Call to turn Post Office into a state bank

Published on Friday 9 January 2009 20:57

A SENIOR Scots MP has called for the Post Office to become a state bank to kick-start the dried-up lending.

John McFall, chairman of the Commons Treasury committee, said this would be solution to the lack of credit during the recession. "We have seen savers flock to trusted, publicly-owned institutions such as Northern Rock, the Post Office and NS&I, as well as mutual organisations," he said.

Mr McFall added: "The Post Office, having secured a vote of confidence from the government with the renewed card account contract, now needs to transform itself into a full provider of financial services.

"What better way to set it on this route, than to provide it with responsibility for realising the government's lending ambitions?

"However, if it takes a new state financial institution to deliver this much-needed lending, then so be it."

He conceded that such a demand a year ago would have provoked a "loony left" jibe, but with the acceptance of nationalisation as a last-resort solution, "the politicians are the only show in town".

The Labour MP for West Dunbartonshire's call came as George Osborne, the shadow chancellor, appealed to Gordon Brown to follow the Conservatives' advice on the economy before he reached for the "desperate last resort" of printing money.

He urged the government to provide loan guarantees, initially worth up to 50 billion for new lending to businesses of all sizes.

The Tories yesterday tabled their loan guarantee plan as an amendment to the Banking Bill. Mr Osborne said: "Every day that Gordon Brown dithers, he is putting at risk people's jobs and livelihoods and futures."