Work and Business: Delivering on the Post Office’s potential

The UK’s post office network, with over 11,500 outlets reaching into every community, provides much-needed services to all sections of society. Larger than all the bank branches put together, its scope, reach and potential is unrivalled.

However, the incoming government in May 2015 will have to grapple with the fundamental and serious problems facing the post office network.

The loss of key services, failure to deliver new services, greater competition and rising running costs are leaving subpostmasters finding it increasingly hard to make a living from their post offices. When this happens, post offices close.

A new Labour government would need to take concerted action in a number of areas to ensure the UK’s post offices survive and thrive well into the twenty first century:

Royal Mail services

Post offices are the well-established shop front for mail services. One third of Post Office income and half of all customer visits derive from carrying out services on behalf of Royal Mail.

But the future of these services is at risk, for two main reasons.

Firstly, Royal Mail and the universal service with its one-price-goes-anywhere six day a week delivery and collections faces deeply unfair competition from rivals such as TNT. By being allowed to cherry-pick the most lucrative parts of the mail system, other companies are threatening the viability of the universal postal service. The incoming government needs to secure our national mail service by putting a stop to these predatory operations.

The second risk derives from the separation of the Post Office from Royal Mail, and the majority privatisation of the latter.

Although a 10-year agreement has been put in place between the two companies, post offices have already experienced damaging effects from the separation. Subpostmasters have lost large numbers of customers through parcel price increases and by Royal Mail encouraging business customers to transact with them directly.

There are growing fears that a Royal Mail in majority private ownership will seek to make further reductions to payments for post offices, in order to cut costs and maximise profits.

But this trend can be halted. The government still owns around one third of Royal Mail. Any incoming government needs to use this shareholding to protect and defend the interests of the public and the post office network.

Government services

The Post Office has traditionally been the key outlet where the public can interact with all arms of government in a trusted, local environment.

In 2010 ministers announced plans to use post offices as the ‘front office for government’, offering face-to-face access to a full range of central and local government identity, information and payment services. This approach can save government money; improve access and convenience for citizens; and provide vital new income for post offices.

However, the government has utterly failed to deliver on its pledge: instead Post Office income from providing government services across the UK has fallen from £576m in 2005 to £164m in 2013.

But the public want these services. ICM Research finds 89% of people say there should be an option of face-to-face access to a full range of government services. 73% say this should be provided at post offices.

The next government must ensure a comprehensive range of central and local government services is made available through post offices. Without this work the post office network will struggle to survive.

Banking and financial services

As the reputation and practices of the high street banks come under ever more scrutiny and increasing numbers of bank branches close, post offices should step in to bridge the gap.

Most high street banks already offer some banking transactions at post offices, but the vast majority of people are unaware they are available. The service is not widely publicised; and banks only allow access to a limited range of services which varies from bank to bank, making it even harder to promote. If promoted effectively, research shows more than 18 million people in the UK would use post offices to access their current accounts.

A future government needs to ensure all high street banks offer access to a comprehensive range of transactions for all accounts; and the service is well-publicised by the banks and the Post Office.

The Post Office also offers its own financial services backed by the Bank of Ireland. Yet there are concerns that these products are insufficiently distinctive from the wide range of other high street bank accounts and most subpostmasters receive no income at all from them.

The new government should make optimum use of the post office network to provide a national solution to the banking needs of citizens and small businesses, offering services genuinely meeting the needs of all sections of society.

This should include ensuring post offices provide comprehensive access to accounts offered by other providers from the high street banks to credit unions, as well as the Post Office’s Bank of Ireland products. It is also critical that the government safeguards the provision through post offices of state pensions and benefits.

But for a really radical difference to the fortunes of the post office network, a Labour government should develop a state-backed Postbank in line with the extremely successful models operating in several overseas postal services. The Postbank could offer a comprehensive range of Post Office banking services including a current account, accounts for people on low incomes, children’s and small business accounts.

The present government has invested substantial amounts of money in the physical fabric of the post office network; but without the services that bring people into post offices, this investment will be ultimately pointless.