Ministers are to consider handing over ownership of the Post Office to its operators after the Horizon IT scandal.
The Department for Business and Trade (DBT) has published a green paper, starting the first big review of the scandal-plagued organisation in 15 years. The review, which will run until 6 October, follows the publication last week of the first part of the findings from a two-year public inquiry into the Horizon IT scandal.
Ministers said part of the review would include looking at the ownership model of the Post Office, which is ultimately controlled by the government, including the possibility of mutualisation or a BBC-style charter model.
Ministers have previously met representatives of post office operators to discuss the possibility of handing ownership to the network branch managers who run its 11,665 outlets.
Gareth Thomas, the post office minister, said: “This green paper marks the start of an honest conversation about what people want and need from their Post Office in the years ahead. Post Offices continue to be a central part of our high streets and communities across the country. However, after 15 years without a proper review, and in the aftermath of the Horizon scandal, it’s clear we need a fresh vision for the future.”
About 1,000 post office operators were prosecuted by the Post Office between 1999 and 2015 because of faulty Horizon accounting software that made it look as if they had been committing fraud.
The scandal, widely considered to be the most widespread miscarriage of justice in UK history, was the subject of the critically acclaimed ITV drama Mr Bates vs the Post Office, which aired last year and thrust the problem into the national spotlight.
The campaigner Alan Bates has previously criticised the idea of mutualisation. “Currently, the government subsidises it [the Post Office] and will continue to have to support it. They can’t just give it to the subpostmasters and say ‘here you go, mate,’” he said last year.
While mutualisation is up for discussion, the government said any change was off the table until the business becomes financially stable, which is set to take some time. The Post Office made a pre-tax loss of £612m last year and its debts have ballooned to more than the value of its assets.
The government said it did not consider it the right time to make significant changes to the Post Office’s ownership model, but that there may be “opportunities to consider more significant changes” once the Post Office has achieved “financial and operational stability”.
The earliest that mutualisation would be considered would be 2030, and it could take up to three further years to implement.
In November, the Post Office announced it was to close up to 115 branches, putting 2,000 jobs at risk. Nigel Railton, the Post Office chair, is cutting hundreds of staff jobs in order to add £250m annually to operators’ remuneration.
The green paper states that the government will spend £500m over the five-year parliamentary period to put the Post Office “on an operationally and financially stable footing”.
The government’s objectives include transforming the Post Office into an organisation with a “positive culture that is run in an accountable and transparent way”.
Unions are likely to be alarmed at a proposal in the paper to potentially remove the Post Office’s requirement to provide a minimum of 11,500 branches.
The government said it believed that the size of the network should be maintained, “but we have heard alternative views and therefore would welcome views”.
The paper says: “Government recognises that a smaller Post Office network would likely be a concern to communities and this option is therefore not the government’s preferred approach. It might be preferable to wait and see how the network evolves in the short term before reviewing the overall size.”
Nearly half of all Post Office branches are not profitable for the operators running them, or make the operator only a small profit from the core Post Office part of the services offered.
On Monday, the government also announced that it was to provide a further £118m subsidy this financial year to help the Post Office push through its restructuring and transformation plans.
The Post Office has been provided with about £3bn in funding since its separation from Royal Mail in 2012 up until the end of last year, according to the paper.
The Communication Workers Union (CWU) criticised the award of the subsidy and said the Post Office and Royal Mail needed to be reunified. A spokesperson said: “Successive governments have failed the Post Office, its workers and customers. The only way to build a successful future is to bring Royal Mail and the Post Office back together through a new joint venture ownership model.”
The owner of Royal Mail was bought by the Czech tycoon Daniel Křetínský’s EP Group in a £3.6bn deal that took the stock market-listed business private earlier this year.
The government said a remerger was “not under consideration” but that it would “work closely with the new ownership of Royal Mail”.
The government said longer-term options for the Post Office, such as a sale or taking direct control, had been assessed as “not viable in the medium term and therefore not set out in this green paper”.
