UK Government cools on Post Office 'bank for the poor'
Plans to help to save the Post Office with the introduction of what had been known as the Universal Bank account have been scaled back, to the fury of sub-postmasters.
They told MPs yesterday that savers were now being discouraged from signing up to Post Office bank accounts, designed to provide basic banking services to people on low incomes.
The claims, by the postal executives, come just months before welfare benefits, currently paid over post office counters, are scheduled to be paid electronically. Executives fear losing up to 40 per cent of their business, which could force more post office closures.
They told the Commons Trade and Industry Committee that the Department for Work and Pensions was encouraging claimants to open accounts with high street banks, rather than the Post Office card account.
David Mills, head of the postal network, said: “It is the Government’s intention to place as many customers in the commercial sector as it can.”
The Post Office card account, which used to be called the Universal Bank, was conceived three years ago by Stephen Byers, the former Trade and Industry Secretary, to help struggling post offices to stay afloat when the electronic payment of benefits is introduced. It was also promoted as a way of helping the financially excluded to gain access to banking facilities.
Mr Mills said that claimants found it hard to get information on the Post Office card account because the Government had yet to approve promotional literature. He said a telephone helpline asked claimants whether they had or wanted commercial accounts before they were offered the Post Office version. Then they had to ask for a personal invitation for the account, which required proof of identity.
Colin Baker, general secretary of the Federation of Sub- postmasters, said that the poor promotion of the Post Office card account, was “potentially disastrous”. Mr Baker said: “Sub-postmasters who have opted to stay in the network must be wondering if they have done the right thing.”
Three thousand urban post offices are already planned to close over the next three years because of dwindling business.
Allan Leighton, Royal Mail chairman, said that the organisation had to rewrite its network strategy because “the last one didn’t add up to a row of beans”.
The Department for Work and Pensions estimates that three million people will want the Post Office card account. Royal Mail believes that there will be up to seven million takers, while the Federation of Sub-postmasters thinks that more than 12 million would want the account if it were properly promoted.
Commercial banks, which are paying £200 million towards the scheme, are also reluctant to have benefit claimants as customers, although they are obliged to accept them. High street banks’ basic accounts, which are to be offered alongside the Post Office card account, cost millions of pounds to administer.
