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Document 1263

Scottish Parliament: Research Briefings: SB 02-33 Scottish Sub-Post Offices

Author(s): Scottish Parliamentary Corporate Body

Copyright holder(s): Scottish Parliamentary Corporate Body: © Scottish Parliamentary copyright material is reproduced with the permission of the Queen's Printer for Scotland on behalf of the Scottish Parliamentary Corporate Body.

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SPICe Briefing 02/33
19 March 2002

SCOTTISH SUB-POST OFFICES (UPDATED)

The Post Office and postal services are matters reserved to Westminster, although there is a recognised need to work closely with the devolved administrations to recognise local needs. There are 1933 post offices in Scotland, 1878 of which are sub-post offices (1). Sub-post offices in Scotland often provide a vital service to local communities, particularly in rural or more deprived urban areas. Run as private businesses, sub-post offices make up 97% of the national post office network. Latest figures indicate that 18 post offices closed in Scotland between March 2001 and September 2001. The Scottish Parliament will debate the issue on 20 March 2002. An interactive debate has also been set up on the Scottish Parliament Live network.

The motion to be debated by the Scottish Parliament comes from Robert Brown MSP (Glasgow):

S1M-2844 Scottish Sub-Post Offices - "Your Guide"—That the Parliament acknowledges the importance of the role that sub-post offices play in Scottish communities, particularly in rural areas and deprived urban areas; recognises the potential financial consequences for sub-post offices in Scotland of the UK-wide Automated Credit Transfer system for the payment of benefits; notes that "Your Guide" is a comprehensive information service currently being evaluated for sub-post offices in England and Wales; further notes that such a service includes Government General Practitioner and Internet Learning Access Point initiatives, both of which provide members of the public with the ability to interact with departments of Her Majesty’s Government and gain government information in an accessible way; further recognises the potential benefits that such a service could provide in Scotland, in terms of improving openness and public participation with government, as well as potentially providing a timely boost to business levels for sub-post offices at a time when the network is having difficulty in sustaining such levels, and considers that the Scottish Executive should pilot such a scheme in Scotland, with a view to rolling out the service across the country as soon as possible.

THE POSTAL SERVICE - Who is involved?

• Consignia, formerly The Post Office Group, is the holding company which owns Royal Mail, Parcelforce and post offices - these names will remain unchanged (note though that most of the post office network is run as sub-post offices and as such are run by private individuals) (2). Consignia is a plc, giving it more commercial and operational freedom than was available as The Post Office. With this freedom, and in an effort to compete with private operators, Consignia have been considering changing to one postal delivery per day, and moving some mail to road from rail in an effort to improve punctuality.

• The National Federation of SubPostmasters is an independent membership organisation and trade union, representing 97% of people running post offices across the UK.

According to a briefing provided by the National Federation of SubPostmasters for a debate on postal services at Westminster in January 2002:

Sub post offices are still closing at the disturbing rate of two a day, depriving whole communities, particularly in already troubled rural communities, of the broad range of services offered by the local sub post office:

• 18,000 sub post offices – some 97% of all post offices – are run by subpostmasters
• they offer a range of 170 different postal, government and commercial services
• 28 million customers make 45 million visits to post offices every week.

The urban reinvention programme is essential to ensure that the urban network remains in a position to successfully deliver a high quality service to customers. It is also vitally important that financial support is given to the rural network to stop the rate of closures.

• The Postal Services Commission was established under the UK Postal Services Act 2000 (3). Postcomm, as they are known, exists to protect and promote customer interests through licensing of the postal services market. It aims to achieve this by promoting competition and controlling prices.

• Also established under the UK Postal Services Act 2000, Postwatch (4) is the watchdog for postal services. They estimate that 28 million people visit a post office at least once a week. The Postwatch remit includes providing advice and information, representing the views of customers, making proposals for improvements to Postcomm and postal operators, investigating complaints, and where necessary referring cases to Postcomm for possible enforcement action (5).

