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Government U-turn on post offices

The government has intentionally leaked plans for the UK Post Office network to the press this week amid signs that a massive U-turn is underway. After initially looking to downsize the Post Office, sell-off the more profitable areas and withdraw from many local communities, Lord Mandelson is believed to be pushing ahead with new plans to make the UK Post Office network a "mini community bank". So what is going on?

Under plans which have yet to be officially released to the press, it is believed that five different types of bank accounts will be made available to the post office network allowing children and adults to open accounts at their local office. The government believes it is now time to make use of the extensive network of post offices within the UK although in some ways it does look as though this may well be yet another attack on the UK banking system.

It is also believed there are plans afoot for the Post Office to become more aggressive in the mortgage market, loan market and general savings market, something which could attract claims of a conflict of interest when you consider the UK government already has significant stakes in Lloyds bank and Royal Bank of Scotland and owns Northern Rock and a large part of Bradford & Bingley. So when is a U-turn not a U-turn?

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