The government promised an "exciting new era" for the Post Office today, pressing ahead with controversial plans to privatise parts of the Royal Mail and pledging to invest in the network, refurbish branches, extend opening hours and cut queues.
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| The government will today confirm its long-term goal of converting the Post Office into a mutual structure. Photograph: Graham Turner/Guardian |
Ministers also announced moves for new government and financial services to be offered at post offices in a bid to attract new customers.
The postal services bill committee started questioning witnesses today, including those from Royal Mail, unions and user groups as the government confirmed its long-term goal of converting the Post Office into a mutual structure, similar to the Co-operative Group, giving employees, sub-postmasters and communities a greater say in how the company is run.
A policy statement published by the government today said that the funding would enable the Post Office to reach out to new customers by investing in its network, refurbishing its branches, extending its opening hours and reducing queues.
The measures will be fiercely opposed by the Communication Workers' Union, which will argue that Royal Mail can have a successful future without being privatised.
Edward Davey, the postal affairs minister, said: "We're determined to turn the Post Office network around and end the years of decline. The Post Office is a tremendous national asset. It will not be for sale and there
will be no programme of closures.
"To underline our commitment we have announced £1.34bn of funding over the next four years. The money will put the Post Office on a stable financial footing. It will help modernise the network and make it even more appealing to customers. Our programme means the network is on the cusp of an exciting new era."
Yesterday, the Royal Mail received permission from the regulator to increase prices on stamped mail by up to 10%, which could equate to a 5p increase in the cost of a first class stamp to 46p, and a 4p increase in the cost of a second class stamp to 36p.
Postcomm said Royal Mail should have the flexibility to increase the prices it charges customers from April 2011 on average by 7%, which would mean it could realise up to £280m in additional revenues.
It also gave greater commercial freedom for Royal Mail under plans to tackle growing competition and maintain the universal postal service.
Royal Mail welcomed moves to give it greater freedom to compete and continue investing in modernisation, adding that no decision on stamp prices had been made.
The government said today that it wanted to see the Post Office continue to expand its range of financial services with an ambition that all UK current accounts would be accessible through the network.
It announced a new agreement between Royal Bank of Scotland and Post Office Ltd to provide access to current and business accounts through post offices.
"This will give RBS and NatWest customers access to their current and business accounts through the Post Office. This will mean that almost 80% of current accounts will be accessible at post offices," a Department for Business statement said.
Ministers also want to see the Post Office become a "genuine front office" for local and national government. It is understood that a number of pilot projects have been agreed and other opportunities are being developed which could see the Post Office verifying supporting documents for customers of the Pension Service.
The government is also thought to be considering whether it might be able to play a role supporting Jobcentre Plus in the national insurance number application process.
Ministers argue that the plans will break the "cycle of decline" and ensure that post offices across the country continue to be at the heart of their communities.
But the CWU stepped up its opposition to privatisation by targeting scores of Conservative and Liberal Democrat MPs it hoped would refuse to support the government.
Billy Hayes, the general secretary of the CWU, warned that plans to privatise the Royal Mail arm of the postal group would "kill off" post offices.
He argued that selling off Royal Mail, coupled with rumours that the payment of benefits was to be handed to a private firm, would deny post offices the "oxygen" they need to survive.
Hayes told BBC Radio 5 Live that his local post office in south London had just closed, and questioned the government's pledge not to repeat Labour's closure programme.
"If you take away the oxygen of the Royal Mail from post office counters, if you take away the welfare contract, you are going to kill the post office network."
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