Gordon Brown promises Kiwibank-style bank

The British Labour party will make the creation of a People's Bank the centrepiece of its election pledges, the minister drafting the manifesto said in a newspaper interview.

Energy Secretary Ed Miliband told the Guardian newspaper's Friday edition that the bank, based round a backbone of 11,500 post offices, would be a "new deal for the low paid."

"Institutions are the things that define governments," he said.

"I think the idea of the People's Bank, the network of post offices around the country connected by a new financial institution, is one of those ideas."

Labour, trailing the Conservatives in opinion polls, must call an election by June and is expected to go to the voters on May 6.

Parties have already begun their pre-election campaigning with the political stage dominated by the fragile state of the economy following the global financial crisis.

The new bank would win support from unions and charities who launched a campaign this week to build a post office bank aimed at small businesses, communities and the disadvantaged.

It could also tap into public disquiet over the state bailout of British banks RBS and Lloyds and the nationalisation of mortgage bank Northern Rock.

"It speaks to people's sense of community - and frankly, banks have let down low-income consumers," Miliband said.

Post offices already offer a range of financial services, but would need extra capital to compete against established banks.

"We have a set of institutions in our post offices that can form the basis of this banking system, but up to now we have not put into practice this idea that it can be a very serious financial institution and, if you like, a competitor to the conventional private sector," Miliband said.

"At present there are limits to what the Post Office can offer in terms of current accounts - we will expand those services and link them up with credit unions."

- Reuters