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Call for 'people's postal bank' Call for 'people's postal bank'
(about 6 hours later)
Making the Post Office the "people's bank" could secure its future and help those not served by banks, a coalition of MPs and interest groups is arguing. The Post Office must become a "people's bank", securing its future and helping more people set up accounts, MPs, unions and interest groups have said.
They are due to outline plans for a Post Bank, offering a wider range of financial services at its branches. They outlined plans for a Post Bank, offering a wider range of financial services, backed by the government rather than a private institution.
Unions say it would help those without bank accounts while business groups say it could create as many as 11,000 jobs. Unions say this would help poor people and pensioners, while business groups say it could create up to 11,000 jobs.
Business minister Pat McFadden said there was "potential" in the idea and promised to discuss it. Business minister Pat McFadden said there was "potential" in the idea.
However, there were several "different models" to look at, he added.However, there were several "different models" to look at, he added.
'Universal obligation''Universal obligation'
The Post Office already offers mortgages, savings accounts, insurance, personal loans and credit cards. The Post Office has offered mortgages since 2003 and also provides savings accounts, insurance, personal loans and credit cards.
The proposals include post offices offering tailored products to small businesses and a "universal banking obligation" - to ensure all people have access to accounts. The Post Bank Coalition's proposals include branches offering tailored products to small businesses and a "universal banking obligation" - to ensure all people have access to accounts.
There are also calls for links with credit unions, to ensure branches have closer links with the local economy. There are also calls for links with credit unions, to ensure post offices have closer ties to the local economy.
Post Bank should be set up with government funding and not be run by the Bank of Ireland, as is currently the case with many Post Office financial services, it is added.Post Bank should be set up with government funding and not be run by the Bank of Ireland, as is currently the case with many Post Office financial services, it is added.
FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme Mr McFadden addressed the launch of the Post Bank Coalition in central London.
Thousands of post offices have closed in recent years. Benefit payments are often paid directly into bank accounts and other products - such as car tax discs - are increasingly sold online. Perhaps it also reaches people who don't always go into conventional High Street banks Business minister Pat McFadden on the Post Office
Despite £1.7bn in government subsidy designed to keep 11,500 branches open, there are fears that more will be forced to shut, particularly in rural areas. Afterwards, a Commercial Workers Union spokeswoman said the minister had been "very positive" about the future of the network.
Supporters of the Post Bank model want it to become a fully fledged "socially inclusive" alternative to commercial banks, serving more than 20 million customers every week. However, she added: "He has totally missed the crucial element that it's not simply an extension of the current banking system that we want.
Labour MP Jon Cruddas and Lib Dem treasury spokesman Vince Cable are among those arguing for a Post Office-branded institution offering more competitive savings products, affordable loans and mortgages. "He was very positive about banking, but he didn't realise how committed we are to having a system backed up by the government rather than a bank. So much has gone wrong with the banking sector and that's not what we want to continue."
They will attend an event in London at which Mr McFadden will also speak. Thousands of post offices have closed in recent years. Benefit payments are often paid directly into bank accounts and products such as car tax discs are increasingly sold online.
Supporters of the proposal say that even before the current banking crisis about three million people did not have basic bank accounts, with pensioners and those on low incomes most marginalised. Despite £1.7bn in government subsidy designed to keep 11,500 branches open, there are fears that more will have to shut, particularly in rural areas.
Supporters of the Post Bank model want it to become a fully fledged alternative to commercial banks, serving more than 20 million customers every week.
They say that, even before the credit crunch, about three million people did not have basic bank accounts, with pensioners and those on low incomes most marginalised.
'Crucial security''Crucial security'
With public confidence in banks at a low ebb, unions say there is a need for a trusted institution offering over-the-counter services.
"The Post Bank answers the needs of the financially excluded and will appeal to many in this time of economic uncertainty," said Billy Hayes, general secretary of the Communications Workers Union.
"The Post Bank will be a true people's bank, meeting the needs of society and business alike, and will bring crucial security to the post office network."
Efforts to give post offices more commercial freedom are backed by employers' groups who say small firms, whose access to credit has dried up, rely on a successful network to help their business.Efforts to give post offices more commercial freedom are backed by employers' groups who say small firms, whose access to credit has dried up, rely on a successful network to help their business.
"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," said John Wright, chairman of the Federation of Small Businesses."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," said John Wright, chairman of the Federation of Small Businesses.
With the credit crunch causing a loss of confidence in both banks and bankers, the time has never been better to create a Post Bank Lorely Burt, Lib DemsWith the credit crunch causing a loss of confidence in both banks and bankers, the time has never been better to create a Post Bank Lorely Burt, Lib Dems
Pensioners' groups said people had "lost faith" in High Street banks over the past year and a postal bank could provide "much-needed security" to those fearing for their savings.Pensioners' groups said people had "lost faith" in High Street banks over the past year and a postal bank could provide "much-needed security" to those fearing for their savings.
The Post Office has sought to diversify its business in recent years, offering mortgages since 2003. With most of the 12,000 branches run by sub-postmasters or franchisees, there are questions over whether they have the expertise to expand in this way and how this will be funded.
But with most of the 12,000 branches run by sub-postmasters or franchisees, there are concerns over whether they have the expertise to expand in this way and how this will be funded. The government says the Post Office is looking at new business opportunities to ensure it remains sustainable, such as being the sole provider for pictures for passports and ID cards.
The government says the Post Office is looking at new business opportunities to ensure it remains sustainable, such as being the sole provider for pictures for new passports and ID cards.
Late last year the government awarded the contract to issue the Post Office Card Account - used by four million benefit claimants - to the Post Office amid fears that an extra 3,000 branches could close if it were contracted out.Late last year the government awarded the contract to issue the Post Office Card Account - used by four million benefit claimants - to the Post Office amid fears that an extra 3,000 branches could close if it were contracted out.
'Trusted brand''Trusted brand'
Mr McFadden told BBC Radio 4's Today programme: "I think there's potential [in the ideas put forward]. There could be an expansion of banking products.Mr McFadden told BBC Radio 4's Today programme: "I think there's potential [in the ideas put forward]. There could be an expansion of banking products.
"Even though we don't have as many post offices as we used to, there are still more than all the banks put together.""Even though we don't have as many post offices as we used to, there are still more than all the banks put together."
Mr McFadden said: "There different models of the Post Office expanding what they do in banking and postal services. Mr McFadden said: "There are different models of the Post Office expanding what they do in banking and postal services.
"I'm sure we can talk about what's best to be done. It's a trusted brand and it has a strong reach throughout the country."I'm sure we can talk about what's best to be done. It's a trusted brand and it has a strong reach throughout the country.
"Perhaps it also reaches people who don't always go into conventional High Street banks.""Perhaps it also reaches people who don't always go into conventional High Street banks."
Liberal Democrat small business spokeswoman Lorely Burt said: "With the credit crunch causing a loss of confidence in both banks and bankers, the time has never been better to create a Post Bank."Liberal Democrat small business spokeswoman Lorely Burt said: "With the credit crunch causing a loss of confidence in both banks and bankers, the time has never been better to create a Post Bank."