Post Office branches are assets or liabilities? [Exclusive]

Crippled by inadequate remuneration, rising costs, and a strained relationship with their corporate overseers, local Post Office branches seem to be in crisis, bringing forth an urgent need for a wholesome systemic change.

While the fallout from the Horizon scandal lingers, relationship between sub postmasters and the Post Office is seemingly on a downhill and continues to remain somewhat toxic.

The mistrust and skepticism among sub post masters towards Post Office run high, as found by Asian Trader, often bordering into a sense of being intimidated.

According to ACS Local Shop Report 2024, 20 per cent of about 50,387 convenience stores in the UK provide Post Office services. In many communities, these branches are often the sole providers of essential banking as well.

While it is often argued that having a Post Office branch boosts retail footfall, sub post masters, in candid conversations with Asian Trader, paint a starkly different picture of the grim reality they face.

Once touted as vital hubs of community life and profitable assets for retailers, local Post Office branches now find themselves as loss-making appendages.

For sub postmaster Jerry Brown, who has been running a Suffolk branch for 17 years, the footfall generated by his branch amounts to little more than "the dirt that falls off people's shoes” and his branch, at First Class Greetings and Plum Green in Hadleigh, costs him £500 monthly.

This sentiment is echoed by others too, including convenience store retailer Benedict Selvaratnam, who has been running a Post Office in Croydon’s Freshfield Market for the past four years.

Despite being a busy branch, the remuneration received from Post Office for the services translates to £6 an hour, far below minimum wage. The financial model, according to the retailer, fails to compensate for the significant responsibility that sub postmasters shoulder.

His frustration is compounded by the Post Office clientele that comes in—most in a hurry, often irate, and sometimes abusive.

He said, “We are a busy post office yet it does not generate a profit. It's actually a cost to the business. But overall, because it brings a football in, that's what we hope and bank upon.

Retailer Benedict Selvaratnam

“I love running the Post Office branch and determined to continue providing the services. However, the amount of responsibility that we shoulder, we are not compensated enough for that.”

Elsewhere in Northamptonshire, sub post master and retailer Vidur Pandya finds himself in a similar predicament. While his unique position as the sole Post Office in the area results in footfall for the retail side, the remuneration does not cover even the minimum wage costs.

Echoing the frustration of sub post masters, the National Federation of Sub Postmasters (NFSP) delivers a damning indictment of the Post Office network’s broken promises.

Calum Greenhow - Chief Executive Officer of NFSP, told Asian Trader, “The anecdotal evidence shows that owning a post office doesn't necessarily make money. Actually, it's the retail side that's actually subsidising the post office branches.”

“In fact, there is evidence that shows that if you've got a strong retail that's actually a benefit to the post office, which is the exact opposite to what Post Office tends to claim.”

The root of the problem lies in the Network Transformation Programme (NTP) introduced in 2012 that saw sub-postmasters paid per transaction instead of receiving a fixed salary.

Under NTP, remuneration rates for local Post Office Branches (as seen by Asian Trader) have been woefully inadequate. Amounts such as 6.00p per £1 sales of First Class stamp sales, a mere 31.00p per completed transaction for Home Shopping Returns, and just 23p per Completed Transaction in Auto Cash Withdrawals (Personal) fail to reflect the critical role the local branches play.

The subsequent removal of profitable government services and increased use of online services have left sub post masters clinging to a shrinking portfolio of less fruitful offerings.

Greenhow revealed, “In 2011, we were being led to believe by government that it was going to lead to a new profitable system. The figure of 300 million pounds was thrown around, and also that we, as investors in the network, would actually have ownership in the business.”

Today, the optimism of that era has soured into disillusionment.

“There is this feeling amongst sub postmasters today of being manipulated about network transformation plan in 2011. It absolutely wasn't fair, because what was sold to us back then and reality is something different,” Greenhow lamented, revealing bare the deep structural issues plaguing the Post Office network.

Toxic Relationship?

The NFSP points to survey data showing declining trust among current sub postmasters towards Post Office. Many sub postmasters feel their concerns are ignored, and their investments in the network go unacknowledged. Some even fear to speak up openly.

Greenhow pointed out, “The level of trust between the two has gone down. Despite everything that the post office is saying that it is doing, it is clearly not making any difference. Their efforts feel like a PR exercise, rather than something substantial or tangible.”

To fill the void, NFSP is coming up with an “oversight committee” to make some space for sub post masters in the system and give them a voice.

Greenhow said, “We must have a better say, we want to work towards mutualisation, because only then sub postmasters will be in a situation where they can really challenge the post office and the government to do better for everyone.”

Once again, Post Office has set out an ambitious five-year Transformation Plan to deliver a “New Deal for Postmasters” that significantly increases their total annual income through revenue sharing and strengthens their role in the direction of the organisation.