Postwatch has no authority to investigate complaints relating to financial/banking services or counter services where the Post Office acts as an agent. The organisation has a Scottish section which can be contacted at Postwatch Scotland, Queen Margaret University College, Clerwood Terrace, Edinburgh, EH12 8TS (phone 08456 013265).

• The Communications Workers’ Union represents workers in the postal and other services.

Post offices in Scotland
In the UK, as of September 2001, the post office network had 9,000 urban post offices and 8,700 rural post offices (6). In Scotland there are 1933 post offices, 1878 of these are sub-post offices. Sub-post offices often have other services attached to them, for instance a shop or petrol station. These income streams are generally considered crucial to the viability of the business.

Sub-post offices in rural areas, and deprived urban areas, are said to play a "lifeline role" for citizens accessing services such as benefit payment.

The most recent Scottish Parliament Written Answer on post offices came on 15 March 2002:

S1W-23640 - Fergus Ewing (Inverness East, Nairn and Lochaber) (SNP) : To ask the Scottish Executive, further to the answer to question S1W-10883 by Ms Wendy Alexander on 16 January 2001, what progress has been made in the delivery of online public services; whether it supports the delivery of such services through post offices and sub-post offices; whether the appropriate equipment will be provided to every sub-post office to enable them to deliver such services, and what other options are being considered for the delivery of online public services.

Answered by Allan Wilson (15 March 2002): Our modernising agenda is about improving choice in the way services are delivered. The Scottish Executive is therefore committed to a multi-channel approach for the delivery of online public services and is continuing to explore a variety of platforms, including the use of interactive digital television, public kiosks, Personal Digital Assistants, the internet and WAP phones.

As part of this, the Scottish Executive is paying close attention to the development of the Your Guide pilot project in Post Offices in Leicestershire and Rutland. Arrangements have been made for ministers and officials from the Scottish Executive to see the project first hand. The pilot will of course have to be comprehensively evaluated to assess the case for national roll out. In particular those organisations wishing to use Your Guide will need to examine carefully how a national service could fit in with their wider service delivery plans, how far it could help in achieving greater efficiencies and whether it would provide value for money compared with alternative direct channels to the public. Until these evaluations are complete, it would be premature to discuss details such as responsibility for the provision of equipment. I can assure you, however, that the Scottish Executive is examining this project and its potential implications for Scotland with great care and that we are committed to finding wayys to achieve citizen-centred public service delivery.

As regards progress in the delivery of online public services, the Electronic Service Delivery Progress Report, published on 16 November 2001, details the services provided by the Scottish Executive, its agencies and non-departmental public bodies. That report shows that 66% of services are now available online, though the majority of these relate to the provision of information. The second Electronic Service Delivery Progress Report is currently being prepared and will be published shortly.

The Spar chain of stores, under its "Keep it Local" campaign has recently opened a 'Combi-store' in Kelvinside, Glasgow, in conjunction with the Post Office, an agreement which allows for customers to buy groceries and conduct post office transactions at the same till (7).

Some reports suggest that Consignia want to see the amount of post offices in the UK halved (8).

Support for rural sub-post offices
Rural sub-post offices have access to a UK fund, the Sub Post Office Start up Capital Subsidy Scheme (9). This scheme, for rural branches that have recently closed, or are likely to close, has a budget of £2million for which payments not exceeding £20,000 per application are available. Below is the most recent question asked on this topic at Westminster (10):

Brian Cotter (Weston-super-Mare): May I again ask the Minister why, 18 months after the introduction of the £2 million interim scheme to help rural sub-post offices and urban post offices, only five claims have been made, totalling £27,000? I have asked that question before, and the issue has been raised on several occasions. There has not been a satisfactory answer, although we are seeing, week on week, sub-post offices closing throughout the country.

