Sir, Northern Rock does present the Government with a considerable opportunity, but selling it to Tesco would be a serious mistake (report, July 1). Instead of selling, the Government should use it to establish a “Post bank” and invest in the long- term future of the Post Office. Small businesses have experienced a sharp decline in access to finance and the Federation of Small Businesses estimates that 120 small companies are closing every day. The Government must choose between short-term profit and securing the long-term future of financial services at the Post Office by using Northern Rock’s banking licence, call centres and competence to establish a “Post bank”.

A trusted and non-profit-making bank run through the Post Office network would address the need for finance for viable small firms, introducing diversity into the retail banking system and protecting the Post Office network. We call on the Government to investigate this solution before selling it off to a big retailer that does not have the trust of the country’s small firms. The Government must not let a chance to really tackle the banking crisis slip through its fingers.

John Wright

National Chairman

Federation of Small Businesses

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