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Bookmark and ShareAndy Wimbush is nef‘s Communications Assistant and blogmaster. He also draws cartoons for nef‘s newspaper.

Pat McFadden: a neoliberal nostalgic

Pat McFadden, a neoliberal nostalgic | Photograph: Sharon Wallace

It’s been over a week now since we launched our proposal for a People’s Bank based at the Post Office. In a packed committee room in the Houses of Parliament we heard politicians of all stripes voice their support for this new kind of bank, one that would put communities, small businessses and the financial excluded first.

The only speaker to mince his words and to temper his enthusiasm with caveats was, of course, the Minister for Postal Affairs, Pat McFadden. There is a danger, McFadden warned us, of becoming so ‘nostalgic’ about the Post Office that it blinds us to its current problems and the need to modernise. And then he said: ‘We can’t simply go back to the way things were’.

We can’t simply go back to the way things were.

But isn’t it McFadden and the rest of this Government – rather than the Post Bank Coalition – who are the real nostalgics here? After all, they’re the ones who are desperate for us to go back to the way things were before Lehman Brothers declared its insolvency, before the failure of HBOS and RBS. They continue to pump seemingly endless amounts of public money into banks which, as nef argued in our banking report I.O.U.K., are no longer able to perform the most basic functions of a bank.

The Post Office, by contrast, remains a vital and much-needed element of the UK economy. nef‘s research shows that each post office saves neighbouring small businesses around £270,000 each year. And small businesses employ the majority of the private sector workforce, around about 58%. Nor is the Post Bank simply a means of saving the Post Office network: we also believe it would offer something markedly different to what the current high street banks are doing, even taking into account the fact that these banks are now effectively in public ownership. As Liberal Democrat Treasury Spokesperson Vince Cable said of the Post Bank proposal:

This is an attempt to clean up banking. The co-option of the system has spread right through into the branches. There was aggressive cross-selling, commission-based branch managers were drawing people into transactions they should never have done. This is a cleaner principle based on sound banking ideas, but driven by public interest rather than narrow short-term profits.

What’s more, the proposal could easily be put into action. A recent poll by PoliticsHome.com revealed that 74% of the electorate think that a Post Bank would be a good idea, even at this early stage. And brand experts have agreed that the Post Office is uniquely situated – both geographically and within the public consciousness  – to be able to provide trusted, reliable financial services amid so much economic turmoil.

The only thing stopping McFadden, Brown, Mandelson and their ilk is their neoliberal nostalgia. They are desperate to get back to business-as-usual without apology because it is too uncomfortable to admit that the Thatcherite economics with which they dramatically transformed their party has failed. While they wish that we could all just go back to the way things were, others are forging ahead with a new economy.

Bookmark and Share Dr Stephen Spratt is Director of nef‘s Centre for the Future Economy.

Before our eyes the financial crisis is accelerating into a downward spiral of nightmarish proportions. Today it was confirmed for the first time that the UK is officially in recession, as the effects begin to hit the real economy in earnest. Nobody expects things to get better before they get a lot, lot worse.

‘Decisive action’, we are told, is being taken to deal with the banks. The latest £50 billion guarantee package comes hard on the heels of the untold billions to ‘recapitalize’, or to provide ‘liquidity’, or just to keep the lights on a little longer in the hope that something turns up.

The government resembles a grimly optimistic hot air balloonist, spat out of a storm and crashing to earth while frantically pumping more and more hot air into the balloon, only to see it flow out of huge holes rent in the fabric of his craft. The pilot, lets call him Darling, will certainly delay the crash a little bit, but only at the cost of using up all of his gas. Once the basket hits the ground – in whatever battered shape – it will surely stay there.

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Bookmark and ShareVeronika Thiel is a researcher and project manager on nef’s Access to Finance team.

tamed.Can the leopard change its spots after all? It appears so! It was a ‘leaked’ letter by Lord Mandelson to the Guardian that indicated a change in Government thinking. Instead of finding new ways to justify post office closures, the Government abandoned a tender for the running of the POCA and left it where it was – with the Post Office.

nef welcomes this move, but we also, as always, go a step further: we want to see the creation of a People’s Bank at the Post Office. Now, it seems, there are some MPs who start to come round to our thinking. As the Financial Times report, the Post Office could indeed soon be offering current accounts.

Since we seem to have the Government’s ear at the moment, can we ask you to consider the following when you recreate the People’s Bank?

  • make sure it is accessible for all, and a champion for innovation as the Girobank once was.
  • make it a bank for people on lower incomes and the financially excluded by being transparent and flexible
  • make sure it invests its deposits where they are collected – in the local communities
  • and use the opportunity to make the high-street banks follow suite.

Britain already has one of the highest banking concentrations, with only four high street banks covering most of the market. This reduces customer choice and stiffles innovation. By introducing a new bank, people would finally have what has recently become a scarce commodity: choice of where to bank.

I would not be surprised to find that many would choose the People’s Bank.

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nef employees blog in their personal capacity. The opinions expressed here do not necessarily reflect those of the new economics foundation.