Calum Greenhow - Chief Executive Officer of National Federation of Sub Postmasters

The “New Deal for Postmasters” , announced on Nov 13, follows a Strategic Review initiated by Post Office Chair Nigel Railton in May. The Transformation Plan sets out an ambition to deliver a £250 million boost to postmasters’ income by 2030. These improvements to remuneration are subject to funding discussions with the government.

Alongside this, the Post Office is establishing a new Postmaster Panel as well as a new Consultative Council.

However, as the NFSP chief and other sub post masters pointed out, much remains uncertain and there are no details yet. For many, these commitments are viewed skeptically, given the Post Office’s historical track record.

Greenhow acknowledges improvements in leadership but warns of potential pitfalls.

“What if they again come up with something that doesn’t suit the Postmasters? That’s the big problem,” Greenhow said.

Lingering Shadow of Horizon

Be it remuneration or dismissive attitude, the relationship between sub postmasters and the Post Office corporate leadership is sour. The lingering scars of the Horizon scandal have only compounded this situation.

For Brown (also a member of Voice of the Postmaster), the psychological toll of unexplained financial shortfalls under Horizon was profound. Describing the Post Office senior executives as “Post Office leeches”, he stated how the scandal has not only caused financial losses but eroded trust in the organisation’s leadership forever.

Brown told Asian Trader, “I believe every sub postmaster suffered some losses under Horizon. We certainly experienced losses over a number of years that we just covered on our own because at the time we had no choice.

“But what still gives me chills is that it could have easily been a £50,000 shortfall instead of a £500 one. These shortfalls, no matter how small, had psychological consequences as we used to get stressed out to find where we made a mistake, even started doubting our staff.”

Greenhow too thanks his stars that he was not caught in the Horizon scandal despite running a branch for over 29 years.

He said, “In truth, there is absolutely nothing that I have done differently as compared to the victims.”

Sub post master Jerry Brown

For current sub postmasters like Selvaratnam, knowing the details of the scandal -Post Office’s attitude towards sub postmasters’ complaints of shortfalls and later the legal actions bestowed upon them- is nerve wracking.

He said, “For us current sub postmasters, the ITV drama was really an eye opener. It really made us think twice about what we are doing daily. We also deal with a lot of cash. We just hope that such a callous miscarriage of justice never happens again.”

NFSP meanwhile underscores the long history of Post Office malfeasance, noting before Horizon, there were other faulty systems that also led to prosecutions, suggesting that prosecution regimes against sub postmasters date back over three decades.

Greenhow revealed, “There are two other programs that the post office provided before Horizon that were faulty. Recent KROLL report shows that there were bugs, defects and errors within Capture, a pre-Horizon system.

“There was another one called ECCO+ that was in operation between 1992 to 1999 and within that period. I have learned, (just in the last few days) that post office undertook 334 prosecutions over that eight year period- that's equivalent to what went on in the Horizon years.

“So we're talking about a prosecution regime over a 32-year period, not a 25-year period.”

Clearly, the Horizon scandal was not an isolated incident but part of a broader pattern of neglect, exploitative and dismissive attitude of the Post Office. Sadly, it is the same attitude that led to prosecution of hundreds of sub post masters, leading to bankruptcy of many, broken families, destroyed reputation and even suicides.

What is disturbing here is the attitude somewhat still remains the same and seemingly not much has changed.

Glimmer of hope?

Some sub postmasters, like Brown and Pandya, express cautious optimism in the leadership of Railton and Brocklehurst, whose relatable approach and apparent commitment to reform have sparked hope for change.

Meanwhile, Post Office area managers are also commended for “humanising” the corporate relationship, providing a much-needed bridge between the top-level management and those on the ground.

“What I see in the forums is that the approach of senior management is changing, albeit very slowly,” observes Pandya, calling for same remuneration rates for all kinds of branches.

Despite the tension and conflicts within the system, the bond between sub postmasters and their communities continues to remain steadfast.

Retailer Vidur Pandya

As Greenhow explained, “There might be a negative feeling against post office as a corporate but there's a real affinity and a real connection between the local postmaster and the community. That relationship has remained very strong.”

What Post Office network needs to comprehensive overall reform and shift in mindset.

As Selvaratnam said, "The government and the post office have got to value and support local branches as essential community assets in such a way that the branches are protected and can continue to provide key services.

“Just because they got us on a commission should not mean they can get away with underpaying us. We are offering services nine to six 365 days a year and we are paid peanuts. This needs to be changed.”

As Greenhow aptly states, “We are talking about the fate of generational family businesses here. The Post Office must treat sub postmasters as partners, respecting their investment and hard work.”

It is clear that the sub postmasters are the backbone of Post Office network and many communities too, providing essential services despite the odds stacked against them.

Yet, the pressing question that remains here is how long can sub postmasters' resilience can sustain a flawed model? And, is it fair?