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Gareth Thomas MP, Former Minister for Trade, Development and Consumer Affairs (jointly with DFID)
Peebles, Scottish Borders, 11 May 2009
It’s good to be here today.
I bring apologies from Pat McFadden who had wanted to be here but who is currently on paternity leave. Part of my responsibilities over the next three months involve helping Pat take the Postal Services Bill through the House of Commons. And I am looking forward to that responsibility.
We were clear in Government that we wanted a minister to come to your event today. Your organisation is not only important because it represents the interests of sub-postmasters up and down the country but because you are also a key voice in helping us develop a Post Office network which is fit for modern times.
Indeed only last Thursday, your President, your General Secretary and members of the Executive Committee met Peter Mandelson and Pat McFadden at the House of Lords to discuss the Federation’s recent report and your current ongoing concerns.
And with the publication of that report, your report on the future of the network, you have provided us with a cogent and very considered analysis of the challenges facing the organisation going forward.
It paints a powerful picture of a network that, as you say, is a “key part of the social and economic glue that binds local communities and economies together”.
That’s certainly a Post Office which we in government recognise.
It’s a trusted institution. It’s a trusted brand.
It’s an organisation whose modern day reach extends beyond the reach of supermarkets, or of all the banks and indeed all the building societies too.
It’s a network that, for more than 90 per cent of the UK’s population, is less than a mile from our door.
Indeed, for many, sadly, the Post Office now is the only cash outlet in their community.
We have made no secret in Government of our appreciation of the value of the Post Office.
And that is precisely why we have provided unprecedented financial support to the network amounting to some £2 billion between 1999 and 2005, and committed a further £1.7 billion through to 2011.
Without that funding, some 7,500 branches might not have survived.
But, as your report recognises, we can’t be blind to the fact that the postal network continues to face major challenges going forward.
In today’s world you can get your car tax online.
Nine out of ten new pensioners choose to get their pension or benefit paid directly into their bank account.
The truth is I can’t see those numbers changing - internet and direct debit have changed the way that people choose to lead their lives.
In that sort of environment the Post Office has found itself playing catch-up – it’s a huge national resource looking to find a national role in a dramatically altered postal landscape.
And its survival will hinge on its capacity to get more people through the doors.
So we have together diagnosed the problem. Slightly different interpretations I accept.
But what is striking is that we are treading broadly common ground in our search for a solution to the future of the Post Office.
Let me respond, if I may, to the specific six steps that you outlined in your report.
Your first two steps look at how central and local government can make more use of the Post Office’s network and services.
And your argument there is that the network does “remain the natural home for citizens to access the full range of UK government services” and that ministers and local government should make greater use of that opportunity.
Let me be clear, I completely accept that analysis.
That’s why I suggest to you that it was important that we put in place a new five year Post Office card account that runs from 2010 through to 2015.
Now as well as offering important and valuable stability for that part of your income, it also offers a hugely valuable service for the four million people who hold a card account.
And the card account I recognise also brings more people into local sub post offices, increasing your promotional revenues.
Beyond that we want the Post Office to become more of a Front Office for Government.
So that’s why Peter Mandelson is leading discussions within Whitehall to identify new services that the Post Office can provide. It’s why too we’ve asked the House of Commons Business and Enterprise Select Committee to identify new business opportunities for the Post Office.
I think we are beginning to see those efforts pay off. The Department for Transport, for example, recently announced that the Post Office would provide the face-to-face service for applications for the 10-year renewal of photo driving licences.
That will allow Post Office to undertake a multi-million pound investment in ID verification technology.
And, indeed, only last week, the Home Office announced that the Identity and Passport Service was working with the Post Office to ensure that people can apply for new biometric passports and ID cards at a local branch.
And we also agree with you that local Government is to a huge potential market for the Post Office.
It already has bill payment arrangements with over 300 Local Authorities.
But there is clearly scope for doing a lot more.
So we’re working with the Local Government Association to make sure that the Post Office and Local Authorities are really engaged in developing new opportunities.
The third step in your report centres on increasing the Post Office’s financial services business.
In recent months that’s generated plenty of headlines – most notably the concept of the Post Bank.
Alan Cook, the managing director of Post Office, who I understand is addressing you this afternoon, recently told the Business and Enterprise Select Committee that what we have, in effect, is a Post Bank in all but name already.
Now in your report the Federation calls for a Post Bank that “would offer a comprehensive banking service to individuals and business customers alike”.
