Where the NFSP went wrong with NT

Where the NFSP went wrong with NT.

I am biting my facetious lip here, so let me just write about the choice the NFSP made to support Network Transformation and I will try not to mention George Thomson.

The NFSP would of course have known about the introduction of NT long before news of it was made public to the rest of the network, but there was an element of a rush job shortly after the General Election in 2010 and the Government surprisingly made the funds available – all £1.34 Billion of it – very quickly.

I am in a relatively good position to write about how the NFSP got it wrong because I was an active dissident as news of this fiasco broke and hindsight has proven me to be correct.   Now I am sure that will be seen by many as a controversial statement so let me just provide my evidence to support it straight away.

  • The £1.34B has now spiralled up to £2b with more to come.
  • As was pointed out by all the objectors at the launch of NT there remain a substantial number of SPMRs who fell into the Stay As You Are bracket that now are faced with ruin.
  • The objectors raised concerns from the outset, in some detail I might add, that the prospect of new Government work to support the network was unlikely and this has proved to be correct
  • But most significantly for the Government, financial targets have not been met and POL are now in meltdown trying to make good their promises.
  • And of course as it was pointed out to NFSP leadership in 2010 the result of this doomed project was always going to lead to the financial ruin of the NFSP – now sustained only by dubious payments from POL.

Just look at the figures:

From 2012 to 2015 SPMR fees have dropped by just £48m despite the promise that NT would cut these costs substantially.  Forget interest rates which would make the calculation even more alarming, it would take 40 years to claw back the investment the Government has made in the network at this rate.

SPMRs/Operators under the local model are now paid peanuts so there is no more savings to be made there.   The enterprising individuals who switched to Mains are now, by and large, doing rather well and in probably over 50% of these establishments actually making more money now than they were under the old TRPs.  Plenty of scope there then to reduce Operator costs!

In 2010 we made these points and more but were overruled.  The NFSP leadership replied to our concerns with their insistence that this was the last chance saloon for the network and that there was no plan B.

Only now do they seem to realise that there was in fact a plan B and they are adopting it with regard to highlighting the massive overhead costs of the POL Head Office operation.   POL have become expendable in my view.  There are countless examples out there of how enterprising former SPMRs have established competing outlets to Post Offices, offering similar services for more reward.   The idea that RMG could introduce a direct franchise is now on the table with senior observers, bypassing POL completely.   RMG after all no longer report to the Government they report to their shareholders who want to maximise profit, not subsidise a failing organisation like POL.

For my part, I produced in some detail a Plan B for the Scottish Government, should the unlikely have happened and we gained Independence.   There was no subsidy required and profits would have been reinvested in to the network.   That Plan B was all about stripping out the POL infrastructure and putting SPMRs in control of their own destiny.   (Whatever happened to Mutualisation?)  That was 4 years ago.  Why has it taken the NFSP so long to realise what the real problem is?

Thomson and his team have led all remaining SPMRs and Operators down a steady path to oblivion.   As you assemble for your conference, perhaps NFSP members will now realise this and fight back.  Only through a change of leadership will your network survive.

The Future of Post Office Ltd

The Future of Post Office Ltd

In my opinion there is no escaping the fact that the institution known as Post Office Ltd(POL) and owned 100% by the Government is doomed.   Perhaps not through the slow process of financial decline but rather through the very sharp shock about to be delivered to it by the group known as Justice for Subpostmasters Alliance (JFSA)

I am sure that anybody reading this is aware of what is going on and that JFSA have launched a legal claim against POL with regard to losses incurred by Subpostmasters (SPMRs) whilst using the Horizon Computer System.

Over the years POL have dug a large hole for themselves in the hope that the JFSA claims would just disappear.   In doing so they have repeatedly chosen to defend the Horizon Computer System rather than address the issues raised by JFSA and that has led to allegations – no – clear evidence of a management led cover up.

POL can no longer backtrack.  There is nowhere to hide.  Victory for JFSA is pretty much assured and the claims arising, in financial terms, will be in the many hundreds of millions of pounds.   In criminal terms there is every reason to believe that the Serious Fraud Office will become involved and, in my opinion, jail terms are likely for senior POL management past and present.

So what does the future hold for POL and the network of SPMRs it supports?

Of course a key player in all of this is the Government.  Heads will of course roll – even Cameron is at risk given a well timed PMQ he was forced to respond to – but that will not be enough.   The British Public will demand a Post Office network and a solution will have to be found.

The Government assigns day to day responsibility for POL to the Department for Business, Innovation and Skills (BIS).   The individuals in that department are implicitly involved in the failings of POL and they will have to go.   So who will take over?   Another Civil Servant of course whose remit will be to come up with an answer to this significant problem.

Royal Mail Group is now a private company and also of course POL’s biggest supplier.   They are however not blameless either.   The CEO Moya Greene was in charge of POL when RMG was still a Government entity.  She was well aware of the problems surrounding Horizon and will not escape investigation into her role at that time.   She will find it hard to stay in her position.

