SIR ROGER Moore has hit the airwaves this weekend on behalf of Post Office savings products, and the former James Bond star's timing couldn't be better. His debut comes as the world's largest and oldest retail network appears ready to triumph over adversity in a style befitting 007.
Less than a year ago, Gordon Brown's government was threatening to put the Post Office card account out to private tender. At that time, opponents said the loss of this vital contract to pay state benefits over the counter would force the closure of
3,000 post offices across a network that was already shedding branches at the fastest rate in its history.
In the face of mounting economic and political pressure, tendering for the contract was abandoned last November. Last week the Prime Minister completed this U-turn by backing plans for a beefed-up Post Office network operating at the heart of community banking.
"There are too many savers and consumers the banks too often forgot," Brown told the Labour faithful at the Brighton conference on Tuesday. "I want the Post Office to step in to help hardworking families save and access their money easily, with banking for the people in our neighbourhoods."
It was certainly electioneering talk as Brown attempted to strike a populist chord before next year's general election. However, campaigners are thrilled at the prospect of a state-backed "people's bank", which they say would benefit both individuals and small business customers.
"We thought it was a terrific signal, actually, even though it was just a one-liner," says Lindsay Mackie, campaign co-ordinator at the New Economics Foundation (NEF).
Others, however, are not convinced there is much substance behind the rhetoric. Tom Clougherty, executive director of the Adam Smith Institute, was at last week's Labour conference. He points out that there is no way to significantly expand the Post Office's financial activities without substantially increasing its subsidy from the government, money the Exchequer simply doesn't have at this point in time.
"This looks like a crowd-pleasing announcement that can bring a cheer at the party conference, and that's about it," Clougherty says.
The Post Office is the UK's largest provider of foreign currency and, through various link-ups, it also offers insurance and savings products; the focus of the new marketing campaign fronted by Moore, who played Bond in the 1970s and early 1980s.
The new multimedia advertising drive marks the first time in 18 months that the Post Office has been on television screens. Moore was chosen as it was felt he portrayed the "sophisticated and respected" image the Post Office wants to project.
Indeed, trustworthiness is thought to be behind the growing popularity of savings products sold by the Post Office. While major banks have fumbled for credibility, the Post Office has moved up the ranks to become one of the fastest-growing suppliers of financial services in the past year. It now has more than two million savers through its joint venture with the Bank of Ireland and, during the 12 months to 31 March, the value of its savings deposits grew by 136 per cent on the previous year. The next step, campaigners say, is to turn the Post Office into a fully fledged bank offering current accounts, and services to small business.
Ministers say they will consult on the development of new banking products for the Post Office. However, the Post Bank Coalition – which includes the CWU and Unite unions, the Federation of Small Businesses, the Public Interest Research Centre and the New Economics Foundation – believes the most sensible option would be for the government to turn over the "good" banking operations of Northern Rock to Post Office Ltd.
"When you look at how to set up a bank, one of the biggest things is the banking licence," says Mackie at NEF. "Taking over Northern Rock, which is already owned by the government, would automatically address that, as well as providing expertise in more complicated areas like mortgages."
Mackie brushes aside any suggestion the Post Office's image as a trusted institution might be tarnished by Northern Rock, even though thousands of its customers have been left smarting since the government took it over in February 2008. She describes the matter as an "almost technical issue" where the Northern Rock name – plus any discredited operating practices – could be ditched, leaving "the bits of the puzzle we need to get a Post Bank up and running quickly".
Though the Post Bank Coalition has laid out its proposals as four separate options, they are not, in reality, discrete recommendations. For example, its second option would be for the government to buy out Bank of Ireland's share of its financial services joint venture with the Post Office, an exclusive deal launched in March 2004.
Regardless of how Post Bank might obtain its licence, this joint venture would almost certainly have to be unravelled. If not, the government would find itself in the politically tricky situation of supporting a foreign-owned bank that would reap half the benefits of any investment from the UK purse.
Though this summer's discontent over the safety of Post Office deposits held in the unsteady Irish banking sector would make dissolution even more appealing, it would again involve shelling out a substantial sum to the Bank of Ireland, which might not be keen to give up such a lucrative line.
"It is not going to be easy, but we do think Bank of Ireland should be bought out," says Mackie. "It's hard to say exactly what might happen, but it could be a bit of a bare-knuckle fight."
Clougherty at the Adam Smith Institute also sees political pitfalls in the Northern Rock plan. He says he would be "very surprised" if the bank was subsumed by the Post Office, given government promises to recoup the bailout funds it invested by eventually returning Northern Rock to private ownership.
"They would run into all sorts of problems if they tried to go back on that in order to prop up the Post Office," Clougherty says.
A further option would be to bring the £85 billion in National Savings & Investments back under the Post Office umbrella. Though NS&I was separated from the Post Office in 1969, the network is a key distributor of these government-backed products, which would give an embryonic Post Bank ample capital backing.
Whatever combination of devices might be deployed, the Post Bank Coalition maintains the new entity must be run as a traditional mutual bank. It says with 11,500 Post Office branches, which reach 95% of the UK, the Post Bank could offer personalised banking based on local knowledge.
For small and medium-sized enterprises, this is expected to translate into easier access to affordable credit and other banking facilities, thus helping ease the putative dearth of financial support on the high street. British Bankers' Association figures showed new lending by major banks to smaller businesses fell between June and July.
Whether Post Bank becomes a reality depends largely on whether Labour – faced with a soaring deficit and budget cuts – is willing to commit before the general election. If Labour loses power, campaigners may have to start afresh with a new party at the helm.
"Our job now is to push and push and push to make this happen," says Mackie. "And we need to keep working to make sure all the parties regard Post Bank as a vote winner."
