The Post Office is talking to leading UK high street banks about plans to launch a new ‘social bank’.
The new bank, which would mainly serve the estimated two million adults in the UK who at present do not have a bank account, is being presented to the main banks as a way of satisfying demands in a final consultation report from the government’s Social Exclusion Unit (SEU). The report says they must improve access to financial services in poorer areas.
A Post Office-led social bank might also reduce the pressure being applied on the banks by Melanie Johnson, the economic secretary to the Treasury. Johnson has said she expects banks to make basic accounts available for low income groups by October.
Basil Larkins, managing director of network banking at the Post Office, said the new social bank could be expected to charge the main banks for each account opened.
The Post Office currently has 19,500 branches. The state-owned organization is made up of Parcelforce Worldwide, Post Office Counters and the Royal Mail. Last year it made a gross profit of £638million.
A call for the Post Office to become involved in providing community banking services is made in the Social Exclusion Unit report, National strategy for neighbourhood renewal: a framework for consultation, which says access to financial services must be improved by stimulating the growth of credit unions in deprived areas. This could be complemented by developing the Post Office network to deliver more financial services, it argues.
It also says there should be government money for community finance initiatives that provide funding and support to small businesses.
Consultation on the report ends on 30 June, after which prime minister Tony Blair will develop a ten-year national strategy which is expected to be in place by spring 2001.
It says business ‘has an important and unique role to play’ in helping deprived communities, and suggests the government should push UK companies much harder to get involved in neighbourhood renewal.
The recent appointment of Kim Howells as corporate social responsibility minister ‘will help achieve this’, the report says.
Department of Trade and Industry minister Patricia Hewitt said: ‘The report identifies that business has a crucial role and much to contribute in helping to turn around deprived neighbourhoods.’
However, the government has stressed that the report should not be taken as its final strategy, and contains proposals, not announcements.
The final shape of the national strategy will be set out later in the year.
The Social Exclusion Unit was set up by Blair in 1997 to improve government action to reduce social exclusion. It produced the final consultation report after examining 18 reports from Policy Action Teams (PATs) that made around 600 recommendations.
Although the PATs have been attached to government departments and staffed mainly by civil servants, they have also included external secondees, some of whom have been from the business community.
The unit was originally set up on an ‘experimental basis’, but the government has decided to keep it open until 2002, when its operation will be reviewed.