The Post Office already offers: savings, insurance, credit cards, and almost 1,700 free-to-use cash points.
Last year, the Chancellor of the Exchequer also announced another service that would be available through the post office network – the Savings Gateway scheme.
So financial services, we agree with you, are potentially a real growth area for the Post Office going forward.
We want to find new possibilities on financial services through the Post Office.
As part of this, Alan Cook told the Select Committee last week that the Post Office plan to expand their mortgage business.
He also said they plan to create a current account, available in every branch, next year.
And the Post Office is also in discussion with the Association of British Credit Unions to see what opportunities there might be for the two organisations to work more closely together to increase financial inclusion.
The fourth step in your report revolves around the subject of mail.
As you will all recognise it’s something of a political hot potato in the last few weeks. Our plans are, I believe, straightforward. and set out in the Postal Services Bill that is currently going through the House of Lords.
We will ensure that the Post Office is not adversely affected by the introduction of a strategic partner for the Royal Mail.
But I do want to stress that the Post Office’s success is intrinsically linked to the success of the Royal Mail.
Because if the Royal Mail is not transformed, if it fails to maintain its position in a competitive marketplace, that will damage the Post Office as a company and the viability of the post office network.
So it is certainly in the Post Office’s interests, and the network’s future, to see Royal Mail transformed.
Our proposals are clear that the Government will continue to own 100 per cent of the Post Office.
They’re also very clear that the existing commercial arrangements between Royal Mail and the Post Office will be maintained. They’re important.
As you will all recognise, whilst a thriving Post Office relies on a thriving Royal Mail it cannot depend on Royal Mail business alone.
And, in that sense, I am encouraged to see that the Post Office is not simply standing still in the mails market.
It recently announced a contract with DX Group which will allow its customers to collect their mail from their local post office.
It’s the first time a private mails company has offered access to its services via the post office network.
It is, I believe, an encouraging sign of things to come, and absolutely in line with your ambitions for the network.
Your fifth step is all about maintaining the size of the network.
I’ve already spoken about the Government’s recognition of the value of the network.
We’re prepared to continue to put our money where our mouth is.
Last month Peter Mandelson committed that we will continue to subsidise the network beyond 2011 and we will not support any further programme of post office closures. Both commitments I would hope you will welcome.
The sixth and final step in your report is about local retail. The report rightly recognises that “subpostmasters are also independent retailers.
Action to support local high streets and small shops will help” and are crucial in helping post offices too.
Again we’re in agreement with that key message.
It’s not just essential for post offices but also for the boost that successful postmasters can give to their local economies, their local district centres, at a time when we’re experiencing the worst recession since the Second World War.
So that’s why, in addition to existing rate relief measures, the Government is about to consult on a range of measures to sustain town centre and on the provision of retail services in both urban and rural communities.
Those include changes in planning policies to make them more flexible and to facilitate the future sustainability of local economies.
And, in that context too, it’s also worth considering the wider measures that Government has taken to assist small business whether it’s topping up trade credit insurance, offering loans to struggling companies or providing advice via Business Link.
I hope I’ve been able to demonstrate, when it comes to our position on the Post Office network, I think there is far more that unites us than actually divides us.
Government does, of course, recognise the concerns that subpostmasters have about the future of your businesses in what has become a rapidly changing world, and, in particular, the uncertainty you’ve expressed about the impact of introducing a strategic partner for the Royal Mail.
The Secretary of State, I’ll say again, has committed that he will not support a further programme of Post Office closures.
And he is working with colleagues across Government to identify new products and services that the Post Office could provide.
He is very clear too that the transformation of the Royal Mail is essential to ensure the future sustainability of the Post Office network.
Now operational issues will rightly remain a matter for the Federation to discuss directly with Post Office Limited.
But, at present, there are clearly a range of broader issues relating to the future of the Post Office network in which we all have an interest.
So we would therefore like to suggest a new joint dialogue to discuss these issues with the Federation and with the Post Office Ltd.
I believe – and I know Pat McFadden and Peter Mandelson agree too – that this is the right way forward.
In the end, we are all bound together by our commitment to achieving a secure and sustainable network.
A network that will be able to more than hold it’s own in the rapidly changing world of tomorrow.
It is surely our job in Government, our job together with you, to work together to give the Postal network the national role and the local role that its status truly deserves.
Thank you.
