Official Report: Minutes of Evidence

The Deputy Chairperson (Ms Forsythe): I welcome to the meeting Jim McCafferty, non-executive director for Northern Ireland of the National Federation of SubPostmasters. We are delighted to have you here as part of our inquiry. I hand over to you to make some opening remarks.

Mr Jim McCafferty (National Federation of SubPostmasters): Thank you very much. I am first and foremost a sub-postmaster. I am postmaster in the Kennedy Centre in Belfast. I represent Northern Ireland sub-postmasters on the national board of the federation.

As I said in the submission, our role is to support, guide and assist every sub-postmaster we can with contractual and process issues and training. Basically, whatever support they need, we are there for them. I am just back from a board meeting. Part of that board meeting is with the Post Office and includes senior people such as the chief executive and chair and so on of the Post Office board. We challenge them on just about every level to make sure that they do things right on behalf of the sub-postmasters and the whole network. My specific role is to keep the postmasters of Northern Ireland in full view, because there are a lot of services that they have in GB that we do not have in post offices in Northern Ireland. We have to keep bringing that up.

That is my introduction. I will leave it at that and you can take it from here, if that is OK.

The Deputy Chairperson (Ms Forsythe): Thank you very much. Will you give us your assessment of the current status of the post office network in Northern Ireland?

Mr McCafferty: Yes. In a previous submission, the figure of 441 was mentioned. That was a figure that we gave to someone from Retail NI, and it is fluid because some outreach post offices were left out of it. Also there is a new thing coming in called "Drop and Collect", which I will explain more about in a moment. The figure is closer to 480 if you class outreach post offices as fully fledged post offices. In case you are not sure what outreach post offices are, they work for four to six hours in a given week in various rural communities. A host store manages them: they are not fully fledged post offices, but they provide a service for the rural communities in Northern Ireland, hence the name "outreach". The figure is about — it is fluid — 480 in Northern Ireland.

There are only a few directly managed post offices in Northern Ireland. A figure of 111 was mentioned in the press a while back. The Post Office will tell you that it hopes to transition those rather than close them down. It will not be able to transition every one of them, but that is what it plans to do for the likes of the ones in Belfast. They are a costly exercise and always have been. As part of the Post Office's central cost reduction, it is trying to transition those; in other words, offload them to another operator, be that what is called a "strategic partner" or an individual, whoever is willing to take it.

The post offices of Northern Ireland, like those in the whole network, are under a lot of pressure to survive. In real terms, in the past decade, income has fallen. In 2015, around £574 million was paid as income to sub-postmasters throughout the network. By 2023 and going into 2024, that was down to something like £326 million. That fall in real or actual terms, whatever you want to call it, was primarily because government services were removed from post offices. Post Office card accounts were closed, and National Savings and Investments services and the ability to pay bills to the likes of HMRC were taken away.

Ten years ago, the Post Office promised that it would increase government services, not reduce them. That is, potentially, another scandal, and it is being looked at by Howe & Co, which worked on the Horizon scandal and the public inquiry into it. That firm is gathering hundreds of applicants as we speak. The Post Office is guilty of a lot of things, but the government services were removed by government, which is why post offices are in a state. For a number of reasons, income has increased in the past year or so — it was £407 million, I think, in the most recent accounts — but it is still a far cry from what it was 10 years ago.

You are probably aware of the new chair of the Post Office, Nigel Railton. He has pledged £250 million for the network by 2030, of which £120 million will be in this financial year. The Post Office had already paid £20 million of that by Christmas, but it is struggling to get the rest of it underwritten by government, because the spending review has not approved it yet. The Post Office is optimistic that the residual £100 million will be paid from April to the end of March next year, but it has guaranteed only £17 million for April and May of this year. That is the only guarantee at the minute.

I will speak anecdotally for a second. As a non-executive director, I am contacted by sub-postmasters in Northern Ireland. If they have a problem, it rests with me. The cases that I am talking about relate to selling your post office. In the past two weeks, four sub-postmasters have contacted me, which is a wee bit unusual, and said that they are looking to sell their post office. It is difficult to do that: a post office is not a saleable asset at the minute. We hope that, by 2030, if people can hang on for that length of time or even for the next few years, a post office will be a valuable asset again, because extra money is being pumped in. However, a post office is not a saleable asset at the minute. If anything, postpeople are throwing their keys up in the air and walking away: they are getting no return for their investment. That is the same across the network; it is not exclusive to Northern Ireland.

