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Outlook: Dear sub-postmaster, you have just been Consignia-ed

Touche and go; Sparks at Marks

Thursday 11 April 2002 00:00 BST
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The following letter has just been e-mailed to 3,000 sub-postmasters by Consignia's Programme Director for Network Reinvention. It was felt safer than trusting it to the post....

Dear Sub-Postmaster,

You will be pleased to hear that your branch has been designated for reinvention. Disinvention would be another way of putting it. An even better term would be closure. For the last few years, we have successfully been re-inventing about 500 branches a year as hairdressers, betting shops and even Indian takeaways. But we at Consignia Centre feel the pace needs to be, how can I put it, speeded up a little.

Don't take this personally. It's not your fault, its ours. We have under-invested in the network for decades and now the Government has come along and decided to take away our biggest source of income by switching benefit payments direct into bank accounts.

This will cost us £400m. To put it bluntly, that makes your unit uneconomic. You've no doubt heard we are already losing £1.5m a day. Well you are responsible for about a fifth of that (not individually I hasten to add).

Automatic credit transfer. Paperless banking. Internet shopping. That's the way ahead. I appreciate that your customers will find it difficult posting Christmas parcels from their local Barclays. But we guarantee that they will still be able to walk to another post office branch within one mile. Unless they are elderly. Or disabled.

I know we have always boasted that the great strength of the post office network is the number of outlets. We made quite a lot of noise about that when we were bidding for the National Lottery.

But now we realise that you can have too much of a good thing. We simply have too many branches. I know it sounds harsh, but if you are shut down it gives another branch the chance to become a sustainable business proposition. Look upon it as a merger, not a closure. That's how the Government has told us to present it.

Anyway, here's the deal. Sign at the bottom and send us back the keys and you'll get a cheque by return of post (ha, ha) for £68,000.Alternatively, if you really want to stick it out, I can put you in touch with our Network Business Support Centre. They'll give you £5,000 (£10,000 if you're lucky) to tart up your premises and some advice about how to survive. Tip number one: start opening on Saturday afternoons and Sundays.I do so hope you will reach the right decision.

PS: If you need a new job I hear Tesco is opening another 75 stores and taking on 21,000 more staff. Perhaps there is a vacancy in your area.

Touche and go

Deloitte & Touche has presumably got better legal advice than KPMG. Or perhaps it is just different. KPMG walked away from rescuing Andersen's UK partnership on the grounds that it could not be certain of insulating itself from the Enron litigation which the disgraced auditor now faces in the US. Deloitte & Touche appears to have no such reservations, however. So confident are its lawyers that it cannot be that the firm has evidently signed a legally binding agreement to subsume Andersen's UK assets and its staff.

Its legal experts have told it that because this amounts to a transfer of assets rather than a merger, it is protected from any action against Andersen's US partners. Even if that proves not to be the case, any litigant would come up against the dense fog that is UK partnership law. Well, maybe. Even supposing the US litigation does not come back to bite Deloitte & Touche, there remains the problem of gaining regulatory approval. With Andersen gone, the big five accountancy firms will become the big four – a prospect which understandably fills regulators from the Financial Services Authority on down with dread. The certainty that KPMG would have been blocked from acquiring all of Andersen's non-US operations was the main reason it dropped its offer.

The hope among the big four now is that they will be allowed to pick off selected Andersen businesses in individual countries. KPMG hopes to swallow up Andersen in France and Germany (even though it is already the biggest player in the German market) and Deloittes has already signed up the Spanish and Portuguese partnerships.

Both the German and the UK partnerships of Andersen are big enough in their own right to make it certain that regulatory examination of any takeovers will pass to Brussels.

The European Commission still regrets its decision to allow the merger of PriceWaterhouse and Coopers to turn the big six into the big five and is therefore ill-disposed to anything that would result in domination by the big four.

Much will depend on whether it decides that auditing is a European business or a series of distinct national markets. If it is the latter then there is just about a case for allowing the Andersen-Deloitte deal since it would strengthen the weakest competitor in the UK market. Even then, the combined business would still be smaller than PwC. But Deloitte also has to negotiate the "failing firm" defence which requires it to demonstrate that all of Andersen's clients would gravitate to it if the firm went under. That is far from easy. The competition authorities have only begun to get their teeth into Andersen.

Sparks at Marks

At this rate Luc Vandevelde is destined to become the most famous Belgian since Tintin. He has rescued a great British institution from collapse and allowed Middle England to wear the St Michael's label with pride once more.

Mr Vandevelde gave himself two years to turn Marks & Spencer around when he arrived in February 2000 on a £20m incentive package. He achieved it in the nick of time with a Christmas trading update which showed the first glimmer of improvement in the company's core womenswear line. The latest figures demonstrate that solid progress has been made since then. The 16.6 per cent growth in like-for-like non-food sales in the last quarter is about twice what the market was expecting and put a fresh spring in the M&S share price.

The derivative Per Una range from George Davis, all bleach-splattered jeans and suede jackets, may not be to everyone's taste. Nor the Blue Harbour men's range with its nautical stripes and chino relaxed image. But enough customers are flocking in. Perhaps more importantly for M&S, its designers and buyers seem to have got the basics right again in the shape of the Perfect range of white shirts and zip-up cardies.

Mr Vandevelde cautions that there is still a long way to go. The recovery is from a very low base a year ago and consumers are not going to spend, spend, spend forever. The good news is that the stock is shifting fast enough to avoid M&S having to resort to heavy mark downs while the switch to cheaper, overseas suppliers will protect margins.

For the first time in four years, M&S is on course to increase profits. But to put that in perspective they will still only be half of the £1.2bn made in 1998. Mr Vandevelde still has a long way to go before he can collect his £20m and be a happy Belgian as well.

m.harrison@independent.co.uk

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