be twice as long in Crown offices than in franchised offices and time spent queuing is not twice as long as Crown offices but still considerably longer than in franchised offices. The average wait in a franchised office is 3.7 minutes and in a Crown office it is 6 minutes. People are getting a better service in franchised offices.
Mr Furey: When the Crown is franchised less customers migrate to the franchised office than to the Crown office. Effectively their customers look for alternatives because they are not satisfied with having to go into a WH Smith or another franchise of that nature. The customers do not move lock, stock and barrel into the franchised office. I suspect that is one of the issues. Crown offices are popular. Nobody likes to queue for a long time, but customers know they get an excellent service in terms of the quality of that service they are being provided with.
Q156 Anne Moffat: It seems to me from your evidence that POL have refused to inform staff about their right to transfer under TUPE and have only given them the option of a simple internal transfer or redundancy. Could you outline the legal position of TUPE and tell us what information has been given to employees?
Mr Furey: The CWU has submitted a tribunal claim, which is due to be heard in May for four days, for Post Office Limited's failure to consult with the trade union in relation to TUPE. Post Office Limited's position at the moment is that they are contesting that claim. We fully expect to have to go through with that claim. We are optimistic and confident of winning that claim because they have failed to consult. The reality is that Post Office Limited has managed to find significant sums of money to avoid their TUPE responsibilities. There was a £1,000 continuity payment designed specifically to encourage people not to put their hands up and say, "I want to move with the work," and retain their terms and conditions. There is also a compromise agreement being put to them stating that they cannot get redundancy unless they sign the compromise agreement and the compromise agreement means they cannot then submit a claim for TUPE thereafter. The Post Office has been very clever in finding ways and means of avoiding their TUPE responsibility, but most of this has come from Government money. The £1.7 billion subsidy that has been provided to 2011 has not only helped to pay for the redundancies of the sub-postmasters, it has also helped to pay for the redundancies of 1,300 of my members that work in the Crown post offices that are being franchised. We say this is an abuse of public funds. What should have happened is that, if there was a commercial agreement to move post offices, the staff should have moved with their jobs and retained their terms and conditions and then the excellent service that the public got would have continued. The reality is that WH Smith did not want my members and they did not want my members' terms and conditions because they want to pay barely above the minimum wage. Whilst my members are not paid a king's ransom, they certainly have trade union bargained pay rates of about £10 an hour. WH Smith offices are paying between the minimum wage and £6. That tells a story.
Q157 Anne Moffat: Could you tell me what proper consultation there should have been between the employer and the unions and the employer and the employees?
Mr Furey: They did not tell the employees that they had an entitlement through TUPE. All they were offered was redundancy or relocation to another Crown post office where somebody would be offered redundancy in terms of 'bumping' to make way for them. They have totally avoided giving anybody the opportunity to move with the work. In terms of consultation with CWU, I wrote to Alan Cook, the Managing Director, seeking consultation in relation to the franchising. He responded by saying to me that once the decision was announced to WH Smith he would be in touch with us. He failed to do so and that is the basis of our claim to the tribunal.
Chairman: We have to be rather careful about mentioning tribunals because it is sub judice. You might prejudice your own action so be a bit careful.
Q158 Anne Moffat: In terms of the £1,000 payment, is there anything in writing to prove that it is £1,000 to shut people up?
Mr Furey: Initially it was billed as keeping up sales and service so that people that were not leaving on redundancy would keep up their game in terms of continuing to sell to people and keep the service provisions going. Regrettably, Post Office Limited sought last year, when we were in dispute with them, to badge it as a gagging order in that staff were told that if anybody did take strike action in a legal, legitimate ballot then they would lose that £1,000.
Q159 Anne Moffat: How were they told that, in writing?
Mr Furey: In writing and in communications. Common sense prevailed and we were able to reach an agreement at the end of the dispute that anybody that had taken strike action would not have forfeited the £1,000, but the threat was there throughout the whole of the dispute and it certainly discouraged some people from taking strike action because they were fearful of losing that £1,000.
Q160 Mr Wright: In terms of the numbers of staff that are transferring to the WH Smith branches, how many are taking redundancy? Have you any figures on that? I spoke to one person in my branch who said that they were not moving across to WH Smith, they were taking the redundancy money, but they would not go into the details.
