TUESDAY 4 JULY 2000

MR STUART SWEETMAN, MR BASIL LARKINS AND MR DAVE MILLER

840.  Are we talking about Wales or the United Kingdom?

  (Mr Sweetman) Wales and the United Kingdom. There is no difference.

841.  You suggest your computer system could be used to collect data to inform social policy. What do you have in mind?

  (Mr Larkins) The card that we are talking about for the universal bank, for example, we have four million people and we can for the first time start creating a database of people who use post offices. We know how many people use it but at present we do not know the names and addresses of a single soul. If you talk to some of the government departments who use our service they will tell you that they have a not less than 100 per cent certainty about the names and addresses of their customers even though they are using post offices. We can begin to create a database and that will create usefulness. That is one issue. There is the holy grail, if you like, of finding a smart card based on a system which has details of the entire population. I personally do not think it is practical but I think four million is a good start.

842.  Your memorandum advocates developing a more sophisticated citizen-focused strategy to manage its interaction with the public that is not exclusively information technology driven, and ensuring joined-up purchasing of the key channels. You mention this in page 4. What on earth does this mean?

  (Mr Sweetman) There is a lot of management speak in there. What that essentially means is that the Cabinet Office Information and Technology Unit have the leadership role when it comes to leading government policy on how government departments and people interact, exchange information, do transactions. In fact, I have been invited by Ian McCartney onto a Committee that he leads out of the Cabinet Office called the Channel Providers Management Board. I think it is clear that because this is being led by a technology unit—and I will be careful with my words here—that they are very fixed on technological solutions. I mentioned digital television earlier on. There is a very strong belief among technologists that digital television is the answer to this. In every living room in every house in the country there will be a way of reaching people. All our research shows that people are gregarious. They want to have face-to-face contact and for many people in the community face-to-face contact is what they prefer to receive services via. What all those words mean is that it is people that count. Do not force technology down on people. Ask people what they want, give people choice. If some people want to continue with face-to-face with their friendly, trusted sub-postmaster or sub-post mistress, let them do it. Do not force them into a technology they do not feel comfortable with. Give them a choice. So do not get besotted by glamour technology.

843.  How do you square your research with what your colleague said earlier on about people withdrawing from face-to-face in banking.

  (Mr Sweetman) It is about choice. We see people choosing to get their benefit through the bank. About one or two per cent a year is the shift

844.  The point you made earlier on that people are gregarious, people want face-to-face interaction, your colleague said quite the reverse earlier on.

  (Mr Larkins) I do not think I did.

845.  You said fewer customers were using bank facilities.

  (Mr Larkins) They still want to be gregarious in other ways, I guess. Banking transactions have become commoditised and you can do it where you like. If you are talking about government, it is better to do that face-to-face.
  (Mr Sweetman) There are many people who feel totally and utterly comfortable with new technology and that is a growing trend. There are many people, you will see them in your own constituencies, who are not attracted by technology and there must be a choice for them to continue to have face-to-face. The proportions will change over time as the population changes and we will have to adapt, but that is what was behind the direct question.

846.  In your written memorandum on government services you refer to departments and agencies which you already provide services to and included in that list is the Scottish Office and Welsh Office. Are you aware that even in February those departments no longer existed? The more important question is what consultations have you had with the Welsh Assembly?

  (Mr Sweetman) I think the consultations have been through the Chairman of the Post Office of Wales, but I am not sure of the detail. I apologise for that. We can certainly find out.[6]

847.  If you want to provide services for one of the departments or one of the governments that now exists in this country, you need to talk to them about providing it.

  (Mr Sweetman) You are right. As an example, in Scotland (which was the first of the devolved authorities), we now have someone on secondment to the Scottish Executive to create that link. That individual has now been there for two or three months. That is a model which appears to be working and is opening up the links certainly between the Scottish Executive and ourselves. We are in early discussions on the same sort of thing in Northern Ireland and I am sure the same sort of model can be applied in Wales. That is something we will keep you in touch with.

848.  Why has it not happened at the same time? There was only a very small timespan between the different elections of the different democratic bodies. Why is Wales not on a par with Scotland and Northern Ireland?

  (Mr Sweetman) I do not think I would want to be drawn into that sort of discussion. We moved with Scotland first. That is the fact. It certainly was not an intentional fact that Wales came second. It was just the practicality of the links that we had.

849.  I apologise that I have not been able to be here for most of this session but just one point I would like to ask you about. You said that you have got 700 post offices connected up and there were 1,451 post offices in Wales. When the Secretary of State made his statement last week about various services which post offices were going to deliver, I think my memory is correct that around about 60 per cent of post offices were going to have banking facilities. 10,000 I think was the figure that he mentioned. Do you have a target for post offices in Wales for them to be automated right up to 1,451 or is there a shortfall and what happens to those post offices that are not connected?

  (Mr Miller) The clear aim is that all post offices in the country, and therefore in Wales, will be automated. We would aim to do the vast bulk of those by the end of March 2001. There will be a number of offices which are, for one or other reason, a bit more difficult, but we would aim to do those in the three to four months after that. So we have a clear intent that all post offices in United Kingdom will be automated.

850.  Why are they difficult?

  (Mr Miller) There are some that, for instance, do not have the ability to link with BT's particular lines that they put in for Horizon. Therefore we have to look at other ways of communicating with those offices, which may be by satellite. It is that sort of thing. There are some offices where we cannot, even with the size of the equipment not being huge, get it into those offices and therefore we need to extend the post offices.
  (Mr Sweetman) There are a few dozen without electricity.
  (Mr Larkins) The PIU Report talks about one of those.

