Last weekend, Ed Davey, the Lib Dem postal services minister, announced that from now on banks will have to grant access to their current accounts through the Post Office. Credit where credit’s due, it’s a good idea. (It’s also one which progressive campaigners such as the Post Bank Coalition have been advocating for some time.) Broadening access through the Post Office network will provide an extra income stream, particularly for small or rural post offices in danger of closing, and the sheer number of Post Office branches, more than all of the high street banks’ branches combined, will improve access for people to their money.
But this government initiative could be a lot more ambitious. The Post Office shouldn’t just be providing access to banks’ accounts; it could be providing a range of simple financial services and helping to combat financial exclusion.
At present, there are over one million households and nearly two million adults in the UK without access to a bank account. On its own, that statistic doesn’t sound too worrying. But the lack of a bank account restricts individuals’ employment options, forcing people to work cash-in-hand or fork out up to ten per cent of their weekly wages to cheque cashing services. Not having a bank account also means that people can’t benefit from cheaper direct debit payments for utilities and services. Research from Save the Children calculated the ‘poverty premium‘ paid by poorer households for a range of essential goods and services is over £1,000 a year. Much of this is to do with a lack of appropriate access to banking. Add to that the stark correlation between being unbanked and being on a low income, and financial exclusion starts to look like a real issue.
While those with no bank accounts at all are seriously excluded, there are millions of adults in the UK without the access or financial capability to access appropriate financial services for them. Simple factors like language barriers, low literacy or a lack of identification can make going into a bank branch and opening even a basic bank account an insurmountable challenge. That’s where an institution like the Post Office can, and should step in, providing a range of simple current and savings accounts.
As local credit unions grow in popularity across the UK, it’s obvious that there is a market for the simple, straightforward products they offer. It’s important that a Post Office Bank isn’t seen just as a bank for poor people, but that it acts as a gateway towards mainstream financial services. The success of post office banks in countries like France, Ireland and New Zealand provides a workable model for going forward.
The Post Office isn’t just a business. It’s a trusted institution, operating nationally and rooted in local communities. Using its network to offer simple and usable financial services won’t just benefit the Post Office, although the extra revenue won’t go amiss, but it will also benefit citizens and the community by increasing financial capability and tackling financial exclusion. We as progressives should keep up pressure for more innovation in post office financial services provision, so that further changes don’t just support big business, but also wider society.