Post Office to go John Lewis style!

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Post Office may face staff ownership in John Lewis-style revolution

Executives are studying John Lewis model to hand over Post Office to staff in possible move triggered by Royal Mail sell-off



Post office Post Office is being considered for staff ownership in a John Lewis-style revolution. Photograph: Graham Turner/Guardian

The Post Office could be turned into a John Lewis-style mutual company owned by its staff under radical plans being considered by the government.

Staff in the UK's 12,000 Post Office branches would own shares in the new company, which would pay them dividends out of its profits and give them a greater say over how to run the network.

Business secretary Vince Cable has already confirmed plans to privatise Royal Mail, which owns the Post Office. As part of the planned sell-off, Royal Mail's workforce will be awarded 10% of shares in the privatised company.

But the Guardian has learned that the postal services bill – which will enable Royal Mail to be privatised – will also include the separate provision allowing for the mutualisation of the Post Office. It is thought that the bill, which has already been drafted, will have its first hearing towards the end of the month.

The bill is much more radical than the Labour government's failed attempt to partially privatise Royal Mail, which would also have guaranteed that the Post Office remained under the ownership of the crown. The coalition government has instead promised that the Post Office would remain in "public ownership".

The Department for Business, Innovation and Skills said: "Across the country there are a growing number of examples of community groups, charities and local people coming together to get Post Office services in their area. We're fully behind this trend and are considering whether there are other ways that we can further support such groups in the future."

The details of how a mutualised Post Office would work in practice are still be worked on. Executives have been attending workshops studying department store John Lewis's model, regarded as the role model for a mutualised company.

The financial viability of the Post Office network remains uncertain. Of the 12,000 branches, fewer than 400 are "crown offices", larger branches, usually in inner cities, owned by Royal Mail. The remainder are owned by subpostmasters, who are contracted as franchisees, paying Royal Mail for the right to offer Post Office services and taking a cut of the profits.

But mail volumes are falling and other services branches offer, such as financial services and payment of benefits and pensions, are moving online. Under Labour, 2,500 branches, many in rural areas, closed because of mounting losses. The National Federation of Subpostmasters says thousands more continue to struggle. The government is subsidising the network by £150m each year, but grants expire in 2012 and it is not clear what – if any – funds will be offered in this month's comprehensive spending review .

The privatisation of Royal Mail also threatens the future of the Post Office, which relies on Royal Mail for about a third of its revenue, but a new owner could decide to use other retail outlets, such as supermarkets, to post parcels. There are concerns that the Post Office is put on a secure, sustainable footing before it is mutualised. Sources close to the National Federation of Subpostmasters said it could support mutualisation if guarantees were made that a privatised Royal Mail – as well as the government – would continue to use the Post Office network.