Mr Furey: To the best of my knowledge nobody is transferring on TUPE to WH Smith. There are approximately 1,500 employees in the Post Office and that includes managers, cleaners and the counter staff. Each of the counter staff and the cleaners - this is about 1,300 of our members - has been offered redundancy on enhanced terms that is paid for from the Government's subsidy of £1.7 billion. Those enhanced terms are better than any that is agreed with the CWU. Those people that do not wish to take redundancy and wish to remain in employment are offered alternative jobs commensurate with their skills in other post offices and in order to make room for them effectively there is "bumping", ie people are offered redundancy in the receiving office to make room for those who want to remain in employment. The net result is there will be 1,300 less CWU members working in Crown post offices, either in the ones that are TUPE franchised or in ones where people are moving into.
Q161 Mr Wright: You are saying WH Smith have got the market advantage in terms of being able to have a clean sweep and start from scratch with every single employee, are you not?
Mr Furey: Yes.
Q162 Roger Berry: Some Crown post offices have been franchised to the Co-op. Is the experience there any different either in terms of service provided, transfer arrangements and so on, or are your criticisms of WH Smith equally applicable to those transferring to the Co-op?
Mr Furey: They are. What has happened pre-Alan Cook's reign within Post Office Limited is that franchising was done on an ongoing piecemeal basis with small companies, it was done over a period of time. What Alan Cook has done is he has done one big commercial deal with 70 Crowns to be franchised over a period of just under a year. That was different from any other franchise in that franchising was effectively done in dribs and drabs, ones and twos were announced on a rolling basis and nobody knew what their future was because they did not know whether the sword of Damocles was hanging over them or not. The difference on this occasion was it was one commercial agreement for 70. There were already six Crowns franchised to WH Smith and so at the end of it there would be 76. In essence, in terms of TUPE and terms and conditions, there is no difference.
Q163 Roger Berry: What happens if a franchised office closes? What has been your experience of this if there have been any so far?
Mr Furey: Thankfully it has not happened too often, but where it does happen the community loses a service altogether. One of our fears from the CWU's perspective is that where you have a Crown post office, it is owned by the Government ultimately and that provides a service that is guaranteed. When it is put into private hands, if that private company was to go bust, then effectively the post office would close and would not be replaced. That is a big concern. In relation to one of the earlier questions about Europe, France actually has the equivalent of more Crowns than private concerns. It is a complete reversal of the model that applies in the UK where the sub-post offices make up about 12,500 versus 400 plus Crowns. In France it is the complete reverse of that. That way, by being publicly owned, it preserves a service and gives a guarantee. If WH Smith was to go into liquidation and go bust then the post offices would be closed.
Q164 Roger Berry: Could you give me a rough idea of what proportion of franchised offices have been closed? Secondly, in the cases where that has happened, does Post Office Limited not consider another franchisee nearby to carry on providing the service, or am I being totally naive?
Mr Furey: The franchising programme has been going on since 1988. There were 1,500 Crowns then. So something like 1,000 Crowns have been franchised in the last 20 years. Some of those have been franchised and then subsequently closed because the sub-postmaster has then taken a package to go. In the previous network reinvention programme there were illustrations of that happening. There have also been companies effectively not being able to trade any longer because of financial problems. I do not think you are being naive. Where possible, to be fair to Post Office Limited, they will try to find alternative premises and another company to run the post office, but this is a wing and a prayer. Whether that can happen or not is debatable. There are no guarantees.
Q165 Chairman: In my own constituency we did have a franchise which had to close, but they are under a commercial obligation - it was the Co-op - to continue to meet their contractual obligation to provide the postal services. They transferred it back to the old Crown office again which was still empty. In that case the company had not gone bust, but it had the financial resources to enable the service it was contracted to provide to be provided. Have you got much evidence of that happening? Could there be some sort of funding arrangement with WH Smith whereby if they did want to close offices there is an obligation to open up another one somewhere else?
Mr Furey: We do not get to see the contracts because of commercial confidentiality. If I were to answer your question I would be surmising as to what I thought would happen. In previous franchising programmes the franchisee has been given a contract for five or seven years. If you take Wimbledon where our head post office is, the Crown post office in Wimbledon was franchised into a department store called "Elys". At the end of their seven-year contract they decided not to carry on operating the post office. For a long time, once the post office closed in Wimbledon, there was not a decent service. Post Office Limited eventually found another private person to run a post office and another sub-post office opened up not far from where the franchise was, but in the intervening period, something like two years, the service to the public in Wimbledon was atrocious because the franchisee had made a commercial decision that they wanted the space in their department store for selling their products rather than people queuing for postal services. It is very much a hit and miss affair. As to what the terms of the contract are with WH Smith, I would be delighted to see that!
