Taxpayers will be expected to provide at least £130m towards the annual running cost of the government's planned universal bank, it emerged yesterday. The contribution from the public purse means that the post office-based bank will cost as much as £300m a year to run its operation.
The estimates, understood to be contained in proposals drawn up by the Post Office, match the worst fears of the industry which feels it being expected to cover the costs of setting up some 3m bank accounts for people on social security.
It is understood that the financial services industry is being asked to contribute at least £130m a year, with 40% of the cost being demanded from Barclays, Lloyds TSB, NatWest-Royal Bank of Scotland and HSBC, the big four clearing banks.
Financial firms are also being required to cover the £50m start-up costs for the universal bank, which is at the heart of the government's plans for the future of the Post Office.
The government wants the financial services industry to contribute to the development of the bank, which is fuelling concern that the burden is effectively a "windfall tax" on their profits.
Some of the leading banking groups are understood to be concerned about how to justify to their shareholders the payments, which they believe will have to be made annually for the life of the universal bank.
Some feel particularly aggrieved because they were already making progress on providing basic, no overdraft accounts for people without them by offering specially designed products through their own branches.
Under the new plans from the Post Office, it is understood that the banks will be able to offer these basic accounts, which they expect to run at a loss, through the 18,000-strong post office network. They see the universal bank as duplicating this effort, offering similar accounts aimed at the same people.
It is understood that the Post Office proposal positions the universal bank as being a way of reaching customers who would not want to open accounts directly in banks.
While the banks complain that they are subsidising post offices, the government argues the universal bank tackles the issue of social exclusion.
The Post Office refused to comment last night.
