The Rt. Hon. Patricia Hewitt

National Federation of sub-Postmasters Conference

Colleagues and friends it is a huge pleasure for me to be here today. Rather like you, Mr President, I am also very pleased to be here in Bournemouth. Some of you may remember a few weeks ago in the House of Commons I made a most unfortunate slip of the tongue, I referred to the bracing sea air of Harrogate. So it was such a relief for me to see that lovely blue sea of Bournemouth as I came down to the conference centre. I am afraid, with geography like mine I will never qualify for Postman Pat. But, I have to say I am very grateful to a very kind gentleman from Yorkshire. I don't think he was a sub-postmaster, but a very kind correspondent nonetheless, who wrote to me after the newspapers reported my reference to Harrogate, and he sent me a cutting from the local newspaper. It was an advertisement for sea cruisers, all that bracing air, direct from Harrogate. So, I thought, I wasn't the only one who failed geography at school.

You and I, of course, have a great deal in common. For one thing we all make our living out of a red box. You can blame Alan Johnson for that one, he only had a second-class joke to spare this morning.

I am very pleased to be here with you all today. It does seem very odd to me having been your Secretary of State for nearly 12 months that, because of the timing of your conference, this is the first chance that I've had to see you all together.

And it is a chance to get to know each other a little bit better. Because I know very well from talking, particularly to Colin and to John, talking to sub-postmasters and mistresses in my own constituency and in my own city and, indeed, in many other parts of the country how anxious and difficult a time this has been for you. And, although, it's the first time that I've seen all of you, as it were, en masse, it's certainly not the first time that I've seen Colin and John. Douglas Alexander, my postal service Minister, and I have been discussing whether or not we shouldn't establish a little sub-post office in 1 Victoria Street, especially for John and Colin because we see so much of you. I do want to pay a tribute, particularly, to Colin. He is unfailingly constructive and positive, and even when we are discussing and arguing difficult issues he is polite. He has got a real vision of where he wants our Post Office network to be. Thank you.

And, Colin it's obvious that your qualities and leadership are really recognised by your members here today. And that is wonderful because I can certainly tell you as the Secretary of State for the Post Offices that Colin's enthusiasm for the Post Office network transmits itself, day in, day out and week in, week out to myself, my Ministers and to my officials. I can also tell you that his lobbying and your lobbying is very powerful and it is heard right at the top of Government. I can assure you, none of us will forget the sight of Colin and John outside 10 Downing Street - that was when I was E-Commerce Minister. And you were delivering sack loads of signatures, 3 million of them, to Tony Blair just a couple of years ago.

So you do make your point loud and clear. Now, a lot of those 3 million signatures came from my own constituency in West Leicester, and indeed The Leicester Mercury collected over 8,000 signatures to its save our Post Offices petition. Like every constituency member of Parliament, I know just how much our Post Offices mean to our constituents. Just a couple of days ago, I was talking to one of the thousands of sub-postmistresses and postmasters who invest their savings and their hard work in keeping the network going.

A Mrs Patel runs the Post Office in Gutheridge Crescent. It's in the Braunstone Estate, which for those of you who know Leicester as John does very well, is one of the most disadvantaged neighbourhoods. Not just in Leicester, not just in the East Midlands, but right across the country. It happens to be the Post Office where last year I launched the pilot for Your Guide. Like so many of your businesses, it's very diverse. There's the Post Office itself, which provides less of the total revenue than it used to; about 35 to 40%. There are bill payments, and I am glad to say The Leicester Mercury have just given all its regular customers a swipe card, so they are now coming in to Gutheridge Crescent and other Post Offices to pay their bills. There's a small general store, there's video rental, there's an off licence and there's now an ATM as well inside the store, not outside, just to make sure those customers really get pulled in.

And it is very hard work, as it for every one of you here and every one of your members. But, I am glad to say they are doing remarkably well. The footfall is up, the income is up and certainly Mrs Patel said a very, very firm no when she got the letter about urban re-invention asking them if they wanted to close.

