Tuesday, May 21, 2019

Post Office Network Inquiry: "Network Transformation has been an unmitigated disaster"

The BEIS select committee Post Office inquiry took place today. I posted a piece earlier today with links to, and selections from the written evidence submitted to the inquiry ("Horizon is not fit for purpose").

The video of the oral evidence session is below. The "unmitigated disaster"quote comes from the CWU's Andy Furey.  Full witness list below.



The first session at 9.30am featured submissions from:

Andy Furey, National Officer, Communication Workers Union
Anne Pardoe, Principal Policy Manager, Postial Services and Telecoms, Citizens Advice
Callum Greenhow, Chief Executive Officer, National Federation of Sub-Postmasters

The second session, at 10.15am features:

Carl Cowling, Managing Director of High Street Business, WH Smith PLC
Edward Woodall, Head of Policy and Public Affairs, Association of Convenience Stores
Alisdair Cameron, Interim Chief Executive, Post Office Ltd

Transcript to follow.

Post Office Network Inquiry: "Horizon system is not fit for purpose"

A one-off evidence hearing into the Post Office network gets underway today in the Grimold Room at Portcullis House. Nearly 50 people and organisations have already submitted written evidence to the inquiry, including the Justice for Subpostmasters' Alliance, the NFSP, WH Smith, the CWU, Which?, Citizens Advice and the Post Office itself. You can read it all here.

There are a few quotes which caught my eye from some of the submissions, in no particular order.

"I am a sub-postmistress and have been since June 2000. I am appalled at the way we are treated by Post Office Ltd, not just the ridiculously low pay rates we get but the terms and conditions of our contracts to which we have no right of reply. The NFSP [National Federation of Subpostmasters] claim to represent us, but how can they when they are being funded by Post Office Ltd? This fact has been highlighted in the recent court trial and the judge’s comments regarding the NFSP were quite damning. 
"The NFSP have repeatedly agreed to pay cut after pay cut resulting in many postmasters giving up their business by just closing, even though they have, like myself, paid out considerable amounts to own their Post Office which was sold to them as an investment.... Please do the right thing and get Post Office Ltd.’s house in order. First step is to allow CWU Postmasters Branch to talk and negotiate on our behalf."
"I am a current sub postmaster with 8 years of experience under my belt. All I have seen is decline of the Post Office in all these years. I did not have a single wage increase while I have increased the wages of my employees 8 times as per national minimum wage rise law.
"I would like to summarise the main concerns below:
- Horizon system is not fit for purpose and postmasters have to make good all losses which arise from the blue, this matter is already being dealt with in courts so I would not comment on it any further.
- POL does not pay us anything for so many daily transactions which is just modern day Slavery.
- The banking transactions are so much time consuming and are a threat to the safety as well, while we are only paid a pittance for all that work which is totally unacceptable.
- There is no recognition of our hard work or good work and never had any incentive or bonus.
- We do not have a proper representation as a CWU union. POL only recognises NFSP which is a company funded by themselves to protect their interests.
- As a result we have lost all our investment and the good will of the business and nobody in the proper state of mind is willing to buy our business if it has a post office inside it."
"Our customer base is being steadily whittled away and for most branches the remuneration is falling per transaction as well.
"The remuneration in real terms for most PO [Post Office] products have failed to keep up with inflation even at the current low rate, means that if we employ staff, we are paying more in minimum wage than we receive from POL [Post Office Ltd] for the work. Postmasters may be prepared to work below minimum wage, but to have to pay over the remuneration rate for staff is another matter and the high rate of branches simply handing in the keys reflects this."
Edward Rigg, Subpostmaster:
"I really love my job and the role my Post offices play in our local communities. However, I believe that the Post Office network is in the worst position that it has ever been... I have huge concerns about the long term resilience of the PO network. Pay rates have been reduced by approximately 15.5% as a result of 2 remuneration decreases since Sept 2017. At the same time all costs have gone up massively including 2 new national minimum wage increases which have hugely impacted on Post Masters staff wage output. However, there has been no new work to counterbalance this and Government work such as Premium Bonds seems to be disappearing. Alongside this, in October 2017, I calculated my own hourly rate of pay based upon hours worked versus take home pay; my hourly rate was £2.12. I have been too frightened to re-calculate."
HM Government:
"The investment that Government has made in the Post Office network, and the progress the business has made toward commercial sustainability mean that the Post Office network is in much better shape today than in 2010, doing more for its customers and more sustainably for taxpayers. However, Government is not complacent and recognises the challenges in POL’s operating environment. BEIS is committed to continuing to work closely with the company to ensure the long-term sustainability of the network." 
"The problems in culture and governance are underlined by the Horizon scandal. The Select Committee will not consider issues that are currently before the courts, but without getting into the substantive matters we do not believe it is possible to ignore the seriousness of what has emerged so far with accusations of the Post Office improperly using its powers to prosecute individuals; directors being accused of misleading the court by the judge and of being unable to accept the Post Office is wrong; and the judge stating the Post Office’s approach to the litigation could be construed as “threatening” and “oppressive”."
The Justice for Subpostmasters' Alliance:
"Following our recent success in our litigation case against Post Office and the Judgement handed down, it effectively has nullified the Post Office contract with not just those in the group action but also for all current serving Sub postmasters.
"Post Office at the moment seems determined to destroy itself and ruin any vestige of its historically good name. It has been desperately trying to maintain a hopelessly flawed Business Model that pockets the financial benefits of continuously transferring risks onto Sub postmasters. Fortunately the court's findings has overturned this."