Bank of Ireland is also a key supplier of financial products through the Post Office Network.  Would they wish to become embroiled in such a fiasco?   They have a significant financial incentive to do so but they would be putting their reputation on the line.

While POL Management will take the brunt of the blame for this sorry state of affairs and very few will remain after a clear out, the fact is that they have, over the years, ensured that the POL workforce has imbibed their insistence that Horizon is a reliable system.  Not only that but the attitude of POL towards SPMRs and vice versa to be fair has been one of ‘Them’ and ‘Us’ and POL have always been seen by the SPMR community to adopt an aggressive, arrogant and threatening stance in their relationship with individual SPMRs.

I just cannot see a situation where a new management team will be able to sort out all these institutionalised problems.   If that is the case then what chance does the Government/BIS have in reviving the fortunes of the Post Office Network?   I don’t think they have any.

That would leave the group that remains, who depend on the network for a significant part of their business, to sort things out;   RMG, BOI and Subpostmasters.   I hasten to add that heaven forbid the NFSP are involved as they too are very much implicated in the Horizon Scandal.

I can see the possibility of RMG and BOI realising at last that they never needed POL in the first place and they could work directly with existing SPMRs in providing a suitable solution.

We’ll see.  The only missing piece now is the timeframe.  It could be months if the Government step in quickly or years if the process is to be played out in the courts.  What is certain is that all will be revealed one way or another.

For the Avoidance of Doubt – and Taxes

For the Avoidance Of Doubt – and Taxes

With all the furore going on with the recent revelations about offshore Tax Avoidance schemes, I think it is of interest to highlight how Post Office Ltd (POL) are involved in something similar and I can’t quite get my head around it.   After all Post Office Ltd is owned 100% by the Government and the Government already subsidises POL to the tune of Billions of pounds of Taxpayers money.    Why would the Government condone such an action and has it all been approved by HMRC?  I have the answer to that one and I’ll come back to it later.

Subpostmasters (SPMRs) work for POL under the terms of an ancient contract that is so out of date it makes no reference to the error ridden computer system known as Horizon that has caused many SPMRs huge personal losses.   That contract was originally worded very deliberately to ensure that SPMRs were not treated as Employees or Workers, yet still remained liable for Class I National Insurance contributions by virtue of a specific decision by HMRC to treat them as Office Holders.   So SPMRs pay NICs and as a result POL are liable for Employer NICs, yet POL are not liable (allegedly) for such things as Sickness, Maternity and Holiday leave or more recently Workplace Pensions.    The employment status of SPMRs is a messy business and has been, and will be in the future, tested in court with different results.

I have in my possession a letter from POL suggesting that I should change my contract with them.  Just the words really, nothing else changes except that now instead of having a one to one relationship with POL I can change to dealing with them as a Ltd Company or a Partnership.   Under a heading – Illustration and explanation of how potential benefit can be obtained – the letter shows how a SPMR currently earning £40,000 per annum and paying approximately £4,000 in NICs could save themselves £3,300 in NICs merely by changing their contract.   It even goes on to tell me how to save extra on VAT payments!

Just to put my mind at rest, the letter explains that there would be little change to the terms and conditions of the replacement contract and any changes that there are would be “mainly because of the change to the type of legal entity entering into the contract”.

Now here is the bit that really sticks in my ‘craw’ – a £250 Payment!  POL will make a £250 payment to me if I change my contract with them by a certain date.   What they think this payment is for and what I think this payment is for may well be two completely different things but I see it as nothing less than a bribe for me to accept this proposal from POL to help them avoid paying taxes.

You see it’s not just the SPMR who is gaining from this, it is POL.    They will no longer be liable for employer NICs which of course are payable to the Government.  I have no idea of how much this saving could amount to now but consider that prior to Network Transformation all SPMRs were on this old contract and all were paying NICs so say 10,000 SPMRs on an average of £20k Pa would equate to £17m in Employer NICs.

But here is the rub.   POL are owned 100% by the Government.  Whatever NICs they pay the Government from their own account makes no actual difference on the face of it because POL are and always will be dependent on a Subsidy from the Government.  So why are POL doing this?

It is, and can only be, down to the problem they have with the Network Transformation program which the Government has spent £2b on over the last 5 years.  This was meant to result in a huge reduction in the annual subsidy payment but it has failed completely to achieve this.   Now they are scratching for all the savings they can muster in areas unconnected with Network Transformation and to hell with their masters – they want to show them results not the fact that they are avoiding previously payable tax by a change of wording in a contract.

To sum up – a Government Organisation is offering employees, £250 to change their contracts so that they avoid paying taxes to the Government that has provided the Government Organisation with a massive subsidy.

Once again with POL, you just cannot make it up.  They are totally unaccountable and completely incompetent.

My question is does Mr Javid know?  After all he is the man in charge of the Government Department who has sanctioned this.    Oh dear!  The poor man doesn’t need this right now.