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The Post Office is drawing up plans to close dozens of branches and axe hundreds of head office jobs as it tries to place its finances on a sustainable long-term footing.

Sky News has learnt that the state-owned company is preparing to announce in the coming days that it will shut or seek alternative franchising arrangements for more than 100 wholly owned branches.

The affected branches collectively employ close to 1,000 people and are said to be significantly loss-making.

A significant number of jobs – believed to be in excess of 1,000 – are also understood to be at risk at the Post Office’s headquarters. Further details of where the axe would fall were unclear on Tuesday afternoon.

Whitehall insiders said that the government had been consulted on the plans, which come as ministers explore the possibility of handing ownership of the network to thousands of sub-postmasters across Britain.

They added that union officials had also been briefed on the proposals, with one suggesting that an announcement could come as early as Wednesday or Thursday.

The cost-cutting measures are said to be designed to help the Post Office stem substantial financial losses, with the company requiring an annual government subsidy to stay afloat.

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Ministers to mutualise Post Office

One government source said the plans should be seen in the context of comments made by Jonathan Reynolds, the business secretary, on Monday at the public inquiry into the Horizon IT scandal.

Giving evidence, Mr Reynolds said: “I think despite the scale of this scandal, the Post Office is still an incredibly important institution in national life.

“I look at the business model of the Post Office, and I think even accounting for the changes in the core services that are provided … there’s still a whole range of services that are really important.

“But I don’t think postmasters make sufficient remuneration from what the public want from the Post Office, and I think that’s going to require some very significant changes to the overall business model of the Post Office.”

Improvements to the pay and working practices of sub-postmasters are expected to be announced imminently, the government source added.

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The 364 year-old institution has been engulfed in crisis since the scale of the Horizon scandal became clear, with hundreds of sub-postmasters wrongly prosecuted for theft and fraud offences.

Brought to a wider public audience by the ITV drama ‘Mr Bates vs The Post Office’, 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.

Former chief executive Paula Vennells, who insisted for years that the Horizon system was robust, was effectively stripped of her damehood in disgrace earlier this year.

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

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 Post Office is Britain’s biggest retail network, with roughly 11,500 branches, 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 a corporate governance fiasco at the company.

In January, Henry Staunton, the chairman, was sacked by Kemi Badenoch, the then business secretary.

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, who has since resigned, 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.

A Post Office spokesperson said: “We will set out a “new deal” for postmasters and the future of the Post Office as an organisation.

“It will dramatically increase postmasters’ share of revenues, strengthen our branch network and make it work better for local communities, independent postmasters and our partners who own and operate branches.”

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‘Leicester is embargoed’: City’s clothing industry in crisis

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'Leicester is embargoed': City's clothing industry in crisis

You probably recall the stories about Leicester’s clothing industry in recent years: grim labour conditions, pay below the minimum wage, “dark factories” serving the fast fashion sector. What is less well known is what happened next. In short, the industry has cratered.

In the wake of the recurrent scandals over “sweatshop” conditions in Leicester, the majority of major brands have now abandoned the city, triggering an implosion in production in the place that once boasted that it “clothed the world”.

And now Leicester faces a further existential double-threat: competition from Chinese companies like Shein and Temu, and the impending arrival of cheap imports from India, following the recent trade deal signed with the UK. Many worry it could spell an end for the city’s fashion business altogether.

Gauging the scale of the recent collapse is challenging because many of the textile and apparel factories in Leicester are small operations that can start up and shut down rapidly, but according to data provided to Sky News by SP&KO, a consultancy founded by fashion sector veterans Kathy O’Driscoll and Simon Platts, the number has fallen from 1,500 in 2017 to just 96 this year. This 94% collapse comes amid growing concerns that British clothes-making more broadly is facing an existential crisis.

A trade fair tries to reignite enthusiasm for the city's clothing industry
Image:
A trade fair tries to reignite enthusiasm for the local clothing industry

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More on this story:
The modern slaves making our clothes in Leicester
How Leicester’s textile workers are being exploited
Boohoo failed in Leicester supply chain malpractice

In an in-depth investigation carried out over recent months, Sky News has visited sites in the city shut down in the face of a collapse of demand. Thousands of fashion workers are understood to have lost their jobs. Many factories lie empty, their machines gathering dust.

Graphic

The vast majority of high street and fast fashion brands that once sourced their clothes in Leicester have now shifted their supply chains to North Africa and South Asia.

And a new report from UKFT – Britain’s fashion and textiles lobby group – has found that a staggering 95% of clothes companies have either trimmed or completely eliminated clothes manufacturing in the UK. Some 58% of brands, by turnover, now have an explicit policy not to source clothes from the UK.

