LTB 728/12 Post Office Mutualisation

[TrueBlueTerrier]

Letter to Branches




No: 728/12
Ref: 10008
Date: 28th September 2012

TO: ALL BRANCHES WITH POSTAL MEMBERS


Dear Colleague

Post Office Mutualisation

The Postal Executive has recently agreed a document covering our approach to mutualisation. The document sits alongside others recently agreed on competition and privatisation and is part of our integrated approach to dealing with all the issues arising from the Postal Services Act. This LTB provides a comprehensive update on the government’s position and summarises the approach being adopted by the Union on mutualisation.

Update on Government’s proposals for Mutualisation

As Branches will be aware, while the Postal Services Act prevents the privatisation of the Post Office, it gives the government the power to transfer its share in Post Office Ltd to a mutual, owned by stakeholders in the business and run for the public benefit. Although much of the detail of what this would mean for the Post Office is yet to be decided the government has been clear in its support for mutualising the Post Office and its desire to see progress towards this by the end of the current Parliament (i.e. by May 2015).

While the Union remains opposed to the principle of the separation of POL from the Royal Mail Group, we recognise that the position has moved on since the ‘Keep the Post Public’ campaign – the Postal Services Bill has been passed into law, the Post Office is formally independent from Royal Mail and the government is progressing its policy for mutualisation – and our engagement with the government and the employer on the future of the Post Office needs to take full account of the industrial impact of government policy.

Currently there is no clear definition of a mutual, beyond it being an organisation which is ‘owned’ by its members – who in contrast to private shareholders cannot sell on their stake in the business – and there are minimal constraints on the type of mutual the government can transfer its ownership to in the Postal Services Act. In July the government published its response to its consultation on the model for a mutual Post Office which has provided some clarity on three areas:






1. Proposed structure and form of the mutual

Firstly, in relation to the structure of a mutual Post Office, the government believes there should be three ‘tiers’ in the business: the membership (the owners) of the mutual, a representative body and a management board. The board would maintain responsibility for the day-to-day running of the business with the representative body exercising oversight of the board on behalf of the membership. However, the government has not expressed a view on a number of key questions on this structure, such as the governance arrangements setting out the powers of these different structures, or who would sit on these.

2. Proposed membership

Secondly, on the membership of a mutual Post Office, the government response states that this should include employees and sub-postmasters and proposes that the government itself should have a purely contractual relationship with the business as opposed to a membership role. Again, however a number of important issues have not been decided upon, including whether consumers and multiples should be included in the membership.

3. Profit distributions

Finally, the government believes that a mutual Post Office should be able to make profit distributions to members, in particular ‘producers’ (i.e. staff and/or postmasters). While the business currently only makes a profit after the receipt of public funding, the government’s consultation response from July states that profit distributions could be made while public funding is ongoing ‘in correlation’ to any reductions in subsidy.

Outstanding issues

Outside of the three areas which the government has expressed a position on, there is a great deal remaining to be determined before mutualisation could take place. The government is proposing to refer a number of these to a stakeholder forum which the Union has been invited to sit on. In the first instance, the forum would consider how the ‘purpose’ of the Post Office should be defined in its constitution.

Subsequently, it is proposed that the forum would consider the membership of the mutual, the makeup of the representative body and the governance arrangements of the business, such as the powers of the representative body and the board. Alongside this, both BIS and Post Office Ltd will be developing more detailed proposals on the mutual model, which would need to be approved by Parliament before any transfer of the government’s share in the Post Office could take place.

Issues for the Union and future steps

While mutualisation would protect the Post Office from private ownership, it raises significant issues for the future of the business – fully independent from both government and Royal Mail – and employees, postmasters and the role of the Union in the Post Office in the future. A mutual which gives little power to its membership or offers no formal involvement to the CWU would clearly dilute the voice the Union and employees currently have in the business and we need to influence the formulation of more detailed plans to ensure that, if mutualisation does occur, it is to the benefit of our members and the business as a whole.

In practice, with Post Office Ltd embarking on a significant overhaul of the network over the next two and a half years it is unlikely that mutualisation could take place before 2015. However, much of the detail for mutualisation is likely to be in place before this and the government could seek parliamentary approval for its plans before the end of the current Parliament (May 2015).

As noted above, the Union has been invited to sit on the stakeholder forum, which will deal with a number of these issues, the first meeting of which will take place in October. Other members of this include Age UK, the BBC, the British Youth Council, Citizens Advice, Consumer Focus, Mutuo, the NFSP and Unite.

