My Lords, in earlier contributions many noble Lords, particularly the noble Lord, Lord Cameron of Dillington, expressed concern at the removal of government services from the post office. Particular concern has been expressed over the recent loss of the green giro account to PayPoint, which took away another source of business from the post office.
The post office network is a unique national resource. It has as many social and community functions as it has business activities. It is woven into the fabric of all our lives. Communities, businesses and individuals all depend on it, and I believe it should be protected and grown. I welcome the Government's commitment that there will be no closure programme for post offices, but we are seeing the loss of many hundreds of post offices across the country. It is therefore paramount that we take action to ensure that there are no further closures of post offices by looking to build and strengthen the business.
We suggest "a cunning plan". A post bank based on the post office is in many people's view one of the best ways of strengthening the post office by building up and extending its current financial services and thus securing the future of the network. As both bank and post office branches have closed in many local communities, particularly the poorest, many people and small businesses have seen their direct access to postal services and essential financial services disappear. Establishing a post bank would ensure the provision of financial services based on a return to basic banking principles under which bankers are situated in and understand their local community and its needs. With its network of branches throughout the country and the high levels of trust that it enjoys, the post office is ideally placed to house a post bank. The proposal also builds on the central idea that post offices are there in great numbers, and it seems sensible to build on what we have rather than to think of other ways to use the service.
A post bank would hugely increase post office custom and would enable the Government to increase the work they pass to the post office. It would enable the post office to build up its business profitably. It would also enable the Post Office card account to be embedded in a trusted bank and would thus remove the threat that it could again be put out to tender. The post bank would be an economic driver, lending at small margins and supporting local enterprise in local communities. The current banking crisis surely provides an opportunity for a radical redesign of retail banking, including combating financial exclusion and creating an accessible and trusted banking system.
One way of doing this would be to put in place a universal banking obligation, similar to the universal service obligation placed on Royal Mail, to create a post bank in the model of the post office with statutory obligations to provide a service. A post bank would allow every local post office to offer current accounts, access to credit and direct debit facilities and to expand its present savings capacity. It would not be shareholder driven and would be able to act in the best interests of local communities and local businesses. It would be localism in action.
As I alluded to a moment ago, the new post bank could address the problem of financial exclusion. Commercial banks have physically retreated from large tracts of the country, leaving people badly served. There are 3 million people in the UK without a bank account, and that figure is still rising as the banking crisis has increased the number of those who have difficulty accessing banking services, especially if they need mortgages, loans or overdrafts. People without access to financial services effectively pay an unfair premium for basic services. I declare an interest as chair of the Foundation for Credit Counselling, which helps nearly 350,000 people a year deal with problems from their credit card use. Many of them are paying high rates of interest for basic services. The establishment of a post bank would be an essential safeguard for the future of the post office network and would hugely increase post office custom. It would enable the Government to increase the work they pass to the post office.
I shall talk a little about the role a post bank could play with small businesses. As many noble Lords have argued, the UK economy relies on small businesses which, in turn, rely on the post office and its efficient, affordable and local service. A post bank would safeguard the post office network and offer more extensive services for small businesses. A recent Federation of Small Businesses survey, which received responses from about 5,500 small businesses, revealed that 38 per cent thought that a post bank based on the post office network was a good idea and that they would consider banking with such a bank. Many respondents also said that they wholeheartedly support the idea, regardless of whether they would use it as a banking service. Clearly, measures that will prevent future post office closures are welcomed by the small business community, as many small businesses rely on local post offices for mail services. The survey showed that 79 per cent of respondents use the post office for their mail services and 88 per cent use stamped mail rather than metered mail. They make the journey to the post office regularly to purchase stamps, and they have parcels weighed and franked. It is an important part of what they do. If small businesses could also access a wider range of financial services at the post office, they could deal with many more errands in one visit, saving them valuable time.
A post bank would reconnect banking with local economies and would liaise with other financial bodies, including credit unions and community development financial institutions. There is growing expertise in the credit union and CDFI sector about how best to service the needs of financially excluded households. Credit unions and CDFIs have been evolving sensitive responses to the financial needs of lower-income households. These sectors of the market involve higher credit risks, higher transaction costs and a high level of professional skill in budgeting and money-management service. A post bank would support these initiatives very well.
There are many international examples of successful post banks. Many of Post Office Ltd's overseas equivalents have developed comprehensive banking services to offset the loss of other traditional services. These have made substantial contributions to the viability of those national post office networks. Even if they are not exactly like-for-like comparisons, they are useful examples of what could happen. The French postal service, La Poste, launched its bank in January 2006, and by 2007 it had over 11 million postal banking accounts and accounted for nearly a quarter of La Poste's turnover. The Italian postal service, Poste Italiane, launched BancoPosta in 2000, and by 2002 Poste Italiane showed a net profit for the first time in 50 years. This turnaround is largely attributable to the business generated by BancoPosta and has led to an expansion of the Italian post office network, which now stands at over 14,000 post offices in a country of very similar size to the UK. In Germany, Deutsche Post's Postbank, although it has recently suffered problems, remains the largest German retail bank by customer numbers, with 14.5 million users, and Germany's largest issuer of credit and debit cards. Banking transactions account for 39 per cent of business over German post office counters.
I remind the House that the Liberal Democrats 2010 manifesto states, on page 54, that they will,
"Improve access to banking for all with a PostBank, revenues from which will also help to secure the future of the Post Office".
On page 83, it states that they will:
"End the post office closure programme to keep post offices open in rural areas where they're the lynchpin of community life, improve access to banking and help secure the future of the Post Office through a PostBank".
To conclude, I have outlined how a successful post bank would offer real, long-term financial security to individuals and businesses and provide a vital role for the post office in accordance with the high esteem in which it continues to be held by the British people. At a time when the Government are creating a green investment bank to deliver funds for clean energy and low-carbon projects and a big society bank to help social enterprise, why not complete the hat trick and create a post bank that will help safeguard the post office network while also delivering a reliable banking service to people who need it most? I beg to move.