The UK government has published plans to turn the Post Office and its 11,500-strong branch network into a "people's bank" offering a range of financial services. With a general election imminent, Business Secretary Lord Mandelson has earmarked £180 million in new funding for the Post Office, which will see a "major expansion" of the financial services it offers.
Says Mandelson: "Since the global banking crisis we have set about reinventing the financial services industry piece-by-piece, building a system that is fairer, trusted and more responsible. Today is the next step in that process. The Post Office is a well-loved community institution and this move will bring more banking services back to the heart of those communities."
As well as introducing a current account which can be accessed from any Post Office in the country, the government plans a children's savings account.
In addition, a "weekly budgeting account" is planned to help people on low incomes manage their household money and make savings by taking advantage of the discounts available for using direct debit to pay utility bills.
Ed Miliband, energy secretary, says: "Paying bills by direct debit often means a discount on bills of nearly £100 a year. This new account will mean some of the consumers who have to pay higher fuel bills can benefit from that discount and manage their energy bills better."
The government is also in "detailed negotiations" with RBS and Santander on giving access to their current accounts through the Post Office. Santander has already agreed to allow business account holders to go through the network.
The Post Office will also offer a new mortgage product with a 90% loan-to-value ratio aimed at first-time buyers. The group will also increase its lending "substantially", aiming to double the value of its mortgage book in the financial year 2010/11.
A 'Saving Gateway' account is also in the offing for people of working age who are on lower incomes which aims to kick-start the savings habit, with government adding 50p for every £1 saved.
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