Referral of the proposed subsidy to Post Office Limited by the Department for Business and Trade

The Subsidy Advice Unit (SAU) has accepted a request from the Department for Business and Trade (DBT) for a report concerning its proposed restructuring subsidy to Post Office Limited (POL).

From:
Competition and Markets Authority
Published
20 October 2023
Last updated
29 November 2023 — See all updates
Case type:
SAU referral
Case state:
Closed
Market sector:
Distribution and service industries
Closed:
29 November 2023

Administrative timetable

Date Action
29 November 2023 SAU’s report published
8 November 2023 Deadline for receipt of any third party submissions (submissions after 5pm on this date cannot be taken into account)
19 October 2023 Beginning of reporting period

Final report

29 November 2023: The SAU has published its report providing advice to DBT concerning the proposed restructuring subsidy to Post Office Limited. The report sets out our evaluation of DBT’s Assessment of Compliance of its proposed subsidy with the requirements set out in the Subsidy Control Act 2022.

Request from DBT

19 October 2023: The SAU has accepted a request for a report from DBT for its proposed restructuring subsidy to POL. This request relates to a Subsidy of Particular Interest.

The SAU will prepare a report, which will provide an evaluation of DBT’s assessment of whether the subsidy complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the subsidy provided by DBT

Post Office Limited is a Public Non-Financial Corporation (Public Corporation). It was constituted under the 2000 and 2011 Postal Services Acts and is wholly owned by the Secretary of State for Business and Trade. Through Post Office Limited, government ensures the provision of a network of Post Office branches, delivering essential services to customers across the UK. Government provides Post Office Limited with subsidy and investment funding and has, since the 2021 to 2022 Financial Year, also provided funding to enable Post Office Limited to manage financial liabilities arising from the Horizon IT scandal.

The Department for Business and Trade is proposing to award Post Office a grant of up to £190m, including £40m contingency, to enable the company to take further action in response to the Horizon IT scandal. Specifically, this subsidy will allow Post Office Limited to continue to meet the costs of (i) delivering compensation to postmasters affected by the Horizon scandal and undertaking associated remediation activities; and (ii) participating in the Post Office Horizon IT Inquiry.

Costs associated with the remediation activities, and of taking part in the Post Office Horizon IT Inquiry, have increased significantly since the 2021 to 2022 Financial Year. Government considers that it is important that Post Office Limited continues to deliver compensation and participate effectively in the Inquiry. Government is therefore proposing to provide additional financial support to the company to ensure it can continue these activities. By extension, it is intended that this investment will also support the provision of a stable Post Office Network, providing essential services to customers across the UK.

The Department for Business and Trade, which is also the sole shareholder of Post Office Limited, will continue to provide oversight of the company to ensure that compensation is delivered quickly and effectively to affected postmasters and that operational costs are well managed. The subsidy will be ringfenced for the purposes outlined above and may not be used for supporting other activities undertaken by Post Office Limited. The grant funding will cover the period to the end of the 2024 to 2025 Financial Year. Grant payments will be released quarterly and will be subject to regular reporting from Post Office Limited.

Information for third parties

If you wish to comment on matters relevant to the SAU’s evaluation of the Assessment of Compliance concerning DBT’s proposed subsidy to POL, please send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to us at SAU-PostOfficeRestructuring2023@cma.gov.uk, copying the public authority glocompensation@beis.gov.uk.

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

  • The SAU will only take your submission into account if it can be shared with DBT. The SAU will send a copy of your submission to DBT together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with DBT using the email address provided above.
  • The SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.
  • For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Contacts

Updates to this page

Published 20 October 2023
Last updated 29 November 2023 + show all updates

  1. Final report published

  2. First published.

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