Postmasters’ buyout plan could split UK Royal Mail

A Postmasters’ group is attempting to mount a management buyout of the main postal network in a move that would split the Royal Mail group, The Times has learnt. The Postmasternetwork, which claims 7,500 members, this week will meet potential American investors to try to secure up to GBP150 million of funding to buy the 14,500-strong chain of loss- making sub-post offices. The group has held meetings with the Department of Trade and Industry already to press the idea. The organisation has emphasised its interest in running the network, although it would need government support for about two years, as the future of the UK’s postal service is being reviewed.
Allan Leighton, the Royal Mail chairman, wants employees to have a stake in the business, although the final structure for such a plan is undecided. The post office network is losing £110 million a year, despite efforts to revive its business after the loss of benefits payments work.

Benefits work, which often accounted for 40 per cent of a sub-post office’s business, disappeared with direct transfers to claimants’ bank accounts.

Gary Coyle, head of the Postmasternetwork, said that the network would face more commercial discipline if it was split off and controlled by private investment. He said: “Post Office Limited could be better-run. If it were to be sold, we are confident that we would raise the money.” Mr Coyle complained that while the future of Royal Mail, the parent group, is being debated through a Government review by Sir George Bain, and as Postcomm prepares its final pricing proposals, the post office network is “like a forgotten cousin”.

The plans could encounter political difficulties. More than 160 MPs have signed an early day motion stating their opposition to any form of employee ownership because they fear that it will be a precursor to full privatisation. It is also thought that any disposal would require new legislation.

Royal Mail declined to comment on the group’s hopes of taking over the network.

The postmasters’ group and Royal Mail have clashed recently over the contract that postmasters have to sign to run a postal facility. The Postmasternetwork has argued that this does not allow sufficient commercial freedom and that postmasters are not paid enough commission for the Royal Mail work that they do.