The Post Office "People's Bank"

[Patrick]

"Making the Post Office the "people's bank" could secure its future and help those not served by banks, a coalition of MPs and interest groups is arguing.

They are due to outline plans for a Post Bank, offering a wider range of financial services at its branches."

I've got one thing to say to that:

Politics played a part in the development of the National Giro as the British Postgiro was named. It reflected a general feeling in the Labour Movement that the banks were not meeting the mass banking needs of the British population. In the early 1960s, the majority of adults in the United Kingdom did not have a bank account and the banks did not court business from the working classes, which they regarded as unprofitable. If you were working class, you would be paid weekly and in cash. If middle class, you were more likely to be salaried and paid with a bank cheque at the end of the month. If you could afford to have a bank account, you could pay the cheque into the account -- but even among the middle class, many had no bank account. It was common practice for cheques to be endorsed to local traders (and especially the milkman) who would know the customer and be prepared to exchange the cheque for cash.

In the 1960s, although most towns had one or more bank branches, smaller communities very often had no bank branch at all. Post Offices, on the other hand were just about in every community. There used to be about 22,000 Post Offices in the UK compared to about 3,000 bank branches. The Post Office was ideally placed to establish a viable mass banking system.

By the late 1970s, one pound in every four pounds deposited in cash at a bank in the UK was deposited with the National Giro at the Post Office. This would later rise to one pound in every three. The organisation was again profitable and repaying its capital costs. Indeed, its rate of return on capital was higher than that of the commercial banks, and this allowed the government to relax the constraints it had placed on the National Giro and even allow for further capitalisation.

Interesting; Michael "5 houses" Meacher writing in a blog last October:

Moreover, when the Government (or at least Mandelson) is thinking of part-privatisation of the Post Office, there is also a strong case for pursuing the opposite course of re-establishing a new Girobank and bolstering the Post Office Card Account within the Royal Mail. The former would provide universal access to banking which the private sector never will. Britain has only 180 bank branches per million inhabitants, against triple that number in France, Germany and Italy and five times that number in Spain. The latter also deals with another private sector failing – financial exclusion for over half the population – when POCA provides a basic bank account for 5 million people while the private banks offer less than 2 million.

I'm ploughing through Google pages trying to find more definitive details of the sell off of Girobank to Alliance and Leicester - but it's pretty bare. Oddly enough only coming up with search results from message boards where folk have the same view that we've "been here before!" There are one ore two Hansard reports - but I'll warrant that this particular sell of has been buried to save the Tories embarrassment! Well, Girobank was profitable! a prime candidate for sell off!