Work in progress to change Post Office into ‘Mutual’ model
The UK government is moving toward transforming the Post Office, which is currently state-owned, into a mutual. The Post Office is a wholly owned subsidiary of Royal Mail, but Parliament’s recently passed “Postal Services Act 2011” allows for its change to a mutual.
On June 13, 2011, Postal Services Act 2011 received Royal Assent, with most provisions coming into effect on October 1, 2011. The Act allows the UK government to privatise the Royal Mail, with private buyers able to own up to 90 percent of Royal Mail, and the Royal Mail staff offered at least 10 percent of the shares. The Act also includes the possible mutualisation of the Post Office.
In response to the possibility, the UK government has been trying to gauge the public’s reaction. In September, a public consultation was launched about mutualising the Post Office, and will close on December 12. Ministers are then expected to issue their response next year.
Ed Mayo, the secretary general of Co-operatives UK, wrote an October 7 article for Social Enterprise in defense of the mutualisation of the Post Office, labeling it as the ideal business structure to best benefit the public.
"Of all the ideas and work underway on co-operatives, the Government's proposal for a mutual model for the Post Office is perhaps the most imaginative and the furthest advanced. Of course there are risks, not least that there needs to be a sound commercial base for post offices for any future, co-operative or otherwise, but the way that the Government has engaged the key partners and been open about developing the model is a positive lesson for the wider work on public service mutuals."
Mayo went on to explain how co-operatives are trustworthy, successful forms of business that benefit the public versus the few.
“We want to see a first class not a second class Post Office,” wrote Mayo. “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.”
Prior to the public consultation, the UK government asked Co-operatives UK to look into mutualising the Post Office and offer suggestions. Their recommendations included having the Post Office owned by its members, with employees and customers all offered a chance to be a part of the Post Office mutual. Co-operatives UK also suggested that the government should still have a role in running the Post Office, such as providing some funding, but should not be a member of the mutual or an owner.
Currently, some individual branches of the Post Office are already owned by mutuals. For instance, Lincolnshire Co-operative operates 39 post offices. In his article, Mayo addresses the current tension between the existing, privately owned Post Office branches, such as Lincolnshire’s, and the state-owned Post Office, stating that they often conflict over pay rates and online expansion. Thus, he argues that by making all of the Post Office a mutual, it will help alleviate such conflict.
Mutualising the Post Office would be a significant step in the British economy, and it would not be the first Post Office to be separated from the government. In 1995, Deutsche Post AG, the mail system in Germany, was privatised. Post Denmark, the postal service in Denmark, similarly was a public limited company in 2002, with employees being sold shares, until in 2009, when it merged with Sweden’s postal service and became government owned and privately owned.