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Government to Hold Talks On Giving UK Post Office to Workers

In Europe
February 03, 2024

(Bloomberg) — The government will meet Post Office workers to discuss handing them ownership of the network in a bid to move on from its historic scandals and to set out a firmer footing for the future.

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Kevin Hollinrake, the business minister, will meet union representatives and figures from the Britain’s co-operative movement on Wednesday, to consider shifting the Post Office from government ownership to control by the service’s branch managers, known as sub-postmasters, who run its 11,500 outlets, several people familiar with the matter told Bloomberg. The topic will be one of several issues on the agenda, they added.

The discussion comes as the government is trying to get a closer grip on the protracted fiasco that has led to postmasters being falsely imprisoned due to accounting glitches caused by its Horizon computer system. Last weekend, the Post Office’s chairman, Henry Staunton, departed while Business and Trade Secretary Kemi Badenoch told Sky News that its problems extended to other areas.

The department for business and trade, which oversees the Post Office, could now revive an idea it supported in 2012 to turn over the Post Office to its workers when it split off and privatized the mail delivery arm, Royal Mail. It did not go ahead at the time, believing the Post Office needed to be made more commercially viable, but it created the possibility of future mutualization in its 2011 Postal Services Act. The business department for business and trade declined to comment to Bloomberg.

“The current model is broken,” Sean Hudson, the Post Office Branch Secretary of the Communication Workers Union, who will attend the meeting with Hollinrake, said. “Mutualization is a very attractive alternative to the current failed model.” Richard Trinder, chair of the Voice of the Postmaster, set up to lobby for staff, will be present and is calling for mutualization to be considered.

Rose Marley, chief executive of Co-operatives UK, a national body for member-owned organizations, will also be at the gathering.

“It is unfinished business for the government,” Marley said. “If the postmasters and communities had a greater stake and say in the control of the Post Office 10 years ago, would it have taken another decade to get justice?”

As part of the shift, the Post Office’s finances would need to be overhauled, a process that could take several years, people familiar with the matter said. That would likely include reducing reliance on government subsidies – which currently stand at £50 million a year to help pay for rural branches and £185 million for investment in systems.

One possibility could be a deeper partnership with banks that use its branches to serve customers and an expansion of joint ventures with delivery services such as DPD and Evri, several people said. That could lead to the Post Office first agreeing to profit sharing with sub-postmasters before moving to full mutualization, they added.

Another challenge is the ongoing wrangling over compensation for workers for past wrongs. There are currently three compensation schemes and the government has acknowledged the bill could reach £1 billion.

Nick Read, who became the Post Office’s chief executive in 2019, has previously raised the prospect of restructuring the Post Office to give sub-postmasters a bigger slice of earnings once the entity’s finances were stronger. That could help create a “common goal” and to start “afresh,” Read said in 2021.

A Post Office spokesperson said yesterday: “We are focused on assisting in providing compensation and redress to the victims of a shameful period in Post Office’s history. Post Office cannot fully move forwards until the past is addressed.”

–With assistance from Kitty Donaldson.

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