Agenda item

(Presentation by Mr Roger Gough, Cabinet Member for Regeneration and Supporting Independence and Mr Adam Wilkinson, Managing Director, Environment and Regeneration)

Present for this item were Mr Michael Fallon MP as well as Mr Gary Herbert, Martine Munby and Sally Hopkins on behalf of the Post Office.  Also present was Liz Craven, Rural Regeneration Manager, KCC.

(1)     In introducing this item, Mr Gough said that whilst the precise nature and scale of the proposed closures that the Post Office was planning for Kent was unknown, the County Council had a number of concerns over how the network change process may be implemented.  These included concerns around the impact that the proposals would have on both rural and urban areas and the fact that the proposed six week public consultation period was too short and gave insufficient time for the communities of Kent to have their say or to develop alternative proposals.  Mr Gough also said that where post offices were proposed for closure, there had to be sufficient funding made available to enable appropriate outreach facilities to be put in place and it was far from clear what the overall effect of the changes would be on the business community, particularly in rural areas.  KCC was therefore undertaking a robust and proactive communication strategy aimed at raising awareness of Kent’s concerns about the way that the network change process was being implemented in Kent.

(2)     Liz Craven said that a major justification being put forward for the changes to the post office network was because current losses were running at some £4m per week.  Post Office Limited was part of Royal Mail Plc Holdings which last year made an operating profit of £22m.  However, Post Office Limited Group had made a loss of some £111m which was nonetheless 9.8% down on the previous year.  Looking at the published figures, it was not clear where the losses were coming from, but what was clear was that the 3% of the current network which was directly managed by Post Office Limited, accounted for some 45% of the losses, which equated to some £50m.  The official regulator Postcom had suggested that rural sub-post office losses of some £150m were being offset by Social Network payments.  These figures were based on those available to March 2006.  The urban network of sub-post offices had moved into profit showing a 7% margin for the year 2005/06.  The question remained however as to why a £4m per week loss in being forecast which was double the loss of the predicted £2m per week.  There are no audited accounts currently in the public domain to explain why that increase in losses may have occurred.

(3)     Mr Carter said that the County Council was deeply concerned at the effect on rural and urban communities that the proposals being put forward would have.  A key question was would these proposed closures really deliver the substantial financial savings on a scale which would make a difference to the whole operation of Post Office Limited?

(4)     Mr Gary Herbert, Development Manager, said on behalf of the Post Office that the company needed to restructure the network in order to address the issue of current losses.  These were running at £2m per week in 2005 and had risen to £4m per week in 2006.  He said these losses had come about because of changes to the way customers were using post office services.  Mr Herbert also said that the number of customers using sub-post offices had fallen from 28m per week in 2005 to 24m per week in 2007.  Nationally, some 1,600 post offices were serving less than 20 people per week.  Mr Herbert also spoke about the Government’s networking policy under which the post office would receive some £1.76b in funding over the next five years to enable it to restructure and return to profitability.  The Government had cited falling customer numbers and changes in use with resultant financial losses as the rationale for these changes. 

(5)     Mr Herbert said in 2006 the Government undertook a consultation which lasted 12 weeks on a range of proposals for change.  The Federation of Sub-Postmasters had indicated their support for the changed agenda which is what was now being taken forward as part of the Post Office Network change process.  The Government had charged Post Office Limited with making changes and these would be undertaken using a strict access criteria.  This criteria, coupled with financial considerations was what would drive individual closure decisions.  The Post Office was therefore following Government set criteria and this had been the subject of national consultation.  The criteria stated that 99% of the population had to be within 3 miles of a post office with 90% being within one mile of a outlet.  Within urban areas 95% of the total population had to be within one mile and in deprived urban areas 99% of the population had to be within one mile.  In rural areas, 95% of the total population had to be within three miles and within post code districts, 95% of the population had to be within six miles.  The criteria also required the post office to take into account any physical geographical constraints.  In concluding his statement, Mr Herbert reiterated that the Post Office was following Government set criteria and this had been subject to national consultation.  In order to take forward the network changes, the Post Office was looking forward to having constructive engagement with stakeholders and to work with these in order to bring about the proposed network changes.

