Postal Services Bill

I thank the noble Lord, Lord Stevenson, for tabling this amendment. The Government are clear that the wide range of financial services that the Post Office offers—personal loans, credit cards and savings products, for example—are an important part of its total product suite. The Government made clear in the coalition agreement that we would look at the case for developing new sources of revenue for the Post Office, including the creation of a post office bank. We have looked at the different options and arguments for such a bank very carefully and have come to the conclusion that, particularly in the financial climate that we are experiencing, it is just not a viable option. My noble friend Lady Kramer spoke further on this and gave us her views, and I think that she felt the same. Setting up and capitalising a new bank would be very expensive as well as creating a much more volatile and risky balance sheet for the company. Instead, we are committed to ensuring that the Post Office continues to offer wide access to existing banking facilities. For that reason, we were extremely pleased that in November last year the Royal Bank of Scotland reached agreement with the Post Office to allow RBS customers, including NatWest customers, access to their current and business accounts at the post office. That will mean that almost 80 per cent of all current account holders will be able to withdraw money free of charge at the post office, while many can also pay money in and check their balances. In response to points raised by the noble Lord, Lord Stevenson, on financial inclusion, supported by the noble Baroness, Lady Turner, the Post Office already offers a range of services to help people on lower incomes, including the Post Office card account and the ability to access all basic bank accounts. The noble Lord, Lord Clarke of Hampstead, will be heartened to know that we are extremely supportive of a stronger link-up between the Post Office and credit unions. Recent announcements by the Department of Work and Pensions on credit union funding open up excellent opportunities for the Post Office to provide access to credit union services to many more people. This builds on existing co-operation between the two sectors, which is already strong. Maintaining the large branch network and increasing access to bank accounts at the post office, as I have said, is an important step towards financial inclusion. Financial services are clearly an area with significant potential for growth. As I have said, though, the creation of a post bank would not be in the best interests of the post office network. Instead, we strongly believe that funding for the Post Office will be best spent modernising and maintaining the network. The funding that we have provided to the network will mean that the Post Office is better placed to compete for new business.