By Claire West

The Government has today put forward an innovative proposal that could see Post Office Ltd turned into a mutual, giving power to staff, sub postmasters and communities.

The announcement was made as the Government put its plans before Parliament to secure vibrant futures for two cornerstones of British life — the Royal Mail and the Post Office.

Speaking following today’s announcement by the Business Secretary, Vince Cable, Ed Mayo, Secretary General of Co‑operatives UK, said:

“At the heart of the Post Office network are the people who run them and who use them. This Bill is a chance to build a sustainable business, using the time-honoured technique of co-operative and mutual membership.

“We are pleased to have been invited to work with Government to explore options for making a success of this.

“It takes time to build a membership-base and a culture of mutuality and it will take time to move Post Office Limited onto a fully commercial, independent footing.

“At present a mutual Post Office is an option, not a conclusion and is all up for discussion in parliament.

“For those who want to see a thriving network of post offices in communities across the UK, what we need now is patience, goodwill and open minds.”

Post Office Ltd is currently 100% owned by the Government and will not be for sale. The Postal Services Bill, which will be scrutinised and debated by Parliament in the coming months, proposes powers to transfer ownership to a mutual.

Embodying the principles of the Government’s Big Society agenda, this proposal would give those who know the Post Office best — subpostmasters, staff and the communities they serve - a say in how the Post Office is run. The Bill includes protections to ensure that the Post Office will always be run for the public benefit.

Business Secretary Vince Cable said:

“Post Offices continue to play a vital social role in the heart of local communities and remain an incredibly important resource. There will be no repeat of the previous Government’s closure programmes.

“But I’m concerned that the current structure of the company is holding the network back. The interests of the central holding company and locally owned branches are not always aligned. So, for example, subpostmasters 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.

“I want to start a conversation about how it is run in the future, but it seems to me that the Post Office is ideally suited to a John Lewis or Co-operative Group style structure — where employees, sub postmasters and communities get a greater say in how the company is run. This would be the Big Society in action.

“We’re already seeing how well the mutual model can work at a local level - across the country there are a growing number of examples of community groups, charities and local people coming together to provide Post Office services in their area.

“A change at a national level would empower those that know the Post Office best and give them more of a stake in its future. It could deliver the common sense of purpose needed to provide a vibrant future for the network.”

Co-operatives UK has been asked to explore options for creating a mutualised Post Office, reporting back to BIS Ministers next spring. Before any move to a mutual structure there would also be a full public consultation.

Peter Hunt, the Chief Executive of Mutuo, said:

"This proposal could help to secure the future of the Post Office for the public benefit.

"As a mutual, the Post Office will be able to harness the experience and goodwill of its employees, business partners and its customers.

"Together they will be part of a practical partnership that uses all of their skills to design a Post Office for the years ahead."

The Government is 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. It believes it is realistic for the Post Office to be in mutual ownership by the end of this Parliament and will be making further announcements on this in due course.