A step in the right direction

Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.

The award of the Post Office Card Account to the Post Office is more brilliant news from the Government (a rarely crafted phrase). Today’s news that the Department for Work and Pensions is, after all, to award the Post Office Card Account to the Post Office, after an ill advised tender process, will safeguard much needed business for the network and provide a better service to ithe card’s 4.3 million users.

So now we have the Government, in the form of Lord Mandelson and James Purnell, publicly recognizing the future potential of the Post Office to provide financial services at a time when the big banks’ credibility and popularity is shot to bits.

It looks as though the Government has seen that being the Dr Beeching of the 21st century by allowing a key part of national infrastructure to be smashed on the altar of privatization and de-regulation isn’t a smart move. If this is so, then crucially the business secretary must now halt the current round of 2,500 post office closures if the Post Office under Royal Mail is to have a chance of being fit for the tough economic future that’s looming.

There are 14,500 post offices in the UK. A key and under reported role they have is in supporting the small and medium sized businesses that will be Britain’s economic saviour . This is a network that can be used to link the productive economy to stable finance. Therefore the next thing the Government has to do is investigate how to set up a People’s Bank based on the trusted PO network. This banking service would be fair and it would provide both local expertise and national linking.

In addition, the Post Office can be a hub for local and national government information. It could become a digitally backed network in addition to the vital real contact with real people. It holds local communities together. It includes the financially excluded. It exists in those place from which banks have pulled out.

Next on the to do list: Lord Mandelson must stop the creeping de-regulation of key parts of Royal Mail and announce that this great British institution is not up for grabs from private companies. Then he should say he recognizes Royal Mail as a British institution that is commercially viable but also a public service (and for this reason he could carry on the PO subsidy) which is not up for sale to private bidders- and he should advise any such potential bidders to take themselves elsewhere.

The campaign to save, strengthen and expand Royal Mail and the Post Office in these clear directions will be even more intensive now. All ideas and collaboration welcome…

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The Post Office can be a people’s bank

Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.

Lord Mandelson‘s leaked letter in the Guardian today couldn’t be more welcome. The business secretary says he wants the Post Office network to be built up and expanded, rather than neglected, pulled apart and run according to swivel-eyed free market principles – government policy for the last decade and a half.

And what he seems to have grasped absolutely is that the UK has been lumbered with a financial system unfit for the purpose of building up our economy and safeguarding our communities – but that the Post Office, with its astounding national network, provides the healthy economic trusted alternative.

In his letter to the prime minister, Mandelson describes the Post Office – with 24 million customers a week – as a trusted brand with a widely accessible network. And so it is. And it would be churlish to point out that the hundreds of thousands of people who have fought to save this network have been saying the very same thing for the two years since the Post Office introduced its detested Network Change programme.

But Mandelson is more than a sinner come to repentance. He has the chance to hit the bullseye, making the government popular by doing the right thing for communities across the UK (and the cities would be as bereft as villages if 2,500 post offices were allowed to close) and strengthening the UK economy as we enter the choppiest of waters.

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Paying for banking – a bargain for the unbanked

Veronika Thiel is a researcher and project manager on nef’s Access to Finance team.

The fallout of the banking crash and the related bailout conveniently pushes an issue in to the background that has been the focus of some considerable, albeit woefully inadequate, initiatives by the Government and banks: that of the unbanked.

In the past 5 years, the Government has convinced banks to introduce a Basic Bank Account (BBA), a current account without cheque and credit facilities. This would enable clients with a bad or no credit history to open up a bank account. More importantly, the BBA is also accessible through Post Offices – but stopping short of allowing the Post Office to run a bank itself. This is despite the fact that the Post Office enjoys the trust of people on low incomes, and a Post Office Bank would be ideally suited to promote financial inclusion as we argue in a recent report.

Initially, 800,000 BBAs were opened, but more recently, the number of people without a BBA or current account has risen again to 3m. This points to a fundamental flaw in the system – banks’ lack of incentive and willigness to cater for the low income market. The current crisis offers an opportunity to rectify this, but we need to break a taboo: paying monthly fees for our bank accounts. Although it sounds counter-intuitive, for the unbanked, paying an adequate fee for a transparent cost structure is a bargain.

Not having a bank account is expensive. The unbanked pay a poverty premium of around £1000 per year. They pay their bills in cash, and use pre-pay meters for gas and electricity. Many companies charge higher prices for bills that are not paid by direct debit, and pre-pay tariffs for gas and electricity are also higher than the standard ones.

So why do they not open an account?