Why a mutual Post Office would deliver a first class solution

Although there seems to be a lot of talk and little action when it comes to co-operatives and mutuals delivering public services, the government’s consultation on mutualising the Post Office is a landmark for the potential introduction of a significant new mutual in the UK economy.

As Secretary General of Co-operatives UK, you won’t be surprised that I believe co-operatives are trustworthy organisations that are able to unleash the talents and energies of their employees and users. And that they are ideally suited to providing such a valued service as the Post Office, offering members an equal say, democratic decision making and a financial or social return.

Which is why I was particularly pleased when the Department for Business, Innovation and Skills commissioned Co-operatives UK – the trade association for co-operative enterprises – earlier this year to explore options for transferring Post Office Ltd from government ownership into a mutual run for the public benefit.

I can understand why Ministers are concerned that the Post Office is being held back by the current structure of Post Office Ltd, the government-owned company that develops and provides products and services which are delivered through the UK’s 11,500 Post Office branches.

We want to see a first class not a second class Post Office. A mutual – rather than a state-owned – Post Office is one way to achieve that, because over time it can let the people who have the greatest interest in the network share in its success.

Co-operative businesses are thriving at present. But in itself being a mutual is not enough. You need to find ways to use the model, with its shared ownership, ethical values and opportunities for commitment and loyalty, to create commercial and social advantage.

The proposals we set out in our report - Mutual Options for Post Office Ltd – would give the local owners of Post Office branches, the sub-postmasters, together with employees, charities and local communities that use it, control over how the network is run.

Working closely with the National Federation of Sub Postmasters as well as retailers, business organisations and a range of experts to examine customer owned mutuals like The Co-operative Group and employee owned mutuals like John Lewis, our report concluded that a hybrid of these two structures would work best for the Post Office.

There are significant challenges to be addressed in this process.

There is often tension between the interests of Post Office Ltd and privately owned local branches which make up 97% of the network. For example, sub-postmasters are pitted against Post Office Ltd when they negotiate annual pay rates. And they fear Post Office Ltd expanding online because they worry it will drive customers away from their stores and that they won’t share in the profits.

Our proposal addresses this tension head on – it recommends that the Post Office is owned, ultimately, by those delivering the service, such as employees, sub-postmasters and representatives of those receiving the service.

We are also clear that before any changes can be made, the network will need to be put on a more secure financial footing, so that a mutual could build from solid foundations, which echoes the recommendations in our report – that a mutual option for Post Office Ltd should be advised if the commercial conditions are right.

With a commitment to providing £1.34bn of funding for the Post Office to maintain and modernise the network, it is encouraging to know that government believes it is realistic for the Post Office to be in mutual ownership by the end of this Parliament. And mutualisation would not prevent the government from providing further funding in the future.

We must all remember that the core purpose of the Post Office is to operate for the public benefit and this should be entrenched, with legal safeguards, for perpetuity.

In the UK, co-operatives and mutuals are a key part of the wider social enterprise sector. There are 5,450 co-operatives, with around 12.8m members and the co-operative sector has outperformed the economy as a whole since the credit crunch.

Just imagine if the Post Office were to join the sector as the mutual Post Office.

Ed Mayo is Secretary General of Co-operatives UK, the national trade association for co-operatives enterprises. He was previously Chief Executive of Consumer Focus and director of the New Economics Foundation (NEF).