Post offices play a major role in banking cash services. As I mentioned, there are 480 post offices. It is a sizeable network in comparison with the other players, such as the banks, credit unions and, for that matter, ATMs. We are still number one for dealing with cash services. I put a figure in the submission — I will get the exact figure for you — from January, which is the last figure that the Post Office has supplied to us. It was around £3·7 billion, I think. That figure has grown by 10% year-on-year. It could be more than 10%, because Northern Ireland has heavy cash usage compared with the rest of the UK, as you know. It is probably more than 10%, year-on-year, for our region.

The Post Office plays the number-one role in the provision of cash services. With there being 80 credit unions and approximately 100 bank branches, with more scheduled to close this year, that role will get bigger, so we need to make sure that post offices are protected and supported, not just by government but by local government, meaning the Assembly. We are asking primarily for new services. We are asking for rates to be looked at. As you are probably aware, there is a rates concession on properties with £9,000, £12,000 and £15,000 net annual value (NAV), which affects only the smaller offices. We do not know which way that will go in the next financial year and whether it will continue. We would like to see its expansion rather than its reduction or elimination.

We ask, as we have already petitioned Land and Property Services (LPS), for the post office network to be looked at as a whole to see the social value and the inclusion value of its cash services, because we deal with the whole community, including the vulnerable and the aged. It is a valuable asset. Without support, whether that is by way of the local government services or concessions such as rate concessions, post offices will close. The planning and spending review here is more or less finished, but what you will do specifically with post offices is not clear, so we are still shouting about that. We have had meetings with Andrew McAvoy from LPS. At the banking round table, I mentioned to Caoimhe Archibald, before she moved on to the Department for the Economy, that we would need further support, and she was keen at that time. We did not know that she was going, however, so we will follow that up with Mr O'Dowd and try to keep the pressure on. There is good reason for extending the rates concession, percentage-wise on a sliding scale, for the network in Northern Ireland.

The Deputy Chairperson (Ms Forsythe): Thank you. You mentioned that a number of people had been in touch who were thinking about walking away from their post offices. You say that a post office is not a saleable asset, but do the people who have contacted you own their post office?

Mr McCafferty: They are postmasters, yes.

The Deputy Chairperson (Ms Forsythe): OK.

Mr McCafferty: Someone from the Coleraine direction who contacted me recently said that they had agreed to sell their post office — not for a huge amount, but it was being sold — along with their café, which was part of the going concern. However, after the prospective buyers looked at the figures and considered the post office — they said that they had looked in more detail at the scandal — they decided to take the café and not the post office. That is replicated here and in GB. I get calls asking about the value of a post office. If the remuneration that it generates is going down, you begin to wonder. The mooted £250 million has not been guaranteed by any stretch, so that is still a worry. Only £17 million has been guaranteed from 1 April this year to the end of March next year.

The Deputy Chairperson (Ms Forsythe): I was going to ask you about the proposals under the new chair. The expectation is that there will be a published Green Paper in response to his proposals in June 2025. Do you expect clarity then on how much money will come your way?

Mr McCafferty: Yes, exactly. We have had meetings and made initial submissions to government on the Green Paper, because they have not given any commitment. The Post Office submitted a five-year plan and the Government and the Department for Business and Trade (DBT) have reduced that to a one-year-at-a-time plan, with a view for five years. That has been diluted already, which is a worry. They would not accept a five-year plan, not even from the Post Office. That is something that we will talk about in our submission on the Green Paper.

There is also the question around the future of the Post Office. There is a lot of discussion around mutualisation, but there is no clear view on that at the minute, because how will it be funded? It is not a network that runs with any kind of profitability. The Post Office is in something like £800 million in debt. If they were to introduce a mutual tomorrow, it would collapse the next day. It just would not work, so it has to get to a stage at which it is profitable. How will it do that?

The Government's Digital First strategy has been damaging. Every Department has been cut back and wants to go digital. They have withdrawn all those services from post offices because it is cheaper for them for customers to go online and so on. That means that we are not getting that business. On that point, GB has a driving licence application service: we do not have that here. We can give a form out, and that is pretty much it. We do not help the customer complete it, we do not submit it and we do not deal with the application, as they do in England, Scotland and Wales. Why is that? Why is the Driver and Vehicle Agency (DVA) different from the Driver and Vehicle Licensing Agency (DVLA)? That has been mentioned time and time again. MPs have written to DVA and been given short shrift and told, "No, we are not dealing with it. You can forget about it". There was no explanation other than, "That is what we are doing". Having said that, they want to go digital across the country, which does not bode well for government services being offered in post offices. Driving licence applications is one of the main government services provided in post offices in GB.