(6)     Mr Michael Fallon MP said that he understood that nationally, there would be a loss of some 2,500 sub-post offices which in terms of its effects on communities he believed would be as severe as those which resulted from the Beeching rail cuts of the 1960’s.  Mr Fallon said that the Post Offices’ proposals equated to four closures per Parliamentary constituency which equalled 70 across the County.  He said already protests were being mounted within his constituency and he spoke of petitions being presented in support of the sub-post offices at Ide Hill and Kemsing.  These had been signed by one thousand and five hundred people respectively and, if that was reflected across the county, that would equate to some 75,000-100,000 people protesting at the post offices’ proposals.

(7)     Mr Fallon said that six weeks for consultation on these proposals was half the normal period that would normally be allowed for a public consultation exercise of this proportion.  Mr Fallon also said that the criteria which was being adopted took no account of the fact that the three miles mentioned was as the crow flies and therefore did not take into account the local road infrastructure or the public transport network.  Mr Fallon also said that the Post Office needed to be more transparent about the information it was providing and said whilst he understood there were issues of confidentiality, general financial information and that regarding customer usage per week, should be published so people could judge and see which outlets were being best used.  Mr Fallon concluded by saying there was so far no evidence that the Post Office was prepared to work with other bodies and agencies to find ways of mitigating the effects of its proposals.  He also spoke about the broader economic effects of the post offices’ proposals and the adverse effect he believe they would have on community cohesion together with increase in traffic and carbon emissions resulting from people having to travel further distances to reach post office services.  He believed that the Post Office should suspend any further work on this programme and publish information relating to the financial and public service background to its proposals and work with KCC and others to look at the issues which were at the heart of the Kent economy and life.

(8)     During the course of questions and answers, Mr Herbert said that the six week consultation period formed part of the agenda set by Government and so could not be changed.  Having six weeks also reduced the continuing uncertainty for Post Office customers.  However, the Post Office representatives agreed to feed back KCC’s strength of feeling that the consultation period should be extended.  Mr Herbert confirmed that the criteria against which closures would be judged would include customer usage; proximity to next available post office (by shortest road route and taking account of the availability of public transport etc); relative size and financial impact on Post Office Limited.  The Post Office representatives also confirmed that the Government required that after completion of the national network change programme, 99% of the population should be within three miles of a post office branch and 90% within one mile.  The accessibility requirement were further refined for urban, deprived urban and rural and post code areas.  The Post Office representatives confirmed that the outreach models proposed would include a hosted service run by the Post Office and operated in a shop, village hall or public house.  A partner model which would mean a basic service being provided in an existing shop alongside that shop’s core business and in very rural areas, a home service, based on telephone/on-line ordering with delivery to home and a mobile post office visiting set locations at set times.  It was also said that the Post Office Network was constantly changing and wherever business justified the opening of a new post office branch, for example in areas of major residential development then it would be provided.  The Post Office representatives also confirmed that in defining a “deprived urban area” the Post Office used the published indices of multiple deprivation.  It would also give weight to other factors, including whether the Post Office supported the last remaining shop in a particular community. 

(9)     The Post Office representatives agreed to pass on KCC’s wish for there to be full publication of all relevant data and in answer to a question as to whether the Post Office had undertaken an Equality Impact Assessment, it was said that this was a requirement to ensure that no area or section of the community was significantly more badly affected than any other.  However, the Post Office representatives said they were not aware that any formal Equality Impact Assessment had been undertaken.  They said if provided with further information they would check and provide more detail.

(10)   In concluding the discussion, Mr Carter thanked the representatives of the Post Office for attending the meeting.  He said it was clear there needed to be more openness and transparency about the proposals being put forward, particularly relating to user numbers and financial viability.  He also said that there needed to be a longer period for consultation to give all those affected by the proposals proper time to consider the effects and to put forward a response.  Mr Carter said that the real shareholders of Post Office Ltd was the public which it served and he urged the representatives present to reflect on the views which had been expressed during the course of the discussion.