11 May 2001
The government's long-awaited proposals to regenerate the ailing Post Office network by extending banking services to the financially excluded were unveiled this week.
After months of wrangling, the main high-street banks have agreed to pay £180m over five years to part-finance the scheme, which aims to provide banking and benefit payment services to more than 7 million people excluded from the finance system.
The Universal Bank will have branches in post offices throughout the country. All those using the service will be offered basic accounts, run through the banks, and will be able to access benefit payments when they become automated in two years time.
Ministers also hope banking will prove successful in providing new business for beleaguered post offices and will stem the closure of the rural network. Consignia, the rebranded Post Office, expects to earn about £100m annually from banking for benefit claimants, which will go some way to offsetting losses of about £400m from the cancellation of the disastrous smart card scheme last year.
Trade and Industry Secretary Stephen Byers said: 'This is a major step forward both in ensuring the future of the Post Office network and in tackling financial exclusion. Universal Banking Services will bring those people currently without bank accounts into the financial mainstream.'
Although the post offices have long supported the proposals – and have criticised the government for delaying the announcement of the new system – the banks have been less enthusiastic because of the costs involved. Royal Bank of Scotland, HSBC, Lloyds TSB, Barclays and Halifax have now all signed up.
The eventual announcement was made just hours before the prime minister announced a general election for June 7.
PFmay2001
