Memorandum submitted by A4e Development
This formal written response is submitted on
behalf of A4e in relation to the Business & Enterprise Committee
consultation on the future of the Post Office network. A4e would
be happy to provide further clarification on any aspects of our
response.
INTRODUCTION TO
A4E
A4e is a private sector organisation with a
strong sense of social responsibility. Our aim, in everything
we do, is to improve people's lives. We are a £140 million,
3,000-strong, global organisation that is focused on innovation,
delivery and social change—for the individuals we commit
to help, and for the governments we support.
We are a market leader in global public service
reform. We design, develop and deliver front-line public services
that benefit individuals, organisations and communities.
Since 1991, A4e has touched the lives of over
one million people providing consultation and advice to people
and organisations.
We excel at bringing new programmes and pilots
into new markets, delivering services that have a positive impact
on the disadvantaged and marginalised
The company operates from over 200 locations
across the UK, France, Poland, Germany, Israel, South Africa and
Australia is one of the UK's premier organisations in the delivery
of social change services on behalf of Government.
A4e provides products and services across five
pillars:
— Education, Learning and Skills.
— Enterprise and Business Services.
— Export and International.
A4e's credentials for responding to this consultation
are based on our role as providers of regulated financial information
and guidance. This role means that we have a grounded understanding
of the challenges that the financially excluded face, it also
means that we understand how people entrenched in financial exclusion
can be supported in making better choices about their financial
position.
Our provision of financial advice includes:
Money Guidance—the Generic Financial
Advice pilot—A4e's GFA pilot for the Financial Services
Authority (FSA) delivered a new, independently branded Service—Money
Fitness—through three Channels of engagement; Face-to-face,
Telephone and Web which engaged over 1,600 consumers in three
months delivery. During this period A4e tested different marketing
channels, from direct press advertising through to intermediary
referral partnerships, we developed a staff training programme
for the delivery of GFA and we tested different ways of engaging
consumers, including those most vulnerable to poor financial decision
making.
Following on from the initial pilot A4e has been
selected to deliver one of two Regional Pathfinders in the North
West of England for the new Money Guidance service. This service
will go-live from the beginning of April 2009 and is the
forerunner of an expected national service.
Young People and Money—The Financial
Services Authority (FSA) is committed to building financial capability
in the UK. As part of their national strategy they are funding
A4e to deliver Young People and Money, a training programme developed
specifically for those working with young people that are either
not in education, employment or training (NEET) or at risk of
being "NEET". The programme aims to train 20,000 people
working with "NEET" young people by 2010.
Advice4Stoke—Provision of a free
and independent outreach advice service to City Council Tenants
of Stoke-on-Trent (and people who are threatened with homelessness)
to enable them to maximise their income and prioritise their expenditure
so that priority financial commitments can be maintained. Through
2000 client appointments a year, since the programme started
in May 2006, we have helped re-schedule over £6 million
of personal debt.
Money Advice Outreach Pilot—funded
by the Legal Services Commission from the Financial Inclusion
Fund, A4e deliver an outreach Money, Welfare Benefits & Debt
Advice service to the financially excluded in Northumberland,
Tyne & Wear; West Wales & the Valleys; and HMP Prison
Establishments. In 2007 Money Advice delivered services to
2,304 clients.
Independent Living Direct Payment Social Care—Direct
Payment for Social Care gives people greater control over the
way they live their lives; it means people are empowered in the
decision and management of their own care while we support them
every step of the way. A4e supports customers in Warwickshire,
North Tyneside, Sheffield, Dudley, East Sussex, Middlesbrough,
Southwark, Stockton, South Gloucestershire, Oxfordshire, Plymouth
and Somerset to decide on how they receive their social care.
After A4e establish the level of support needed we help our customers
to take responsibility for managing both their own money and their
own care.
HBOS—Money Help—A4e deliver
a national programme of financial education to Schools across
the UK in partnership with HBOS. Overall, Money Help provides
children aged 13-16 with key skills to empower them to manage
their personal finances effectively including budgeting, usage
of consumer and financial products and increase financial awareness.
Over the last year Money Help has reached 15,000 school children.
EXECUTIVE SUMMARY
A4e's response to this consultation focuses
on re-purposing the Post Office network to offer local communities
a range of services, the heart of these services will be a "Post
Office Bank" whose primary focus would be to deliver services
to the financially excluded.
