Post Office bank scheme warning

Plans to counter closures are making slow progress

Plans to prevent post offices closing by introducing over-the-counter banking services are making slow progress according to a senior MP.

Ministers announced earlier this year that they were talking to the high street banks to persuade them to use post offices as agents.

The move followed fears by postal workers and rural communities that government plans to end the payment of social security benefits at post office counters will mean more closures.

But ministers are hoping that their bank scheme could ensure custom for the ailing businesses and mean that people on benefits would have easy access to a bank account into which their payments could be made.

Need for action

But Labour MP Martin O'Neill, chairman of the Commons trade and industry select committee, warned on Tuesday that the plan was at risk of foundering.

"There seems nothing concrete coming out of the discussions the minister has entered into," he told BBC Radio 4's Today programme.

"At the moment we are just waiting, although I am not holding my breath."

Colin Baker, of the National Federation of Sub-Post Masters, was equally gloomy, telling the same programme: "Post offices are still closing, in fact the rate of closure is still growing. The need for action is now - not 2003."

The government had attempted to "blackmail" the banks in the wake of a highly critical report on the industry, Mr O'Neill said.

And he added that now the banks appeared less willing to deliver.

One was on board but might quit the scheme if others did not join in, he warned.

Discussions

A Department of Trade and Industry spokeswoman stressed the government was "strongly committed" to maintaining a nation-wide network of post offices:

"We have accepted all 24 recommendations in the Performance and Innovation Unit report on modernising the Post Office and network.

"We are working very closely with the Post Office and the National Federation of Sub-Postmasters to achieve this."

"As far as universal banking services are concerned, discussions with the banks and the Post Office are continuing and the government remains strongly committed to the concept," she said.