Whitehall to deliver plan to mutualise crisis-hit Post Office

Published

3 weeks ago

October 19, 2024

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Ministers are exploring plans to hand ownership of the Post Office to thousands of sub-postmasters across Britain in an historic shake-up at the 364 year-old institution.

Sky News has learnt that the Department for Business and Trade (DBT) has asked BCG, the management consultancy, to examine options for mutualising the Post Office.

The work is said to be at an early stage, but is expected to result in a report being handed to Jonathan Reynolds, the business secretary, in the coming months, according to a government insider.

BCG’s work is expected to include assessing the viability of turning the Post Office into an employee-owned mutual, a model which is used by the John Lewis Partnership, the Whitehall insider added.

People close to the process cautioned this weekend that no decisions had yet been taken, and said that a mutualisation of the Post Office could be a lengthy and complicated process.

The Post Office is Britain’s biggest retail network, with roughly 11,500 branches, but is only financially viable because of an annual subsidy it receives from the government.

In April, Kevin Hollinrake, the then Conservative minister responsible for postal affairs, met trade union officials and representatives of the co-operative movement to discuss the possibility of mutualising it.

The minister who currently oversees the Post Office, Gareth Thomas, chaired the Co-operative Party for nearly 20 years.

Both Mr Thomas and Mr Reynolds are scheduled to give evidence to the public inquiry into the Horizon IT crisis next month, and may be asked about the project being undertaken by BCG during their appearances.

The Post Office is wholly owned by the state, with the public’s shareholding managed by UK Government Investments (UKGI).

In recent months, calls for a review of the company’s ownership model have grown amid rising public anger at the wrongful conviction of hundreds of sub-postmasters after they were accused of stealing cash from their branches.

Crystallised by the ITV drama Mr Bates vs The Post Office, which exposed the scandal to a wider audience, it has been labelled Britain’s biggest miscarriage of justice.

Many of those affected suffered ill health, marital breakdowns or died before they were exonerated.

This week, Sir Alan said the government should consider suing former directors of the company

Sir Alan, who was knighted in the King’s birthday honours in June, is still to agree a compensation settlement with the government.

The Post Office’s travails have deepened this year, with internal governance rows and disputes between the company’s board and its owner erupting in public.

In January, Henry Staunton, the chairman, was sacked by Kemi Badenoch, the then business secretary, for what she alleged were serious governance failings.

Mr Staunton subsequently disclosed an investigation into bullying claims against Nick Read, the Post Office’s chief executive, which the organisation said in April had exonerated him.

Mr Read was accused of constant attempts to secure pay rises, even as sub-postmasters were facing protracted delays to their entitlement to compensation after being wrongfully convicted.

As part of their efforts to repair the Post Office’s battered finances and reputation, the government has parachuted in Nigel Railton, a former boss of National Lottery operator Camelot, as its chairman.

One of Mr Railton’s first major tasks is to find a new chief executive, after Mr Read confirmed last month that he was leaving after five-and-a-half years in the job.

Any attempt to mutualise the company would also need to take into account the ongoing financial cost of the compensation bill for the Horizon IT scandal, as well as the fact that a replacement system has yet to be successfully implemented.

After meeting Mr Hollinrake in April, Andy Furey, a national officer at the CWU Union, said: “There has to be a totally new operating model for the Post Office going forward to remain relevant for society.

“[The] people on the frontline delivering the service to communities on a daily basis deserve a much bigger say in the running of the Post Office.”

This weekend, a spokesman for the Department for Business and Trade declined to comment.

Business

Post Office campaigner Sir Alan Bates says he is yet to receive reply to letter to PM

Published

22 hours ago

November 5, 2024

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Post Office campaigner Sir Alan Bates says he is yet to receive reply to letter to PM

Post Office campaigner Sir Alan Bates is yet to receive a reply from Sir Keir Starmer, despite writing to him over a month ago.

Sir Alan said he had written to the prime minister to remind him the “clock is still ticking” on a financial redress deadline for victims.

In his letter, he demanded a March 2025 deadline for compensation for sub-postmaster victims of the Horizon scandal.

Sir Alan confirmed to Sky News he was yet to hear back from the prime minister.

“It was over a month ago,” he said.

“I sent him a reminder yesterday. I told him the clock is still ticking and it’s now five months from the March deadline, which I’m told is still achievable by other professionals.

“So let’s get on with it, that’s all we want. Get on with it.”

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Business

Vodafone and Three merger could get green light, says UK’s competition watchdog

Published

1 day ago

November 5, 2024

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Vodafone and Three merger could get green light, says UK's competition watchdog

A £15bn merger between two of the UK’s biggest mobile networks could get the green light – if they stick to their commitments to invest in the country’s infrastructure, the competition watchdog has said.