The range of stakeholders on this reflects the fact that the Union is only one of a number of groups recognised as having a legitimate voice by the business, government and the media on Post Office issues. If we did not take part in the forum, it is likely that Post Office Ltd and the government would make progress on the issues without the Union’s input and we will not be able to prevent mutualisation or secure the best outcome for the Post Office and our members by acting unilaterally.

However, at the same time, we have concerns over the way the stakeholder forum has been designed. The forum is to be chaired by the Chief Executive of Post Office Ltd, and POL will run and make recommendations to the government from the forum. This means the current management can have a key influence over the development of a mutual model and there is a risk that it will seek to minimise the power and scrutiny the membership of a mutual could exercise over it in the future. Indeed there are already mixed messages on the forum itself from Post Office Ltd, which regards it as a ‘thinktank’, and the government, which sees it as a decision-making body. We are currently engaging with the government, the Post Office and other stakeholders on these concerns.

The Union’s ongoing work in relation to mutualisation of the Post Office – both on the stakeholder forum and outside of this – will be underpinned by the need to ensure that we represent our member’s interests in having a significant stake in Post Office Limited going forward. The Union itself will seek to have a formal and meaningful role in any governance arrangements and any transfer of ownership of the Post Office must continue to protect employees’ existing terms and conditions and the collective bargaining process, particularly in relation to the government’s proposals for profit sharing.

Future work and keeping members updated

The Postal Executive has agreed to set up a sub group to oversee the work required on mutualisation. This will also be reported to the Postal Executive on a monthly basis. In the meantime, members have been kept up to date on the government’s consultations and the proposals for mutualisation through LTBs and information published on the website and in the Voice. However, Post Office Ltd has said very little to employees on the proposals. We recognise that this makes it particularly important for the Union to ensure members are informed of the prospective changes and we are preparing a home mailing explaining the current position and the Union’s role and objectives for the stakeholder forum. We will also be inviting members’ views on the proposals.

We would ask that Branches ensure that the content of this LTB is circulated to the relevant representatives and discussed at appropriate Branch meetings. Further information will be sent out in due course. Any enquiries on the general content of this LTB including the stakeholder forum should be addressed to the DGS (P) Department, enquiries relating to POL specific industrial issues to Andy Furey Assistant Secretary.

Yours sincerely


Dave Ward Billy Hayes
Deputy General Secretary (P) General Secretary


Andy Furey
Assistant Secretary

[LinChong]

"As noted above, the Union has been invited to sit on the stakeholder forum, which will deal with a number of these issues, the first meeting of which will take place in October. Other members of this include Age UK, the BBC, the British Youth Council, Citizens Advice, Consumer Focus, Mutuo, the NFSP and Unite."

At the moment, everyone in the UK owns POL through the Government's 100% share of Royal Mail Holdings. If someone's local post office is being closed, they can complain to their MP who has to do something about it. If the (POL management picked) stakeholders for this forum become the members of the mutual, the MPs will be able to fob off their constituents to the bodies that represent consumers. "Sorry, can't help you mate, you need to complain to Age UK, the British Youth Council, Citizens Advice, Consumer Focus or the BBC".

WTF is the BBC doing on this Stakeholder Forum?

Why are employees under represented on this forum?

POL should never have been allowed to choose who to invite on to the Stakeholder Forum and POL should never have been allowed to chair the Forum. And before it is suggested, Lord 'Freddy Patel' Hooper is not a suitable Chair either.

[LinChong]

Emergency motion.

The CWU should only agree to take part in the Post Office Stakeholde Forum if all parties are guaranteed to only be bound by unanimous decisions made by this Forum.

If any party votes against a decision that is accepted by a majority, that party will be free to oppose the decision in whatever way it needs to, up to and including Industrial Action.

[subbie]

I would like to think that a national ballot of all persons effected by any new Mutual Company status change, would take place before anything is set in stone.

Mutuals only work if ALL the participants want to go Mutual, I do not recall ever being asked, has anyone else?

Subbie

[LinChong]

Any views from CMA members?

[Snaggletooth]

Go on, I'll bite, as a CMA member.

In theory I quite like the idea of a mutualised Post Office, but the more you think about the practicalities, the more complicated it becomes. In, say, John Lewis, my understanding is that every single 'employee' is actually an equal partner in the business, so it works. But the PO isn't like that. How do you evaluate my say as a direct employee with what a sub-postmaster says, or the views of a big multiple franchisee? It would be very easy to have one group massively dominate in some kind of informal block voting and the various groups have very different interests. E.g. multiples dominate and vote to remove cross subsidy to Crowns to increase their revenue stream, or small sub postmasters dominate and vote to issue tax discs in every office, at huge cost to the network, or the Crowns dominate and vote themselves a silly pay rise paid for by everyone else. It can't work effectively because the parties are unequal.

