Main feature
T
he Post Office has moved a step
closer to mutualisation, following
last month’s government report
setting out the next stages in giving subpostmasters, staff and customers
a bigger say in the running of the business.
The publication of the government’s plans
follows a 12-week public consultation
which revealed widespread enthusiasm for
the proposal.
POL is required to provide certain services
and a branch network of a certain size
and coverage. The government believes
that removing the Post Office from government ownership could change the culture
of the organisation and make it more
commercial.
Some post offices, whilst having a high
social value to their communities, may
simply be commercially unsustainable,
perhaps because they are located in
sparsely populated areas.
Whilst the government would like to
reduce the amount it pays to support the
post office network, it accepts that after
mutualisation there will almost certainly
remain a need for continued public subsidy to maintain these post offices. The
government will also retain a mechanism
to ensure that it can “intervene if needed
to protect the public benefit”, for example
through a ‘special share’.
Public benefit
Safeguards
A range of further safeguards to protect
the public interest is also proposed. This
Partnership
progress
Annabel Barnett looks at the government’s plans
for the mutualisation of the Post Office
Subpostmasters
would have a
greater say in how
POL is run under a
mutual model
includes ensuring that once the Post Office
has been mutualised it cannot be sold off,
but instead only transferred to another
mutual or back to the government.
An asset lock should be applied to a
mutual Post Office so that assets – such as
Crown offices and other properties – cannot be sold in a way that erodes the
business’s value and ability to act for the
public benefit.
Similarly, the government emphasises,
the distribution of any future profits (dividends) of the Post Office must only occur
if it serves the public benefit; for example
by incentivising those who work in the business. Currently, the Post Office only
generates a profit as a result of subsidy
from government, so the question of
dividends is hypothetical at this stage.
However, the government would like to
see the possibility of dividends for subpostmasters and Crown post office staff in
the future.
Membership
The government says the voices of subpostmasters, Post Office employees and
consumers should all be represented within
a future mutual.
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The Subpostmaster August 2012
ship could help wipe out the losses
of Crown post offices as well as lead to
higher productivity.
Because of the wider social purpose of
the post office network, the government is
keen that there is a formal mechanism for
enabling the mutual to connect with the
public. Consumers or their representatives
might be members of the mutual or could
alternatively have their interests spoken for
through other channels.
Members would be represented by a
‘representative body’, to which individuals
are likely to be appointed or elected. The
board of a mutual Post Office would be
accountable to the representative body
and report to them on the performance of
the business. However, the representative
body would not run the day-to-day aspects
of the business.
The government is not setting out the
precise balance of each interest group on
the representative body nor is it specifying
exactly how they will be represented within
the mutual. Instead it will be the job of the
stakeholder forum to develop these details.
What is a mutual?
A mutual is an organisation which
is owned by its members. Members have formal input into the
administration and management of
the organisation. Members are
usually employees, workers and/or
customers or suppliers.
Examples of mutuals include
John Lewis department stores, the
Co-op Group, building societies
and credit unions.
While the importance of subpostmasters’ current role is acknowledged by the
government, making them members of the
mutual and giving them ownership would
further harness subpostmasters’ “interests
and frontline expertise”. The government
also believes involving POL staff in owner-
Government’s role
Hands and John Lewis image: istockphoto.com
The government recognises that the post
office network is important because of the
vital services it provides customers. More
than just a commercial organisation, it supplies a range of important local retail and
community services, and offers a social
hub and trusted public services to people
across the country. The government
stresses that a number of safeguards
should be built into a future Post Office
mutual to ensure the network continues to
do this crucial job.
One of the first steps in making the radical change to mutual ownership will be to
identify the business’s objectives – so that
the purpose of the organisation can be
included as a central part of its constitution. For the Post Office this will mean
defining an appropriate level of service and
the customer needs that it must meet. The
interests of subpostmasters and employees will also have to be defined.
To help the Post Office determine these
“collective interests”, it is setting up a
stakeholder forum. The forum will
comprise representatives from the NFSP,
Post Office Ltd (POL), the government and
other organisations representing staff and
customers.
Currently POL is 100% government owned
and the government says it will not withdraw from ownership until the Post Office
is financially stable. This depends on the
success of the Network Transformation
programme, which will reduce the network’s fixed costs; and on POL finding
new sources of income, particularly
through providing more government and
financial services.
Ultimately, however, the government
thinks the current relationship could be
replaced with a contractual one in which
www.nfsp.org.uk
Next steps
No timetable has been set for mutualisation. The timetable will depend on the
government, POL and other interested
parties being satisfied that the Post Office
is sufficiently financially stable and commercially sustainable to create a sound
basis for transferring ownership.
Recognising that successful mutuals
consult their members more and have
greater transparency than non-mutual
organisations, the government says
before becoming a mutual POL should
change its culture and improve openness
and communication. Already POL has set
up a Strategic Partnership Board with the
NFSP to work together to achieve the
overall objectives of the business. In addition to the stakeholder forum, in which the
NFSP will play a central part, POL is
planning regular road shows for subpostmasters to improve its ability to listen and
respond. Similar activities are planned
with POL employees.
POL is also working with its stakeholders to work out how financial stability and
commercial sustainability can be
measured. The government will look at
how well the Post Office is doing against
these measures before deciding whether
it is ready for a transfer of ownership.
Finally, before mutualisation can happen, the government must formally
support the proposal on a basis that it
represents value for money for the taxpayer. Parliament will then vote on whether
to approve the transfer of ownership to a
mutual.
l See www.nfsp.org.uk to download a
copy of the government’s full report. n
NFSP view
The government’s
commitment to
mutualise Post Office
Ltd (POL) is an
important milestone in
a key strategy
developed over five
years ago by the
NFSP’s Executive
Council, designed to
give subpostmasters a
real say in how the
company is managed.
The NFSP welcomes the
fact that many of our
suggestions have been
Mervyn Jones
accepted by the government.
Subpostmasters have over £2bn invested in the
network and our voice should be heard at the highest
level within POL. Ultimately the NFSP is seeking a
company structure that will enable everyone working
in the business to become shareholders and joint
owners, sharing in the success of a sustainable and
profitable company through dividend payments.
In order for this to happen, we need to ensure that
the government delivers on its promise to make the
Post Office the ‘front office for government’, providing
a comprehensive range of government services across
our counters. We now need new work and increased
income to help sustain a physical network which
serves our communities and also regenerates our
high streets.
We must also encourage POL to rip out large portions
of its central costs. The losses sustained by the Crown
offices, and excessive distribution, IT and staff costs
urgently need to be addressed.
Subpostmasters own 97% of branches and conduct
around 80% of transactions yet receive less than
50% of POL gross income and we need to ensure that
more of that income flows through to our members.
The key to the success of POL is an alignment of
interests – what is good for POL should also be good
for subpostmasters. Our members must be able to
share in the success of the company.
Through the stakeholder forum the NFSP will seek to
put in place a new company structure which will
ensure subpostmasters’ investment and efforts are
recognised and rewarded.
We are at last embarking on a journey towards a
new company structure which will recognise the
requirements of customers, subpostmasters, POL
employees and government.
There is still much work to be done and both the
NFSP and POL will be required to adapt and change if
our partnership is to be successful. A partnership of
equals based on trust and respect for each others’
view is the best way to start.
Mervyn Jones
NFSP Commercial and Network Director
The Subpostmaster August 2012
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