Lordship Lane Post Office Closure

[James Barber]

The Post Office is a still owned by the government.

The decisions about whether to keep the Crown Post Office open or replaced with a downgraded version on Lordship Lane is a Labour Government decision. 

[Insuflo]

I am not disputing that the Post Office remains publicly owned. But the Lib Dems’ decision to separate and privatise Royal Mail has fatally undermined the PO. 
It is within the power of the Labour government to save what is left of the PO and the service it provides to the community, if they care enough; I suspect they do not. 
However, the appalling postal service is a constant reminder of the Lib Dems’ duplicity on this matter. It is actions taken under the Lib Dem / Conservative coalition that have brought us to this point.

[first mate]

But didn't that separation begin with New Labour and Peter Mandelson?

[Penguin68]

If you want to look for blame, look at McKinsey's. It was their model of separating cost and profit centres which started the restructuring of the Post Office - once BT was fully separated off - into Lines of Business - Parcels; Mail Delivery and Retail outlets (set aside the whole Giro Bank nonsense). Once you separate out these lines of business and make them 'stand-alone' you immediately make them vulnerable to sell off and additionally, by separating the 'businesses' make each stand or fall on their own, without cross subsidy. The Post Office took on banking and some government outsourced activity - selling licences and passports etc. as  additional revenue streams to cross subsidize the postal services, and to offer an incentive to outsourced sub post offices. As a single 'comms' delivery business the Post Office (which included the telcom business) made financial sense. Start separating elements off and it doesn't. Getting rid of 'non profitable' activity makes sense in a purely commercial environment, but not in one which is also about overall national benefit - where having an affordable and effective communications (in its largest sense) business is to the national benefit.

Of course, the fact the the Government treated the highly profitable telecoms business as a cash cow (BT had a negative PSBR - public sector borrowing requirement - which meant far from the public purse funding investment in infrastructure BT had to lend the government money every year from it's operating surplus) meant that services were terrible and the improvement following privatisation was simply the effect of BT now being able to invest in infrastructure - which is why (partly) its service quality soared in the years following privatisation.

I was working for BT through this period and saw what was happening there.

[Cyclemonkey]

The main problem Post Offices have, IMO, is they are generally a sub optimal experience and don't really deliver services in the way people  want or need these days.

I always dread having to use one as you know it will be time consuming and annoying. 

[Insuflo]

Penguin, I broadly agree, except that the Girobank was a genuinely innovative and successful operation. It’s rather ironic that after all these years we are now back to banking at the Post Office due to all the bank branch closures. 
I agree that the roots of the problem go back further than 2012 (?), when the PO and RM were separated so RM could be sold. I’m willing to blame Peter Mandelson, Margaret Thatcher or even Keith Joseph. But none of them will be standing for the local council, hoping to make capital out of the possible closure of Lordship Lane PO, as if they are in no way responsible. The Lib Dems can’t be let off the hook that easily.

[Penguin68]

Girobank was genuinely innovative, regarding the addressed customer base (significantly the previously unbanked) - but this would have been an ideally outsourced operation to an existing bank which already had the operational systems (and the regulatory experts) to manage a bank for someone else at marginal cost. The Post Office - when you consider the issues over the Horizon software - never originally designed by ICL/ Fujitsu for the application it ran - is a very good reason why the Post Office being involved in banking was long-term a bad idea. 

To get back to the topic of this thread, the Horizon debacle is still not over (the software system is still in place) - most of the wrongly penalised sub-postmasters are still out of pocket - I'm not sure I would be leaping to take on the franchise being offered in Lordship Lane.

Edited Saturday at 10:02 by Penguin68

[Sue]

18 hours ago, James Barber said:

A franchise Post Office is in fact a sub Post Office. It isn't able to provide the same services as the current Crown Post Office on Lordship Lane. Things like Road Tax, Passports, etc are not allowed via sub Post Offices.

Likely the staff wont be transferred across as their hourly rate would decrease. It may be the hours of operating will increase. Crown Post Office staff are often unionised, sub Post Office staff are not usually unionised. Franchise sub Post Office commission for completing the various services is lower than for Crown Post Offices.

Thank you for clarifying, James.

So why would anybody want to take this on as a franchise if it is staying in this building?

If it is now to be a sub office, does that mean that much of  the space could be used as a different kind of business altogether, with just part of it being used as a sub Post Office?

Because if it is all to remain solely for Post Office business, (albeit as a sub Post Office it won't be providing all the services which it currently does) I can't see who would want to take it over?

If it isn't profitable as a Crown office, how could it be  profitable running just as a sub office, even if staff are being paid less and it's opening for longer hours?

Because presumably all the other overheads such as rent will remain the same?

[ianr]

21 hours ago, James Barber said:

A franchise Post Office is in fact a sub Post Office. It isn't able to provide the same services as the current Crown Post Office on Lordship Lane. Things like Road Tax, Passports, etc are not allowed via sub Post Offices.

