Whitehall to deliver plan to mutualise crisis-hit Post Office | Business News

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.