The Government's Handover Of The Post Office To Its Managers Would Be A Poisoned Chalice

7th February 2024

The Government is meeting with Post Office stakeholders today to explore handing over its ownership to branch managers. However, the home delivery expert ParcelHero says the plans are a knee-jerk reaction to the Horizon scandal and the Post Office needs urgent modernisation.

The Government is reportedly holding a meeting today between business minister Kevin Hollinrake and representatives of the co-operative movement, union officials and other stakeholders, to revive plans to mutualise the Post Office.

However, the parcel comparison site ParcelHero says handing over ownership of the Post Office to its branch managers is far from the generous offer it appears. The Post Office needs significant modernisation and investment.

ParcelHero's Head of Consumer Research, David Jinks M.I.L.T., says: ‘Stakeholders and sub-postmasters should be in no hurry to take on ownership of the UK’s struggling Post Office. It could be like inheriting a seemingly valuable country home that is actually decaying and mortgaged to the hilt.

‘Following the Horizon scandal, the Government clearly now sees the Post Office as a hot potato it wants to pass on to new hands as soon as possible. However, very little has changed since 2012, when it first attempted to offload the Post Office to its managers at the same time that the Royal Mail was privatised.

‘Back in 2012, the Government’s own report, "Building a Mutual Post Office", recommended: “A formal transfer of ownership should only take place when commercial sustainability and financial stability have been achieved.” That goal has yet to be achieved.

‘For the financial year 2022/23, the Post Office Group posted a total statutory loss of £76 million and ended the year with net liabilities of £799 million. That does not represent commercial sustainability.

‘The news service Bloomberg reports the meeting between the Minister for Enterprise, Markets & Small Business and stakeholders is scheduled for today. The meeting has been called by the Communication Workers Union, which represents Post Office operators but, following the Horizon scandal, its timing is certainly fortuitous for a Government seeking to divorce itself from the troubled organisation. Hundreds of Britain’s sub-postmasters were prosecuted for theft, fraud and false accounting because of problems in the Post Office’s faulty accounting software.

‘The scale of the problems facing the Post Office are still huge. Letters are in significant decline and other revenue streams, such as the Post Office Card account, have closed. Even its contract with the DVLA is now under rolling review. In a 2023 Parliamentary debate on the future of postal services, MP Tahir Ali said: “There are big cracks in the Post Office network that gesture towards a bleak future.” He warned that the Government has been “significantly reducing investment in the network”.

‘Of course, Post Offices still have a vital role to play in our communities. In fact, despite the significant overheads the Post Office Group carries, its branch and online operations actually achieved a trading profit of £50 million in 2022/23.

‘That’s not the only sign of a potentially brighter future. Last November, it announced partnerships with new carriers DPD and Evri. In the words of its Chief Executive, Nick Read: “We are fundamentally transforming Post Office by introducing new mails carriers for over-the-counter sales for the first time in our 360-year history.”

‘This month, however, the BBC revealed many sub-postmasters across the country are facing significant financial hardships trying to make a living running their post offices. What’s more, the now-notorious Horizon system is still in place and in urgent need of replacement.

‘The original Post Office mutualisation plans from 2012 offered an interesting future for the beleaguered network. Following significant consultations, the plan was that both “consumers” and “producers” should be represented within a Post Office mutual. This would include sub-postmasters and multiple retailers. There would also have been a way for the mutualised Post Office to engage with consumers, perhaps through membership, rather like the Co-op.

‘However, the recommendation of the Government’s own report was that: “Before it can be mutualised, the Post Office must be on a secure financial footing. It would not be in anyone’s interests - whether Government, stakeholder or the wider public’s – to transfer the Post Office to mutual ownership if it cannot sustain itself financially. Nor would the Government consider handing over control of the Post Office if it were not satisfied that the company could flourish in the absence of current levels of subsidy and concomitant Government scrutiny.”

‘That conclusion seems as valid now as it was back in 2012. The Post Office’s challenges are part of the ongoing struggle in retail to find a new equilibrium in the era of e-commerce. It will be those retailers and organisations with strong in-store and online sales that will ultimately triumph. ParcelHero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030. Read the full report at: https://www.parcelhero.com/content/downloads/pdfs/high-street/deathofthehighstreetreport.pdf