Post Office could be owned by its workers, government says

The Post Office could be turned into an employee-owned business, the government has suggested, as it launched a public consultation over the future of the service.

The business, which operates counters or shops in more than 11,500 locations around the country, is fully state-owned and subsidised by the tax payer.

Plans for mutualisation have been under discussion for more than a decade, but were sidelined as the scandal around the wrongful conviction of sub-postmasters unfolded.

"It's clear we need a fresh vision," said Post Office Minister, Gareth Thomas, launching a Green Paper on the service's future.

The government said it wanted to transform the organisation's culture in the wake of the scandal which saw hundreds of sub-postmasters wrongly accused of false accounting and theft at the branches they were running on the basis of data from faulty software.

The scandal was brought back into the spotlight last week after the public inquiry into what went wrong published the first report of its findings, focusing on the impact on sub-postmasters and their families.

Mr Thomas said the Post Office had had "a grim past, a poor commercial track record and unstable leadership".

But the 12-week consultation would mark the start of "an honest conversation about what people want and need from their Post Office in the years ahead," he said.

That includes whether there should still be a requirement for the Post Office to operate the currently mandatory 11,500 branches.

The minister also announced a further £118m to support the work already underway to deliver changes in the Post Office.

The Post Office is the UK's largest retail network, but most of its counters operate within other stores, such as newsagents and convenience stores or even libraries.

As well as the question of ownership, the government is asking for views on what services the Post Office should offer in future, in particular banking services, as High Street bank branches continue to close.

Currently customers can use the Post Office to pay in and withdraw money from accounts at most banks. They can buy foreign currency, pick up welfare benefit forms and payments, and submit passport applications. But the full range of services are only offered at larger sites.

Research published alongside the Green Paper suggests the Post Office adds "social value" of £5.2bn per year to households and £1.3bn annually to small and medium sized businesses.

But the business has struggled to make a profit, relying on tens of millions of pounds of state subsidy, as customers posted fewer letters and turned to online services and other delivery operators, bypassing Post Office counters.

According to the Post Office, currently 99.7% of the population live within three miles of a Post Office and 4,000 of its branches are open seven days a week.

The Post Office has already announced it is shifting its last remaining standalone shops to the franchise model that the majority are run on, which grants franchise-holders the right to offer Post Office services alongside other retail services.

However, depending on the results of the consultation, there could be a further shake-up to the ownership structure, as the government seeks ways to turn the business around.

Last year, the Post Office minister told parliament nearly half of branches were not profitable or made only a small profit from Post Office business. That has led to a stagnation in pay for postmasters.

The idea of making the Post Office a co-operative organisation was raised in 2012 after it was split from the Royal Mail, the service that delivers post to the door.

Many smaller businesses operate on some kind of shared-ownership model, but the most well-known larger UK businesses that are run that way are the John Lewis Partnership and the Co-operative.

In mutually-run organisations, staff are more closely involved with decision-making and have a greater stake in the performance of the business.

The government said switching to a mutual model would be "complex, time consuming and potentially expensive" and said any such changes would have to wait until the Post Office had achieved "financial and operational stability".

However, it floated two alternatives for longer term change:

• A joint-venture between the government and a sub-postmaster-owned mutual to run the Post Office
• A charter model – as used for the BBC and universities – with the government setting out guiding principles but relinquishing its ownership role

Proponents of mutualising the Post Office argue that the Horizon scandal would not have happened had staff been part of the management.

Neil Brocklehurst, the Post Office's chief executive, said the Green Paper offered "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".