So that was a good news story and I know it's not like that for all you. It certainly isn't like that for all of the Post Offices in my constituency and I have seen quite a few close over the last couple of years, despite enormous efforts from the sub-postmaster and often the community and the Post Office itself to keep them going. And I know that very often when a sub-Post Office closes people really do feel as if the heart has been ripped out of the community.

They've lost somewhere they can go for services, but very often they feel they've lost a friend in the sub-postmaster or sub-postmistress as well. And I think people also feel that when a sub-post Office closes, they are losing something which represents values that all too often seem to have gone missing in our modern world. Values of security and reliability and community. And those are the values that, as we re-invent the Post Office and change it for changing times, we must never ever lose sight of.

Forty years ago, of course, there were 25,000 Sub-post Offices, today 17,500. And we all know why that's happening. More people have cars, more supermarkets for them to drive to, more telephones, more faxes, more e-mails, more text messages, more people with bank accounts, indeed, half a million more people already switching from Giro cheques to bank accounts every year for their pension and their child benefit payments. I can't hold back that change and you can't hold back that change. What we have to do, and we can only do it together, is to manage that change. Turn that change, difficult and painful though it is, to our advantage.

And we start with incredible advantages. With those 17,500 Post Offices, we are by far the biggest retail network in the country, bigger than Tescos, Boots and WH Smiths all put together. I couldn't quite believe it when I was told that. I went away and double-checked, and it's true and it'll remain true after urban re-invention.

Twenty eight million customers, half the population, making 40 million visits to Post Offices a week, and only about half of them doing it in order to cash their benefit cheques. And, perhaps most important of all, the best known and best loved retail brand in country.

So how do we capitalise on these extraordinary strengths?

How do we meet this very tough challenge of change?

But, of course, that's what the report of the Policy and Innovation Unit (PIU) was all about. And that report to the Prime Minister published just 2 years ago, April 2000 was hugely important, it is was important to each of you, to the Federation and certainly to Government.

I know how committed the Federation was to the PIU report. You've shaped so many of its recommendations. And I know too, not least from your very rousing speech yesterday, Mr President, that some of you were worried about whether or not we are as committed to it as you are.

Well, let me make it quite clear, there were 24 recommendations in that report from Universal Banking to a Government GP, rural protection, urban re-invention and so on. And we accepted every one of those recommendations. We are committing £270m (and its not always easy to get £270m out of the Treasury), £270m towards implementing them.

And we are delivering every single one of them. i's dotted, t's crossed.

Let me say just a little bit more about where we are on most key recommendations, and where we still have to go. If we are going to deliver on the PIU report and that vision of a vibrant, dynamic, renewed Post Office network, then above all we have got to do three things.

First of all, we have to have much better management in the Post Office system. And let me make it quite clear, I am not talking about you, you are doing a great job. I am talking about the management and they know it. I am not saying anything to you here that I haven't said to their face. Because I think my single most important responsibility, as Secretary of State, is to make sure that the Post Office and the Royal Mail - Consignia as a whole - has got first class management.

And what is very clear to me - and you have known it for years - is that the Post Office network has been the Cinderella of the Group as a whole for far too long, and that the real focus of management attention has been the mails and parcels business.

That is simply not good enough. It's not good enough for you because you are putting your life savings into this network. It is not good enough for those 28 million people whom you serve every week. And it isn't certainly good enough for me.

So I am changing it. And Allan Leighton, the new Chairman of Consignia, who we are going to hear from this afternoon of course, was originally appointed to the Board in order to take a special interest in the Post Office network. He was the man who turned around ASDA. So he shares your commitment, my commitment and our enthusiasm for the biggest retail network in the country. But, he also agrees as the new Chairman of the Group as a whole, that the Post Office network needs its own dedicated top class management.

