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Post Office: Financial Services

Volume 705: debated on Thursday 13 November 2008

asked Her Majesty’s Government:

Whether they plan to increase the financial services role of Post Office Ltd.

My Lords, the Post Office has increased the range of financial services and products available through the post office network with considerable success in recent years. The Government welcome these initiatives and will be exploring with the company the scope for developing and introducing further financial services which will be attractive to Post Office customers.

My Lords, I thank my noble friend for that Answer, and I look forward to the Statement which we are to receive later. Is he aware that there is very considerable support on these Benches and, I suspect, elsewhere for the views reportedly expressed by my noble friend in a letter to the Prime Minister on 30 October which was reported in the Guardian on Tuesday? It stated:

“we should examine the prospects for Post Office Ltd becoming a much more significant player in financial services—offering a wider range of attractive products within easy reach of the whole population, available from an institution they can trust”.

Is this not now exactly the right time when we should be looking at plans for a people’s bank based on the Post Office, the transfer of much more of the Government’s own business to it and an end to any further branch closures?

My Lords, I obviously cannot comment on private correspondence between myself and the Prime Minister, tempting as it may be, but I share very strongly my noble friend’s sentiments about the future of the Post Office. I do not have a master plan or a magic wand to transform the Post Office, but I do have strong faith in its future, not just as an anchor for local communities but as a serious business proposition.

My Lords, may I welcome the Secretary of State, and say how much we all look forward to that great day when we at last hear just one important announcement from him here in Parliament before it appears first in the media? Is he aware that much of British business, and post offices, are now in a battle for survival? Almost 5,000 post offices have closed since 1997 and it is anticipated that, by the time of the next general election, around a third of the entire network will have been lost on this Government’s watch. These nebulous proposals would represent a considerable U-turn, and raise more questions than answers. The noble Lord chairs the Cabinet committee charged with reviewing the future of the Post Office network. When will he be coming forward with more detailed proposals, and when is he going to publish the Hooper report?

My Lords, I hope that the Hooper report on how best to maintain the universal service obligation in a competitive postal services market will be published before much longer. I have already met Mr Hooper, and his findings are at an advanced stage. I believe very strongly that we have an opportunity here for the future of the Post Office, one that has been enlarged by the turbulence elsewhere in the financial services sector. The recent rationalisation of the network obviously has not been painless, but it has placed it on a firmer footing. I believe that more can be achieved to expand the Post Office’s financial services to its customers, and that is precisely what I am going to examine.

My Lords, the whole House will endorse the remarks of the noble Lord, Lord Faulkner, in welcoming the apparent progress towards stabilising the Post Office network. But, putting the question of the noble Lord, Lord Hunt, into some context, does the Minister accept that, as we speak, many sub-postmasters will be contemplating whether to close their operations after the Christmas trading period? What comfort can he give them as to timing and to why they should stay open?

My Lords, the programme of rationalisation undertaken by the Government has definitely placed the entire network on a much firmer footing. A government funding package of up to £1.7 billion is in place to support the nationwide network of 11,500 branches to 2011, providing reasonable access for all. This includes a network subsidy of £150 million a year to support some 7,500 non-commercial offices. So the Government are doing their bit. They have demonstrated their commitment, and we will maintain that commitment.

My Lords, does the Minister agree that the highly popular, efficient and straightforward banking service provided by the Post Office through the National Girobank was a very successful operation? It was a tragedy when it was, some would say sold off, but I would say given away to the Alliance and Leicester for £118 million. At that time thousands of people were waiting to open accounts with National Giro. In the further consideration that the Minister has said he will give to Post Office affairs, does he not think that it is now time to look again at reintroducing National Girobank?

My Lords, I take note of what my noble friend has said. In the first instance I am going to convene a group of government departments to identify the potential additional work that the Post Office may do. There are opportunities there and we want to examine them closely.

My Lords, does the Secretary of State know the identity of his very enthusiastic supporter who was responsible for the leak of the letter to the Guardian on Saturday and for the leak today of the policy announcement that he is going to give to the House later?

My Lords, now that the Minister has said these encouraging words about the Post Office, does he agree that one should build on the advice of the noble Lord, Lord Faulkner, and persuade the BERR and Treasury mandarins to give up their obsession with meddling with the Post Office, leave it alone and let it operate as a commercial organisation, making at least a reasonable revenue profit, and get away from privatisation? This is the people’s Post Office. Does he agree that now is the time to have a wholehearted reassurance package for the entire Post Office organisation?

My Lords, I do not think that we are meddling. We are investing and assuring the future of the Post Office and the maintenance of its national network. The fact is that the Post Office is an established and trusted brand; it is not starting from scratch in the financial services sector. It therefore has a lot to build on, and we want to see how that can be done.