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): I am glad to say that one of the reasons why there has not been as much demand as there would have been in the equivalent period last year is that the rate of post office closures is falling, not rising. The significant figure to which I draw the hon. Gentleman's attention is that, in the current year, the total number of closures has been far less than the 434 that occurred last year. In fact, real progress has also been made on the scheme to which he refers. In addition, more than 100 forms have been sent to organisations across the country. My predecessor ensured that many parish councils were notified of the scheme's availability. I am confident that, as the months proceed and where opportunities for community involvement in post offices exist, the scheme will provide an effective and efficient means by which to make progress.

The DTI insist they are still supportive of the network of rural sub-post offices. Indeed (11):

"the Government has placed a formal requirement on the Post Office to maintain the rural network and to prevent any avoidable closures of rural post offices. Rural in this context applies to communities of up to 10,000 people (the Countryside Agency definition) rather than the previous Post Office definition of communities of up to 6,300 people. The wider definition brings about 1,500 more offices into the protected rural category. An unavoidable closure is one where no one suitable is prepared to over from the departing subpostmaster or subpostmistress, where no suitable premises remain available or can be identified, or where an associated retail business is no longer viable."

This highlights the important relationship between sub-post offices and the businesses attached to them. If the attached business is not viable, then the likelihood is that the sub-post office will close too. It is then important to note that support is available for other types of business, such as under the Rural Petrol Stations Scheme. Some types of rural business can have 50% non-domestic rates relief (100% at local authorities' discretion).

The Post Office has in place 6 rural transfer advisers in Scotland to help ensure the continuity of services in rural areas by finding replacements if subpostmasters retire/resign or branches close.

Another important consideration relating especially to rural post offices is the network of post buses, which operate as vital links for those who do not have access to a car, and play a role in the tourism industry as well.

Postcomm has produced a useful document on this topic: Serving the Community I - evidence of the community value of post offices in rural areas (a similar document was produced for urban post offices - Serving the Community II - evidence of the community value of post offices in urban deprived areas).

Support for urban sub-post offices

Whilst rural sub-post offices are of great importance to local communities, urban sub-post offices face their own difficulties. Defined as those being in communities with more than 10,000 inhabitants it is generally accepted that there are too many, although there will clearly be variances in certain areas.

The National Federation of SubPostmasters accept that all sub-post offices cannot remain commercially viable and the restructuring of the urban network will require closures, mergers and relocations of branches. This could give a larger customer base for some, thus allowing for investment in improved facilities, additional counter positions and longer opening hours (12).

On 3 January 2002 Douglas Alexander, Minister for E-Commerce and Competitiveness welcomed an agreement between Consignia/Post Office Ltd and the National Federation of SubPostmasters with regard to the development of the Urban Reinvention Programme. This programme (13):

"will be carefully tailored to the circumstances of each locality to ensure that Post Offices branches meet the high expectations of customers and are in the right locations for their communities."

The UK Government has made £15 million available with regard to funding for Post Office Branches in urban deprived areas of England. The Scottish Executive has been allocated similar pro rata funding by the UK Government, but this has not been ring fenced for Post Offices (14).

The Postcomm document Serving the Community II - evidence of the community value of post offices in urban deprived areas gives further useful background, including the fact that free community services are used more in Scotland and Northern Ireland than in England.

POST OFFICE SERVICE DELIVERY
There is an ongoing debate as to how post offices can best provide services to customers. According to the Department of Trade and Industry (15):

"The Government remains fully committed to a viable network of post offices across the country. The sub-post office plays a valuable role in local communities, particularly for the less mobile, but the Post Office cannot sustain a network if it is not sufficiently well used, and nor can the Government."

In June 2000 the Performance and Innovation Unit of the Cabinet Office published a report (16) containing 24 proposals (17) for modernising the network of post offices, all of which are being taken forward. The proposals include:

