Post bank a great way to secure future of network

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AS small businesses endure the continuing hassle of the Royal Mail strike during the past few weeks, the focus has started to switch from the postie to the workers behind the post office counter.

Cross-party support has emerged for a new “post bank’, to be run as part of the post office network. The FSB estimates the formation of such a bank could create 11,000 jobs.

The campaign has been gathering momentum through the Post Bank Coalition. The FSB is a leading member of the coalition, whose members also include the Communication Workers’ Union, the New Economics Foundation, the Public Interest Research centre, the National Pensioners Convention and Unite the Union.

Pat McFadden, Minister for Employment Relations and Postal Affairs, confirmed the Government’s commitment to a secure and sustainable future for the Post Office. He said financial services were an increasingly successful service offered through post offices. The network is already the UK market leader in foreign currency and also provides insurance, credit cards and cash machines.

The coalition’s proposals for a post bank include: providing more financial services to businesses and people not currently being served by high-street lenders; strengthening the role of post offices; ensuring a stable source of finance in the heart of communities; linking the productive economy with finance; and returning to the concept of “relationship lending” that was abandoned by the UK’s biggest banks in recent years.

But the debate needs to focus on how to enact these changes, as it could be done either through the creation of a post bank, or through an existing relationship with the Bank of Ireland.

But small businesses are not getting the services they need from the Post Office. The future Post Office should look and function very differently from the current model. It should be made into a flexible business hub, able to stand on its own feet and service the small business community, which constitutes the backbone of the British economy.

Each branch could establish a dedicated business desk, with specially trained staff; establish mobile business support services; offer dedicated advertising facilities to help small businesses reach other small local businesses and potential customers; offer wi-fi facilities; offer meeting room facilities to start-ups and micro businesses; establish a full range of financial services, including business banking.

The small business community provides an extremely loyal customer base. Reaching out to the small business community in a bigger way will not only help small firms improve and grow their business, it will also bring in much needed revenue to the post office network.

The post office network is also a community hub essential for the Government’s sustainable communities’ agenda. It is the only national network that encourages intergenerational contacts and communications to flourish while generating footfall for surrounding small businesses.

The Government has said that the entire future of Royal Mail needs attention, saying that a post bank alone would not be enough to overcome problems faced by the company. However, Vince Cable, deputy leader of the Liberal Democrats, says the Post Office’s strengths lie in its localism and diversity of funding sources, and has congratulated the coalition on the proposals.

There are three key elements to this debate: the issue of financial exclusion – a big problem and getting bigger as the banks are tightening their requirements; the ability of a post bank to breathe life and purpose into the post office network; and its potential to act as a mechanism to “clean up” banking. A post bank would offer a clear alternative, run on sound ideas and driven by public interest.

The liberalisation of the postal market in 2007 has not yet benefited small businesses to the same extent as large businesses, because of their smaller mailing volumes. Small businesses find it difficult to find an alternative carrier to Royal Mail.

The Postal Services Bill, introduced to Parliament in February, but currently shelved, does not deal with the Post Office specifically but raises the issue of part-privatisation, regulation and how to deal with the pension deficit of Royal Mail. The biggest issue for small businesses is not who owns or regulates Royal Mail but whether they have access to fair competitive postal services.

To wait for a trickle-down effect on price competition to reach the small business community is not a good enough approach. Post offices as well as mail carriers ought to look at the small business community as a viable market sector not yet fully catered for.

Small businesses are dependent on the post office network for the running of their business and have suffered the consequences of the last Network Change Programme, which got rid of 2,500 post offices. The post office closure programme has greatly affected the elderly and those in rural areas, and so there is a need to develop and provide sustainable and attractive services.

Our proposals are still at an early stage and the Post Bank Coalition is engaging with financial experts to find ways to turn the proposal into reality. But the FSB believes that a post bank is a great way to secure the future of the post office network. The closures of post offices, which we have seen over the past two years, have been devastating for the small business community and we cannot bear any more.

Russell Lawson is spokesman for the FSB Wales