So we have already appointed a new Chief Executive for the Post Office network, David Mills, whom you met yesterday. Now David's only been in the job for a month. He's going to need time to get fully on top of the business. But I know that he has already been out visiting a lot of you. I know from talking to him that he has already got the ideas that are needed. He is getting on top of this job very fast. And his appointment really is a second crucial step following Alan's appointment to providing a new approach to the management of the network.

The challenge that we have given him is quite clear: to transform a business that is facing enormous difficulties into a business that's got a clear vision and sound finances, a really good future. A future that builds on the history, builds on its traditional strengths, but delivers modern, relevant, accessible services to all those millions of people who need them.

I call it, best of the old, best of the new. And I reckon Allan Leighton and David Mills are the guys to deliver it.

But, we are taking further steps to strengthen David's position.

We are re-structuring Post Office Limited to take it out of the shadow of the mails business. We are going to make it a business in its own right. Alongside, not underneath the mails and parcels company.

And we are also about to recruit a new Chair for Post Office Limited. So that we make the presence of the P.O.L. Post Office network within the Group as a whole much stronger than it has been. I'll be officially announcing that appointment to Parliament and we will be advertising it shortly.

That new Chair of P.O.L., like David, will sit on the Board of the holding company. So that its not a Cinderella service within the Group any longer at all, but a full-scale business in its own right with several seats at the top table.

Now, I've challenged Allan and David to come back to me with a new strategic vision for the Post Office network. And I've also challenged David to make the management of the network far more efficient.

I know that many of you get very irritated when you get far more leaflets than you can use, when you are told to push products that simply will not work for your customers in your particular area. But, I told David yesterday, I want him to go and see Mrs Patel at Gutheridge Crescent because she spelled out to me exactly how much money she saw wasted on all the stationery with the new name. And she said they could have put it on a rubber stamp and recycled the old stationery. I did ask her whether she'd like a job in the Post Office Limited, but she said she was very happy in Gutheridge Crescent, thanks very much. So, that's alright, she can tell David directly as well.

And - she was very clear about this - she said she gets great support from her area manager. But she gets very fed up being told, for instance, to push travel insurance or Bureau de Change. This is on a council estate, where almost nobody can afford to take a foreign holiday. And you don't need Euros to go to Skegness.

I know as well, that you are fed up with the administrative costs that somehow disappear on the way from the Government paying its money, to you actually receiving it. Let me assure you that as a Government, and I speak as an ex-Treasury Minister, we want to make sure that as much as possible of the transaction fees that the Government pays to the Post Office goes directly to you in the sub-post Offices, not to the management.

And David is absolutely clear about that. Less management, less overheads more money for the Sub-post Offices. So the first thing we need is better management. Leaner, more efficient management.

The second thing we have got to do is create better services and products, because its by delivering better value to our customers - your customers, my constituents - that we are going to deliver better and more reliable incomes for all of you.

Now, the PIU report, of course, identified two key new services, Universal Banking and Government GP, Your Guide. We are on track with both sets of recommendations. I know it's taken 2 years to get from the initial report to where we are today. And I have to say, nobody ever told us in opposition just how long it takes to get things done. We are trying to speed it up, but we have come a long way already.

First of all, Universal Banking - don't underestimate how complicated this is. We've got to get DTI, Department of Work and Pensions and the Treasury, all working together and we are, but that isn't easy. We've got to get all the Banks on board and working together with all of us. We've got Post Office Limited and all of you. And as if it wasn't complicated enough already, we've got those wonderful people, the suppliers of the information technology systems.

Now, plenty of people, particularly in the press, said that the Universal Banking wasn't going to work. We all read those stories, they started immediately after the PIU report was published, saying that Universal Banking had fallen flat on its face.

Well, it hasn't.

As Stephen Byers said to you last year, the major banks agreed to make their own basic bank accounts accessible at the Post Offices and they agreed to chip in a fair amount of money, about £180m, towards the cost of establishing the Card Account at the Post Office.

