Sub-post Offices

Part of Opposition Day – in the House of Commons at 4:09 pm on 12th April 2000.

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Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry 4:09 pm, 12th April 2000

I want to make some progress. I have given way many times and I want to put on record the Government's approach to these important matters.

Many people, including those in the federation, recognise the importance of modernising the network. The Conservatives did nothing to help the Post Office to prepare for the challenges ahead. From 1992 to 1997, they frequently announced their policy to sell off Parcelforce and review the status of the rest of the Post Office business; but they did not even do that.

This is an important point, because it strikes at the heart of the money that has been made available to the post office network: by 1995, the Treasury had taken £1 billion from the Post Office. Over the next two and a half years, an additional £1 billion was taken from the income received by the Post Office. That money could have been used to invest in the network, but the Treasury came first with the Conservatives.

Under this Government, £500 million is being invested in the Horizon project and computerisation. We are helping the Post Office to adapt to the changes that are taking place, but that means taking what are often difficult decisions. We have heard the concerns about our decision to cancel the benefit payment card and move progressively to ACT as the norm for benefit payments between 2003 and 2005. That is the sensible way forward.

I want to explain the background to our decision. The previous Government committed themselves in 1994 to modernising how benefits are paid, and in May 1996 an eight-year contract was awarded under the private finance initiative to ICL Pathway. The aim was to automate post office counters and provide a secure and more efficient way of paying benefits, through a card.

By early 1997, still under the Conservative Administration, it was clear that the project was in difficulties. We inherited those difficulties. In late 1997, the project was incurring cost overruns of £600 million and was three years behind schedule and we had to consider whether it could be continued. We undertook a detailed review and in 1998 we tried to put the project back on course, but slippages continued. In October 1998, the key milestone for the start of live trials of the system was missed yet again. There were real and increasing concerns that, even if the card could be delivered, the technology was becoming increasingly out of date.