David Prosser: It's not the Post Office's ownership that matters most but its funding


Outlook Having spent the previous 24 hours publicly eating his words on tuition fees, Vince Cable must have been relieved to get on to a fluffier topic yesterday. The Business Secretary's announcement that the future of the Post Office might lie in a mutual ownership model was the sort of heart-warming stuff he used to specialise in during his humble days as an opposition spokesman on Treasury matters.

It all felt delightfully post-capitalist – so much more Liberal Democrat, you might say. Who could fail to be moved by the idea of communities across the country coming together with their sub-postmasters to decide how the nation's post offices might be run?

Just one hitch. What about the money? The organisations Mr Cable name-checked yesterday, the John Lewis Partnership and the Co-operative Group, are poster boys for mutuality because as well as having ownership models that people admire, both consistently turn in exceptionally strong commercial performances.

If only one could say the same of Post Office Limited. It made a £64m loss last year on sharply declining revenues. The organisation relied on a £150m subsidy from taxpayers which is due to rise to £180m next year.

The explanation for these numbers is relatively straightforward. This is a business that is not run purely with the bottom line in mind. If it were, many hundreds more post offices would already have been closed. Post OfficeLimited is also overexposed to Government policy – the decision to switch to electronic benefits payment, for example, starved post offices of many of their customers. Royal Mail privatisation might repeat that trick, since Post Office Limited relies on the operator for around a third of its business and there is no guarantee it will keep these revenues once it has to deal with a private sector organisation.

Changing the ownership structure of Post Office Limited will not address any of these issues, even if it leaves all those concerned with a warm glow. It does, however, allow the Government to neatly sidestep the more fundamental question – how much taxpayers' cash should be handed over to the organisation in the years ahead in order to subsidise small businesses that are socially valuable but not commercially viable?

This is not to say there is anything wrong with these subsidies. If, as a matter of public policy, we decide unprofitable post offices are worth maintaining in the name of social cohesion, so be it. But let's not pretend mutualising the Post Office is somehow going to solve its funding issues.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss