Post bank announcement is welcome news

The Post Office is to receive £1,280 million to provide new financial services and to improve financial inclusion through credit unions and weekly budget plans.

Our guest writer is Lindsay Mackie, a consultant for the new economics foundation

Well, we have made progress. The Post Office is to get a dollop of £1,280 million Government (ie. our) money to provide new financial services and to improve financial inclusion through credit unions and weekly budget plans.

The big banks have been made to offer up their current accounts for access in Post Offices and the poor will now be able to pay utility bills by direct debit instead of through the disgracefully over priced meters. The Government is talking about how it can levy retail banks to pay for credit unions to access accounts wherever they are in the country.

One cheer, two maybe, since today’s announcement does show that the Government has entirely changed direction by recognising, and saying strongly, that the Post Office network is important, is highly valued by the people, and needs to be sustained.

The Post Bank Coalition, supported by Compass, was set up 15 months ago to concentrate the mind of the Government on the need to have a strategic plan for the Post Office network to stop it crumbling. Our proposal was that a Post Bank- of the sort which flourishes in Italy, France, New Zealand and elsewhere – South Africa is about to start one – is the answer both to the business future of the Post Office and to our need for diversity in the banking system.

We did a lot of work on the present community and economic value of the Post Office (which had just been butchered by the network change programme which closed 2,500 post offices in the face of huge local opposition almost everywhere) and on the business possibilities it could take advantage of in the future.

At present the financial services offered by the Post Office – which it does do very successfully, being, for instance, the number one provider of foreign currency in the UK – are run by the Bank of Ireland so that 50 per cent of all profits go back to Ireland. But worse than that, the Bank of Ireland is in a very shaky position and its capacity so far has not even included offering a current account to PO customers, nor children’s savings accounts.

We on the Coalition think it is probably not even capable of offering the new range of products adequately. It may have been the right partner at the time when the PO went into financial products but it isn’t now.

So we would have liked the Government to grasp that nettle. The other problem about the welcome first steps announced today is that they don’t do anything substantial for the big Post Office problem of the falling revenues of a third of all post offices. Only a publicly owned Post Bank, with all the revenues going back into the Post Office, with all the innovation and increased footfall it would bring, can do that.

But the Post Bank Coalition is pleased, so is the Federation of Sub Postmasters. A good first step to keeping and protecting this astounding and far reaching underpinning of the public realm.

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