Post Office to set out plans for branch closures and job cuts
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.”
Santander is to buy TSB, becoming the UK’s third biggest bank in the process.
Once completed, the combined bank will have the third-largest number of personal account balances in the UK, and be fourth in terms of mortgage lending, with a total of nearly 28 million customers, Santander said.
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The deal is still subject to approval by regulators and shareholders of TSB’s parent company, Banco Sabadell, but is expected to conclude in the first three months of 2026.
It could mean the TSB brand is no longer visible on the high street, as Santander said it “intends to integrate TSB in the Santander UK group”.
Job losses may also result.
Santander‘s interest in tabling a bid for TSB was first reported by Sky News.
TSB has five million customers, offers business and personal accounts, and is the UK’s tenth largest lender for mortgages and deposits. After cutting jobs and branches last year, it currently employs roughly 5,000 staff and operates 175 branches, the seventh largest network in the UK.
It comes just months after speculation that Santander would leave the UK market, despite denials from the Spanish-owned lender.
File pic: iStock
In recent months, it had rejected takeover attempts from rivals NatWest and Barclays.
Barclays had also bid for TSB.
Banco Sabadell said it was selling TSB “to focus our strategy on Spain”, its chief executive, Cesar Gonzalez-Bueno, said.
Santander has agreed to pay an initial £2.65bn for TSB, with the final price expected to rise to £2.9bn when yet-to-be-announced financial results are factored in.
The price is 1.5 times the value of TSB’s assets.
“This is an excellent deal for customers, combining two strong and complementary banks, creating one of the most substantial banks in the UK and materially enhancing the competitiveness of the industry,” said Mike Regnier, CEO of Santander UK.
A major component within household energy bills is set to rise sharply from next year to help pay for efforts to maintain energy security during the transition to green power.
The industry regulator Ofgem’s draft determination on how much it will allow network operators to charge energy suppliers from 1 April 2026 to 31 March 2031 would push up network costs within household bills by £24 a year.
These charges currently account for 22% of the total bill.
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The findings, which will be subject to consultation before a final determination by the end of the year, reflect demands on network operators to make power and gas networks fit for the future amid expansion in renewable and nuclear energy to meet net zero ambitions.
Ofgem says the plans it has given provisional approval for amount to a £24bn investment programme over the five-year term – a four-fold increase on current levels.
A total of 80 major projects includes upgrades to more than 2,700 miles of overhead power lines.
If rubber stamped as planned, the resulting network cost increases threaten further upwards pressure on bills from next April – a month that has now become synonymous with rising essential bills.
The watchdog revealed its plans as the 22 million British households on the energy price cap benefit from the first decline for a year.
It is coming down from an annual average £1,849 between April and June to £1,720 from July to September.
That’s on the back of easing wholesale costs seen during the spring – before the temporary surge in wholesale gas prices caused by the recent instability in the Middle East.
A new forecast released by industry specialist Cornwall Insight suggested households were on track to see a further, but slight, decline when the cap is adjusted again in October.
At the current level it is 28% lower than at the height of the energy-led cost of living crisis – but 10% higher than the same period last year.
The price cap does not limit total bills because householders still pay for the amount of energy they consume.
Ofgem is continuing to recommend consumers shop around for fixed rate deals in the market as they can offer savings compared with the price cap and shield homes from any price shocks seen within their fixed terms.
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Jonathan Brearley, the regulator’s chief executive, said: ”Britain’s reliance on imported gas has left us at the mercy of volatile international gas prices which during the energy crisis would have caused bills to rise as high as £4,000 for an average household without government support.
“Even today the price cap can move up or down by hundreds of pounds with little we can do about it.
“This record investment will deliver a homegrown energy system that is better for Britain and better for customers. It will ensure the system has greater resilience against shocks from volatile gas prices we don’t control.
“These 80 projects are a long-term insurance policy against threats to Britain’s energy security and the instability of prices. By bringing online dozens of homegrown, renewable generation sites and modernising our energy system to the one we will need in the future we can boost growth and give ourselves more control over prices too.
“Doing nothing is not an option and will cost consumers more – this is critical national infrastructure. The sooner we build the network we need, and invest to strengthen our resilience, the lower the cost for bill payers will be in the future.”
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