Universal Banking Services (Hansard, 15 November 2000)

§ Lord McIntosh of Haringey
My Lords, the Post Office and the high street banks are working together to develop the concept of universal banking services.

§ Lord Newby
My Lords, we are extremely grateful to the noble Lord for that Answer. I am sure that many noble Lords will be concerned at what appears to be a lack of progress and a conspicuous muddle in relation to this matter. Has the Minister read the report published yesterday by the Select Committee on Trade and Industry in another place which, among other matters, concludes that the universal bank, must not be allowed to fail because of … a lack of Government funding"? Given that this is of great concern to all involved in 1 he negotiations, not least the Post Office, can any assurance be given by the Minister on behalf of the Government that the establishment of a universal bank will not be jeopardised by a lack of funding from the Government?

§ Lord McIntosh of Haringey
My Lords, I was cautious in giving my first Answer for a good reason. Negotiations are taking place at the moment. As the Post Office is negotiating with the high street banks, I do not believe that it is appropriate for me to reveal our hand in public. Of course, government money will be available, but that money forms part of the negotiations. The Post Office would not thank us for speculating in advance on how much money is available. Certainly there is adequate provision in the public purse for the contribution that will be necessary. I remind the noble Lord, Lord Newby, that in the spending review 2000 we put aside £270 million for the proposals in the Performance and Innovation Unit report, Counter Revolution.

§ Lord Barnett
My Lords, my noble friend refers to universal banking services. Are they the same as the universal bank?

§ Lord McIntosh of Haringey
Yes, my Lords.

§ Baroness Byford
My Lords, without declaring the Government's position, can the Minister tell the House whether the report is correct in stating that at present only one bank has shown interest in this scheme? Is the Minister concerned that the delay in forming the universal bank is having dire effects on our 273 post offices, particularly those in rural areas? Noble Lords who took the Postal Services Bill through this House in July expressed concern and were assured that there was no problem? Does the Minister also accept that for the survival of post offices this service must come into being? I understand that approval had to be sought from the European Commission before it could go ahead.

§ Lord McIntosh of Haringey
My Lords, I shall answer the first two questions posed by the noble Baroness. It is not the case that only one bank has shown interest. We are in negotiations with all the banks, including, in particular, the main big high street banks. All of them are in active negotiation and all have shown interest. As to the accusation that there is delay, it was always intended that negotiations would go on now as they are.

§ Lord Clarke of Hampstead
My Lords, does my noble friend agree that when the Postal Services Bill was passing through the House, the concept of the universal bank came like a rabbit out of the hat late in June? Does he also agree that the government statement made at the time, that they give full backing to the PIU's support for the concept of a universal bank, was based on information gained through consultation and discussion with the retail banks prior to that statement? If so, was any commitment given, or was it just a hope that was floated at the time to allay the fears of people who could foresee the loss of their post offices?

§ Lord McIntosh of Haringey
My Lords, as the noble Lord, Lord Clarke, knows, there had been discussions with the banks before the PIU report was produced, and they had not gone well. Therefore, it was necessary to look again at the provision of universal banking services following the PIU report. That is why new proposals are now being put to the banks. Constructive dialogue is taking place.

§ Lord Mackay of Ardbrecknish
My Lords, I know that the Minister probably will not answer this question, but perhaps he can give the House an idea. When will this matter come to fruition? Will it be next year or the year after? If it does not happen—there is a possibility that it may not—do the Government have contingency plans for dealing with the problem?

§ Lord McIntosh of Haringey
My Lords, the negotiations are in place, as intended. To set deadlines for them would weaken our negotiating position and we have no intention of doing that.

§ Lord Harrison
My Lords, can the Minister say whether Giro Bank could fulfil the needs set out in the Question posed by the noble Lord, Lord Newby?

§ Lord McIntosh of Haringey
My Lords, we had a universal bank, but it was sold off by the Conservative Government in 1985. Bearing in mind the state of 274 technology and information technology at that time, it was a rather good bank which would have served our purpose well. It is sad that it is no longer available for that purpose.