Q166 Chairman: We cannot separate these two themes. We will be talking mainly about sub-post office closures with our future witnesses but clearly there is a read across. Most of the sub-post offices in Worcester are delighted that the Crown offices are being franchised because they reckon there will be a large transfer of business away from the Crown offices towards the sub-offices. There is also the concern that the post office closure process is not taking account of the transfers of Crown offices to franchised offices, because often these are geographical moves of some significance as well that can impact on the viability of sub-post offices in the area. Have you any comments to make on the interaction between the franchising process and the sub-post office closure process?
Mr Furey: We are very concerned that the franchising process has been a negotiation between WH Smith and the post office. I suspect WH Smith have got what they want from that negotiation. A good illustration of that is in Coventry. When the main post office in Hertford Street closes there will not be a Crown office in the eleventh biggest city in the UK. That is a big concern. The reality is that the franchise that is moving into WH Smith is moving closer towards where another franchised post office is and that franchisee is not happy because they are going to be competing for the same custom and trade. You can actually see the sign for the other post office outside the WH Smith indicating where you can get post office services. There is a lack of planning, there is no doubt about it. There are large parts of the United Kingdom where clearly there should be Crown post offices and there are not. Whilst the sub-postmasters are private businessmen and women, it is about being able to do postal services and post letters and recorded deliveries and registers and it is about undermining the whole universal ethos of the service, but also our postmen and women collect and deliver mail items to those post offices. It is an attack on the infrastructure of the whole of the Royal Mail group to close sub-post offices. I do not think there has been much analysis done of the interaction between a franchised Crown post office and the sub-post offices that are closing.
Mr Hayes: When we had Sunday collections, which were taken out unilaterally by the business, the collection pillar boxes tended to be the sub-post offices. They tend to be where the phone boxes are because we were the GPO many, many years ago. It tends to be a focal point for the community and not just rural communities but urban communities. On a lot of council estates the only thing that is keeping the shopping arcade going is the sub-post office or the Crown office. There is a synergy there.
Q167 Mr Hoyle: Can I just take you back over a couple of things that we have discussed? Something we talked about, and the Chairman was quite adamant about, was the queuing problem. Do you feel that the queues are being deliberately created? What I have heard from one Crown post office is that the queues are extended in order that you can be picked up while you are in the queue to offer to sell you services and if you go and listen to the services that are on offer you then only wait one minute in a queue. Priority is given to those people who may talk about insurance at the expense of everybody else who may only be queuing for a stamp.
Mr Hayes: I think that gets in the way of the transaction. There is a point about buying another product whilst you are there.
Mr Furey: The culture that Post Office Limited is trying to bring in is one of sales and trying to sell financial products. Three or four years ago that would have been fairly alien to post office counter staff in that they saw their primary role as serving the public. There has been a change there. They are encouraged to engage in customer conversations effectively to sell travel insurance, home insurance, car insurance, et cetera. There has been a move to put out on the public side of the counter what are described as "meeters and greeters" so that they can then engage in this sales culture. If somebody walks in with a car tax renewal they are an ideal person to identify for car insurance. The CWU has been supportive of trying to increase revenue via sales because we want the Crown offices to be turning back into profit so they are not at threat of further franchising. It is a bit of a double-edged sword for us because we want new revenue coming in to protect the jobs in the Crown offices but at the same time, the culture of having an interaction with the public about selling does take longer and undoubtedly will have a detrimental effect on the length of the queues and that is a worry for us.
Q168 Mr Hoyle: I think that is right. You have Granny Smith who is coming in for her pension, but the person behind her is there to renew their car tax and is taken straight out of the queue and offered some services. They are served within one minute and Granny Smith has to stand on her feet for the next five minutes because she is not worthy of being offered any of those services. I think there is some frustration creeping in. Do you share the concern that Crown post offices are being closed even if they are valuable and it is about selling off the silverware? It is not really a justification about anything else but the fact that they can get a big cash receipt by moving it into a WH Smith. It is a double whammy. First of all, they can save on the TUPE transfer and, secondly, they have received a big lump of money by selling off the Crown post office.
Mr Hayes: The Post Office has got one of the biggest real estate portfolios in the UK and they tend to be in prime locations.
Q169 Chairman: Mr Hayes and Mr Furey, we have come to the end of our allotted time. Is there anything you would like to add?
Mr Hayes: We have also got the Royal Mail review coming up. There has been some suggestion in some quarters about separating Post Office Counters from Royal Mail. We would be opposed to that. We see the synergy of the network in the universal service we provide. We would be opposed to any separation of Post Office Counters from the Royal Mail Group.
Chairman: It is very likely, although we are not committing to this, the Committee will look at these issues later in the year. Thank you very much.
Examination of Witnesses
Witnesses: Mr Billy Hayes, General Secretary, and Mr Andy Furey, Assistant Secretary, Communication Workers Union, gave evidence.
