The Government has
today put forward an innovative proposal that could see Post
Office Ltd turned into a mutual, giving power to staff, sub
postmasters and communities.
The announcement was made as the Government put its plans before
Parliament to secure vibrant futures for two cornerstones of
British life – the Royal Mail and the Post Office.
Post Office Ltd is currently 100% owned by the Government and
will not be for sale. The Postal Services Bill, which will be
scrutinised and debated by Parliament in the coming months,
proposes powers to transfer ownership to a mutual. Embodying the
principles of the Government’s Big Society agenda, this proposal
would give those who know the Post Office best – subpostmasters,
staff and the communities they serve - a say in how the Post
Office is run. The Bill includes protections to ensure that the
Post Office will always be run for the public benefit.
Business Secretary Vince Cable said:
“Post Offices continue to play a vital social role in the heart
of local communities and remain an incredibly important resource.
There will be no repeat of the previous Government’s closure programmes.
“But I’m concerned that the current structure of the company is
holding the network back. The interests of the central holding
company and locally owned branches are not always aligned. So, for
example, subpostmasters are pitted against Post Office Ltd when
they negotiate annual pay rates. And they fear Post Office Ltd
expanding online because they worry it will drive customers away
from their stores and that they won’t share in the profits.
“I want to start a conversation about how it is run in the
future, but it seems to me that the Post Office is ideally suited
to a John Lewis or Co-operative Group style structure – where
employees, sub postmasters and communities get a greater say in
how the company is run. This would be the Big Society in action.
“We’re already seeing how well the mutual model can work at a
local level - across the country there are a growing number of
examples of community groups, charities and local people coming
together to provide Post Office services in their area.
“A change at a national level would empower those that know the
Post Office best and give them more of a stake in its future. It
could deliver the common sense of purpose needed to provide a
vibrant future for the network.”
Co-operatives UK has been asked to explore options for creating a
mutualised Post Office, reporting back to BIS Ministers next
spring. Before any move to a mutual structure there would also be
a full public consultation.
Peter Hunt, the Chief Executive of Mutuo, said:
"This proposal could help to secure the future of the
Post Office for the public benefit.
"As a mutual, the Post Office will be able to harness
the experience and goodwill of its employees, business partners
and its customers.
"Together they will be part of a practical partnership
that uses all of their skills to design a Post Office for the
years ahead."
The Government is clear that before any changes can be made, the
network will need to be put on a more secure financial footing, so
that a mutual could build from solid foundations. It believes it
is realistic for the Post Office to be in mutual ownership by the
end of this Parliament and will be making further announcements on
this in due course.
Notes to editors
1. The Postal Services Bill and an accompanying policy statement
which explains the Government’s approach have been published today
and introduced in Parliament. They can be accessed here
http://www.bis.gov.uk/policies/business-sectors/postal-services/postal-services-bill-2010 .
2. Current ownership
model:
Post Office Ltd is 100% owned by the Government.Around 370
(actual figure is 373) Post Office branches are directly managed
by POL. These are called Crown Offices.The remaining branches are
managed on an agency basis either by subpostmasters or franchise
partners. Franchise partners include Tesco, SPAR and
Londis.Although a nominated person the “subpostmaster” makes the
application and provides the business plan – branches have a
variety of different ownership structures. Individual retail
entrepreneurs run the greatest number of branches - however, it is
estimated that around 1000 individual Post Offices are run by
either a mutual body or a member of a mutual body.This includes
approximately 525 Post Offices in Co-op branches, approximately
200 in Costcutter stores, 240 in NISA stores and 150 in community
run shops.Subpostmasters are not POL employees, but instead have a
contract with POL to provide services using their own premises and
staff. Generally, subpostmasters receive a fixed payment from POL;
this is topped up by a variable payment based on the number of
transactions they carry out. Most subpostmasters run their post
office business under the same roof as another retail business. In
urban areas this is often a newsagent or stationery business. In
rural areas it is typically a village shop.
3. Possible future mutual
model:
There are many different types of mutual structure - any final
structure for the Post Office mutual would be subject to public
consultation. What follows is an outline of what the structure
might look like.A mutual body – for example a company or
cooperative – would be set up and those with an interest in the
Post Office could become its members. The Government would then
transfer ownership of Post Office Ltd to that body.Members could
then have a say in appointing the Board of Post Office Ltd,
agreeing its long-term strategy and sharing in its profits.The
Government would ensure there are clear safeguards in the
constitution of that mutual body, protecting the interests of the
Post Office. For example, the mutual would have to act for the
public benefit by promoting the use by the public of Post Office
services (rather than short-term profit-taking). And it would not
be able to sell its shares in Post Office Ltd. These protections
would be set down in legislation. Further legislation would also
be required for any demutualisation.All of the experts on mutual
ownership the Government has consulted have stressed that, for a
mutual to work, all interested parties need to agree on the
structure adopted. The structure must develop organically rather
than be imposed by a “command and control” central Government. So
Government will hold a full public consultation before agreeing
any final structure for the Post Office mutual.
4. The Government has already committed to increase its Post
Office subsidy to £180m for 2011/12, with funding for future years
to be finalised within this autumn’s Spending Review.
5. Co-operatives UK is the national trade body for co-operatives
and works to promote, develop and unite co-operative enterprises.
For more details see: http://www.uk.coop/about/co-operativesuk
6. Mutuo is a not for profit society which seeks to promote a
better understanding of mutuals and to encourage mutual approaches
to business and public policy. For more details see:
http://www.mutuo.co.uk/about/
7. BIS' online newsroom contains the latest press
notices, speeches, as well as video and images for download. It
also features an up to date list of BIS press office contacts. See
http://www.bis.gov.uk/newsroom
for more information.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Henry Tanner
Phone: 020 7215 5947
henry.tanner@bis.gsi.gov.uk