The obvious defence against the situation above is to give lots of power to customer and other outside stakeholder groups ... but that isn't the answer either, as the public have massively unreasonable views about what we should do and what they should pay for us doing it.

[billyhayes]

vote themselves a silly pay rise paid for by everyone else.

Unlike now? branch managers on 30 grand plus to run what is essentially a shop. That's how you bite chum. Don't just nibble...

On the flipside, CWU grades tearing stamps out of a book... £11 an hour!!??

Tis madness I tells ya

[The BFO]

The whole thing sounds like a recipe for a 'Dog's Breakfast' to me.

[POSTMAN]

Do Dogs retire?

[Snaggletooth]

vote themselves a silly pay rise paid for by everyone else.

Unlike now? branch managers on 30 grand plus to run what is essentially a shop. That's how you bite chum. Don't just nibble...

On the flipside, CWU grades tearing stamps out of a book... £11 an hour!!??

Tis madness I tells ya

Hmm. I assume you are tounge in cheek there. Many of my colleagues are on much less than £30k, especially the ones who came direct from retail. And most of them fail to cope because it's too complicated compared to shop work. I worked in a shop briefly in my youth and then went on to the counter, I was suddenly expected to be the fount of all knowledge (at least I think he called me a fount). Today I have mostly been talking about FSA compliance, US import prohibitions, the Drop & Go service, Post & Go maintenance and Special Leave rules. Tomorrow will be totally different (except the FSA bit, which is constant).

[subbie]

I dont think members of a Mutual PO will be dealing with voting on matters such as pay and conditions etc, I think they will be mainly required to debate and vote on overall company strategic direction and polices, and oversee that any barriers are removed that prevents profitability, whilst ensuring that we remain valued as workers within the Mutual.

Pay and rations will still be the domain of the Union and the POL Exec, but above them would be a Strategic Board who would set the forward plan for the company. Sorting out voting rights will be a bit tricky I admit. But the whole venture requires a change of mindset, what would you give up if higher profits was the result leading to a distribution of profits to the members which within John Lewis have been as high as 20% of gross annual pay.

I think it must start with the company ethos, what will the company stand for? What culture do we want? Sort that out then we might stand a chance of all working towards one common goal.

But.....should any one group seek to dominate then it will all collapse.

Subbie

[LinChong]

The Government have decided that the Post Office is costing them too much. The voters, who the Government are meant to serve, want to keep the Post Office but the interests who the Government really serve have decided to get rid of it.

The Government say we can only have a Post Office Network in the UK if it can fund itself but how is it is possible to provide the sort of Post Office that the public want without public subsidy?

Commercial outfits cannot provide the quality of service the Post Office provides and make a profit. The public want this quality of service.

The Government want to get rid of the Post Office but they want other groups to take the blame. I don't know why POL and the CWU seem to have accepted that the Post Office should be self sufficient.

The services that the public want from the Post Office are being slyly removed. There was an attempt to piss off the public who use Post Offices by making the experience as unpleasant as possible. There was an experiment in subjecting customers to long queues and hard selling. Gladly, this has now been abandoned.

The Government strategy is obvious. They want to make the public fall out of love with the Post Office and they want to bully the people who work for the Post Office into believing that the only way to save their jobs is to come up with solutions to make the Post Office self sufficient. They hope a false crisis will panic POL employees to accept wage cuts.

The public want the Post Office but they are not being allowed to have what they want.

If Labour have really dropped New Labour, they will commit now to reversing the privatisation of Royal Mail and the mutualisation of the Post Office.

We need to get rid of this Government now. A General Strike will force an election.

[subbie]

Lin

POL will do as their told by their political masters, but where is your evidence to support your comment that the CWU has accepted that public subsidy should be removed from POL?

Subbie

[LinChong]

I said that POL and the CWU seem to have accepted that the Post Office should be self sufficient. The use of the word 'sustainable' in their joint statements indicates they agree that sustainability is their objective. However, they haven't made clear what 'sustainable' means to them.

The Government have made it clear that their goal is for the Post Office to be self sufficient.

[The BFO]

There was an attempt to piss off the public who use Post Offices by making the experience as unpleasant as possible. There was an experiment in subjecting customers to long queues and hard selling. Gladly, this has now been abandoned.

Really? When?