Q140 Chairman: Gentlemen, thank you very much indeed for coming in today. I am glad that, contrary to my earlier indications, we are able to squeeze you into the programme. We are trying to do this as rapidly as possible because we want to be able, if there are things to influence, to influence the process and not come in afterwards when everything is done and dusted. We are adding you in as very valuable witnesses this morning. We are grateful to you for coming, for the constructive relationship we always enjoy with the CWU and for your excellent written evidence, thank you very much indeed. Please introduce yourselves.
Mr Hayes: My name is Billy Hayes. Andy Furey is the national officer responsible for post office counters. First of all, Chairman, thank you for this opportunity. It is good to see that MPs can reflect on things, which has caught us a little bit unawares in terms of this opportunity to give evidence, but we understand that it is a tight timeframe. We have not had the time to give as much evidence as we would have liked. Obviously the whole question of post office closures is a big issue and it is a big political issue and I think MPs should reflect on that. It is the whole of the network that concerns us, not just where CWU members are affected.
Q141 Chairman: I was going to ask you about that. How does this issue concern you, both franchising and network closures?
Mr Hayes: It reduces the universal service. What people often forget is that a lot of these sub-post offices will sometimes have very small delivery offices at the back. It reduces the footprint of the network and that is of concern to us. Any network that is reduced obviously affects the whole of the service. The fact that there is a reduction in the universal service and provision is a big part of our concern. We think it is a funny consultation process that says there are going to be 2,500 post office counters closed at the beginning and at the end of the local consultation process says there are going to be 2,500 post offices closed. We do not think that the consultation process is as good as we would like.
Q142 Chairman: We were told by the National Federation last week that they accepted, reluctantly, that these cuts were needed to sustain the viability of the overall business. Do you agree it is necessary to make cost savings in the system, and is this the right way to do it?
Mr Hayes: In terms of the National Federation of Sub-postmasters and Mistresses, they are coming at it from a different perspective. In a minute we will touch on the whole question of how that is being dealt with in terms of the money some of their members stand to gain from a closure. They are looking at their own individual circumstances and their own individual sub-post offices, so they are coming at it from a different perspective. We are coming at it from the universal service aspect of it. There were 21,000 post office counters a few years ago and now there are 12,000. We are concerned that there is being a continuing running down of the network.
Q143 Chairman: You do not accept there is a need to make cost savings at all?
Mr Hayes: We are not saying that. We need to look at what is causing some of those problems in terms of what the Government is doing. Obviously we have to deal with cost savings year-on-year. The amount of subsidy that the networks get is £150 million a year until 2011. That is a pittance compared with what other institutions are currently getting. No one is suggesting that Post Office Counters be given £25 billion or £50 billion, as other institutions seem to be getting at the moment.
Q144 Chairman: You mean Northern Rock?
Mr Hayes: You said it!
Q145 Mr Bailey: The Government has said that a network of around about 12,000 is adequate. Do you think that is so?
Mr Furey: No, we do not. Our view is that the network as it currently stands is sustainable. There should be investment in that network. Only a few years ago there was a network reinvention programme by Post Office Limited which closed nearly another 3,000. Our concern is, once this 2,500 goes, what is going to happen next? The view is that the current plans could leave a network of between 6,000 and 7,000. In a previous Select Committee Adam Crozier said that the optimum for the network to be profitable is about 4,500. It is a question of this being never ending and it is a managed decline. If you are offering 28 months-worth of compensation, it is quite lucrative for some sub-postmasters and mistresses that are maybe relatively elderly to take that money and go. What it does not do is it does not take account of the public and the service to the public.
Q146 Mr Wright: In your memorandum you say that "no post office network in the world makes a profit on its network operations". What information do you have as far as European countries are concerned as to what the state payment would be in those areas, if there is any?
Mr Hayes: In terms of the general problem, Elmar Toime, the Deputy Chair of Royal Mail, said to me - and he had experience of post offices in New Zealand where it was in a liberalised environment - that there is no postal network in the world that is sustainable without some kind of Government subvention. Our experience at a European level is that there are similar problems in terms of post office networks across Europe. I know Ireland has similar problems in terms of sustaining the post office network. I think the plain fact is, if you look across the whole of the world, Government has to play its part in sustaining the post office network. In terms of the exact amounts of money, I do not have that information to hand. We could probably provide that to the Committee.
Mr Furey: La Poste and Deutsche Post are very, very successful because there has been investment. What happened with the British Post Office is that Girobank was supposed to be the people's bank and it was sold to Alliance & Leicester for £1. The reality is that the Post Office should be the people's bank. That is what other European nations have done with their post offices and with big success.
