Mandelson: 'Financial crisis could help save Post Office' » Communities » 24dash.com

Business Secretary Peter Mandelson is urging Gordon Brown to save the Post Office network by allowing it to provide a new range of government services and financial products, according to a report.

In a leaked letter to the Prime Minister seen by The Guardian, Lord Mandelson suggested that the economic downturn combined with "recent events in the financial services" presented a new opportunity for the Post Office.

"We should examine the prospects for POL (Post Office Ltd) becoming a much more significant player in financial services - offering a wider range of attractive products within easy reach of the whole population, available from an institution they can trust," he said.

The suggestion is likely to be welcomed by Labour backbenchers who have bitterly resisted government moves to scale back the current network, which have seen 2,500 post offices slated for closure.

A spokesman for the Department for Business and Enterprise said: "We do not comment on private correspondence."

Meanwhile, the Government last night promised that the long-awaited decision on the future of the Post Office Card Account (POCA) would be taken "very soon".

Challenged repeatedly on the timing of the announcement, Work and Pensions Secretary James Purnell said it would be "way before"
Christmas.

He told MPs: "The decision has to be taken in due order and I cannot take a decision before all the necessary options have been completed.

"The worst possible thing would be to take a decision which then got unwound."

Mr Purnell was responding to concerns from all sides of the House that months of delay in announcing whether the contract would be retained by the Post Office was creating uncertainty.

The Card Account is seen as a lifeline to many branches, bringing in valuable trade, but the deal runs out in 2010 and there are fears in the industry the contract could go to a rival operator.

In a Liberal Democrat-led debate, Mr Purnell said no one believed the Post Office should be run on a purely commercial basis.

Many people did not have access to online services and two million did not have bank accounts, which was why the Government had decided to renew the POCA contract.

But he refused to comment on the tendering process, insisting "due process" had to be followed.

Labour former minister Kate Hoey asked: "Why did we have to go out to competitive tender on this. There are other countries in the EU where this has not happened...?"

Labour former deputy leader of the House, Paddy Tipping said: "Will you take it from me and people on these benches, the Post Office and their customers, that the sooner you come to a decision and announce it will be in your interest and everyone else's interest."

Mr Purnell said: "Due process is important and it is important we take decision legally. I can reassure Members we will be taking this decision very soon."

He was pressed by Liberal Democrat Sir Robert Smith (W Aberdeenshire and Kincardine) who demanded on behalf of worried postmasters and
postmistresses: "Will it be before Christmas?"

Mr Purnell replied: "They will definitely have a decision way before that."

Opening the debate, Liberal Democrat spokeswoman Jenny Willott said it was estimated that between 3,000 and 6,000 branches could close if the POCA contract was lost.

"The Government's indecision has already proved extremely damaging to the Post Office.

"But a decision to give a Post Office Card replacement contract to a different operator could be completely deadly."

The Commons Business and Enterprise Select Committee said in a report today that it was concerned the delay was "destabilising" for the Post Office and for communities in rural and deprived urban areas who rely on their local branches.

Shadow work and pensions secretary Chris Grayling told ministers tonight that they should be "ashamed" of the way they had handled the issue.

"The big fear is that lack of judgment by ministers will be the death knell to yet another swathe of post offices."

He said: "The long delay makes it look pretty clear ... that ministers have decided to move the account elsewhere but realise the political consequences won't be pretty."

The impression was left that ministers were "struggling behind the scenes to soften the blow".

It would a "tragedy and a travesty" if the account was not handled by the Post Office and thousands more branches closed.

Labour former minister Sir Gerald Kaufman (Manchester Gorton) accused the Liberal Democrats of being "totally opportunistic", spotting a cause they thought might be popular and running with it.

Along with the Tories, he said, they tried to pretend POCA was a "grand old British tradition" when in fact it had been created by Labour in 2003.

Mr Kaufman conceded it cost money to run, but argued several other major schemes did as well.

