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Post Office bank plans welcomed

PUBLISHED: 10:15 30 March 2010 | UPDATED: 17:14 30 June 2010

A £180m move to create a Post Office 'bank' to get more people using the region's post offices was broadly welcomed last night.

The government announced yesterday that people will be able to open current accounts or a special savings account for those on low incomes at East Anglian post offices.

A £180m move to create a Post Office 'bank' to get more people using the region's post offices was broadly welcomed last night.

The government announced yesterday that people will be able to open current accounts or a special savings account for those on low incomes at East Anglian post offices.

And the £180m boost to 11,500 national branches will also see first time buyers gain access 90pc mortgages, the setting up of business accounts and the creation of children's savings account.

The announcement by Business Secretary Lord Mandelson was welcomed by groups representing Norfolk pensioners and rural communities.

However there was criticism from some of the county's MPs who accused the government of electioneering - especially in the light of a series of cutbacks which saw dozens of post offices close across the region in 2008 as part of a national cull of 2,500 branches.

The setting up of the Post Office 'bank' was hailed by Age Concern Norfolk which said it will be easier for older people to access banking services, especially in rural communities.

Linda Gill, Age Concern Norfolk information advisor said: “This is excellent news. We welcome anything that helps elderly people access their money.

“I think it is a step in the right direction to increase accessibility especially as post offices are very sympathetic to the needs of elderly people.”

As well as the creation of several new types of account, banking companies RBS and Santander are in negotiations to allow their current account holders to gain access to their accounts at post offices.

Peter Smith, development officer at the Norfolk Rural Community Council, said: “This is a brilliant piece of news. The announcement of any extra funding for post offices is always welcomed as it will strengthen rural economies.”

Lord Mandelson's announcement follows in the wake of a £1.7bn investment in the nation's network of 11,500 branches.

Since Labour's rise to power in 1997 more than 6,500 branches have vanished from the high street - with dozens disappearing from Suffolk and Norfolk in the last round of cuts two years ago.

Keith Simpson, the Conservative MP for Mid Norfolk rounded on the government announcement.

He said: “Call me an old cynic but this might have something to do with the fact there is a general election in a few week's time.

“My constituents will easily see through this gimmick.

“My party has been calling for this type of action to provide better banking facilities for years.”

Norman Lamb, Liberal Democrat MP for North Norfolk, said he had mooted the idea of a Post Office bank in 2005.

He said: “My real frustration is that we are five years on and all we have seen in that time is the closure of post offices.

“But I should not be churlish so better late than never I suppose.”

Announcing the £180m post office bank plan Lord Mandelson said: “The Post Office is a well loved community institution and this move will bring more banking services back to the heart of those communities.”

The first of the new services - a children's savings account - will be introduced in the next 12 months, the government said.

The mortgage product, backed by the Bank of Ireland, will also be introduced within the next year.

But some of the other proposals have not yet been given a firm introduction date. For example, the supply of a current account will only happen when the Post Office considers the market conditions to be suitable.

More negotiations were needed before a time commitment was made for the launch of the new weekly budgeting account, a spokesman for the Department for Business said.

This would allow people on low incomes to hold an account which they could use to pay household bills and take advantage of the discounts available through paying by direct debit.

There are also plans for business people to access their accounts through Post Office branches.

“The Post Office can provide a range of good value, simple financial products for everyone,” said Business Minister Pat McFadden.

“These are the clear messages that people have given us and we are acting on them - a major step towards making the Post Office a sustainable neighbourhood banking service.”

A consumer watchdog welcomed the changes, but called for a new basic bank account to be introduced quickly.

“Consumer Focus research shows that many on low incomes do not trust banks but do trust the Post Office, and that up to one million people could be lifted out of financial exclusion by a Post Office basic bank account," said Andy Burrows, of Consumer Focus.

“Government must take this opportunity and introduce a basic bank account - which would be simple to use, convenient and work for those on low incomes. It cannot just be an off-the-shelf copy of existing bank accounts.

“We hope this is the first step towards the Post Office becoming a proper neighbourhood bank: accessible in towns and the countryside and open to all.”


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