The party is set to make the new banking network the centrepiece of its election pledges when it unveils its manifesto in the coming weeks.
The People’s Bank will run out of the network of 11,500 post offices around the country. The Government will lift the restrictions that limit the Post Office to offering savings products and allow them to provide current accounts.
Ed Miliband (pictured), energy secretary and one of the architects of the Labour Party’s manifesto, says the bank will be a “new deal for the low paid.”
“It speaks to people’s sense of community, and frankly, banks have let down low-income consumers,” he says, adding that the bank “can be a very serious financial institution and, if you like, a competitor to the conventional private sector”.
The bank could tap into public disquiet over the financial services industry, which is said to have increased in the 18 months since the worse of the financial crisis.
A recent poll of 1,600 consumers for the Direct Marketing Association found that 71% did not trust the industry.
The pledge will also win the support of unions and charities, which last year called for the creation of a “people’s bank” to provide more financial services to people and businesses not currently served by the major high street banks.
Separately, Conservative Party leader David Cameron has announced plans for a unilateral tax on banks. The party has dropped its pledge to only introduce the tax if other countries did as a way to pay back taxpayers in the wake of the Northern Rock, Royal Bank of Scotland and Lloyds Banking Group bailouts.
Labour favours a bank tax but only with international agreement, while Lib Dems say banks must pay for taxpayer protection.