That was a huge breakthrough and I want to pay a real tribute to Stephen Byers, who was my predecessor, who put a huge amount of personal effort and time into getting the Banks around the table and signed up and committed.

Crucial breakthrough. We've agreed the basic principles on which this is all going to operate and Colin knows very well, that was a tough negotiation inside Government as well.

But, we've agreed it. No cap on the numbers of Post Office Card Accounts. Stephen promised you that last year, Douglas Alexander and I have delivered it this year.

No eligibility criteria either. Everyone, everyone who wants to get their benefits in cash at a Post Office will be able to do so. Whether they use it, a bank account or a Post Office Card Account.

And we've got most recently a place for the Federation at the table with the Department of Work Pensions sorting out all the details, and they are crucial details, of exactly of how the migration to ACT and the Post Office Card Account will work.

We are getting all the contracts and administration arrangement now being put in place, the banking engine for the Post Office itself the agreements between the Department of Work and Pensions, Benefits Agency and the Post Office, the agreements between Post Office and the Banks.

And what this gives us, and it is hugely exciting, is a Post Office-based solution that delivers the Prime Minister's commitment. Everyone who wants their benefits in cash at a Post Office able to do it. It delivers more banking services at the Post Offices, so more customers and new sources of revenues as well and, of course, it helps us tackle the evil of financial exclusion that afflicts so many of my constituents and millions of people around the country.

So huge progress on Universal Banking and on track to deliver it next year.

Then there's Your Guide. Now, of course, I've seen Your Guide not only in Gutheridge Crescent but a lot of other Leicester Post Offices because that's where we trailed it. Not, I am told, because I am the Secretary of State, but just because Leicester and Leicestershire is a great place, right in the heart of the country, it was an ideal location in which to trail this great new service. And it a is terrific new service. We put £25m investment into and I have to say all credit to the management of the Post Office Limited, they really delivered a quality product.

I know from the Sub-postmasters and mistresses I've told talked to, that they appreciate it, they appreciated the support and the back up that they got for it.

Your Guide builds on the role that you already play in the Post Offices. Often quite informally and without getting any payment for it, providing a whole range of advice and information to citizens. What we now have to do is evaluate it against two very simple tests. Does it bring in more customers and does it deliver enough value to citizens for other Government Departments to be willing to pay for it? Because that's what you want to know as business people. Are there going to be more customers? Is there going to be more income? That's what we need to know in Government.

So we've got to make a decision that is right for you in the Post Offices and right for us in Government. We trailed for 6 months which finished in March of this year. The 3 month evaluation will finish at the end of June and again, having spoken to David about this just yesterday, I know that evaluation is on track to be finished at the end of June and we will make a decision by the summer.

But I am also looking, and you too should be looking, to Post Office Limited itself to develop other new products. Products that people want to buy and that you can sell at a fair margin. Because it is quite extraordinary that one of the very few products of its own that the Post Office has got is that wonderful old postal order, invented I don't know how many years ago. I think there's a scope for a lot more besides. And I certainly want to see P.O.L. coming back to me with plans for new popular financial services products.

Household insurance, for instance. Now, I gather there's been a trail of that. I haven't seen that particular trail yet in Leicester, but I hear that where it has been tried it is an enormous success and its going to be rolled out nationwide.

Not just bank accounts, why not credit card accounts as well? And there's no reason why people shouldn't be able to invest in the stock market through a financial product offered in a Post Office. PEPs and ISAs alongside the Premium Bonds that you've been selling for years. And with David's background in banking, he is the right man to deliver those new, profitable products for you and for us.

Now that third thing that we need to deliver on the PIU report is, of course, better Post Offices. All of us know the problem in some of our urban areas. Too many Post Offices, too few customers, too little income for Sub-postmasters and mistresses and that means in turn too little investment to draw in the customers. So it's a vicious circle really of decline.