"Of course it costs money, it's quite an expensive service compared with other services," he said.

"But so do other services created by the Labour Government. Jobcentres are expensive, Sure Start is expensive, the New Deal is expensive.

"And who today would disband any of those on the grounds that they cost a lot of money?"

Mr Kaufman called on Mr Purnell to keep the POCA with Post Offices.

"Come up with what we want and you will be an even bigger hero than you are now," he said.

Tory Peter Luff, chair of the Commons Business and Enterprise Select Committee, said Post Offices offered a "personal touch" to users.

Outlining the conclusions of the committee's report, he said whoever provided POCA must be able to offer reliable access to cash.

And he said that in a time of impending recession it would be odd for the Government to take a decision that put small businesses at risk, arguing that many relied on POCA and that the Post Office network was the best way to provide it.

"It would be very strange indeed to take a decision that directly threatened the future of at least 3,000 and possibly rather more businesses," Mr Luff said.

"It is the job of ministers to say, 'No, there is something immensely important and valuable here, we must not allow the country to lose'."

He added: "Please help the Post Office do that - don't get this decision wrong."

Labour's Lindsay Hoyle (Chorley), who tabled a motion earlier this year calling for POCA to remain with the Post Office, said: "There is no way that that majority of this House supports anybody other than the Post Office delivering POCA2."

Mr Hoyle went on: "It could be as much as 80% of Post Office counters will close throughout the UK without POCA2 because they are so dependent on it. That is the amount we are talking about."

He wanted to see a community bank set up within the Post Office to help save branches.

"We will replace the banks that have been lost throughout villages and towns in this country, we have a great opportunity to do so."

Such a bank would also benefit local businesses.

He attacked the BBC for removing the ability of people to pay for their TV Licence at the Post Office: "It is an absolute disgrace. On the one hand they are willing to take taxpayers' money but yet they are not willing to support the taxpayers' business through the Post Office." He called on the Government to "listen and deliver".

Liberal Democrat Greg Mulholland (Leeds NW) attacked the Government's "inconsistency accompanied by a real lack of leadership and will."

He said if a private firm was awarded POCA and more Post Offices closed it would hit the elderly and the vulnerable particularly hard.

"If the Post Office loses this tender it will leave huge numbers of older people both financially and socially excluded."

Labour former minister Kate Hoey (Vauxhall) said she could not accept the need for a tender process. "I will not accept that we did actually need to tender it."

She said that the Republic of Ireland government had not carried out such a tendering process as it had "stuck up" for its citizens.

"That is what I think our Government should do and I think it is time we started to stand up to the ludicrous nature of some of the rulings and directives that come from the EU."

John Thurso, winding up for the Liberal Democrats, said POCA could provide the Post Office network with an opportunity to transform itself.

He said: "The replacement card contract is wanted by the customers - our constituents.

"It's vital to the future of the network and supported by the vast majority of members in this House on all sides.

"The Government have been overseeing the systematic removal of business from the Post Offices and it is time to stop.

"It is time to support the Post Office and allow it to adapt for the 21st century and for that Post Office Card Account two is needed and it's needed by the Post Office."

Work and Pensions Minister Rosie Winterton acknowledged there had been a "passionate debate".

"The Post Office is a treasured and essential cornerstone of local communities across the UK," she said.

"It is trusted in ways others are not. It is understood in ways others are not. And it is not to be treated as a purely commercial service.

"I can assure the House that decisions regarding the Post Office will be taken respecting that unique situation and focused on the importance of our Post Office to the lives of many millions of our constituents who use it every day."

The Liberal Democrat motion calling on ministers to "consider the impact on communities across the country if the Post Office card account is not renewed" was defeated by 278 votes to 240, Government majority 38.

The Government amendment welcoming its commitment "to provide £1.7 billion of support up to 2011 to maintain a national post office network and access to Post Office products" was approved by 279 votes to 232, majority 47.