851.  What specification of telephone line are you talking about?

  (Mr Miller) We are talking about ISDN lines.

852.  ISDN lines are few and far between in a lot of parts of rural Wales. Are you going to pay for ISDN lines to be put in all those post offices?

  (Mr Miller) We have a contract with ICL Pathway and they clearly have to fulfil that contract and they have to be able to do the transactions that the Horizon system requires. They have fully researched it and it is their job to make sure those connections occur. The finance of that is there. The thing is rolling out as we speak.
  (Mr Larkins) Your point about 10,000, could you help me, I do not recall that.

853.  It is obviously a dangerous thing to do, I have not got the Minister's statement in front of me. He referred to 10,000 post offices and there were about 18,000.

  (Mr Larkins) I think the 10,000 figure is the number of rural post offices. The banking number he might have mentioned would be 3,000. That is the number with ATMs which is rather different. The intention is that the banking services will be offered provided they are wired up, as Dave explained. It is either 18,000 or 17,900 and something. So it will be everybody.

854.  You point out that 28 million people visit the post office each week. Do you think to some extent this is because there is nowhere else for them to go? Do you think there could be better places that they might prefer to tax their cars, for example in supermarkets? Is it lack of choice that makes them use the post office?

  (Mr Sweetman) If I can address that and then ask my colleagues to also contribute. For all of our services that we provide through the post office there is competition for those transactions, be it buying a stamp, which you can now buy in supermarkets or corner shops, paying benefit through bank accounts, paying bills through post or direct debit. I think the only transaction you cannot do anywhere else is buy a postal order. Therefore for all of our products and services they are part of a conscious decision by somebody to choose us. It could be that in many of the communities we are talking about we are the only practical option for those people and that is the mainstay of many of our offices. But I think there is no complacency when it comes to knowing we are in a competitive environment. As each year goes on and as new channels and new technologies emerge, we are ever more conscious of that competition and option people have. Again, the PIU Report recognises, notwithstanding the known hit that we are going to suffer on the Benefits Agency move, that all of our other product and service streams are under varying degrees of competitive pressure. If we are going to survive and provide the service, we are going to have to retain the loyalty of those customers. That can only be provided by excellent personal service aided by technology.

855.  We have been told that the Post Office prevents sub-postmasters and mistresses from offering certain services outside the main post office hours such as the sale of electricity or gas tokens. Is that correct and why?

  (Mr Larkins) There is no such thing as main post office hours because the sub-postmaster can choose his hours.[7] Where I live I get home at about half past six or seven and the local post office does not shut until half past seven at night. We say we only do part time but essentially the split is up to the person. In terms of the services you might be thinking of, for example a service you can do in a post office because we have a contract for it but we have competitors who also have distribution, occasionally we come up with a competitor wanting to have his operation in the same shop as us. Where there is a conflict it is not right that should happen and the contract the sub-postmaster has precludes it. It has been looked at by people from the OFT and by the PIU. Every time it is looked at, and it is regularly looked at, the argument that we advance that this is for the greater good of the preservation of the whole network has won the day and it has been accepted by the OFT and PIU that this is a reasonable business practice. In fact, it does not genuinely add to anyone's good if we allow people competing against ourselves in our own premises. All that will happen is that many sub-postmaster's shops will become less viable.

856.  Is there any risk that the increased commercialisation planned by post offices will put off some customers and that they will not be seen as playing the traditional role they have always had?

  (Mr Larkins) There is a lot of research that says the great thing consumers feel about us is they can trust us. They might think we are a little old-fashioned and bureaucratic but they can trust us. They can be sure they are not going to have something forced down their necks or sold to them. That is exactly why, for example, in the banking area we are determined to work in partnership with people to preserve that set of values which is absolutely key to what our consumers want. It is the same things our customers, our clients want because, for example, you can go into a post office and pay an electricity or gas bill, that same gas or electricity company must be sure that we are not going to try and promote one against the other. We must be neutral and fair in the middle. So it is absolutely essential that we preserve that kind of trust. There is a danger that things would change but it is my belief that we can avoid it and we must do that.

  Ms Morgan: Thank you.

857.  If this Committee were to make recommendations in this report about financial exclusion, which is highly likely, what three recommendations would you like us to make?

  (Mr Sweetman) The clear role we can provide to communities up and down the country is our proposal on universal banking. That can be a major plank for including people and putting them on the bottom rung of the ladder so they can then rise themselves. We will introduce them to mainline banking services through the universal bank. I think our ability to provide support information from many government departments through the concept of the government as general practitioner will continue our existing role and maybe even grow it. Taking the fear factor, which undoubtedly exists, out of dealing with government departments by appearing to be the advocate of the individual rather than the advocate of government is a role that the government GP recognises. I think that is the second thing on which your support would be very welcome. The third thing is we are living in a commercial world and the viability of many of our outlets depends on the viability of the retail offering sitting alongside the post office and I think there are many measures in government policy right across many departments which can help preserve outlets in the rural areas. We have had rate relief which has helped some offices, but I am sure there are policy areas across many departments that could aid the last shop in the village. It is maybe not appropriate if there are half a dozen shops competing against each other but the last shop retail survival is something where government policy can be concentrated.

  Chairman: Thank you very much indeed for coming this afternoon.

7   Providing he opens as a minimum from 9 to 5.30 Monday to Friday, and Saturday mornings. This condition applies to all but the smallest offices. Back