‘We’ll open 2,000 new post offices’
Reforming boss aims for £100m profit – after decades in red
PAULA Vennells, the no-nonsense boss of the Post Office, refuses to be cowed by the threat of strikes and promises the centuries old British institution is set to report its first profit in decades. Gone are the premium bonds, paper tax discs and people queuing out of the door to pick up their pension. Just like the drop-off in letterwriting, the decline of the Post Office seemed a foregone conclusion in digitally-driven times. Only last month, union members staged another walkout in protest at further job cuts.
Yet the boss attempting to transform this cornerstone of the community has a message for the doubters: there will be no sounding the last post on my watch.
Rather than closures, Vennells has openings in mind. She can see room for an extra 2,000 post offices over time, some of them on wheels to serve remote communities.
In fact, the growth of her 11,600strong network might hasten shutterings of a different kind. When a ‘universal access’ deal is struck early next year, the Post Office will take on more basic banking services on behalf of the high street lenders who are eager to scale back on costly branches themselves. It is one of the reasons that Vennells believes she can report a first profit in almost two decades for the 371-year-old institution in 2018.
‘My ambition now is to create a business that generates a profit of £50 million to £100 million on an annual basis,’ she says, mild-mannered with a hint of steel.
Vennells spent her career on the high street, working at Lunn Poly, Argos and Costa. At the Post Office, in clambering back from a £200million loss at its nadir, Vennells tells a tale of entrepreneurship on either side of the counter: the sub-postmaster with three franchised outlets who has installed a cafe to boost takings; the young mum who sells face creams on eBay and uses her post office to dispatch orders and manage her money.
It all adds up to the Post Office’s £9.3 billion ‘social value’ to the nation, if you believe the findings of a recent Government-commissioned report. ‘I think the Government was quite startled with the figure,’ she adds. ‘I wasn’t.’
Such upbeat talk is unlikely to appease union bosses. Thousands of workers have been out on strike twice this autumn, with the threat of more to come. The Communication Workers Union and Unite are angry at the transfer of some of the directly-run Crown post offices to WHSmith stores, as well as 600 redundancies at the firm’s cash-handling operation. Closure of its final salary pension scheme rubbed further salt in the wounds.
‘They have a right to strike and I completely respect that but actually they have made no difference to the business at all. Some 99 per cent of branches remained open,’ she says.
The squeeze continues. Vennells suspects more of the near-300 remaining directly run post offices will transfer to concessions within the stores of partners such as McColls, Spar and the Co-op. ‘There isn’t an ambition to have none, the ambition is to get them as efficient as we can.’
The end is in sight for a transformation programme that has poured £2billion of taxpayer cash into an estate that was spiralling downwards. Some 7,000 post offices will have been modernised by next March, with extended opening hours at evenings and weekends.
However, the estate has shrunk from 18,000 post offices in 2000. Many long-serving self-employed sub-postmasters decided not to make the switch that urged them to expand their retail offering and accept what many regarded as inferior commission payments. Is this a case of front-door commercialisation – or the back-door privatisation that her critics claim? ‘I would say it is business as usual for the last 20 years,’ says Vennells, as she thinks about what next.
Negotiations have begun with the Government over an extension to the subsidy that has dropped from £210 million a year to £80 million but runs out in 2018. Not so long ago, the view was that the Post Office would need financial support forever, especially to support the 3,000 community post offices that don’t make money.
Now Vennells believes ‘the business itself may well be able to sustain them without further subsidy’.
It depends how much money her shareholder wants to invest. She is angling for extra cash to launch new digital services, but, like Theresa May and Brexit, ‘I am not going to give a running commentary’ of how those conversations with the Department for Business, Energy and Industrial Strategy are going. Compared to last year’s £24million loss, making more than £50million by 2021 ‘needs to be on a sustainable basis, it is not a one-off target. The whole point is this is a business that is really important right across the UK. I’m not generating a profit for Post Office Limited, it is actually to keep this value that is created in communities going.’
Post-related income is just over a third of the business these days. In 2012, when the Post Office was separated from the soon-to-be-privatised Royal Mail, a long-term commercial deal was struck. Counter staff handle everything from special delivery parcels to home shopping returns and sacks of office mail that get dropped off for collection.
The growth opportunity is in financial services – even after National Savings and Investments withdrew premium bonds from sale in-store last year. The Post Office sells travel money and mortgages and showed how serious it was about the industry by buying out the Bank of Ireland from their insurance joint venture. It also sells home and broadband packages.
Vennells wants to spend on its website, call centres and kiosks, installing screens that connect customers to remote financial advisers. ‘The footfall is there [17million cus- tomers a week] but what you can’t do is sell some financial services face-to-face in corner shops.’
The chain already performs a frontline role for the banks, offering basic account management for 95 per cent of current accounts. Banking bosses grumble that a framework deal to do more would have been in place months ago if only Vennells wasn’t driving such a hard bargain.
‘Actually the sticking point is not particularly around the financials although we have negotiated hard on that,’ she says. ‘What is more complicated is trying to standardise the service across the banks.’ At the point which that is agreed, a mass closure programme for the banks ‘would be for them to think about’, not her.
Vennells, 57, will have spent a decade at the Post Office next year, having taken the top job in 2012, but insists she is far from done. Today she is on duty in her other role, as a part-time Church of England curate, preaching near her home in Bedfordshire. She insists there is no conflict between her faith and leading a huge increase in weekend opening hours even though some of her flock might believe in keeping Sunday special.
‘Most of my parishioners think it is a great thing that they can use a post office on a Sunday – after they have been to church.’
Government was quite startled with our £9.3 billion ‘social value’ figure. I wasn’t
My parishioners think it’s great they can go to a post office on a Sunday ...after church