The Deputy Chairperson (Ms Forsythe): Thank you. We see the move to digitisation in areas across the board, and it definitely creates a hierarchy of access. A lot of the time, that means that the more vulnerable in society are not able to access services.

Mr McCafferty: Correct.

The Deputy Chairperson (Ms Forsythe): Our inquiry is looking specifically at access to banking for those whose business and money is in Northern Ireland. Is there anything specific to Northern Ireland?

Mr McCafferty: We have asked for banking services in post offices to be expanded. We get people coming in who want more from their banking, not just cash withdrawals and deposits. What about mini-statements, for example, and the ability to submit applications for current accounts and saving accounts through the post office? Those are all things that have been mentioned time and time again but have not happened. They may happen with the Green Paper because the Government can give directives, as they do with the Financial Conduct Authority (FCA) and everything else. There is scope there to do something. Whether they have the will to do it is another matter, of course. Digital ID services is a big thing that has not yet been extended properly throughout the network. That is quite a thing in certain areas of GB but not so much here. There are not too many post offices here that would call that a big thing. That could be expanded for other applications and for benefits and that sort of thing.

There is so much more that could be done through government. Most of the money could come from there, as well as from big businesses.

The Deputy Chairperson (Ms Forsythe): Thank you. I will bring in members.

Mr Carroll: Thanks, Jim. Jim is based in my constituency, so thank you for your work there, too, Jim.

Mr McCafferty: Thanks, Gerry.

Mr Carroll: We have had a bit of back and forth in the Committee about Fujitsu. Some members think that we should not question the awarding of government contracts, but there are big questions on that, given the Horizon scandal. Do you and your organisation have confidence in Fujitsu's ability to carry out government contracts?

Mr McCafferty: Do you mean government contracts in general?

Mr Carroll: Yes.

Mr McCafferty: Well —.

The Deputy Chairperson (Ms Forsythe): I am sorry, Jim. Can we keep to the inquiry on banking services? Gerry, is there any way that you could make your question more specific to that? Jim is here to talk as a representative of the National Federation of SubPostmasters specifically on our inquiry into banking services.

Mr Carroll: Horizon was mentioned in the Committee's briefing pack, was it not? It is a valid question.

Mr McCafferty: I will answer briefly on Fujitsu. Fujitsu's role with the Post Office was the subject of quite a bit of scrutiny in the inquiry. It is well documented in the inquiry that it had failings and denied back-office access and so on and so forth. As the Deputy Chair said, that is not strictly a banking question, but the Post Office is stuck with the Horizon system until it is gradually changed. That affects banking services in post offices too. Hopefully, the Post Office will get a new system in place that allows post offices to provide more banking services.

Mr Carroll: Thanks, Jim. I have a couple more quick questions. Over the years, have you had issues with people trying to get their benefits through post offices, particularly around bank holiday and public holiday periods? I recently received a query from a constituent who was unsure of their payment dates. I assume that that process is all quite smooth. Are there any issues with people getting their payments at those times of year, or are things going smoothly at your end?

Mr McCafferty: In days gone by, people had Post Office card accounts. Now, apart from a few exceptions, they pretty much all have bank cards, so they can lift their money any time they want rather than, as used to be the case, waiting until the day or week before to get their money in advance of a bank holiday. A lot of people seem to manage their money a bit better when their benefits go into their accounts week in, week out because they can lift it when they want to. There is not, therefore, the big glut that there used to be. It used to be that we would be slaughtered the day or week before a bank holiday; now, we barely notice when a bank holiday is coming up. That is not a big issue. There has never been any sort of problem; people's money generally goes in. The odd time, people say that there should have been money in their account, but, when they make a phone call about that, the issue is usually resolved quickly.

Mr Carroll: It runs pretty smoothly, then. That sounds positive.

I have two other quick questions. You mentioned the disparity between the services offered here and those offered in Britain for passport and driving licence applications. We have a lot of constituents who go to the post office to post passports and the like. Do you record information about passport queries?

Mr McCafferty: We deal with Irish and British passport applications at the post office counter. Most people do it online now, so the post offices have lost quite a bit of that activity. For example, we used to do 600 applications a month in January, February and March, whereas we now do 50. That is because of people going online. The best that a post office like ours gets is doing the photograph, but the service that we used to provide is no longer there. That is another government service that has been removed.

