Ed Mayo: From state network to our mutual friend

The typical post office offers up to 170 products and services, from foreign currency to fishing rod licences, and all but a handful are run by private operators, such as co-operative stores or individuals with the grand title of “sub postmasters”.

It is the largest retail network in the country and in a rural setting, 73 per cent of post offices are co-located with another outlet, often making it the “last shop in the village”.

Over recent years, the network has come under considerable pressure. From a high of around 18,000 branches, successive rounds of closures, including 2,500 in recent years, have been a cause for public concern and campaigning.

Yet there is a double paradox here. First, the people with the best ideas on how to save them, the sub postmasters, have tended to be sidelined in decision-making. Second, the members of the public who love their post office are not always the people who use them most.

Richard Bates, who has evaluated the closure programme for the agency, Consumer Focus, suggests that “if a community had used their post office half as vigorously as they campaigned against its closure, the branch would never have been under threat”.

There is an alternative model, which is to imagine, if you will, that the Post Office were a mutual, not owned by the state, but by the sub postmasters who run the post offices and, in some form, the public they serve. In principle, that would allow the people who have the greatest stake in the Post Office a share in its success.

This is the idea that Co-operatives UK has been exploring, at the request of the Liberal Democrat Business Minister, Edward Davey.

Co-operatives UK is the network for co-operative and mutual businesses – ranging from co-operative shops and pharmacies through to the super ethical Co-operative Bank and Yorkshire business stories such as SUMA, Green Valley Grocer and, recently, the Hudswell Community Pub, where local people saved their pub from closure by taking it into community ownership.

It is easy to assume that after years of privatisation elsewhere, Post Office Limited, being owned by the state, is a dying breed. The letters side of Royal Mail is, after all, being privatised. But privatisation is fundamentally wrong for the post office network, because, as we found when we interviewed those involved, it has a social mission and delivers a public benefit.

To let private investors shape the network according to profit would be to lose the very point of a network. It can act as a trusted agent for government services and it can play a vital role in the local economy.

Countless small businesses, for example, rely on the post office as a commercial lifeline. Economists have estimated the social benefit of the network at around £2.3bn.

For this reason, the Post Office has to be run in the public interest, for now and for the future.

Our work was to explore whether this could be achieved not just through public ownership but, as an alternative, though mutual ownership, by inviting the people who work in post offices and use them, to have a say through a democratic governance structure.

We found that, at present, sub postmasters and retailers are restricted by rules and regulations that get in the way. Rather than the Post Office making it easy for them, there was a clash of interests and a culture of top-down solutions which didn’t always work.

The benefit of a mutual model is that the incentives are aligned – if people help improve the business, they benefit as a result because they are co-owners.

We have suggested that the Post Office would be owned, ultimately, by its members. Those delivering the service, such as employees and sub postmasters, and representatives of those receiving the service – such as consumer, charitable and community groups – should all have the chance to become members of the Post Office mutual.

The Post Office should still be run on a day-to-day basis by a board of directors and non-executive directors. But this board would be answerable to, and appointed by, a forum that is representative of the members.

This is a model that works well for large-scale mutuals here and abroad. The UK Co-operative Group, for example, is the world’s largest consumer co-operative. In Spain, the fast-growing retail network, Eroski, has both shoppers and workers as co-operative member owners, while FC Barcelona has become a poster child for co-operatives as a club owned by its fans.

The idea of a Post Office Mutual is not one to introduce overnight. The Post Office network is too precious and there needs to be urgent work to get it all onto a more commercial footing.

Those involved, from sub postmasters to trades unions and community groups, need to have a say and to shape what emerges. It would help to have cross-party interest and support.

But the idea of a mutual as an alternative to state ownership is now being debated in Parliament and the Government has committed to bringing forward a public consultation on the idea later this year.

It is early days for the idea, but a Post Office Mutual could help to turn our passion for post offices into something that injects new life into the network, rather than raging against its decline.

Ed Mayo is secretary general of Co-operatives Uk.