Seamstresses in former Leicester factory
Image:
Seamstresses in one of the city’s former factories

Clothing industry workers in Leicester
Image:
Clothing industry workers in Leicester

Jenny Holloway, chair of the Apparel & Textile Manufacturers Association, said: “We know of factories that were asked to become a potential supplier [to high street brands], got so far down the line, invested on sampling, invested time and money, policies, and then it’s like: ‘oh, sorry, we can’t use you, because Leicester is embargoed.'”

Tejas Shah, a third-generation manufacturer whose family company Shahtex used to make materials for Marks & Spencer, said: “I’ve spoken to brands in the past who, if I moved my factory 15 miles north into Loughborough, would be happy to work with me. But because I have an LE1, LE4 postcode, they don’t want to work for me.”

Shahtex in Leicester used to make materials for Marks & Spencer
Image:
Shahtex in Leicester used to make materials for Marks & Spencer

Tejas Shah is a third-generation manufacturer
Image:
Tejas Shah, of Leicester-based firm Shahtex

Threat of Chinese brands Shein and Temu

That pain has been exacerbated by a new phenomenon: the rise of Chinese fast fashion brands Shein and Temu.

They offer consumers ultra-cheap clothes and goods, made in Chinese factories and flown direct to UK households. And, thanks to a customs loophole known as “de minimis”, those goods don’t even incur tariffs when they arrive in the country.

An online advert for Chinese fast fashion company Shein
Image:
An online advert for Chinese fast fashion company Shein

According to Satvir Singh, who runs Our Fashion, one of the last remaining knitwear producers in the city, this threat could prove the final straw for Leicester’s garments sector.

“It is having an impact on our production – and I think the whole retail sector, at least for clothing, are feeling that pinch.”

Inside one of the city's remaining clothesmakers
Image:
Inside one of the city’s remaining clothesmakers

While Donald Trump has threatened to abolish the loophole in the US, the UK has only announced a review with no timeline.

“If we look at what Trump’s done, he’s just thinking more about his local economy because he can see the long-term effects,” said Mr Singh. “I think [abolishing de minimis exceptions] will make a huge difference. I think ultimately it’s about a level playing field.”

A spokesperson for Temu told Sky News: “We welcome UK manufacturers and businesses to explore a low-cost way to grow with us. By the end of 2025, we expect half our UK sales to come from local sellers and local warehouses.”

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Thames Water hit with largest-ever fine issued by regulator Ofwat

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Thames Water hit with largest-ever fine issued by regulator Ofwat

Thames Water, the UK’s biggest water provider, has been hit by a record fine by regulator Ofwat.

The company has been fined £122.7m following Ofwat’s “biggest and most complex” investigation.

It follows two investigations related to Thames Water’s wastewater operations and dividend payouts.

Of the total fine, £104.5m – 9% of Thames Water‘s turnover – has been levied for breaches of wastewater rules – just below the maximum 10% of turnover that Ofwat could have applied.

Money blog: Inside the booming one-bed flat market

Pic: istock
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Pic: istock

Another £18.2m penalty will be paid for breaches of dividend payment rules.

It is the first time Ofwat has fined a company for shareholders’ payments which do not “properly reflect” its performance for customers and the environment.

The fine will be paid by Thames Water and its shareholders, Ofwat said, rather than customers.

‘Unacceptable’ environmental impact

The regulator was highly critical of Thames Water’s handling of wastewater, describing it as having an “unacceptable” impact on the environment.

Its investigation of treatment works and the wider wastewater network uncovered failings which “amounted to a significant breach of the company’s legal obligations” and caused that unacceptable environmental impact.

The company announced a 40% spike in sewage spills in December for the period from January to September 2024.

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Thames Water boss can ‘save’ company

The fine was so large because Ofwat’s chief executive, David Black, said Thames Water “failed to come up with an acceptable redress package that would have benefited the environment”.

“This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment,” Mr Black said.

“Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.”

As a result, Thames Water is required to agree to a remediation plan with Ofwat within six months.

Another investigation by the Environment Agency into environmental permits at sewage treatment works is ongoing.

Bad news for Thames Water finances

Thames Water serves 16 million customers across London and the South East and has just about fended off effective nationalisation, having secured an emergency £3bn loan. Its debts now top £19bn.

These fines were not factored into Thames Water’s financial planning for the next five years. The company’s chief executive, Chris Weston, told a recent sitting of the Environment, Food and Rural Affairs select committee that Thames Water’s future was dependent on Ofwat being lenient with fines.