• There is a need for rural post offices to modernise and for the services they provide to be broadened and improved. The Government should back this modernisation with financial support;
• The Post Office should embark on a programme of modernisation of the urban network in partnership with sub- postmasters and other stakeholders;
• If the Post Office does decide that it needs fewer outlets than at present in some urban areas, then it will need to ensure that sub- postmasters who are affected are adequately compensated for the loss of the value of their asset;
• The aim of Government policy should be to provide a mechanism to ensure that people in deprived urban areas continue to enjoy convenient access to a post office. And that where post offices have the potential to anchor high quality shops, they are able to do so.
• The Government should positively support the Universal Bank (see below) viewing it the best means to ensure that benefit recipients can continue to access their entitlements in cash at post offices;
• The Post Office should develop a role for the network as internet learning and access points. The Government should positively support the development of this role;
• Government clients of the Post Office network such as the DVLA, National Savings Executive Agency and the Passport Agency should be free to develop new channels for delivering their services to citizens. But, in parallel, there should be a presumption that they continue also to offer their existing services at post offices – so long as there remains sufficient customer demand to make it cost effective to do so.

Market opening

As well as initiatives focusing on the post office network, there are broader proposals to open up the postal service to competition which are concerning some Members of the Scottish Parliament, as indicated below:

S1M-2905# Alasdair Morgan: Market Opening of Postal Services in Scotland—That the Parliament expresses its severe concerns about the impact which Postcomm’s proposals on market opening will have on the post office network in Scotland.

The Postcomm proposals referred to relate mainly to Royal Mail services rather than directly to the post office network. The proposals to open up the market will come online in three stages (18):

1. April 2002 – 31 March 2004: Bulk mail above 4000 items, consolidation services, certain niche services – around 30% of Consignia’s market by value

2. April 2004 – 31 March 2006: Opening up approximately a further 30% of the market by lowering the bulk mail threshold as appropriate – this is expected to be to between 500 and 1000 items per mailing. Plus a review of restrictions on consolidation licences with a view to enabling operators to pass mail for delivery to operators other than Royal Mail.

3. No later than 31 March 2006: All restrictions on market entry abolished.

Post offices will have to be able to provide services to any competitor in the postal services market if they want to survive. According to the National Federation of SubPostmasters:

“Let’s be clear about this – today’s Postcomm announcement is essentially a Royal Mail issue which will mainly concern postmen and postwomen, sorting offices and large postal delivery services.

“It is not about the counters service and the vital contribution our members make by providing a range of postal services to urban and rural communities. Neither is it about the plans to re-invent the urban post office network and deliver more viable and vibrant sub post offices.

“However, we consider that Consigina will be stifled by over-regulation and we would urge caution when opening up certain parts of its business to competition - there’s no point shutting the stable door after the horse has bolted.

“This is cherry picking and if it continues businesses will stand to get their post cheaper, while the general public will end up having to subsidise less profitable parts of the mail delivery business.

Consignia themselves are equally concerned about market liberalisation. The company claimed in a press release of 6 March 2002 that they stood to lose £2b of revenue should the regulator, Postcomm, continue with its proposals.

OTHER GOVERNMENT INITIATIVES

"Your Guide"

"Your Guide" is a Government initiative designed to provide a one stop shop at the post offices for services across the public, private and voluntary sectors. Transactions, advice and information will be available through:

• Counter assistance;
• Leaflets;
• Touch screens;
• Free phone;
• Expert advice sessions from specialists such as the Inland Revenue and Department of Work and Pensions (in larger post offices).

The Government are of the opinion that the Post Office is ideally placed for this sort of initiative, given that it is a trusted brand and already has an extensive network of 18,000 branches.

"Your Guide" was piloted in Leicester City, Leicestershire and Rutland from July 2001 until March 2002. Allan Wilson indicated in a recent written answer (19) that:

"the Scottish Executive is paying close attention to the development of the Your Guide pilot project in Post Offices in Leicestershire and Rutland. Arrangements have been made for ministers and officials from the Scottish Executive to see the project first hand. The pilot will of course have to be comprehensively evaluated to assess the case for national roll out. In particular those organisations wishing to use Your Guide will need to examine carefully how a national service could fit in with their wider service delivery plans, how far it could help in achieving greater efficiencies and whether it would provide value for money compared with alternative direct channels to the public. Until these evaluations are complete, it would be premature to discuss details such as responsibility for the provision of equipment. I can assure you, however, that the Scottish Executive is examining this project and its potential implications for Scotland with great care and that we are committed to finding ways to achieve citizen-centred public service delivery."

