Department for Business and Trade, Post Office Limited

This is a proposed grant by the Department for Business and Trade (DBT) of up to £83 million to support the continued delivery of the Post Office Limited (POL) network of at least 11,500 Post Office branches by way of a Service of Public Economic Interest (SPEI), in financial year 2025 to 2026. The grant is a continuation of the annual network subsidy from DBT to POL since POL’s incorporation.

Our key takeaways from the Subsidy Advice Unit (SAU) report are:

• Assessments should make full use of all available financial records and evidence when demonstrating how a subsidy will change the beneficiary’s economic behaviour.
• Assessments should clearly explain why the subsidy is considered to be the minimum necessary size. In this instance, the SAU recommended the Assessment should explain how the POL forecasted shortfall was estimated and scrutinised, how the difference between the shortfall and the subsidy will be funded, and why POL are unable to fund a greater proportion of the shortfall.
• The SAU provided a reminder that subsidies should not normally compensate for ‘business as usual’ costs (3.68-3.69 Statutory Guidance).
• As to the counterfactual scenario, the SAU noted that the Assessment could better describe the likely scale of Post Office network reduction that would occur in absence of the Subsidy.
• The SAU additionally noted that the subsidy is one of six subsidies referred by DBT to the SAU concerning assistance to POL since October 2023. The SAU advised DBT to consider the impact of this “broader landscape of financial support” on its assessment of this subsidy and other subsidies to the Post Office (e.g. in relation to proportionality).
• For subsidies engaging Section 29 (Services of public economic interest) of the Act, the SAU recommended that Assessments take a systematic approach to outlining how the SPEI requirements have been considered and should explicitly explain how each of the Section 29 requirements will be met.
• The SAU also referred to 6.19 of the Statutory Guidance, which encourages a good practice of publishing written SPEI agreements.

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