I've seen that in Leicester as well. The Sub-postmaster at the Belgrave Boulevard Post Office in Leicester, Robert Spence, was quoted in the Leicester Mercury just a few weeks ago saying, "the problem is, there is no trade now. Within a mile radius of us", he said, "there are ten other Post Offices".

And I will guess none of them really making much of a living. That doesn't make sense. And that's why I accepted the PIU recommendation for the re-invention of the urban network. It's why we back the Federation and the Post Office Limited in agreeing a sensible way forward. It's why we've agreed to allocate up to £210m in compensation payments for Postmasters who decide that really the best thing for them to do, sad though it is, is to leave the business.

Some of that money, of course, will instead go toward investment grants to support Sub-postmasters and mistresses who are going to invest in making a go of the Post Office that remains. It's why we are fast tracking the whole process of getting European State Aid's approval which we need for our £210m commitment. I hope we will have that by the end of July.

So we will invest money in compensating those Sub-postmasters and mistresses who are going to leave the business, but we'll also invest it in creating bigger, brighter Post Offices. That will bring in more customers and will deliver a better living to the people running them. Urban re-invention, I believe, is going to help far more of our Post Offices to succeed commercially. But we also know, that not every Post Office can succeed as a commercial business, and if we simply said the commercial consideration were the only thing that mattered than out communities would lose out as a result.

In our rural areas and in some of our deprived urban neighbourhoods as well, we know that our responsibility in Government is to make the payment for servers, the payment for the service to the community that Post Offices need to survive.

We put a formal requirement on Consignia in November 2000 to maintain the rural network and to prevent every avoidable closure. We've put aside money to enable the Post Office to do just that. We've had recommendations from Postcomm for the best way to channel those community services payments. We are looking at those in some detail. We are developing our proposals. We will make an announcement on the very soon.

We've created already a new fund to support volunteer and community initiatives that will maintain or re-open rural Post Office facilities. And, you know, that's already beginning to work. By the end of April this year, we had had 88 applications submitted. We've already approved 46 grants totalling nearly £400,000. We've got a new office opening in Capel-le-Ferne in Kent. That's after receiving a grant of £20,000 from the fund, and it's opening next Thursday.

And that's great, because it was the first grant that the scheme paid out and it marks the return of a Post Office to Capel-le-Ferne after more than 2 years absence. I want to see much more of that. I want to see Post Offices opening where in the past they've closed. And I also want to see Post Offices services getting out there to people in our villages where perhaps it simply isn't viable even with our help open a full-time Sub-post Office.

Mobile Post Offices, for instance. Or the idea of a bespoke model that the Federation has been putting to me and to Post Office Limited of combining a Post Office facility with perhaps a training centre or community café as part of the re-generation of a deprived urban area.

All of that will be possible. Indeed, in some urban areas, Stephen Byers' new Department is now coming forward with proposals for their £15m scheme for Post Offices in urban deprived areas. Particularly where they might be the last shop in that community.

I think, for the first time in years we have a real vision based on the PIU report of how we can deliver it. And we will deliver it, on time and on budget. We need a network, as I've said, with better management, with better services and products and better Post Offices.

We need, and I know we have, the energy, the enthusiasm, the commitment and sheer hard work of all of you Sub-postmasters and mistresses ready to work with us to fulfil that vision.

As the Cabinet Minister responsible for the Post Office, I will go on championing the Post Office in the Cabinet and right across Government. I will back you as business people, and I speak as the former Minister for Small business, because I want you to be able to make a success of your investment and your business. And I will back you in providing an absolutely vital part or our social fabric.

Just as I will go on working with the Federation and, particularly with Colin and John, to make sure that you are not just at the heart of the community, but that you are at the forefront of the changes taking place in information and communications technology. And, indeed, in financial services revolution.

Mr President, I think we have got a once in a lifetime opportunity to re-invent our Post Offices for a new century and a new world. Together, I know, we can do it.

Thank you.