Q147 Mr Wright: What you are saying is, rather than direct state intervention, it was the creation of the banking system within the post office network that has given it that support, but we got rid of our one and that means it has lost one element of business which could have created that level of subsidy. So it was not a direct subsidy as such, it is a subsidy based on good business practice.
Mr Furey: Absolutely.
Q148 Mr Wright: Could you provide us with other figures in terms of the subsidies, either indirect intervention in terms of providing them with services or perhaps other areas?
Mr Furey: Yes.
Q149 Chairman: Have you seen the speculation in the media that the French postal bank is going to buy Société Générale? That is the bank that took the hit from the rogue trader. The French postal bank is being helped by the French state to buy Société Générale to get out of its difficulties.
Mr Hayes: I have not seen that, no.
Chairman: It might be something worth watching.
Q150 Mr Clapham: I want to turn to franchising and accessibility as well as the continuity of service standards. In your memorandum you refer to franchising services to WH Smith and you are somewhat critical of that because you say that it has worsened access and the service. When we had Postwatch before us last week they took a different view. Have you any survey evidence that the services has worsened?
Mr Furey: I think it is easy to identify that the service has worsened because effectively Post Office Limited in cahoots with WH Smith have avoided TUPE. The reality is that in the new WH Smith post offices the staff have no experience and no expertise and they have not had years of serving the public and the community like my members have in the Crown post offices. If you look at any Crown post office that is being franchised, there will be hundreds of years of combined public service that cannot be replicated overnight by people working in the WH Smith on significantly inferior wages.
Q151 Mr Clapham: Could you tell us the kind of training that people get in the Crown post offices?
Mr Furey: Crown post office staff get two weeks of intensive training away from the counter and then they have training directly on the counter in a live environment where they are overseen. They are constantly monitored, they have trial reports and performance development reviews. They are trained to a high standard. I suspect that the WH Smith staff will be trained to a similar standard, but the reality is that you cannot replace overnight years of experience and expertise. My members want to serve the public; that is why they joined the Post Office. What is happening is it is an inferior, poor replacement of an excellent service.
Q152 Mr Clapham: In one sense there is almost a kind of community culture in the way in which the post office staff approach matters and are trained whereas it is purely the business culture of some of the franchising, is it, that causes you some concern?
Mr Furey: WH Smith might beg to differ. Our view is that WH Smith wants the footfall from the post office into their shops so that money can be spent on their products and goods. Their primary concern is to sell newspapers and soft drinks. The primary concern of my members working in post offices is to provide a service to the public. They know the public, they know them by name and they meet them every single week of every single year. There is a relationship that has been built up there. That certainly will not be replicated in WH Smith.
Q153 Mr Clapham: Within that service provision that has been built up, that community orientation, there is consideration given to disabled people and access. Is there any evidence that some of the franchising is given to people that do not have access in their properties for the disabled?
Mr Furey: Firstly, the Crown post offices all have disabled access. Most of them are on the ground level. Where they are not on ground level there are resistance sand built ramps. There are also counters for people in wheelchairs, et cetera. I think post offices overall do a good job in providing facilities for the disabled to get their postal services. In WH Smith I think they are passing all the necessary legal requirements, but I think the concern that is being expressed by the community at large is that many of the post offices are being put either in the basement where you have to get a lift down to get the postal services or on the first floor where you might have to get a lift or escalators up. I have seen at first-hand evidence of that where people less sure on their feet might struggle in those circumstances. They are meeting the minimum requirements of health and safety legislation with accessibility, but the minimum is the minimum, whereas in post offices I think it is significantly better.
Q154 Chairman: Whose fault was it that lengths of queues were so appallingly long in Crown post offices? They have got better. Even now in franchised offices queuing lengths and times are shorter than in Crown offices. That is the one reason I do not use the Crown office very much, the queues have been so long. Whose fault was that, your members or the management?
Mr Furey: One of the problems is that the Regulator and Post Office Limited have no agreements to monitor or measure queue lengths in Crown offices. PostCom effectively agreed to do away with any monitoring and service obligation in terms of length of queues and time spent in queues and that is a regret. I think PostCom made a mistake there. I think it suited Post Office Limited for that to stop. Our view is that there have been cost-efficiency savings ongoing in Post Office Limited to make the Crowns more profitable or turn them back into profit. That has put pressure on the remaining staff because there have been job cuts. The reality is the public love the Crown post offices because they know they get excellent service in terms of the quality and the expertise and the accuracy and the information that is needed to be imparted to customers to make choices on what they are doing with mail services, et cetera.