The Competition and Markets Authority (CMA) said the merger of Vodafone and Three had “the potential to be pro-competitive for the UK mobile sector”.

Announced last year, the proposed £15bn merger would bring 27 million customers together under a single provider.

The watchdog previously warned that tens of millions of mobile phone users could end up paying more if the merger went ahead.

However, the two groups recently set out plans to protect consumer pricing and boost network investment.

The CMA has now laid out a list of “remedies” required for the deal to go-ahead.

They include the networks committing to freezing certain tariffs and data plans for at least three years to protect customers from short-term price rises in the early years of the network plan.

Stuart McIntosh, chair of the inquiry group leading the investigation, said on Tuesday: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed.

“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger.

“A legally binding network commitment would boost competition in the longer term and the additional measures would protect consumers and wholesale customers while the network upgrades are being rolled out.”

Today’s announcement is provisional, with a final decision due before 7 December. The inquiry group is inviting feedback on today’s announcement by 5pm on 12 November.

The CMA also published a list of potential solutions – which it called remedies – to issues it identified with the merger.

If the networks want the merger to go ahead, the watchdog requires Vodafone and Three to:

• Deliver a joint network plan to set out network upgrades and improvements over eight years;

• Commit to keeping certain existing tariff costs and data plans for at least three years to protect customers from price hikes;

• Commit to pre-agreed prices and contract terms so Mobile Virtual Network Operators (MVNOs) – mobile providers that do not own the networks they operate on – can obtain competitive wholesale deals.

Vodafone and Three are two of the biggest mobile firms in the UK, and their networks support a number of MVNOs including Asda Mobile, Lebara, Voxi, and Smarty.

Responding to the watchdog’s announcement, a spokesperson for Vodafone on behalf of the merger said: “The merger will be a catalyst for positive change.

“It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country.

“The merger is also closely aligned with the government’s mission to drive growth and to encourage more private investment in the UK.”

Earlier this year, Three’s chief executive hit out at the UK’s “abysmal” 5G speeds and availability as he urged regulators to approve the company’s merger with Vodafone.

Robert Finnegan noted his firm’s “cash flows have been negative since 2020 and our costs have almost doubled in five years, meaning investment in [the] network is unsustainable”.

“UK mobile networks rank an abysmal 22nd out of 25 in Europe on 5G speeds and availability, with the dysfunctional structure of the market denying us the ability to invest sustainably to fix this situation,” he added.

Business

Bosses rail at business secretary over ‘avalanche of costs’

Published

2 days ago

November 4, 2024

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Bosses rail at business secretary over 'avalanche of costs'

Business leaders expressed frustration with ministers on Monday amid a growing budget backlash that bosses said would trigger an “avalanche of costs” and leave them with no choice but to slash investment and increase prices.

Sky News has learnt that bosses of large retail and hospitality companies and trade associations told Jonathan Reynolds, the business secretary, that last week’s budget risked damaging consumer confidence and exacerbating challenges facing the UK economy.

Among the dozens of companies represented on the call are said to have been Burger King UK, Fuller Smith & Turner, Greene King, Kingfisher and the supermarket chain Morrisons.

Mr Reynolds is said to have acknowledged that Rachel Reeves‘s inaugural fiscal statement had “asked a lot” of British business, with James Murray, the financial secretary to the Treasury, understood to have described it as “a once-in-a-generation budget”, according to several people briefed on the call.

One insider said that Nick Mackenzie, the chief executive of Greene King, had highlighted that the increase in employers’ national insurance (NI) contributions would cause “a £20m shock” to the company, while Fullers is understood to have warned that it would be forced to halve annual investment from £60m to £30m as a result of increased cost pressures.

Rami Baitieh, the Morrisons chief executive, told Mr Reynolds that the budget had exacerbated “an avalanche of costs” for businesses next year, and asked what the government could do to mitigate them.

Sources added that the CBI, the employers’ group, said its impact would be “severe”, while the British Beer & Pub Association added that there was now a disincentive to invest and flagged “a tsunami” of higher costs.

The range of comments on the call with ministers underlines the scale of discontent in the private sector about Labour’s first budget for nearly 15 years.

Only a small number of interventions during the discussion are said to have been in support of measures announced last week, with the Federation of Small Businesses understood to have praised the doubling of the employment allowance, which would see many of the smallest employers having their NI bills cut by £2,000.

The Department for Business and Trade has been contacted for comment, while none of the companies contacted by Sky News would comment.