Savings stamps to be re-launched

The stamps can be exchanged for goods and services at the Post Office

The Post Office is reintroducing savings stamps after an absence of 40 years, to help people juggle finances.

On sale from Monday, they are aimed at helping people save for regular outgoings, such as household bills.

The £5 stamps can be bought over the counter at 16,000 branches and used to pay for any services the Post Office offers, including bill payments.

Post Office chief executive David Mills described stamps as a "jam-jar" for people who find paying bills difficult.

Consumer demand

As many as 22 million people are thought to struggle with their bills and five million do not have a bank account

Savings stamps were first introduced by Henry Fawcett, who was Post Master General between 1880 and 1884, but were phased out in the 1960s.

The new stamps, which savers do not earn interest on, can be redeemed at up to £500 a time.

There is no time limit on when they must be exchanged.

HISTORY: SAVINGS STAMPS First introduced by Henry Fawcett in the early 1880s Minimum of one shilling could be saved Late 1960s - Post Office savings stamps phased out 1975 - stamps for electricity launched 1976 -TV licence stamps launched 1978 - water stamps introduced Late 1990s - utility companies and BT phase out their stamps TV licence and car road tax stamps are still available

Mr Mills told BBC Radio 4's Today programme: "Some people like to keep their bills and their money separate so that they can pay the things as they arrive.

"A lot of people have difficulty doing that because they have already dipped into their savings.

"This is a way they don't need to dip into their savings. They can keep them with a savings stamp and know they have enough money to pay their bills."

Mr Mills said saving stamps were making a return because of consumer demand.

He said: "This is one of the ways we can keep post offices open - by keeping people coming to us and using our facilities.

"We have to make a profit and we have also to give our customers those products and services they are asking us for.

"As it happens, savings stamps are exactly one of those things."

'Very worrying'

Claire Whyley, deputy director of policy at the National Consumer Council, hopes the move will help people to avoid debt.

She said: "People on low incomes tell us they prefer to manage their money in cash on a weekly basis and to make small, frequent payments towards their bills.

"Spreading the cost of large bills is a key way for people to control their spending and avoid falling into arrears.

"There are few options for them to do this without incurring extra costs and charges which make tough financial situations even more precarious."

But critics say stamps are a backward step.

Martin Lewis, of financial advice website moneysavingexpert.com, said the move was "very worrying".

He said: "This is just going back in time. What you're going to do is get people saving up and earning no interest.

"They are not benefiting the consumer."