Q155 Chairman: You have seen the Postwatch survey. It endorses what you say about disabled access. Seven of the eight post offices where wheelchair access was deemed impossible were franchised offices. There was one Crown office that was deemed impossible too. The queue tends to be twice as long in Crown offices than in franchised offices and time spent queuing is not twice as long as Crown offices but still considerably longer than in franchised offices. The average wait in a franchised office is 3.7 minutes and in a Crown office it is 6 minutes. People are getting a better service in franchised offices.
Mr Furey: When the Crown is franchised less customers migrate to the franchised office than to the Crown office. Effectively their customers look for alternatives because they are not satisfied with having to go into a WH Smith or another franchise of that nature. The customers do not move lock, stock and barrel into the franchised office. I suspect that is one of the issues. Crown offices are popular. Nobody likes to queue for a long time, but customers know they get an excellent service in terms of the quality of that service they are being provided with.
Q156 Anne Moffat: It seems to me from your evidence that POL have refused to inform staff about their right to transfer under TUPE and have only given them the option of a simple internal transfer or redundancy. Could you outline the legal position of TUPE and tell us what information has been given to employees?
Mr Furey: The CWU has submitted a tribunal claim, which is due to be heard in May for four days, for Post Office Limited's failure to consult with the trade union in relation to TUPE. Post Office Limited's position at the moment is that they are contesting that claim. We fully expect to have to go through with that claim. We are optimistic and confident of winning that claim because they have failed to consult. The reality is that Post Office Limited has managed to find significant sums of money to avoid their TUPE responsibilities. There was a £1,000 continuity payment designed specifically to encourage people not to put their hands up and say, "I want to move with the work," and retain their terms and conditions. There is also a compromise agreement being put to them stating that they cannot get redundancy unless they sign the compromise agreement and the compromise agreement means they cannot then submit a claim for TUPE thereafter. The Post Office has been very clever in finding ways and means of avoiding their TUPE responsibility, but most of this has come from Government money. The £1.7 billion subsidy that has been provided to 2011 has not only helped to pay for the redundancies of the sub-postmasters, it has also helped to pay for the redundancies of 1,300 of my members that work in the Crown post offices that are being franchised. We say this is an abuse of public funds. What should have happened is that, if there was a commercial agreement to move post offices, the staff should have moved with their jobs and retained their terms and conditions and then the excellent service that the public got would have continued. The reality is that WH Smith did not want my members and they did not want my members' terms and conditions because they want to pay barely above the minimum wage. Whilst my members are not paid a king's ransom, they certainly have trade union bargained pay rates of about £10 an hour. WH Smith offices are paying between the minimum wage and £6. That tells a story.
Q157 Anne Moffat: Could you tell me what proper consultation there should have been between the employer and the unions and the employer and the employees?
Mr Furey: They did not tell the employees that they had an entitlement through TUPE. All they were offered was redundancy or relocation to another Crown post office where somebody would be offered redundancy in terms of 'bumping' to make way for them. They have totally avoided giving anybody the opportunity to move with the work. In terms of consultation with CWU, I wrote to Alan Cook, the Managing Director, seeking consultation in relation to the franchising. He responded by saying to me that once the decision was announced to WH Smith he would be in touch with us. He failed to do so and that is the basis of our claim to the tribunal.
Chairman: We have to be rather careful about mentioning tribunals because it is sub judice. You might prejudice your own action so be a bit careful.
Q158 Anne Moffat: In terms of the £1,000 payment, is there anything in writing to prove that it is £1,000 to shut people up?
Mr Furey: Initially it was billed as keeping up sales and service so that people that were not leaving on redundancy would keep up their game in terms of continuing to sell to people and keep the service provisions going. Regrettably, Post Office Limited sought last year, when we were in dispute with them, to badge it as a gagging order in that staff were told that if anybody did take strike action in a legal, legitimate ballot then they would lose that £1,000.
Q159 Anne Moffat: How were they told that, in writing?
Mr Furey: In writing and in communications. Common sense prevailed and we were able to reach an agreement at the end of the dispute that anybody that had taken strike action would not have forfeited the £1,000, but the threat was there throughout the whole of the dispute and it certainly discouraged some people from taking strike action because they were fearful of losing that £1,000.
Q160 Mr Wright: In terms of the numbers of staff that are transferring to the WH Smith branches, how many are taking redundancy? Have you any figures on that? I spoke to one person in my branch who said that they were not moving across to WH Smith, they were taking the redundancy money, but they would not go into the details.