Other speeches by The Rt. Hon. Patricia Hewitt

• Chemicals Industry Association (23/01/03)
• Women in IT Conference (22/01/03)
• Awards for Responsible Capitalism (27/11/02)
• E - Summit (19/11/02)
• Daycare Trust Conference (13/11/02)
• Asian Trader Awards Event (12/11/02)
• T&G Manufacturing Conference (11/11/02)
• LGA Economic Regeneration Conference (05/11/02)
• Quoted Companies Alliance Dinner (30/10/02)
• The British Retail Consortium Annual Dinner (29/10/02)
• Leading Edge ICT Seminar (22/10/02)
• European Union - Challenges and Opportunities (16/10/02)
• The Government view on Business and the Environment (10/10/02)
• 100 Group Speech (08/10/02)
• Institute of Public Policy & Research Manufacturing Project Speech (23/09/02)
• The Royal Television Society (10/09/02)
• Science Strategy Document Launch (23/07/02)
• Full and Fulfilling Employment (11/07/02)
• Invest UK Annual Review of Operations 2002 (10/07/02)
• Company Law Speech (05/07/02)
• Celebrating Excellence in the Knowledge Economy (03/07/02)
• Royal Society of Chemistry Parliamentary Links Day (25/06/02)
• Labour Market Speech to MEPs (19/06/02)
• UK Labour Market (29/05/02)
• Intellect Launch (16/05/02)
• Council for Excellence in Management and Leadership Report (13/05/02)
• Research Councils UK Launch (01/05/02)
• British Chambers of Commerce Annual Conference (22/04/02)
• Russian Economic Forum (18/04/02)
• Housebuilder of the Year Awards (28/03/02)
• Statement to the House of Commons (06/03/02)
• Reforming Europe's Economy: Obstacles and Practicalities (04/03/02)
• Trade & Industry Dinner (27/02/02)
• Social Enterprise & Co-operatives: 21st Century Businesses (26/02/02)
• Keele University (21/02/02)
• Women in Rural Enterprise Conference (07/02/02)
• The Lisbon Agenda - Delivering Jobs and Prosperity for all (06/02/02)
• NCVO Annual Conference (06/02/02)
• TUC Flexibility for All Conference (05/02/02)
• QED Annual Review (24/01/02)
• The Future for Manufacturing Industry (23/01/02)
• Women in Science - the 10th Anniversary of the Daphne Jackson Trust (21/01/02)
• The Annual Dinner of The British Israel Chamber of Commerce (16/01/02)

(the following are available from the archive)
• Free Trade For a Fair, Prosperous World (24/07/01)
• Business in the Community Awards for Excellence (11/07/01)
• Business And Society - Roles and Responsibilities (09/07/01)
• Statement at the Press Launch of Enterprise for all (18/06/01)
• Business Unlimited : Investing in South Africa Conference (14/06/01)
• AEEU Conference (13/06/01)
• Regulating UK Communications (22/03/01)
• "The UK Online: The British Government's approach to e-business" (19/01/01)
• Creating Competitive Advantage in the Knowledge Economy (21/11/00)
• European Telework 2000 'New Ways of Working' Conference (13/09/00)
• World Congress on Information Technology: "Better Government: The Vision and the Challenges" (14/06/00)
• Microsoft Government Leaders Conference (07/04/00)
• e-Commerce Strategy Presentation by the Minister for e-Commerce, Harvard Information Infrastructure Project (14/03/00)
• Business Link National Conference (19/10/99)
• The CBI & Real Business Magazine 9th Growing Business Awards (06/12/01)
• Proshare Awards Speech (04/12/01)
• Building a high productivity, low carbon economy (04/12/01)
• Yorkshire Forward Business Lunch (30/11/01)
• "Made in Sheffield" Dinner (29/11/01)
• Free and Fair Trade for Peace and Prosperity (06/11/01)
• "Building a Stronger World Community Through Trade" (25/10/01)
• "Economic Reform in Europe : more important than ever." (24/10/01)
• TUC Congress (10/09/01)