MPs back call for new Post Office ‘bank’

MPs ACROSS the north and north-east last night backed an urgent appeal to the UK Government to use the Post Office network to provide state-backed banking facilities.
The proposal from influential Commons Treasury committee chairman John McFall, Labour MP for West Dunbartonshire, came amid clear evidence that high street banks are continuing to cut back credit lines to hard-pressed businesses and charge more for the facilities they provide.
Mr McFall said the likeli-hood of bank lending returning to 2007 levels is “slim”. “The Post Office, having secured a vote of confidence from the government with the renewed Card Account contract, now needs to transform itself into a full provider of financial services,” he said.
“What better way to set it on this route, than to provide it with responsibility for realising the government’s lending ambitions?
“However, if it takes a new state financial institution to deliver this much-needed lending, then so be it.”
He said that individually, banks were acting “rationally” by retaining their capital and curtailing lending. But this was “suicidal for the country”.
His proposal was immediately labelled “a good idea” by Caithness, Sutherland and Easter Ross Liberal Democrat MP John Thurso, a leading member of the committee, who added: “I have long thought that local post offices offer a good opportunity to create a simple and straight-forward method of delivering a basic banking service to ordinary people.”
Inverness, Nairn, Badenoch and Strathspey MP Danny Alexander said the government should, in the light of the banks’ reluctance, be looking into providing direct lending by the state.
The Lib Dem MP said: “The Post Office has an enormous amount of trust both with businesses and individuals and would be very well placed to carry out this job as well.”
SNP business spokesman Mike Weir, MP for Angus, said the proposal “has a lot of merit” and would be considered by the Commons business and enterprise committee, of which he is a member. It has been asked by the government to report on future business opportunities to make the Post Office network viable.
He said: “This could be the key to restoring banking services to many areas where there are now no banks and help secure the post offices’ future.”
Gordon MP Malcolm Bruce, a former Liberal Democrat treasury spokesman, said this would replace the Post Office Giro Bank whose sale was forced through by former Tory Prime Minister Margaret Thatcher.
He said: “This is an eminently sensible suggestion. The Post Office is already underwritten by the government and should be given the opportunity to provide traditional finance.”