The Post Office has set out plans to double the average annual income of each branch by 2030, in a new transformation plan revealed by chair Nigel Railton today. The five-year plan puts as many as 115 branches at risk.
Subject to government funding, the plan aims to add a quarter of a billion pounds annually to postmasters’ remuneration by “dramatically increasing” their share of revenue.
Postmasters, who run 11,500 branches, could expect up to £120m in additional pay by the end of the 2025 financial year, representing a 30% increase in revenue share, the Post Office said.
The state-owned company will also be reviewing 115 directly managed “loss-making” branches, in a bid to sustainably finance the business long-term. It is also understood that hundreds of head office jobs could be at risk as part of the radical business shake-up.
“We are considering a range of options to reduce our central costs” said a Post Office spokesman. ”This includes considering the future of our remaining directly managed branches (DMBs), which are loss-making. We have had long held a publicly-stated ambition to move to a fully franchised network and we are in dialogue with the unions about future options for the DMBs.”
As part of the new transformation deal, the Post Office also aims to strengthen postmasters’ role in the direction of the organisation, implementing a new panel of postmasters to help the business improve the support and training it provides to branches.
A new Consultative Council will also be established to work with the Post Office on the delivery of the transformation plan, ensuring that postmasters’ interests remain “front and centre”.
Securing the Post Office’s future
In his speech delivered to postmasters this morning, Railton outlined the commercial, operational, cultural and reputational challenges that must be addressed to deliver change for postmasters and learn the lessons from the Horizon IT public enquiry.
“The Post Office has a 360-year history of public service and today we want to secure that service for the future by learning from past mistakes and moving forward for the benefit of all postmasters,” he said. “We can, and will, restore pride in working for a business with a legacy of service, rather than one of scandal.
“The value postmasters deliver in their communities must be reflected in their pockets, and this transformation plan provides a route to adding more than £250m annually to total postmaster remuneration by 2030, subject to government funding.
“It begins a new phase of partnership during which we will strengthen the postmaster voice in the day-to-day running and operations of the business, so they are represented from the frontline to the boardroom.”
The five-year plan also encompasses a series of other changes designed to increase remuneration for postmasters, including strengthening their commercial offer to customers, particularly in accelerating the rollout of banking hubs.
It also plans to deliver a “lower-risk, better-value” new branch IT system for postmasters gradually, investing in the automation of cash and mail services in-branch to reduce postmasters’ cost-to-serve in their branches.
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Finally, the plan aims to create a new streamlined operating model to better support postmasters by “offering expert support in marketing, training, and technology to postmasters”.
“This transformation plan is the first step in a five-year journey that will set up the Post Office for years to come,” said acting CEO Neil Brocklehurst. ”There are many consumers who primarily shop online, but there are also many who struggle to use online services or actively choose to shop on their local high street and who want to be served by a human being.
“Postmasters across the UK serve every generation, and this plan not only improves their incomes but the support we provide to let them run their businesses and serve their communities.”
Elliot Jacobs, serving postmaster and a non-executive director on the Post Office board, said: “The last few years have been challenging for many retailers and postmasters are no exception. We have faced cost pressures from rising energy prices, as well as increased national minimum wage and National Insurance contributions.
”It’s vital that the Post Office embarks on this major transformation plan so that we have a sustainable financial future, and one that benefits the thousands of postmasters who work tirelessly day in, day out to support the local people and businesses who rely on us for essential everyday services.”
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