Mr Furey: To the best of my knowledge nobody is transferring on TUPE to WH Smith. There are approximately 1,500 employees in the Post Office and that includes managers, cleaners and the counter staff. Each of the counter staff and the cleaners - this is about 1,300 of our members - has been offered redundancy on enhanced terms that is paid for from the Government's subsidy of £1.7 billion. Those enhanced terms are better than any that is agreed with the CWU. Those people that do not wish to take redundancy and wish to remain in employment are offered alternative jobs commensurate with their skills in other post offices and in order to make room for them effectively there is "bumping", ie people are offered redundancy in the receiving office to make room for those who want to remain in employment. The net result is there will be 1,300 less CWU members working in Crown post offices, either in the ones that are TUPE franchised or in ones where people are moving into.
Q161 Mr Wright: You are saying WH Smith have got the market advantage in terms of being able to have a clean sweep and start from scratch with every single employee, are you not?
Mr Furey: Yes.
Q162 Roger Berry: Some Crown post offices have been franchised to the Co-op. Is the experience there any different either in terms of service provided, transfer arrangements and so on, or are your criticisms of WH Smith equally applicable to those transferring to the Co-op?
Mr Furey: They are. What has happened pre-Alan Cook's reign within Post Office Limited is that franchising was done on an ongoing piecemeal basis with small companies, it was done over a period of time. What Alan Cook has done is he has done one big commercial deal with 70 Crowns to be franchised over a period of just under a year. That was different from any other franchise in that franchising was effectively done in dribs and drabs, ones and twos were announced on a rolling basis and nobody knew what their future was because they did not know whether the sword of Damocles was hanging over them or not. The difference on this occasion was it was one commercial agreement for 70. There were already six Crowns franchised to WH Smith and so at the end of it there would be 76. In essence, in terms of TUPE and terms and conditions, there is no difference.
Q163 Roger Berry: What happens if a franchised office closes? What has been your experience of this if there have been any so far?
Mr Furey: Thankfully it has not happened too often, but where it does happen the community loses a service altogether. One of our fears from the CWU's perspective is that where you have a Crown post office, it is owned by the Government ultimately and that provides a service that is guaranteed. When it is put into private hands, if that private company was to go bust, then effectively the post office would close and would not be replaced. That is a big concern. In relation to one of the earlier questions about Europe, France actually has the equivalent of more Crowns than private concerns. It is a complete reversal of the model that applies in the UK where the sub-post offices make up about 12,500 versus 400 plus Crowns. In France it is the complete reverse of that. That way, by being publicly owned, it preserves a service and gives a guarantee. If WH Smith was to go into liquidation and go bust then the post offices would be closed.
Q164 Roger Berry: Could you give me a rough idea of what proportion of franchised offices have been closed? Secondly, in the cases where that has happened, does Post Office Limited not consider another franchisee nearby to carry on providing the service, or am I being totally naive?
Mr Furey: The franchising programme has been going on since 1988. There were 1,500 Crowns then. So something like 1,000 Crowns have been franchised in the last 20 years. Some of those have been franchised and then subsequently closed because the sub-postmaster has then taken a package to go. In the previous network reinvention programme there were illustrations of that happening. There have also been companies effectively not being able to trade any longer because of financial problems. I do not think you are being naive. Where possible, to be fair to Post Office Limited, they will try to find alternative premises and another company to run the post office, but this is a wing and a prayer. Whether that can happen or not is debatable. There are no guarantees.
Q165 Chairman: In my own constituency we did have a franchise which had to close, but they are under a commercial obligation - it was the Co-op - to continue to meet their contractual obligation to provide the postal services. They transferred it back to the old Crown office again which was still empty. In that case the company had not gone bust, but it had the financial resources to enable the service it was contracted to provide to be provided. Have you got much evidence of that happening? Could there be some sort of funding arrangement with WH Smith whereby if they did want to close offices there is an obligation to open up another one somewhere else?
Mr Furey: We do not get to see the contracts because of commercial confidentiality. If I were to answer your question I would be surmising as to what I thought would happen. In previous franchising programmes the franchisee has been given a contract for five or seven years. If you take Wimbledon where our head post office is, the Crown post office in Wimbledon was franchised into a department store called "Elys". At the end of their seven-year contract they decided not to carry on operating the post office. For a long time, once the post office closed in Wimbledon, there was not a decent service. Post Office Limited eventually found another private person to run a post office and another sub-post office opened up not far from where the franchise was, but in the intervening period, something like two years, the service to the public in Wimbledon was atrocious because the franchisee had made a commercial decision that they wanted the space in their department store for selling their products rather than people queuing for postal services. It is very much a hit and miss affair. As to what the terms of the contract are with WH Smith, I would be delighted to see that!
