It’s a welcome, if long overdue, development. But the Post Office’s troubles are far from over. As letter volumes fall and more services move online, roughly half of all branches make a loss. Earlier this year, the government launched a consultation into the “Future of Post Office” – with the aim of making the organisation “financially sustainable”.
But postmasters fear a reduction of the already tiny subsidies they rely upon. “People are nervous,” says Brown, who is also treasurer for the voluntary organisation Voice of the Postmaster. “Unless you are a postmaster, nobody understands what our problems are.”
What’s going on at the Post Office?
To understand the predicament of the Post Office, you need to understand its peculiar structure. Before 2013, Royal Mail and the Post Office were one publicly owned service: Royal Mail handled delivery; the Post Office ran the face-to-face network. When ministers carved them up to make Royal Mail attractive to buyers, they left the Post Office as a standalone state-owned company. This, says academic and postal services expert Stephen Mustchin, followed a well-established pattern.
“Since the 1980s large swathes of the public sector have been privatised either wholly or with the use of privatised, outsourced modes of delivery for particular functions,” Mustchin tells Big Issue.
The result has been “a hugely complex, fragmented organisational structure” across public services. Post was no exception, says Mustchin: “In Royal Mail there had been repeated attempts from the 1990s onwards to privatise the service.”
In 2024, these attempts reached their zenith. Czech billionaire Daniel Křetínský bought Royal Mail’s parent company, International Distribution Services (IDS) as part of a £3.6bn deal. But the Post Office remains in public ownership.
Advertising helps fund Big Issue’s mission to end poverty
You can still go into a Post Office to send a Christmas card, but it is Royal Mail that issues the stamp and delivers it. It gets more complicated. The Post Office hasn’t been privatised – but Jerry Brown and his fellow postmasters aren’t government employees. The vast majority of branches (around 11,600) are run by sub-postmasters, who are independent franchisees.
A government-appointed board – Post Office Limited (POL) – runs the network, paying postmasters a small commission for each transaction, depending on the service: for Royal Mail products (letters, parcels, special delivery), POL receives money from Royal Mail; for government services (renewing a driving licence), POL is paid by the relevant department. POL then passes a portion of that income on to postmasters.
“We have no fixed income. If we don’t do a transaction, there’s no money,” Brown explains.
But fewer people are using the service, which means fewer transactions. Footfall has dropped from 14.6 million weekly visits in 2007 to 9.6 million in 2024 – a 34% fall. Meanwhile, the rates per transaction are low: for example, about 8p to process a bill payment.
That’s where selling Christmas cards comes in.
“For an awful lot of postmasters, their retail business has to subsidise their post office,” says Brown.
Advertising helps fund Big Issue’s mission to end poverty
POL says it recognises the financial pressures facing postmasters and argues that its five-year transformation plan will make the network sustainable. Paying postmasters more is one aim.
A spokesperson says, “The Post Office transformation plan aims to add £250 million annually to total postmaster remuneration by 2030. We are one year into this new phase and strong progress has been made, but we recognise there is more work to do.”
Read more:
What next for the Post Office?
The government requires that POL maintain at least 11,500 branches and ensure 99% of people live within three miles of one – criteria unchanged for 15 years.
It’s an expensive guarantee: successive governments have spent about £3bn supporting the network since 2012, subsidising unprofitable branches. The Future of Post Office consultation will consider ways to bring this down. One suggestion is relaxing the 11,500-branch minimum – though the government says that this is not its intention.
“We recognise a strong and accessible Post Office network is crucial to delivering services valued by communities across the UK,” a Department for Business and Trade spokesperson says. “It is right to consider a range of options to secure the organisation’s long-term future, but we have been clear our preference is to keep the overall size and shape of the network the same.”
Advertising helps fund Big Issue’s mission to end poverty
For the post offices that remain, pressure could rise. With less public funding, POL may have to cut costs, and postmaster remuneration is one of the few levers it controls. Making POL profitable should not be government’s main intention, Brown says. The profitable parts of Royal Mail had historically subsidised its loss-making branches in the post office.
“To privatise Royal Mail, they had to strip Post Office from the business, because nobody would have bought Royal Mail, at least not at the price they wanted with POL included in it, because it can’t make money,” he says. “So why, by separating it, did the government at the time and governments now and Post Office Management think that this artificially created business can all of a sudden be a normal commercial business? It can’t, and it never will be!”
Mustchin agrees the fragmentation was ideological rather than operational.
“The breaking up of the service with numerous private providers … is representative of an obsession with quasi-markets in the public sector,” he says. “Inefficiencies and a reduced quality of service have often emerged from these forms of restructuring.”
Why does this matter?
Post offices are far more than places to buy stamps. Citizens Advice research shows they’re essential for the people most likely to struggle with digital-first services. More than half of Pension Credit recipients rely entirely on post offices for letters. Around 40% of people with low digital skills use them for basic banking. Over a quarter depend on them for paying bills. They’re also community hubs. In rural areas, more than four in 10 low-income, retired or disabled residents use them to meet neighbours, get informal help or find local information. For Brown, the social role is the point.
“One of the big problems is government wants digital by default,” he says. “When people can’t manage online, they come to us. But we can’t help them if the transaction has been taken away.”
Advertising helps fund Big Issue’s mission to end poverty
The New Economics Foundation (NEF) suggests reforming procurement to recognise their public-service role rather than just commercial value.
“The post office is much more than just a retail outlet,” according to The Last Post, an NEF report published last year. “It also has important social and economic impacts, particularly in disadvantaged urban communities, and plays a crucial role in building social capital.”
Christmas will soon bring a welcome spike in footfall, but the surge is temporary. For most of the year, the pressures continue to mount.
When Big Issue put these concerns to POL, it pointed to new deals aimed at boosting branch income. These include long-term payments for everyday banking, parcel partnerships with DPD Gold and Evri, an InPost locker trial, and an expanded Western Union money transfer service in 4,000 branches. These moves are meant to bring in more customers and “put more money in postmasters’ pockets.”
“We are supportive of the current 11,500 branch number requirement and want to increase the number of services which customers can access at their local post office branch,” a spokesperson says.
Nonetheless, as Brown prepares for the festive rush, his thoughts return to the branch he used to run just a few miles away.
Advertising helps fund Big Issue’s mission to end poverty
“We’ve been here for nearly 19 years, but before we had a village store and post office only about three miles away,” he recalls. “It was a general store. We did everything, fresh fruit, newspapers. But we sold that and moved here.” That old shop is now gone. “Unfortunately the business that we used to have closed down two years, ago,” he says. “It was sad, but the post office was just draining the life out of the retail business.”
This winter, he hopes his current branch won’t face the same fate.
Do you have a story to tell or opinions to share about this? Get in touch and tell us more.
Change a vendor’s life this Christmas.
Buy from your local Big Issue vendor every week – or support online with a vendor support kit or a subscription – and help people work their way out of poverty with dignity.
