The Big Society Post Office bank

I don’t know what it says about the state of things that, as the election draws closer, thebathhouse has become quieter. I feel overwhelmed by rhetoric and wrangling over NI and I sense that a lot of interesting policies are muffled under the force of loud ElectionLive!-type of reporting.

It’s pretty old news already but the two ‘main’ parties have each proposed something interesting on progressive banking. I’ve only looked at this a bit, so if anyone knows better please correct me.

Cameron’s Big Society Bank wants to use the unclaimed money from dormant bank accounts as a base for attracting ‘ethical investment’ bonds and the likes, which will then lend money to social enterprise bodies, who will then invest in social enterprises. It’s an investment bank rather than a bank for lending to people. The idea of using dormant money already exists – at the moment it goes to the national lottery fund, which then lends to charitable organisations to lend to charities. So that’s hardly new.

As for the principle removing the state from care, there must be a worry that relying totally on profit making charities (social enterprises) will affect what type of care is delivered and how. It seems like a useful way of promising care without promising half of the investment needed. I want to know what Will thinks about this, since he’s the one with a street-level view.

Brown’s Post Office Bank is so nearly brilliant, but then, being New Labour it can’t help but slip up in a crucial way. It’s less an investment bank and more a high-street lender. The focus is on lending at normal rates to poor people who are normally charged extortionate rates. This is heady news indeed and could be a step towards reform that will break the massive power of elite private finance firms, who act as cartels when setting distorted high interest rates to poor people. Yet rather than keep this as a public service, it is a join venture with the Bank of Ireland (who were given the contract to provide financial services through the post office a while ago).

So the profits made from expanding finance to the majority will be channelled up into the hands of a tiny elite, all of this using public money. The Post Office Bank will invest in credit unions, but why not make the Post Office Bank a credit union instead. That way the profits could go back to members and would have the majority wielding the financial power of a big bank.