By Mark Kleinman
Mark Kleinman is Sky News’ City Editor and writes a weekly column for City A.M. This week, he tackles the Post Office, succession at Lloyd’s and the six-days-a-week Royal Mail obligation
Check out these words from Nick Read, chief executive of the Post Office, uttered in April 2021: “I intend to work with government on the various means by which we could deliver on a longer-term aspiration to facilitate profit-sharing between Post Office Limited and postmasters,” he said, hinting that such an arrangement might be in place within four years.
Fast-forward to today, and those words look like a delusional pipe-dream. Not only is the UK’s largest retail network in a financial state which means it is as reliant as ever on its state owner to finance its continued operation, but its leadership team’s promises of reform have been fundamentally discredited.
The litany of fraudulent behaviour uncovered by the public inquiry into the Horizon IT scandal, along with the glare of public attention galvanised by the ITV drama Mr Bates vs the Post Office, have reinforced an uncomfortable truth: the lack of intellectual rigour from those in positions of influence which could have exposed this grotesque cover-up much sooner has persisted until the present day.
The lack of intellectual rigour from those in positions of influence which could have exposed this grotesque cover-up much sooner has persisted until the present day.
All the procrastination, non-cooperation and obfuscation by those responsible for submitting evidence to the inquiry could have been dealt with far more quickly, if there had been firmer and more decisive leadership. The fiasco last year over the wrongful payment of a bonus worth tens of thousands of pounds to Read, and his delay in repaying it, indicates the extent of the rotten culture which continues to exist at the Post Office.
It emerged last week that Ben Tidswell, a former corporate lawyer who by all accounts is held in high regard in Whitehall, would step down as the Post Office’s senior independent director after just one three-year term on the board. The reasons for that are unclear but I understand that his departure was his decision alone.
I suspect that other changes in the Post Office’s boardroom are imminent, too, and they need to take place at the very top if the government really does want to orchestrate genuine change.
Sedwill is dark horse for Lloyd’s chair
From Ten Downing Street to the chairman’s office at One Lime Street? There seems a decent chance of that outcome as Lloyd’s of London embarks on the search for a successor to Bruce Carnegie-Brown, whose term is due to expire next year.
Lloyd’s has yet to hire a headhunter to oversee the process (although that is likely to change in the coming weeks), but it is telling that the Council director who will lead it is Fiona Luck, the insurance industry veteran. That’s because the obvious person to spearhead the hunt for Carnegie-Brown’s successor would have been Lord Sedwill, who was appointed senior independent deputy chairman in 2021.
The decision of Lord Sedwill, who served as cabinet secretary under Theresa May and Boris Johnson, to recuse himself from leading it suggests that he has thrown his hat into the ring himself.
Since leaving Whitehall, he has also joined the board of BAE Systems, the defence contractor, and become a non-executive director of Rothschild & Co; chairing Lloyd’s would be an obvious further step into the corporate establishment.
One source tells me that Lord Sedwill has yet to make up his mind about becoming a candidate for the job. During a comparatively benign period for Lloyd’s, his political credentials would nevertheless be useful.
It has just agreed a deal with Chinese landlord Ping An to remain at its famous headquarters until the 2040s, and has dealt with one of the more sensitive chapters in its history by pledging to pay $50m to development projects by way of reparations for its involvement in the transatlantic slave trade.
Carnegie-Brown’s has proved to be a steady hand on the tiller, with half-year profits last September of £3.9bn. But with climate risk and global volatility spiking, alongside the ‘black swan’ events which have a habit of disrupting insurers’ best-laid plans, finding a replacement with a combination of political and business acumen would serve it well for the rest of this decade.
Ofcom’s Royal Mail reforms bear the stamp of irony
I can’t have been the only person who noted the irony in the timing of yesterday’s Ofcom consultation paper on reforming Royal Mail’s universal service obligation (USO) – a document that could ultimately be regarded as one of the most important in the 507-year history of Britain’s postal service.
Part of London-listed International Distributions Services, Royal Mail is, in financial terms, on its knees. Much of the culpability for that lies with the company itself – a botched approach to industrial relations, poor operating performance and an absence of leadership continuity have all cost it over the last decade.
Now for the ironic part. Last September, the regulator announced that it would publish proposals for an overhaul of the financially burdensome USO regime by the end of the year.
Instead, it came 24 days into 2024. Many Royal Mail customers will, of course, be painfully familiar with the concept of delayed deliveries. Indeed, Ofcom itself imposed a £5.6m penalty on Royal Mail last November for failing to hit both first-class and second-class post targets.
That penalty was due to be paid into the Treasury’s coffers by January 13. Indeed, it would surprise nobody if the money had turned up late.
