Royal Mail chief attacks delays in universal bank

Allan Leighton, chairman of Royal Mail, yesterday attacked the Government over its handling of the rolling out of the "universal bank" which is intended to reduce the number of people without a bank account and also boost the finances of the Post Office.

Mr Leighton put the blame at the door of the Government for delays in advertising the new "bank" and also for the complicated process customers have to follow if they want to take out one of its new accounts through the Post Office.

Speaking at the Trade and Industry Select Committee, Mr Leighton told MPs: "What's happened would not be allowed to happen again. Things should have been done earlier and they should be made clearer."

The universal bank was dreamed up by the Government after it decided to move by 2005 all of the UK's 13 million benefits recipients from collecting the cash over post office counters to an automated system of paying the money straight into bank accounts.

It was hoped the move - which would see the Post Office lose £400m of annual revenue - would be offset by a new banking network where individuals could take out a new "card account" with the Post Office which the Government would fund. They would then have three choices for collecting their benefit - through the card account, a basic account from a high street bank or a regular current account.

Mr Leighton, a former chief executive of Asda, spelt out the importance of the universal banking concept to the future of the Post Office, which has been haemorrhaging cash and closing branches.

Mr Leighton and David Mills, recruited last year from HSBC to run the Post Office, have made rolling out the universal bank one of their highest priorities. "We're becoming a retailing network with a banking bias. This is not what we had been in the past. We need a national range of products which is better than the range of products in place at the moment," Mr Leighton said.

While the first phase of the universal bank was up and running from its target start date in April, it has been mired in controversy and delays due to turf wars between the Department for Work and Pensions, the Department of Trade and Industry and the Post Office.

The DTI, which oversees the Post Office, believes the DWP and the Treasury have made it difficult for customers to open a Post Office card account in order to keep down the costs to the Government. Minimising the number of people opting for a card account means more benefits recipients would take out a basic bank account, financed by a consortium of high street lenders.

In contrast, the Post Office is keen for as many people as possible to take out a card account as a way of safeguarding footfall into its 17,500 branches, where sub postmasters make income from other revenues such as selling alcohol and cigarettes.

Malcolm Wicks, a DWP minister, denied there had been a "conspiracy" to discourage people from taking out a Post Office account and said the Government expects more than three million people on benefits to choose a card account.