"The viability of sub post offices and the morale of subpostmasters has been eroded to the extent that the network’s resilience is extremely limited. We believe a tipping point has been passed and the consequences of this are now being realised.
"To reference every factor that led to this situation would generate a prohibitively long response. Instead we will consider a key finding from the NFSP’s Member Survey – that subpostmasters feel disenfranchised from and marginalised by the main industry stakeholders: PO and its owner the UK Government, and Royal Mail."


- 61% of subpostmasters are taking home less now than in the past.
- 76% earn less than the National Minimum Wage per hour for working in their post office.
- 19% of subpostmasters (or their spouse or partner) have taken on work elsewhere in the last year just to make ends meet.
- Many struggle to take time off (one third did not take a single day off in 2018) because they cannot
afford to employ other staff and are forced to work longer hours themselves.

"Running a Post Office continues to be an attractive proposition for many retailers. However, while the model is now more sustainable, Postmaster incomes have not kept pace with increasing costs. Furthermore, we know that while the Post Office franchise is valued because of the footfall it brings, operating a Post Office is complex because of separate technology, the need to meet certain regulatory requirements and the knowledge required to support a multi- product operation. We must make it more attractive for Postmasters and our strategy is to make it easier for them to make more money with less effort.
"To that end, we are currently trialling increased incentives for Postmasters selling telecoms and insurance products. We have recently announced that we are increasing the fees paid to Postmasters for transactions under the Banking Framework. We have also announced a strategic review of Postmasters remuneration, to report back towards the end of the year."
"The biggest threats to the PO network is firstly POL Senior Management, secondly Royal Mail and finally HMGov. The current senior management team of POL does not share its vision for the future of the network with me as a SPMR [Subpostmaster], so how am I expected to carry it out? I’m not involved in the formation of policy, as I’m not consulted nor am I truly represented. 
"I’m sure you’re aware of the unrepresentative relationship that the NFSP has with SPMRs as outlined by Mr Justice Fraser following the first trial this year. Funded by POL directly, the NFSP is used by POL to ensure that they rubber stamp any new initiative or cut to SPMR remuneration. POL is only making a profit currently by cutting transaction fees to SPMRs by £37m over the last two years when our costs continue to rise e.g. the NMW [National Minimum Wage]. POL would greatly benefit from having a proper critical friend. The morale of SPMRs that operate agency branches (98% of POs) would be greatly enhanced by proper representation, such as the CWU which other individuals have working in the Crown Network."
Helen Walker, former Subpostmaster:

"I... gave up my Post Office counter after less than 12 months, due to unexplained losses, repeated system crashes and insufficient support. I decided to collect the experiences of other subpostmasters in the form of an unbiased online questionnaire, and managed to reach 311 contributions."

It's worth reading all of Helen's survey - self-selecting, but very interesting. Killer stat highlighted in bold below. That should worry everyone.

Helen's survey:

On average during your time at this office, have you ever experienced unexplained losses that were not resolved and resulted in having to make good the Post Office cash / have sums deducted from your monthly payments?