THE NEED
FOR REFORM
The future of the UK's Post Office network has
become high profile issue for the Government. An independent review
of the UK's postal services led by Richard Hooper reported to
the Government at the end of last year.[2]
The report identified that there was pressing need for reform
and laid out clear steps that needed to be taken in order to both
preserve the universal service currently provided by Royal Mail
and to deliver modernisation.
Whilst the review largely restricted itself to reviewing
the postal services rather than the Post Office network there
is also a clear need for reform here too. Despite rationalisation
following the DTI consultation in 2007, the 11,500 strong
network of Post Offices remains financially unsustainable losing
£2 million every week.[3]
The steps for reform laid out by the Hooper
review involve creating new partnerships and offering new services.
A4e believe that these steps to reform are equally applicable
to the Post Office network.
A FUTURE FOR
POST OFFICES
A4e believe that the future of the Post Office
network can be secured by leveraging the two key features of the
network, its scale and the public's trust in the brand, into a
community focused "Post Office Bank".
The Post Office is the largest retail and financial
services chain in the UK—bigger than all of the UK's banks
and building societies put together. The UK Government through
the "Minimum Access Criteria"[4]
has ensured that the Post Office has a unique delivery infrastructure:-
— Nationally, 99% of the UK population
to be within three miles and 90% of the population to be within
one mile of their nearest post office outlet.
— 99% of the total population in deprived
urban areas across the UK to be within 1 mile of their nearest
post office outlet.
— 95% of the total urban population across
the UK to be within one mile of their nearest post office outlet.
— 95% of the total rural population across
the UK to be within three miles of their nearest post office outlet.
Post offices play an important social and economic
role in the communities they serve. As such they enjoy great public
trust and support. This is probably best evidenced in the public
response to the current perceived "threat" to the Post
Office network.[5],[6]
,[7]
The scale of the Post Office network and the
public trust the institution engenders supports the strengthening
of the financial services that the Post Office provides.
POST OFFICE
AS A
BANK
A4e believe that the financial institution created
by this process should not be another high street bank offering
the same current accounts, ISAs and large personal loans. The
mainstream financial market, despite the recent market failure,
already offers a wide range of choice. It is also likely that
the Government would face strong opposition from the banking sector
if they tried to position the Post Office in direct competition.
Instead, A4e believe that the Post Office Bank should have a strong
social/community focus serving the customers who do not access
mainstream financial services. This approach would allow the Government
to use the newly formed bank to directly tackle financial exclusion
and indirectly to tackle wider social issues such as poverty,
inequality and social exclusion.
Financial exclusion can be defined as the inability,
difficulty or reluctance to access appropriate, so-called mainstream,
financial services. According to a recent study there are approximately
two million adults in the UK without a bank account.[8]
The financially excluded suffer significant disadvantages including:
higher-interest credit; lack of insurance; no account into which
income can be paid; and higher-cost utilities.[9]
In the current economic climate the financially excluded can ill
afford these additional penalties. Financial inclusion has two
elements: access to suitable products and services (the "supply
side" of the equation) and good financial decision-making
(the "demand side"). Both of these elements could be
provided under the aegis of the Post Office Bank. The Post Office
Bank would operate from within current Post Office premises alongside
the current services provided.
Products & Services
We would expect the Post Office Bank to specialise
in financial products which have a low access threshold; examples
would include basic bank accounts which allow customers to pay
for utilities via direct debit and smaller loans (between £50-£500).
We also think the Post Office Bank would be ideal for providing
people access to HM Revenue & Customs/HM Treasury's "Saving
Gateway" and the Department of Work and Pension's "Social
Fund".
Saving Gateway[10]
The Saving Gateway is a cash saving account
for working age people on lower incomes. It provides a strong
incentive to save, through a Government contribution of 50p for
each pound saved. The details for this service are still being
finalised but the Bill setting in place the rules for the scheme
were introduced to Parliament on 4 December 2008. One of
the key problems to overcome for the Saving Gateway scheme is
to ensure the delivery infrastructure provides everyone who qualifies
for the scheme access. The Post Office network provides a solution
to this problem.
Social Fund
The longstanding service supports people on
low incomes to meet unforeseen costs and expenses through a combination
of loans and grants. The scale of the support that is delivered
through Social Fund is substantial; the fund provided £944 million
in payments in 2007-08. The Social Fund is in the process of being
reformed; DWP issued a consultation paper on the Fund in December
2008[11]
and has declared an intention to consult again on reform this
summer (09). Currently the fund is administered by Jobcentre Plus
however the recent Welfare Reform Bill includes provision to allow
other providers to administer the Social Fund provision. Moving
the fund away from JCP would not only free up their staff to deal
with the growing client volumes, it would also allow the delivery
of financial information, advice and guidance alongside the services.
