Article created : 31/03/2010
The Commission for Rural Communities commenting on the Government's response to the Post Office Banking consultation
The Commission for Rural Communities welcomes the Government's decision to invest an extra £180m next year to maintain the current network of post offices and convert the Post Office into a leading provider of financial services. This will bring banking services to the heart of many rural communities where these do not exist at present
The Post Office is held in high regard by the public and continues to have extensive geographical coverage with more than 9,000 offices throughout England, over half of which are in rural locations. Allowing post offices to act more like banks would double the number of outlets.
It is right that the Government's proposal for post office banking considers the specific financial services and products required by low income and/or financially excluded households, such as the weekly budgeting account. However, it is equally important that the Post Office provides mainstream financial services in areas where there is no current local provision.
The availability of banking facilities in rural areas has declined considerably over the years and now only one in eight banks and building societies are in rural areas, despite the fact a fifth of the population in England live there. Of these around 200,000 do not have access to a bank account of any kind. This is equivalent to 10 per cent of the total number of 'unbanked'. A new Post Office current account and increased access at post offices to accounts of other banks will mean that mainstream banking services would again be accessible to rural communities.
Similarly, the proposed partnership between credit unions and the post office would increase credit union coverage across the country and help those in rural communities currently without access to affordable credit and other credit union services.
The Government's plans for a Post Office business bank account available throughout the network would strengthen the position of the growing number of small to medium sized enterprises based in rural areas. Small businesses are a vital component of the rural economy and are increasingly important to the economy as a whole. These businesses therefore have a key role in helping the country recover from recession. Yet many of these concerns have been facing increasing difficulties in obtaining finance from mainstream banks.
We also welcome the introduction of a new mortgage product designed to help first-time buyers. The cost of housing and affordability of loans is currently a major deterrent for younger people who would like to stay in the countryside.
In its response to the Government's consultation, the Commission for Rural Communities fully supported the principle of expanding the role of post offices in the provision of financial and banking and we are pleased to see that many of our proposals are now contained in the Government’s latest statement.
Taken from Commission for Rural Communities website:
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