Q166 Chairman: We cannot separate these two themes. We will be talking mainly about sub-post office closures with our future witnesses but clearly there is a read across. Most of the sub-post offices in Worcester are delighted that the Crown offices are being franchised because they reckon there will be a large transfer of business away from the Crown offices towards the sub-offices. There is also the concern that the post office closure process is not taking account of the transfers of Crown offices to franchised offices, because often these are geographical moves of some significance as well that can impact on the viability of sub-post offices in the area. Have you any comments to make on the interaction between the franchising process and the sub-post office closure process?
Mr Furey: We are very concerned that the franchising process has been a negotiation between WH Smith and the post office. I suspect WH Smith have got what they want from that negotiation. A good illustration of that is in Coventry. When the main post office in Hertford Street closes there will not be a Crown office in the eleventh biggest city in the UK. That is a big concern. The reality is that the franchise that is moving into WH Smith is moving closer towards where another franchised post office is and that franchisee is not happy because they are going to be competing for the same custom and trade. You can actually see the sign for the other post office outside the WH Smith indicating where you can get post office services. There is a lack of planning, there is no doubt about it. There are large parts of the United Kingdom where clearly there should be Crown post offices and there are not. Whilst the sub-postmasters are private businessmen and women, it is about being able to do postal services and post letters and recorded deliveries and registers and it is about undermining the whole universal ethos of the service, but also our postmen and women collect and deliver mail items to those post offices. It is an attack on the infrastructure of the whole of the Royal Mail group to close sub-post offices. I do not think there has been much analysis done of the interaction between a franchised Crown post office and the sub-post offices that are closing.
Mr Hayes: When we had Sunday collections, which were taken out unilaterally by the business, the collection pillar boxes tended to be the sub-post offices. They tend to be where the phone boxes are because we were the GPO many, many years ago. It tends to be a focal point for the community and not just rural communities but urban communities. On a lot of council estates the only thing that is keeping the shopping arcade going is the sub-post office or the Crown office. There is a synergy there.
Q167 Mr Hoyle: Can I just take you back over a couple of things that we have discussed? Something we talked about, and the Chairman was quite adamant about, was the queuing problem. Do you feel that the queues are being deliberately created? What I have heard from one Crown post office is that the queues are extended in order that you can be picked up while you are in the queue to offer to sell you services and if you go and listen to the services that are on offer you then only wait one minute in a queue. Priority is given to those people who may talk about insurance at the expense of everybody else who may only be queuing for a stamp.
Mr Hayes: I think that gets in the way of the transaction. There is a point about buying another product whilst you are there.
Mr Furey: The culture that Post Office Limited is trying to bring in is one of sales and trying to sell financial products. Three or four years ago that would have been fairly alien to post office counter staff in that they saw their primary role as serving the public. There has been a change there. They are encouraged to engage in customer conversations effectively to sell travel insurance, home insurance, car insurance, et cetera. There has been a move to put out on the public side of the counter what are described as "meeters and greeters" so that they can then engage in this sales culture. If somebody walks in with a car tax renewal they are an ideal person to identify for car insurance. The CWU has been supportive of trying to increase revenue via sales because we want the Crown offices to be turning back into profit so they are not at threat of further franchising. It is a bit of a double-edged sword for us because we want new revenue coming in to protect the jobs in the Crown offices but at the same time, the culture of having an interaction with the public about selling does take longer and undoubtedly will have a detrimental effect on the length of the queues and that is a worry for us.
Q168 Mr Hoyle: I think that is right. You have Granny Smith who is coming in for her pension, but the person behind her is there to renew their car tax and is taken straight out of the queue and offered some services. They are served within one minute and Granny Smith has to stand on her feet for the next five minutes because she is not worthy of being offered any of those services. I think there is some frustration creeping in. Do you share the concern that Crown post offices are being closed even if they are valuable and it is about selling off the silverware? It is not really a justification about anything else but the fact that they can get a big cash receipt by moving it into a WH Smith. It is a double whammy. First of all, they can save on the TUPE transfer and, secondly, they have received a big lump of money by selling off the Crown post office.
Mr Hayes: The Post Office has got one of the biggest real estate portfolios in the UK and they tend to be in prime locations.
Q169 Chairman: Mr Hayes and Mr Furey, we have come to the end of our allotted time. Is there anything you would like to add?
Mr Hayes: We have also got the Royal Mail review coming up. There has been some suggestion in some quarters about separating Post Office Counters from Royal Mail. We would be opposed to that. We see the synergy of the network in the universal service we provide. We would be opposed to any separation of Post Office Counters from the Royal Mail Group.
Chairman: It is very likely, although we are not committing to this, the Committee will look at these issues later in the year. Thank you very much.