Joanna Blythman on the post office

Let's turn the Post Office into a publicly-owned people's bank and use its network of 14,500 branches in most neighbourhoods and rural areas to provide the public service which the banking system has failed to deliver. Now there's a big, radical idea, but one that's building up a head of steam.

As the recession bites and pensions and investments nosedive in value, a wave of disaffection with our financial system is sweeping the country, triggering a deep longing for a financial institution that's solid and trustworthy.

Until recently, this proposition was only taken seriously by Labour left-wingers like Jon Cruddas MP and the trade unions of this sector. Government was in thrall to deregulated free-market economics, and key parts of the business of the Post Office and Royal Mail were up for tender to the private sector, the acceleration of a long, slow death by a thousand cuts that would lead, inexorably, to privatisation.

Before the financial crisis, the government, through its eminence grise, Peter Mandelson, seemed to be calling for the privatisation of Royal Mail, refusing to see that it could have a remit that goes beyond the purely commercial. Now, following the banking bail-out, he is urging the prime minister to save the Post Office network by "allowing it to provide financial products and government services". There are echoes here of the people's bank idea.

More evidence that the financial shock has caused the government to rethink its unbridled enthusiasm for the privatisation of such vital services came last week, with work and pensions secretary James Purnell's decision to cancel the competitive tender for the processing of state benefits, leaving the business, worth £1 billion, in the hands of the Post Office.

So what we have is a temporary reprieve for the 3000 post offices that would have closed if the post office card account had gone to PayPoint, and a window of opportunity to make the case for reinventing our denuded post office network as an accessible, reliable banking system.

This requires a leap of faith and not a little vision.

But for too long, our post office network has been a shadow of its former self. Once the linchpin of both rural and urban communities, government policy has treated it like a second class, anachronistic, Cinderella service for the poor, the aged and people who can't drive to a petrol station or supermarket to use a cashline or PayPoint.

Younger generations can no longer remember when post offices inhabited handsome, purpose-built premises which spoke of public pride in a cherished public service.

Britain created the first postal savings bank in 1861, and by the early 20th century many other countries had copied the model.

I have the good fortune of living near a pleasant sub-post office and am on first-name terms with Amar and Shaukut, the pleasant, helpful, efficient people who run it.

Their post office props up an entire parade of shops left vulnerable by supermarket sprawl.

But these days, with so many of the profitable services that sustained them - such as TV licensing - stripped away, too many post offices have become claustrophobic little counters with long queues, stuck away at the back of deadbeat convenience stores, desperately selling every bit of tat they can lay their hands on to try to supplement their dwindling income.

No wonder it is the ambition of most people to visit the post office as little as possible.

The Royal Mail has been similarly run down and asset-stripped. The government has aided and abetted private companies in cherry-picking its most profitable services.

What do we have to show for this creeping privatisation that was to bring a better service and increased profitability for the taxpayer? Slower delivery times, fewer pick-ups, more cards through the door that require you to pick up parcels from depots of private courier companies inconveniently located on faraway industrial estates, and shockingly low morale among Royal Mail staff.

The Hooper review on the impact of liberalisation on British postal services is about to report its findings. However, it has already concluded that the breaking-up of the Royal Mail has failed most users.

As for the government's refusal, on grounds of cost, to support post offices to the tune of £150 million a year through the social network payment, that now looks like a very bad joke indeed when you consider Gordon Brown's £500bn bail-out of our shaky banks.

Both our post office network and the Royal Mail need to be modernised and made responsive to the needs of citizens. They have been run down just enough to make them look irredeemably inefficient and outdated.

Yet in their scope and reach there is so much that they still do well, and could do even better, were they given the long-term security that government means to retain them as valued, state-owned public assets.

The people's bank? Let's add the people's post office, and charge government with developing them both.