Post Office bank at risk for lack of funding

16 Nov 00
Plans to create a universal banking system for the Post Office must not be allowed to fail because of a lack of government funding, a select committee of MPs warned this week.

17 November 2000

A report by the Commons Trade and Industry committee said a 'fully-funded' system should ensure universal post office banking, which could serve as many as 3 million people, would also be reliable and cost effective. The scheme would be aimed at people deemed 'socially excluded' – or without a bank account.

But the MPs questioned the ability of the Post Office to deliver a banking system. It said there was a 'substantial gap' between the plans to provide financial services and its 'ability to do so at the moment'.

The report, published on November 14, said the Post Office was already failing in its efforts to provide 3,000 cashpoint machines over the next two years. About 400 should have been in place by the summer, but only 341 sites had been confirmed. 'The outcome to date is not impressive,' says the report.

Trade and Industry Secretary Stephen Byers is due to announce the final details for post office banking, including plans for funding, by the end of this year.

A spokeswoman for the Department of Trade and Industry said the government would provide funding on the 'basis of a robust business case'.

But the government wants retail banks to help meet the cost of setting up a universal bank, conservatively estimated at £150m. Ministers claim that it is part of their social obligation.

Peter Carr, chairman of the Post Office Users National Council, said that post office closures would continue because of uncertainty surrounding their future.


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