DWP face the same problem with the Social Fund as the HMRC/HMT
face with Saving Gateway, deciding on an appropriate delivery
infrastructure. DWP's initial consultation suggested they were
considering the network of Credit Unions for delivery of the Fund,
but as a number of the consultation responses have suggested the
present network of Credit Unions does not have the geographical
coverage or the capacity to undertake this role.[12]
The proposed Post Office Bank would be able to fulfil this role.
Financial Information, Advice & Guidance (IAG)
It is important that any products aimed at reducing
financial exclusion are provided alongside financial IAG. This
ensures that customers understand the support which is available
to them and are signposted accordingly. In the context of the
proposed Post Office Bank, the financial education should also
extend to ensuring that people are receiving all the benefits
to which they are entitled to and where customers are in debt,
they are prioritising the debt appropriately. Our current line
of financial support initiatives includes a project called Advice4Stoke
which A4e runs on behalf of Stoke-on-Trent City Council. This
project is important as it serves as an example of what the Post
Office Bank Financial Capability service could look like.
The service is aimed at supporting housing tenants
in areas typified by low incomes, unemployment, poverty and deprivation,
so that they can markedly improve and take control of their financial
situation. A4e delivers benefits and debt advice on a one-to-one
basis, ensuring we understand the real needs of our clients and
providing them with professional, confidential advice and support.
Our advisers are fully trained in all areas of money and debt
advice ensuring we can answer all customer queries which include:
Housing problems—rent arrears, council
tax bills and utility.
Personal Finance—credit cards, overdrafts
and loan payments.
Benefit Advice—welfare claims and entitlements.
In these first 18 months, Advice4Stoke
has prevented 98 evictions. Using figures provided by Shelter,
who estimate that a Local Authority's costs for evicting a tenant
for rent arrears at between £1,913 and £3,190 ,
and bringing the figure up-to-date by factoring in inflation ,
Advice4Stoke have helped Stoke City Council save approximately
£226,184—£377,104 in prevented evictions.
During its brief lifetime so far Advice4Stoke has also helped
clients identify and claim a total of £1.84 million
in unclaimed benefits and reschedule £6.81 million of
high interest debt.
The Post Office Bank could adopt a similar financial
education approach and deliver these outcomes on a national scale.
NEXT STEPS
The Post Office Network is in need of reform
to ensure it continues to play a central role in many communities;
the Post Office Bank would represent a bold change of direction
which would significantly diversify the services provided. Developing
the capability to deliver these services would be challenging.
It is hard to see how current Post Office staff would be able
to deliver these services on their own. Just as the Hooper review
concluded that reforms needed to preserve and modernise the wider
postal services require partnership with other agencies we would
suggest that in order to develop the capacity to deliver the Post
Office Bank we would recommend that Post Office Ltd subcontract
the client facing advisory elements of the proposed Post Office
Bank out to a third party. This third party could conceivably
come from either the private sector (eg A4e) or from the third
sector (eg Citizens Advice Bureau).
February 2009
2 Hooper R (2008) Modernise or decline-Policies to
maintain the universal postal service in the United Kingdom Back
3
The Royal Mail Website (2009)
http://www.royalmailgroup.com/portal/rmg/content1?catId=23200554&mediaId=23700541£13900297 Back
4
DTI (2007) The Post Office Network-Government Response to Public
Consultation Back
5
Lancashire Telegraph-27 February 2009. "Post Office
closures have left East Lancashire elderly isolated" Back
6
Watford Observer-11 February 2009. Council's final fight
to save Moatfield post office in Bushey Back
7
The Daily Telegraph-24 February 2009. Union threatens to
withdraw £1 million Labour funding over Post Office
row Back
8
HM Treasury (2007) Financial Inclusion: The Way Forward. London:
HM Treasury Back
9
Mitton, L (2009) Financial Inclusion in the UK. York : Joseph
Rowntree Foundation Back
10
HM Treasury (2009) Saving Gateway (http://www.hm-treasury.gov.uk/saving_gateway.htm) Back
11
DWP (2008) The Social Fund: A new approach. Back
12
DWP (2009) The Social Fund: A new approach-Response Document. Back
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