Post Office ownership could be handed to sub-postmasters

Thousands of sub-postmasters across Britain could be handed ownership of the Post Office, ending 365 years of government ownership.

Ministers are considering changing the retail business’s ownership structure to a mutual model, as they hope to overhaul its culture and avoid future miscarriages of justice in the wake of the Horizon IT scandal.

The Department for Business and Trade (DBT) launched a new green paper on Monday, alongside a three-month consultation over the organisation’s future.

“After 15 years without a proper review, and in the aftermath of the Horizon scandal, it’s clear we need a fresh vision for its future,” Gareth Thomas, the Post Office minister, said.

Customers and postmasters will have the opportunity to have a say in how it is run, according to the DBT. This includes the Post Office’s ownership model, as the government considers mutualisation, which could mean handing ownership of the company to thousands of its sub-postmasters.

Ministers also announced plans to award a new subsidy package worth £118 million to fund a transformation plan and further investment that could improve its services.

The Post Office is a retail business with 11,500 outlets and operates as a franchise model, with individual branches owned and managed by sub-postmasters. The shop’s business was a subsidiary of Royal Mail, for letters and parcels, until the latter was spun off and listed in 2012.

At about the same time, news of postmasters being wrongly convicted of crimes due to faulty data in the Horizon accounting system came to light — a scandal that is now expected to set the taxpayer back £2 billion in compensation and legal costs.

The Horizon IT scandal resulted in hundreds of sub-postmasters being wrongly prosecuted

KIRSTY O’CONNOR/PA

This, along with sky-high pay for its executives and a failure to tackle a toxic culture, has reignited the debate over mutualisation.

Sir Edward Leigh, the father of the House of Commons, said in 2023: “Here we have a nationalised industry, badly run, with people paying themselves huge salaries and bonuses, when all the work is done by the 11,000 sub-postmasters who have been treated absolutely appallingly. We should consider mutualisation, we should pass control of this body to the people who do all the work.”

Under mutualisation, the Post Office would be owned by members, who could include employees, sub-postmasters and customer representatives.

Such a plan remains controversial as the business has struggled to wean itself off government subsidies, which allow about 3,500 unviable branches to continue serving their largely rural communities.

Sir Alan Bates, pictured in March 2001 at his branch

STAFF/MIRRORPIX/GETTY IMAGES

Sir Alan Bates, the former sub-postmaster and Horizon campaigner, has said that it would be unfair to burden postmasters with the company, given its poor financial state. Even excluding the cost of the Horizon scandal, the government has been subsidising the Post Office by about £50 million per year.

The idea is also nothing new. Mutualisation was considered in 2010 by the coalition government, only for it to be dropped by the 2015 Conservative administration.

Neil Brocklehurst, the chief executive of the Post Office, said: “We now have a once-in-a-decade opportunity to have a national conversation about the future of our post offices and their role in supporting communities across the UK.”

It would take until the mid-2030s to mutualise the Post Office, the review said, adding the business would need to be profitable to make the change

DBT said the current level of taxpayer funding for the government-owned postal service was “unsustainable”, and it has raised an option to scrap the 11,500-branch requirement, which would lead to the closure of village post offices.

Dave Ward, the general secretary of the Communication Workers Union, criticised the plans as “prioritising further cost-cutting and offering no vision for its future”.