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A Thames Water spokesperson said: “We take our responsibility towards the environment very seriously and note that Ofwat acknowledges we have already made progress to address issues raised in the investigation relating to storm overflows.

“The dividends were declared following a consideration of the company’s legal and regulatory obligations. Our lenders continue to support our liquidity position and our equity raise process continues.”

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Business

‘Leicester is embargoed’: City’s clothing industry in crisis

Published

on

By

'Leicester is embargoed': City's clothing industry in crisis

You probably recall the stories about Leicester’s clothing industry in recent years: grim labour conditions, pay below the minimum wage, “dark factories” serving the fast fashion sector. What is less well known is what happened next. In short, the industry has cratered.

In the wake of the recurrent scandals over “sweatshop” conditions in Leicester, the majority of major brands have now abandoned the city, triggering an implosion in production in the place that once boasted that it “clothed the world”.

And now Leicester faces a further existential double-threat: competition from Chinese companies like Shein and Temu, and the impending arrival of cheap imports from India, following the recent trade deal signed with the UK. Many worry it could spell an end for the city’s fashion business altogether.

Gauging the scale of the recent collapse is challenging because many of the textile and apparel factories in Leicester are small operations that can start up and shut down rapidly, but according to data provided to Sky News by SP&KO, a consultancy founded by fashion sector veterans Kathy O’Driscoll and Simon Platts, the number has fallen from 1,500 in 2017 to just 96 this year. This 94% collapse comes amid growing concerns that British clothes-making more broadly is facing an existential crisis.

More on this story:
The modern slaves making our clothes in Leicester
How Leicester’s textile workers are being exploited
Boohoo failed in Leicester supply chain malpractice

In an in-depth investigation carried out over recent months, Sky News has visited sites in the city shut down in the face of a collapse of demand. Thousands of fashion workers are understood to have lost their jobs. Many factories lie empty, their machines gathering dust.

Graphic

The vast majority of high street and fast fashion brands that once sourced their clothes in Leicester have now shifted their supply chains to North Africa and South Asia.

And a new report from UKFT – Britain’s fashion and textiles lobby group – has found that a staggering 95% of clothes companies have either trimmed or completely eliminated clothes manufacturing in the UK. Some 58% of brands, by turnover, now have an explicit policy not to source clothes from the UK.

Seamstresses in former Leicester factory
Image:
Seamstresses in one of the city’s former factories

Clothing industry workers in Leicester
Image:
Clothing industry workers in Leicester

Jenny Holloway, chair of the Apparel & Textile Manufacturers Association, said: “We know of factories that were asked to become a potential supplier [to high street brands], got so far down the line, invested on sampling, invested time and money, policies, and then it’s like: ‘oh, sorry, we can’t use you, because Leicester is embargoed.'”

A trade fair tries to reignite enthusiasm for the city's clothing industry
Image:
A trade fair tries to reignite enthusiasm for the local clothing industry

Tejas Shah, a third-generation manufacturer whose family company Shahtex used to make materials for Marks & Spencer, said: “I’ve spoken to brands in the past who, if I moved my factory 15 miles north into Loughborough, would be happy to work with me. But because I have an LE1, LE4 postcode, they don’t want to work for me.”

Shahtex in Leicester used to make materials for Marks & Spencer
Image:
Shahtex in Leicester used to make materials for Marks & Spencer

Tejas Shah is a third-generation manufacturer
Image:
Tejas Shah, of Leicester-based firm Shahtex

Threat of Chinese brands Shein and Temu

That pain has been exacerbated by a new phenomenon: the rise of Chinese fast fashion brands Shein and Temu.

They offer consumers ultra-cheap clothes and goods, made in Chinese factories and flown direct to UK households. And, thanks to a customs loophole known as “de minimis”, those goods don’t even incur tariffs when they arrive in the country.

An online advert for Chinese fast fashion company Shein
Image:
An online advert for Chinese fast fashion company Shein

According to Satvir Singh, who runs Our Fashion, one of the last remaining knitwear producers in the city, this threat could prove the final straw for Leicester’s garments sector.

“It is having an impact on our production – and I think the whole retail sector, at least for clothing, are feeling that pinch.”

Inside one of the city's remaining clothesmakers
Image:
Inside one of the city’s remaining clothesmakers

While Donald Trump has threatened to abolish the loophole in the US, the UK has only announced a review with no timeline.

“If we look at what Trump’s done, he’s just thinking more about his local economy because he can see the long-term effects,” said Mr Singh. “I think [abolishing de minimis exceptions] will make a huge difference. I think ultimately it’s about a level playing field.”

Continue Reading

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