Monday 2 February 2009

Would you like a mortgage with those stamps?


Business Secretary Peter Mandelson has said he is in favour of widening the financial services already offered at the Post Office. The continuing talk is of creating a post bank or, as it is predictably being touted in New Labour speak.. 'A People's Bank.'

Post Office currently provides a range of financial services from bill payments to insurance and savings accounts in a partnership with the Bank of Ireland, while also providing access to the governments own National Savings and Investment products. The new scheme is set to take things much further and create a state bank. A complete U-Turn from the huge closure program that ended only last month, but you can see why Mr Darling may be keen to push ahead with the scheme. The Banks are still not doing what the government wants them to do. John McFall MP has repeatedly said that the restriction of credit lines to business and bank lending risks dooming the economy to an even greater depression. The establishment of a State Bank will allow the government to deliver on its lending targets. It seems that the government has rather belatedly realised that it already owns the largest network of branches in the UK with 12,000 Post Office branches and all of Northern Rock's and Bradford and Bingley's. A new motion [EDM 412} has already been tabled to create a Post Bank.

The idea of a State Bank has been greeted with horror by all good capitalists. The dead hand of state interfering and undercutting and under performing and overmanning without regard to profits or shareholders or customers. However, much good can come from a State Bank. The new Savings Gateway account,to further the relentless end to child poverty, aimed at those on very low incomes,has been signed up to by ... zero banks. Only the Post Office is on board. That's not surprising. The Post Office already has the lowest income and high benefits families as its customers. The Bank's don't want them. They doesn't really want the smallest business customers or the smallest loan customers either.

La Poste's received almost a quarter of its turnover in 2007 from its 11 million bank accounts and it only became a post bank in 2006.. Italy's BanoPosta achieved its first profit in 50 years after it became a post bank. If you want a profitable mail service, then allow it to be a bank so it can generate profits and achieve all government's vote-worthy social agendas, that the banks would much rather avoid. What is unclear is if the government will provide provide any financial backing or guarantees to the move – or how they would set with European competition rules.

What is odd though is that at the same time HMG decides on a State Bank it is looking to privatise Royal Mail by flogging bits off to TNT, totally against the wishes of the unions, the workers, the public and loyal MP's.. Post Office to state and Royal Mail to private sector seems to be the plan.

Left hand, right hand?

5 comments:

Old BE said...

When the government was talking about its "basic accounts" several years ago I thought to myself why not set up a Post Bank like they have in other countries...

NS&I and the Post Office account and benefits could all be rolled up into one scheme.

AntiCitizenOne said...

Wouldn't a citizens dividend be a much better start before a government bank?

Pogo said...

I seem to remember something called "Giro Bank" that was run out of the Post Offices... Whatever happened to it?

Bill Quango MP said...

Blue Eyes. Most banks didn't sign up to Basic bank accounts. Or rather they did {forced into it} but never advertised, promoted or even acknowledged the existence of them. then claimed they were a failure.

NSi + PO and Accounts AND WH SMITHS, who now have PO in them. the list of Post banks gets longer. And when bank branch closures begin, there may be somewhere else for non city folk to go to to get their money.

AnitCitizenOne: May well be. but longer term the bank gov says "lend this much " and its lent. it says "stop lending" and the lending criteria changes. It wouldn't have to make record annual profits so the tap can be turned on/off for political ends

Pogo: yes. Maggie T sold it off during one of those "sell everything we need cash for tax cuts" moments.

roym said...

Couldnt the Post Bank come under UKFI's remit? maybe this could limit too much state interference?