Never                                                  11.90%  
Around one a year                              20.26%
1 to 3 times in a year                          23.25%
More than 3 times in a year               18.33%
More than 6 times in a year            18.33%
Between 9 and 12 times in a year      8.04%

More survey responses:

From your own experience, how confident are you in Horizon’s reliability in relation to balancing / losses/ gains?

Somewhat lacking in confidence: 35.37%
Very lacking in confidence:          20.26%
Extremely lacking in confidence: 15.11%

From your own experience, do you consider that the training you received from Post Office Ltd on using the Horizon IT system was:

Poor:                 34.73%
Very poor:         30.87%

From your own experience, would you consider that the training you received to enable you to identify the cause of shortfalls was

Very good:         4.5%
Very poor:          55.95%"

"The network is not resilient because POL and the NFSP are an unnecessary financial burden upon the network. Neither organisation contributes to growth or income. Both organisations collude to reduce Subpostmaster incomes. POL is failing to reduce overhead cost yet aggressively attacking the sub-postmasters who have invested hard cash into the system."
Tim McCormack, former Subpostmaster and campaigner:
"A brief review of parliamentary questions to the various ministers in charge of Postal Affairs over the last 10 years will show that the stock answer is a hands off approach to the way the Post Office is run by the Government....  In fact if it were not for one of my interventions POL would still be misusing the working capital loan received from BEIS and a recent FOI request has revealed that POL were again misusing government funds to finance the current trial and they had to repay several millions to the government as a result."
Jaiprakash Patel, Subpostmaster:
"The post masters renumeration has been decreased as the amount we get per unit has been reduced and another reason it has gone down is we are forced to open longer hours and this incurs higher staff costs. So not only has the staff costs gone up, but the amount we are getting per unit of sale has reduced."Even [though] the cost per unit of sale with regards to banking renumeration is due to go up, it is not enough to cover the increase wage costs so ultimately, we lose out. In addition to this, what the post office pays us for banking business, is much less than what we pay our own banks for the equivalent services."Since the first closure of the network, the sub postmasters were always told we would receive a lot of governments services, but this has not happened and not a single government business was given to us and in fact, services have been removed, mainly the post office card account and in turn, this has affected the retail business. If [an] office is open from 8am to 8pm, 7 days a week, the renumeration paid to [the] Subpostmaster does not justify business we are taking in these hours.
"If offices have to close and hand over keys, it will affects a lot of local communities. If husband and wife are running a business where they cannot meet expenses, one will have to go out to work to keep business going...
"I was close to handing over keys 4 weeks ago. By closing a crown office near by, I was told by Post Office that they would invest money into the office to provide all services mentioned before. After putting in 2 closure notices in for 2 weeks each, the post office decided that it would cost them too much money and they pulled the plug. On one side, post office want customer service, and on the other side, they can’t provide equipment to give to customer. IN THIS matter, we had done everything they wanted, but they still let us down."
Anonymous contributor (likely a serving or ex-PO employee):

"There’s the ongoing GLO [Bates v Post Office], the impending investigation by the Criminal Cases Review Commission, the failed IBM migration, the acquisition of Payzone, cuts to Agents pay, cuts to staffing levels within multiple partner sites, mooted large scale Sub Post Office branch closures and competition from within – accordingly there must be concerns?
Report no.75500 [a PO report], is silent on the Post Office acquisition of Payzone and the failed attempt by Post Office Ltd to migrate its Branch IT operating infrastructure from Fujitsu Services Ltd to IBM. The latter may be an indicator of the likely success of the former and should not be silent."

The cast list for the oral evidence should make things interesting:

Andy Furey, National Officer, Communication Workers Union
Anne Pardoe, Principal Policy Manager, Postal Services and Telecoms, Citizens Advice
Callum Greenhow, Chief Executive Officer, National Federation of Sub-Postmasters
Carl Cowling, Managing Director of High Street Business, WH Smith PLC
Edward Woodall, Head of Policy and Public Affairs, Association of Convenience Stores
Alisdair Cameron, Interim Chief Executive, Post Office Ltd

I'll have a look at the transcript when it's all over.

*************************

If you can, please help keep this crowdfunded public-interest journalism project going by chucking a few quid in the tip jar below. Contributors who give £20 or more will start receiving regular "secret" emails which have all the info and gossip about this litigation as it makes its way through the courts.

If you want to find out a little bit more about the underlying story, click here. 
Choose an amount