Mr Carroll: To clarify, was the 600 a month the figure across all post offices?

Mr McCafferty: No, that was the number for my post office specifically, but it is indicative of what was being done in other post offices across the region.

Mr Carroll: Given that those figures are collected, could we get the figures for the passport applications?

Mr McCafferty: Yes, by all means. I can get the figures for you, certainly.

Mr Carroll: I have a final, quick question. You alluded to your role in the rural context — it is maybe more apt in the rural context, but it also applies in the urban context — in reducing social isolation and exclusion. Will you talk about the importance of the post offices being there for people to interact with staff?

Mr McCafferty: Absolutely.

Mr Carroll: It is not talked about enough at your end.

Mr McCafferty: There is a big social value to the post office. People do not just come in for purely transactional purposes. They come in to withdraw their money, deposit their money or maybe pay a bill, but they also come in for a wee chat or a visit. You can tell that a lot of people come in, especially older and vulnerable people, and want to spend a minute or two at the counter talking about their ailments, the weather or whatever it may be. Generally speaking, most sub-postmasters know most of their customers by name and maybe keep a wee eye on them. Sometimes, a customer will come in with a bruise after a fall that day or the previous day. I am thinking of such a case this morning, and it happens quite a bit. You are involved with the customers: you know them by name, and they know your name and enjoy their visit. That is even more important in rural post offices because they are physically more isolated. There is a massive social aspect to every post office.

Mr Carroll: Thanks, Jim. That is really important.

Dr Aiken: Jim, thanks very much for your evidence. I have a couple of questions. First, as an MLA, I have, on a number of occasions, had conversations with banks that have said, "We are shutting down the branch, but it will not be an issue because people can do their banking through the post office". Then, the next day, you get a notification that one of the post offices in South Antrim is closing. It becomes really frustrating, and I really understand the difficulties. However, if a post office is not a saleable asset, are a lot of them only staying open because the sub-postmasters cannot get rid of them?

Mr McCafferty: Partly, yes, to put it bluntly. A lot of sub-postmasters feel a commitment to the community. Quite a lot of them run their business to the point where they are in debt, and they then decide that they cannot go any further. Do not get me wrong: not all post offices are unsaleable. It is just difficult for an awful lot of postmasters to make a living out of them. I do not know whether I put the figure in the briefing, but 70% of postmasters receive less than the national minimum wage. That is an accepted figure by the Post Office and government.

Dr Aiken: On the whole idea of the banking inquiry, you continuously get from the banks that they are doing much more digitally and online but the overspill or whatever can be dealt with by the post office network.

Mr McCafferty: Yes.

Dr Aiken: There does not seem to be any connect or joined-up thinking on the future of the post office network and the banking system. That is one of the main concerns that I have.

Mr McCafferty: That is an issue. Even locally — regionally, if you like — when a bank closes, there is meant to be engagement with the local post offices, but it just does not happen. It happens on some occasions — I have heard some good stories — but, sometimes, a bank branch will close and the local post office will find out about it only some time later. Sometimes, there is not the necessary cohesion or communication. The banks will just do their own thing, as they have done, without so much as a consultation with the local post office. In some cases, they say, "Go to your local post office", yet they have not even contacted the local sub-postmaster. That has happened quite a few times.

Dr Aiken: I get that. We had an incident like that in Crumlin recently. It was unbelievable. The bank shut and said, "Oh, you can go to the post office". It has gone. It should be a case of, "Left hand, this is the right hand".

Mr McCafferty: Such incidents should not happen.

Dr Aiken: In your document — thank you very much for that — you talk about an awareness session. I want that awareness session to bring all the stakeholders together, because there is no joined-up thinking in this area. It is about the social value of the post office network added to the fact that we have more of a cash economy than other areas.

Mr McCafferty: We do.

Dr Aiken: There is also the fact that, if we are to provide and deliver the services across Northern Ireland, we need to be more joined-up. I am fully supportive of coming together and setting up some kind of task force or working group to look in the round at banking and post offices —

Mr McCafferty: Cash and cash-inclusive services. Absolutely.

Dr Aiken: — including government services. That is all that I want to say. The most remarkable thing that you said was about the 10% increase in cash coming across —.

Mr McCafferty: Yes, that is largely due to the bank closures, to be fair.

Dr Aiken: It just shows that, if it is going up, there is a market there, so there must be some way of making it so that you can get some value out of it.

