The time is right for a new Post Office transformation plan

No comments

Today was a big day for the Post Office. Battle-scarred from years of negative headlines and public outrage over the Horizon IT scandal, interim chair Nigel Railton chose the final day of the inquiry’s hearings to set out the organisation’s vision for the future.

Upon assuming the role in May, Railton immediately ordered a strategic review of the business, which – with 11,684 branches – is Britain’s biggest retail network.

This morning, in a video call with various stakeholders, including postmasters, he presented the result – what the Post Office is calling its five-year ‘Transformation Plan’ that will deliver a ‘New Deal’ for postmasters.

The Post Office says this deal will significantly increase its total annual income through revenue sharing, strengthening the role of postmasters in the direction of the business.

Subject to government funding, the plan aims to remunerate postmasters by an extra £250m by 2030, with about half of that (£120m) expected to be delivered by the end of the plan’s first year (in March 2026).

There will also be greater postmaster engagement in the running of the business via the new Postmaster panel and consultative council.

Hated Horizon IT system to be phased out

Perhaps most significant, not least symbolically, will be the “major investment” in automation of in-branch services, particularly around cash and mail. The Post Office says this will reduce manual tasks and free up more of postmasters’ time to serve customers, but it also means phasing out the hated Horizon system – to make transactions faster, smoother and simpler.

Of course, many postmasters would be forgiven for rolling their eyes at the promise of yet another fresh start being promised by management.

Nick Read, who will step down as CEO in March, made similarly positive noises when he took the reins in 2019 – yet, five years later, postmasters find themselves in a broadly similar position.

And the plan hasn’t stopped the government from commissioning its own review next year.

But the speech was delivered with an air of optimism, with Railton arguing that the combination of a new government, new Post Office leaders and the end of the Horizon inquiry “gives us permission to look ahead”.

It’s a fair point. And sources close to the Strategic Review have told The Grocer that Railton and acting CEO Neil Brocklehurst do seem genuine in their desire to put postmasters first for a change.

There was also much in this speech that will have cheered them, particularly around remuneration, which Railton admitted has not kept pace with inflation.

That’s an understatement. Later this week, I’ll be looking in more depth at the scandalously low fees postmasters receive for providing crucial services. To give one example, a postmaster currently receives 8p for helping a customer pay a utility bill. It’s a transaction that can easily take five minutes to complete given the need to count cash by hand or deal with payment cards that rarely work.

While Horizon has stolen the headlines (and postmasters’ money) increased pay really is every bit as important to the future of the Post Office. The time taken versus remuneration issue is the key point made by practically every postmaster when discussing whether the Post Office is a viable business.

Banking Hubs are the Big New Idea

To generate the extra income for subpostmasters, the Post Office has a number of new ideas, but perhaps the most significant is its Banking Hubs – spaces operated by the Post Office in partnership with nine major banks, offering basic personal and business banking services. It’s increasing the number from 88 to 500 by 2030.

With more than 6,000 bank branches having closed since 2015 according to Which? the nation’s Post Offices provide many of the crucial frontline services that have been lost – all while being poorly remunerated for those services, of course. So pushing through more than 400 in five years seems a big ask – and there’s still a question over how this helps make banking services pay for postmasters.

Reaction to the potential closure of all 115 Crown Post Office branches, which are owned and operated by the Post Office itself, was also less than positive. The move would result in approximately 1,000 job losses and was called “tone deaf and immoral” by unions. It certainly doesn’t provide ideal optics for an organisation trying to show it cares more about its employees nowadays.

However, many convenience store owners and other retailers who are forced to subsidise their Post Office business through their retail offer have long complained about the huge losses that Crown branches have been racking up for decades.

So, even on a day when the organisation was attempting to draw a line under the mistakes of the past, it feels like the Post Office is facing a ‘damned if they do, damned if they don’t’ situation. It just needs to decide who it would rather be damned by.