The most recent question answered at Westminster on the topic was (20):

Mr. David Kidney (Stafford): Will the Leicestershire pilot of "Your Guide" be extended nation wide later this year? If so, who will pay for it?

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): As I said in a debate late last year, the pilot will be completed on time, at the beginning of March. That will allow us not only to evaluate the effectiveness of the service and the income stream to Post Office Counters Ltd., but to expedite work across Government in considering the delivery of electronic services. I can assure my hon. Friend that we are proceeding apace not only with discussions within Government, but also with the evaluation of the pilot with Post Office Counters.

Universal Bank

The Government is keen to take the 10% of adults who do not have a bank account out of financial exclusion. One of the drivers for this is a desire that all benefits should be paid electronically. This would be under the UK-wide Automated Credit Transfer system referred to in Robert Brown's motion. The Government has signed up to the development of Universal Banking Services. The key behind this is the availability of bank accounts at post offices using the existing large network of outlets (21).

On 8 May 2001, the three main Scottish banks had joined the scheme, as outlined by Secretary of State for Scotland, Helen Liddell. Key to the scheme is that the banks themselves will meet some of the cost of developing the system. The scheme should begin in 2003 and be complete by 2005. Under it, account holders will be issued with a bank card to allow them to withdraw money at post offices and ATM machines.


SPICe Briefings are compiled for the benefit of Members of the Scottish Parliament and their personal staff. Authors are available to discuss the contents of these papers with Members and their staff but cannot advise members of the general public.


1 Source: Consignia
2 Post Offices are those directly owned by The Post Office as Crown Offices. Sub Post Offices are run by agents under contract to Post Office Ltd.
3 House of Commons Library Research Paper on the Bill as introduced available at http://www.parliament.uk/commons/lib/research/rp2000/rp00-018.pdf. Explanatory notes to the Bill available at http://www.legislation.hmso.gov.uk/acts/en/2000en26.htm
4 Postwatch is the brand name of The Consumer Council for Postal Services (CCPS), established under the UK Postal Services Act 2000. CCPS replaced the former Post Office Users’ National Council (POUNC) and the Country Councils in Scotland, Wales and Northern Ireland.
5 Memorandum of Understanding - Joint Postcomm/POUNC document. Available in SPICe.
6 http://www.subpostmasters.org.uk/research%20briefing%20Opposition%20Debate%20Briefing.htm
7 Sunday Herald - Spar combines with Post Office, 10 March 2002
8 Scotland on Sunday - Plan to close half of all Post Offices, 20 January 2002
9 More information available from Email: rural.fund@postoffice.co.uk
10 Westminster Oral Questions 14/02/2002, reference 380 c306 - http://www.publications.parliament.uk/pa/cm200102/cmhansrd/cm020214/debtext/20214-04.htm#20214-04_spnew2
11 http://www.dti.gov.uk/por/postoffice_network.htm
12 http://www.subpostmasters.org.uk/research%20briefing%20Opposition%20Debate%20Briefing.htm
13 DTI press release 3 January 2002
14 Postwatch quoting Consignia
15 http://www.dti.gov.uk/por/postoffice_network.htm
16 Interesting elements include international case studies of France and New Zealand in Annex 4 of the report.
17 Available in summary on page 96 of the report
18 http://www.postcomm.gov.uk/documents/Media/Competition%20proposals%20013102.doc
19 S1W-23640
20 Westminster Oral Questions 14/02/2002, reference 380 c306 - http://www.publications.parliament.uk/pa/cm200102/cmhansrd/cm020214/debtext/20214- 04.htm#20214-04_spnew2
21 This is as part of a wider strategy, some of the key elements of which were outlined in a speech in July 2001 by Ruth Kelly MP, Economic Secretary to the Treasury

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Scottish Parliament: Research Briefings: SB 02-33 Scottish Sub-Post Offices

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