Mr McCafferty: Yes, people have to make a living out of it at the end of the day, and that is where we are trying to get to. Incidentally, when we got the invitation to the banking round table a while back, we were very pleased. However, as I sat there with Mark Gibson from the Post Office and Chris O'Reilly from Retail NI, there was talk about credit unions, banks, ATMs and so on, but there was no mention of the Post Office. Do not get me wrong: we were there for that reason, but there was no mention of us. It was as if we did not exist, yet we are the number-one place in which ordinary people go about their everyday business or banking. I was pleased to be there and to get that point across.

The previous banking round table was convened in, I think, 2022. The National Federation of SubPostmasters was not invited to that. I do not even know whether representatives of the Post Office were there. I thought that that was a bit odd, given that we are the number-one choice for customers, if you like, for cash deposits and withdrawals, savings — you name it. However, we were not present, or we were not invited. It was good that we were invited to the most recent one. Hopefully we will be invited again so that there is the awareness that you talked about.

Dr Aiken: I hate to say this, because you and I are probably of a similar age, but sub-postmasters are a bit of an ageing workforce. People will not take on sub-postmaster roles, because, on the basis of everything they will have heard about the Horizon project and all the rest of it, it is not an attractive position to go into, is it?

Mr McCafferty: At the moment, no. We are optimistic that the Government will underwrite what they suggest in the Green Paper and the £250 million that the Post Office put forward. We hope that that will come to fruition. If it does, it will, hopefully, turn the situation around and make post offices a valuable and aspirational asset again, which they have not been for a long time — not for 10 years, I would say.

Dr Aiken: Thank you for the good work that you do.

Ms Dolan: Thank you for coming in and for your presentation. I have one question. It might not fall under your remit, but I will ask it anyway. We covered a lot about bank closures and the impact that they have on local areas. My area has also fallen victim to bank closures. I commend the post offices for stepping up and filling the void in some cases. I represent a rural area that is cross-border: the Fermanagh and South Tyrone area. People have issues with currency, because they are paid in euro but live in the North. Does the Post Office have any plans to streamline things a wee bit for those who try to lodge euros in the North? As I said, my question might be completely outside your remit, but I thought that I would ask while you are here.

Mr McCafferty: It is a wee bit, but I have heard about the issue before. If someone from a border area comes into Belfast with euros, we basically buy the money off them and give them sterling. They can then do whatever they want with the sterling. However, you are right: the money loses a bit of value that way. Euro accounts have never been brought up — not to me anyway. I will take a note of the issue and mention it at meetings. You never know.

Ms Dolan: That is great, thank you.

The Deputy Chairperson (Ms Forsythe): I have a final question, Jim. You mentioned that you were at the banking round table. Have you had any engagement with the cost-of-doing-business survey that is going on?

Mr McCafferty: I completed a survey. Is that the survey that was sent out in the —?

The Deputy Chairperson (Ms Forsythe): It was commissioned by Caoimhe Archibald when she was Finance Minister. It is about the cost of doing business, taking account of the rates piece and the different pressures on businesses. You specifically mentioned rates, so I was wondering whether you had engaged with that survey.

Mr McCafferty: No, I have not seen that, to be totally honest with you. The last one that I did was the one from the Consumer Council, the results of which we are due to see.

The Deputy Chairperson (Ms Forsythe): You said that post offices were sort of forgotten about at the banking round table. We are talking about the review of business rates, and we do not want to see post offices being forgotten about in that. This week, we saw the expansion of the legislation that gives rates exemptions to rural ATMs.

Mr McCafferty: It was not specifically mentioned during the meeting. I approached her afterwards and explained to her that we had met Andrew McAvoy from LPS and so on and that we should set up a wee meeting, but then she was gone, if you know what I mean. She said that that was fine, but we got no further. I have not completed a survey for that.

The Deputy Chairperson (Ms Forsythe): As Steve Aiken said, the banks say, "We are closing, but it is OK, because you have the post office", but it is almost as though the post offices are falling off the edge of everything, even though they provide a critical service.

Mr McCafferty: The banks have used that as a crutch and a reason and so on, but they have not involved the Post Office, apart from just telling the customers that, closing the door and running away.

The Deputy Chairperson (Ms Forsythe): Thank you very much for your evidence and taking the time to come here. We really appreciate it. It is very valuable to our inquiry.

Mr McCafferty: I appreciate the invitation, thank you.

The Deputy Chairperson (Ms Forsythe): Thank you for your good work.