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March 25, 2009

The Case for a Post Bank

Last week saw the official launch of the campaign for a Post Bank a secure accessible banking system based on Post Office branches. This initiative would return banking to the heart of our communities but it must strengthen, not undermine community owned financial mechanisms like credit unions

New Economics Foundation

New coalition launches Post Bank campaign

As the Government struggles to get to grips with the financial crisis, a comprehensive proposal for a new ‘Post Bank’ to run as part of the Post Office Network is launched today (Tuesday 17 March) by a new coalition of trade unions, a business organisation, pensioner and pressure groups and charities.

The proposal for the Post Bank will be formally launched at a Parliamentary reception hosted by Jon Cruddas MP this afternoon, with cross-party speakers including Pat McFadden, Minister for Employment and Post Offices, Vince Cable, Deputy Leader of the Liberal Democrats.

The model for a Post Bank proposed by the coalition would:

* provide more financial services to people and businesses currently not served by high street lenders.

* strengthen the role of post offices and the Post Office Network making it more viable, creating new job opportunities, and securing its role for the future,

* ensure a stable source of finance in the heart of communities, particularly for the three million people still not using banks and the many small businesses looking for alternative sources of finance,

* link the productive economy with finance through a return to the form of relationship banking abandoned by our biggest banks

The Post Office and its network of 11,500 branches (almost twice the number of the major high street banks combined) is a unique national resource which communities, businesses and individuals around the UK depend on. The Post Bank coalition believes there is a unique opportunity to answer both concerns around secure and equitable finance and the future of the post office network by setting up a Post Bank.

Evidence from the coalition members demonstrates the clear need for a local banking infrastructure through a Post Bank:

* Around three million people are still denied access to basic finance in the UK, including the most disadvantaged, pensioners and those in very remote rural areas.

* The dynamic small businesses that pound for pound create more jobs than big business, are experiencing an increase in the cost of new credit through the high street banks and many are looking for alternative sources of finance to help them through the recession

* 38 per cent of small firms would consider banking with a Post Bank built on the Post Office Network.

The Post Bank which would be established with Government funding, supported for example by the issue of local bonds, would offer a variety of finance services through post office branches and online would address these key concerns. Instead of using Government money to service existing bad debt, the Post Bank would provide stable finance where it is needed most, in the heart of our local economies.

The Government must now seize this opportunity and build on the foundations of the Post Office network to create a Post Bank that works for the people and businesses of the UK.

Quotations:

Billy Hayes, CWU general secretary, said: The Post Bank is the right proposal at the right time politically and industrially. It answers the needs of the financially excluded and will appeal to many in this time of economic uncertainty. The Post bank will be a true People¡┬Žs Bank meeting the needs of society and business alike and will bring crucial security to the post office network. The government must move swiftly to endorse this timely proposal.¡¨

John Wright, National Chairman of the Federation of Small Businesses said:Small businesses are completely reliant on the Post Office network with 80 per cent passing their letters and parcels through the Post Office and 47 per cent visiting a post office a couple of times each week. Most Sub Post Offices are run like small businesses, and keeping the network alive by establishing Post Bank would not only retain jobs but could also, we estimate, create 11,000 new jobs.

Lindsay Mackie, campaign co-ordinator at nef (the new economics foundation) said: The Post Bank Coalition proves that the idea of a trusted, fair and accessible bank based on the valued Post Office network has wide support across British society. We think that our proposal is an example of the radical re-thinking of our financial institutions that the Government should be working on urgently. In fact, the failure to do so would leave local communities, local economies and the thousands of small businesses that are the lifeblood of UK plc, very vulnerable¡¨

Paul Reuter, Unite national officer, said: “Unite welcomes the valuable work of the Post Bank Coalition. There is clearly an appetite for a banking network that would reverse the trend of exclusion of local communities and improve services to small businesses, whilst at the same time supporting and maintaining the Post Office network. The experience of other established Post Banks in Europe are successful examples. The Post Bank – at the People’s Post Office offers an opportunity for social inclusion, security and innovation in the banking sector which Government must endorse.”

Frank Cooper, President, National Pensioners Convention, said: “The Post Office network provides an everyday lifeline to millions of older people, many of whom rely on the services it offers and its valued place in local communities. Recently pensioners have lost faith in the financial sector and the launch of a new People’s Bank at the Post Office will offer some much needed security to those who feel their money is currently under threat.”

Tim Helweg-Larson, Director, Public Interest Research Centre said: The Post Office has long provided the public with a face-to-face means of investing their money securely, in Government-backed pension funds and bonds. It also offers the perfect means of leveraging investment for a new, renewable and sustainable energy infrastructure at this critical time. PIRC fully supports the goals of the Post Bank Coalition, which will be essential in providing local communities and small businesses with the financial security they so urgently require.”