UK financial exclusion and a possible Post Office Bank

Financial exclusion has since the 1990s been recognised as a significant problem in the UK, with local physical access to financial institutions particularly important for those less mobile and less able to access financial services indirectly via the telephone and internet. The number of bank branches in the UK has declined significantly since the 1980s, and the change in the spatial distribution has contributed to financial exclusion. A 2008 paper by Andrew Leyshon, Shaun French and Paola Signoretta looked at the geography of bank and building society branch closure in the UK, concluding that less affluent areas were “shouldering a disproportionate share of net branch closure”.

In 2001 the Government allowed the Post Office to provide access to some financial services under the Universal Bank project, aimed at tackling financial exclusion. Leyshon et al noted that “[p]erhaps the most significant new distribution channel for financial services has been neither the telephone nor the Internet but the partial integration of the Post Office into the British financial services industry.” Ironically, the cost of this integration, along with Post Office branches becoming substitutes for participating banks’ own branches, may have contributed to more bank branch closures. This would be less of a concern if the Post Office network itself had not lost substantial numbers of branches, with 18,400 in 1999 reduced to 14,500 in 2008 and 12,000 in 2010.

In the runup to the May 2010 General Election, the then Labour government announced that if re-elected it would turn the Post Office into the “People’s Bank”, with a full range of financial services. This policy was supported by the Liberal Democrats, and subsequently appeared in the new Conservative-Liberal Democrat government’s coalition agreement. It was unclear how the proposals would affect the Post Office’s existing relationship with the Bank of Ireland, which was contracted to run the Post Office’s financial services until 2020. Besides expanding access to financial services, expanding the Post Office’s revenue from financial services might reduce branch closures.

View the Orford et al (2009) article hereLeyshon et al (2008), “Financial exclusion and the geography of bank and building society branch closure in Britain“, Transactions of the Institute of British Geographers, Volume 33, Issue 4, Pages 447-465
Jackie Ashley, The Guardian: Post offices can kickstart Labour's radical agendaJackie Ashley, The Guardian, 21 March 2010, “Post offices can kickstart Labour’s radical agenda
Guardian: Coalition plans for Post Office Bank cause bafflementJill Treanor, The Guardian, 20 May 2010, “Coalition plans for Post Office Bank cause bafflement

Robin de la Motte

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