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Tim Allen’s Postmaster Ponderings: Gulp… Are you about to be Strategically Reviewed?

Jun 6, 2024 |

This article is the individual ponderings of a postmaster and does not necessarily reflect the views of the NFSP but is the sort of communication we receive or hear that in turn is reflected in our future policies/actions.

Being a postmaster is not unlike being a farmer. It’s a world of uncontrollables. A farmer can’t control the weather, he can’t control his seed costs, he can’t control his fuel costs and he can’t control his sell price either. Over here in postmaster land, we can’t control the services we are allowed to sell or the price we can sell at or the margin on the services we do sell.

No retailer in his right mind would come up with the 2.8p (and eight seconds that equates to if you want to recover minimum wage) for selling a second-class stamp. However, the farmer can manage the manageable and so can you. The farmer can irrigate his farm and he can take his own position on fertilizers and pesticides. You can be proactive on social media, you can be accurate with your mails, you can suggest mails products that deliver best value to the customer whilst giving you a better return. Manage the Manageable, it’s how you maximise your chance in life.

Sometimes, however, the unmanageables are really big. If there was one thing you could say that Nick Read and Kevin Hollinrake agreed on at the NSFP Annual Conference it was that a Strategic Review is coming down the tracks. A Strategic Review is management speak for a cull. Not enough income, not enough margin and too many post offices to share it amongst was the softly worded messaging.

There’s an election coming up but how likely is it that the outcome of that will avoid some post offices being Strategically Reviewed out of existence?  Putting it another way, how many does it take for there to be a material difference in the amount of money available for distribution to the survivors? Is it 10%, 20%, 30% or even more? Postmaster renumeration is so low we know the business model on which Post Office Ltd (PO) relies is the critical importance of the retail model co-existing alongside the post office. How galling is it that Government put no monetary value on the social value we bring to our communities? Even if you do have a fantastically busy post office, measured on its own it simply doesn’t pay enough to cover a living wage for two full-time staff, associated overheads and that dirty word “profit”.

Back to the cull…

Let’s start by having a look at post office numbers shall we. There are 11,684 post offices, this number coming from the handily released and snappily titled “Post office numbers” that was published by the House of Commons Library in the last week of March 2024 and is up on last year’s report when there were 11,635 post offices. We all know that there have been 11,500 post offices for donkey’s yonks, so this latest reaffirmation of the number looks like good news but before we get too excited let’s take a slightly deeper look and see how well this supposition holds up.

Firstly, the report tells us that the picture across the country is not an even one. The East of England has seen a 5.6% increase in post office numbers over the last 10 years whilst Scotland has lost 6.7% of its post offices. Just dealing with last year, Scotland lost 18 post offices, Wales lost 15 and the South West lost 16, while London and the South East gained 53.

Just to keep throwing numbers at you for a moment. There are 3,308 Mains, 4,218 Locals and 1,885 Traditional branches totalling 9,411 postmaster branches plus 1,924 outreach services, 117 Crown offices and, wait for it … 232 of the new Drop & Collect branches.

Cutting to the chase the summary is that 230 handheld scanners have been added to the network whilst nearly 200 real post offices have closed. An educated guess from the data would suggest most of the closures would appear to be rural and the addition of 23 Outreach services would support this thinking.

Let’s go back to the question of the Strategic Review. If there was a 10% cut in the total network that would be 1,168 branches, but it seems highly unlikely the cuts would come from Crown, Drop & Collect or even from Outreach if the Government don’t relax the access criteria and therefore, to lose this number from postmaster branches, would actually require a 12.5% cut in post office numbers.

What would it mean for the surviving 87.5% if they did make this cut? The answer is unfortunately close to nothing as it makes no difference to your financial feeling of well-being because my guess is that the smallest branches may only actually account for as little as 2 or 3% of the money PO pay out to postmasters. This leads to the awful thought that they might need to cut as much as 30% before any sums of any significance are realised.

Hang on, though, a pound is a pound wherever it comes from so not enough income can also translate into too much cost. How many staff do PO themselves need? Their latest accounts say the answer is 3,486 at a cost of £175m. That’s an average cost of £50,200 each per annum. Why is HQ in central London rather than Coventry or some other city where costs would be lower?

At the Horizon Inquiry, Alisdair Cameron, former Interim CEO and Post Office CFO, said in his edifying and open testimony something along the lines that PO only exist to provide support to the network of post offices. That can’t be completely true as PO are busy developing their on-line direct to customer presence but, none-the-less, £175M is a pretty big “Support Cost”.  

My belief is that the Government thinking on post offices is completely wrong. The withdrawn services prove it and our social value to the millions of non-digital people living in our country isn’t valued. Government talk about it, but words cost nothing and it isn’t valued in the pounds and pence we need. 

It seems blindingly obvious to me that if most of the services that have been taken away were restored, giving customers the option to use us, then more income for PO would flow over our counters. Add the income that would come from mandating utilities to give customers the option of making payments in our branches yet more would come our way.

At the NFSP Conference, the guest speaker, Darren Burns, from The Timpson Group, talked about their approach to management which included a refusal to accept anyone who might build an “ego-empire” which sat alongside the need for continual review to make sure they weren’t getting fat. 

He said this management had a name and it was the “Cut the ‘crap’ Committee”. I wonder if there’s a place for one of these in any other organisation we can think of.

Tim Allen

Kington Main

June 2024

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