I can't find any evidence that the Norwood Road, Herne Hill PO is a Crown office, even in an FOIA reply of 2014 listing them all then: https://www.whatdotheyknow.com/request/lists_of_crown_owned_and_franchi/response/505799/attach/6/Post Office Crown Branches List.pdf; but it does seem to offer some road tax and passport service: https://www.postoffice.co.uk/branch-finder/1330071/herne-hill.  So may there be some degrees of freedom?

[James Barber]

21 hours ago, Sue said:

Thank you for clarifying, James.

So why would anybody want to take this on as a franchise if it is staying in this building?

If it is now to be a sub office, does that mean that much of  the space could be used as a different kind of business altogether, with just part of it being used as a sub Post Office?

Because if it is all to remain solely for Post Office business, (albeit as a sub Post Office it won't be providing all the services which it currently does) I can't see who would want to take it over?

If it isn't profitable as a Crown office, how could it be  profitable running just as a sub office, even if staff are being paid less and it's opening for longer hours?

Because presumably all the other overheads such as rent will remain the same?

Very good point Sue. If a replacement franchise is successfully let then it would throw into question whether the Crown Post Office was unprofitable. The only obvious differential would be levels of pay for the staff and level od service for customers and any up tick in usage. 

[CPR Dave]

Presumably a sub-post office could choose to use the shop space to replace unprofitable services with other commercial activities that a crown post office can't (like having an off licence business instead of taking back everyone's over-ordered clothes that don't fit etc)?

[Sue]

24 minutes ago, CPR Dave said:

Presumably a sub-post office could choose to use the shop space to replace unprofitable services with other commercial activities that a crown post office can't (like having an off licence business instead of taking back everyone's over-ordered clothes that don't fit etc)?

Yes, presumably, in terms of using some of the space for non Post Office things, as other sub post offices do.

But as a sub office I doubt that they will be able to cherry pick what Post Office services they offer.

My understanding is that there are only a few things which Crown offices presently do but sub offices don't (like passports).

Edited 11 hours ago by Sue

[Burbage]

2 hours ago, Sue said:

Yes, presumably, in terms of using some of the space for non Post Office things, as other sub post offices do.

But as a sub office I doubt that they will be able to cherry pick what Post Office services they offer.

My understanding is that there are only a few things which Crown offices presently do but sub offices don't (like passports).

I think there's a fair number of "participating" sub offices that do passports or, at least, play the "check and send" game (£16 for glancing at your form), so some degree of cherry-picking seems to be permitted. Though it does look as if Post Offices "Indentity Services" are where it things the future lies, and "Right to Rent" (though it's more an eligibility check) looks a bit of an earner, along with DBS checks and the Age Verification services that, if the government gets its way, we'll all need to subscribe to before we're allowed on mumsnet.

Those services, incidentally, seem mostly outsourced to an outfit called "Yoti", a privately-owned, loss-making "identity platform" with debts of £150m, a tardy approach to filings, and a finger in a bunch of questionable pies ("Passive Facial Liveness Recognition" sounds gloriously sinister) so what the Post Office gets out of the arrangement isn't clear, but I'm sure they think it worthwhile. That said, they once thought the same of funeral plans which, for some peculiar reason, failed to set fire to the shuffling queues, even metaphorically.

For most, it seems, Post Office work is mostly a dead loss, and even the parcel-juggling is more nuisance than blessing. As a nonchalant retailer of other people's services the organisation can only survive now on the back of subsidies, and we're not even sure what they are. The taxpayer-funded subsidies from government (a £136m hand-out to keep Horizon going, £1bn for its compensation scheme, around £50m for the network, and perhaps a loan or two) are clearish, but the cross-subsidies provided by other retail activities in branches are murkier. As are the "phantom shortfalls" created by the Horizon system, which secretly lined Post Office's coffers as postmasters balanced the books with contributions from their own pockets. Those never showed up in the accounts though - because Horizon *was* the accounting system - so we can't tell how much of a subsidy that was. We might get an idea of the scale, however, from Post Office's belated Horizon Shortfall Scheme, which is handing £75k to every branch that's complained, though it's anyone's guess if that's fair or not.

Still, that's all supposed to be behind us now, and Post Office's CEO-of-the-week recently promised an "extra" £250m a year for the branches (roughly enough to cover a minimum wage worker in each), which might make it worth the candle for some. Though he didn't expect that would happen before 2030 (we can only wonder when his pension will mature) and then it'd be "subject to government funding", so it might have to be a very short candle as it doesn't look like a promise that he can make.

Still, I wouldn't want to discourage anyone from applying for a franchise, and it's possible that, this time, Post Office will be telling the truth. And, you never know, we might all be back in the Post Office soon, and eagerly buying stamps, if only for existence permits, rather than for our letters.