Labour would set up a publicly-owned bank run through the post office network in a bid to offer face-to-face-banking to every consumer and to create the largest branch network of any UK banks.
The party’s shadow chancellor, John McDonnell, said it would create up to 3,600 “Post Bank” branches - with almost 300 of them located in Scotland - if it were elected, saying it wanted to ensure that every community has access to “face-to-face, trusted and affordable” banking.
It claimed the move would revitalise Scotland’s high streets by bringing footfall back into town centres.
Research by Which? recently revealed that Scotland has lost more than a third of its bank and building society branches in just eight years, with 610 branches closing down between 2010 and 2018. It has also lost more than 200 ATMs in the past year alone.
John McDonnell MP, Labour’s shadow chancellor, said: “Poor access to local bank branches hurts our town centres and local communities, particularly affecting elderly and more vulnerable customers, as well as damaging the ability of local small businesses to invest.
“That’s why the next Labour government will roll-out a new network of almost 300 Post Banks in Scotland to help reverse the decline of our high streets and ensure people don’t have to use expensive ATMs to get their own money.”
He added: “Labour’s Post Bank will provide an essential public service, making sure everyone has access to face-to-face, trusted and affordable banking on their high street or in their local community.”
As well offering banking services to individuals, the Post Bank will provide relationship banking with small businesses, acting as an “on-lender” for the regional development banks, to kickstart SME investment.
According to a report by the Bank of England, around 20 per cent of firms are under-investing in their businesses because they are unable to access bank credit needed to expand, with one report by Move Your Money estimating that bank branch closures dampen SME lending growth by 63 per cent.
According to a 2017 survey carried out for Citizens Advice, almost all individuals and most small businesses describe the Post Office as ‘trustworthy’. Meanwhile, 60 per cent of those with an impairment or disability say that the Post Office is either extremely or very important to them.
Labour said the Post Bank would have by far the largest branch network of all UK banks, spread evenly across the country.
Earlier this week, Carolyn Fairbairn, the head of the Confederation of British Industry (CBI), warned that Labour party plans to renationalise industries such as rail would cause “profound harm to the economy”.