Mark Kleinman: Radical Post Office reform has mutual interest
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly Morning Wire column
Radical Post Office reform has mutual interest
Talk about a pregnant pause: it’s nine months since I reported that ministers had asked the consulting firm BCG to explore options for transferring the Post Office into mutual ownership – a move that would offer long-suffering sub-postmasters a genuine say in the future of Britain’s largest retail network.
This week, we finally got the government green paper putting some – albeit limited – flesh on the bones of that plan.
According to the document, which is subject to a 12-week consultation period ending in October, this review of the Post Office’s size, services and ownership and governance arrangements is crucial. The branch managers who were victims of the worst miscarriage of justice in recent British history would no doubt agree.
The Horizon IT scandal is not in and of itself reason to rip up the current arrangements and hand ownership to sub-postmasters in a preening display of government largesse.
The Post Office’s continued reliance on government subsidy to survive, along with undoubtedly difficult decisions about whether the current network of 11,500 branches provide reasons for pause – their critical social and economic role mean the government will need to retain a fundamental voice in its future.
Nevertheless, there seems little reason for Whitehall to permanently exercise full ownership of a company which finally has a leadership team worthy of the label.
BCG’s report to ministers has not been published, but I would be surprised if it had not highlighted the hybrid option of a large collective stake being handed to sub-postmasters, with government continuing to own a large stake which could be sold down over time, subject to a golden share or other appropriate safeguards.
“Post Offices continue to be a central part of our high streets and communities across the country,” the Post Office minister Gareth Thomas said this week. “However, after 15 years without a proper review, and in the aftermath of the Horizon scandal, it’s clear we need a fresh vision for its future.”
If that vision really is to be “fresh” continuing with the status quo of a full state ownership which has become corrupted beyond repair is no longer viable – for any of the Post Office’s stakeholders.
Reeves steps back from brink of bizarre cash ISA move
Rachel Reeves vs the building societies: not a headline you’d have expected involving a Labour chancellor in the build-up to their inaugural Mansion House speech.
And it was only because of the latest in a growing tide of Labour u-turns that Reeves found herself avoiding standing in that position on Tuesday night, having abandoned – or paused – plans to review cash ISA thresholds amid howls of protest from Britain’s biggest financial services mutuals.
Amid a blizzard of other announcements at Mansion House – ranging from the digitisation of share certificates and simplification of capital-raising bureaucracy to the effective neutering of the Financial Ombudsman Service – her ISA raid would have been bizarrely self-defeating, as last week’s letter from the Building Societies Association warning of the damage caused by a draining of available funding for mortgage lending highlighted.
“Beyond their personal benefits, Cash ISAs play a vital role in the broader economy. The funds deposited in these accounts support lending, helping to keep mortgages and loans affordable and accessible,” the BSA letter said.
“Any significant reductions to the Cash ISA limits would make this funding more scarce which could have the knock-on effect of making loans to households and businesses more expensive and harder to come by.”
Warnings about the fragility of Labour’s housebuilding target have been more voluminous than the number of homes constructed since the party came to power. The BSA’s might just be one more voice to add to the list – but making an adversary of a constituency which should be a natural supporter of Labour policy would have been one of the least credible choices she had made since taking office – and that has become a disappointingly fast-growing list.
Interpath bankers shouldn’t struggle to get £800m price tag amid professional services deal boom
If the lull of summer is finally upon us, try telling that to dealmakers in the hectic world of professional services. With Teneo and a minority stake in AlixPartners up for grabs, another major restructuring player is preparing to change hands in the form of Interpath Advisory, the former restructuring unit of KPMG UK.
Owner HIG Europe, the private equity firm which bought a controlling stake in 2021, has been focused on growing the business internationally ahead of an exit.
A public markets trade has always been unlikely, leaving HIG focused on an outright sale, either through a secondary disposal to private equity peers or a transaction with a strategic. The latter, too, looks less likely given that Interpath’s creation as a standalone business was triggered by audit firms’ race to rid themselves of conflicts with consulting services which had begun to draw regulatory heat.
I understand that bankers at Citi and Moelis are the two remaining contenders for the sellside mandate, with the possibility that HIG decides on a joint appointment. There is already significant inbound interest from other buyout firms, meaning that an autumn auction could be one of the most hotly contested in the City this year.
And with Interpath now profitable after an improved performance under new chief executive Mark Raddan, HIG’s mooted aspiration of an £800m price tag does not look especially fanciful.