Post Office Services

– in the House of Commons at 1:05 pm on 24th March 2004.

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Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

I beg to move,

That this House
believes that all Post Office customers who wish to continue receiving their benefits, pension payments and tax credits through the Post Office should be able to do so through a Post Office Card Account opened at the counter of a Post Office or sub-post office;
notes that the Government has encouraged Post Office customers to use their own bank accounts or basic bank accounts, whilst preventing the promotion of the Post Office Card Account;
further believes that the Government should use the roll out of Direct Payment to encourage the take-up of all benefits and tax credits;
calls on the Government to clarify urgently how housebound, disabled and older people who are not able to cope with the three direct payment options will be able to claim their pensions and benefits after 2005;
recognises the significant role played by local post offices in both rural and urban areas;
appreciates that ending cash benefit payments will deprive sub-postmasters of an average of 35 per cent. of their income;
notes that this will make many post offices commercially unviable and is likely to lead to yet further closures;
further calls on the Government to ensure that the urban post office closure programme is conducted systematically and only after consulting all relevant parties including Post Office users;
and condemns the Government's failure to deliver benefits and tax credits in a simple, easy to understand manner while at the same time jeopardising the future prosperity of the Post Office.

The motion reflects a widespread belief not just among those on the Opposition Benches but in all parts of the House about the importance of post offices as part of the local community. We have deep concerns about the long-term viability of the post office network under the Government's approach. Those concerns were powerfully expressed by my hon. Friend Mr. O'Brien in the debate in the House on 13 January. That debate focused on the post office network and the importance of sustaining it and investing in it. Today I shall consider the post office network from the point of view of the people who use it—from the demand side, rather than the supply side. I shall consider the point of view of benefit claimants and the pensioners whom we represent, who wish to have access to a viable post office and to claim their benefits in a way with which they are long familiar and comfortable.

Although it is always good to see the Secretary of State in the Chamber, it is a great pity that she was not present for the debate on 13 January, which was about her responsibilities for support for post offices. Today, even though we are talking about services for benefit claimants, the Secretary of State for Work and Pensions is not present. I regret that, because I want to consider the crisis in our post offices from the point of view of those claiming benefits, many of whom are very unhappy with the Government's approach.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

May I tell my hon. Friend about Belper? Under the reinvention programme, which seems to be more like a programme of mass destruction, of the five post offices that were opened in Belper, four were closed. We were assured that the one remaining post office would be able to cope, but last week there was absolute chaos in it. When the Government made a commitment to allow people to collect their benefits, they did not say that they would make it impossible for them to do so—but that is just what they have done.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

My hon. Friend reflects the views of many constituents across the country who face practical problems that give the lie to some of the complacent assurances that we received from Ministers. The Trade and Industry Committee report "People, Pensions and Post Offices" contains powerful evidence about the scale of the problem that our post offices face and confirms why we are right to press for the right of people to choose how they receive their benefits. Paragraph 12 of the report states that the "old" system—the so-called old system—

"offered the choice between a bank or building society account or an order book for use at a post office to collect benefits and pensions. Direct Payment essentially offers the choice between a bank or building society account which may or may not be usable at a post office, or the Post Office card account, but not the order book. It is difficult to see that customer choice has, in practice, been extended significantly. Offering the full range of customer choice would entail allowing those who wish to persist with the order book system to do so."

The Opposition are committed to the order book system as an option not because we are retro or old-fashioned, but because we believe in choice. If there are millions of people in Britain, including many pensioners, whose choice it is to use such a system, why should the Government try to deprive them of the choice that they reasonably wish to exercise?

People are right to be wary of some of the options that are in front of them instead. I shall quote the experience of a constituent of mine—Mrs. Mortain, who lives in Havant—whose case I have heard about literally in the last few days; I have her permission to do so. She has been receiving her pension via her bank account, in exactly the way that Ministers are trying to encourage, but she has not received a bank payment for the past five weeks. They have suddenly ceased. She got on to the Pension Service and it told her that it is currently experiencing what it called

"a glitch in the system", and that hundreds of others are affected.

The Secretary of State for Trade and Industry may not be able to respond to this, but I hope that in the winding-up speech of the Under-Secretary of State for Work and Pensions, Mr. Pond, we will learn whether he is aware of problems in delivering pension payments into bank accounts, and whether my constituent is not alone and there is a glitch in the system affecting many others. It has reached the stage where the Pension Service is saying, "The only way we can get you the money is to issue you with a giro cheque that you can cash at your local post office." That will be the fallback when computerised payments to bank accounts have not worked. Is that not why so many pensioners do not trust the Government's assurances on payment in other ways?

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

That news will be of great concern to old people in Reigate, where three post offices have been closed—in fact, the latest one is closing on Saturday—and they are left with the main post office in Reigate, which is hosted by Safeway. Morrisons, which is taking over Safeway, has been quite unable to provide me with any reassurance that the post office will stay open. Meanwhile, the Post Office is pressing ahead with closing the branch in Holmesdale road. It is a dreadful state of affairs if it cannot guarantee to pay people their money. The reinvention programme should be stopped immediately until the matter can be sorted out.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

My hon. Friend is absolutely right. He rightly draws my attention to the fact that, given all the changes in the world of supermarkets at the moment—in my constituency, Tesco has just taken over our local one-stop shop—many of the established arrangements for post offices in such shops are in question. That is another source of uncertainty and instability. I hope again that we will hear from the Secretary of State about what steps she is taking given that significant communities—towns—face the uncertainty that my hon. Friend describes.

Photo of Gregory Barker Gregory Barker Opposition Whip (Commons)

Does my hon. Friend accept that a great deal of insult seems to be added to injury when post offices are closed in the circumstances that he has just articulated, because of the mechanistic and formulaic way in which the Post Office goes about closing them? In Bexhill, three post offices have closed, yet when I have tried to make representations, I have received only a computer-manufactured letter, and even when errors in the reply have been pointed out, I have merely received a further computer-generated letter.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

My hon. Friend is quite right. One problem with the so-called consultation is that it is not real. Instead, we have something of which the Government have made rather a speciality: bogus consultation during which one never gets the sense that one is receiving a genuine, individual letter or that any response will be properly assessed by an individual. The Opposition wish to respect the views of the people whom we represent—the pensioners and the many people claiming benefits. We are in favour of choice and in favour of the customer. That is the philosophy that underpins our approach to the Post Office.

There is further evidence in the direct-payment statistics produced by the Department for Work and Pensions about what people prefer. They show the responses that it has had when it has invited benefit claimants to convert to the new payment systems. We see from the latest statistics that it has so far approached approximately 2.5 million pensioners, of whom 1.9 million have responded. Of those 1.9 million responses, only about 750,000 have said, "Here are my bank account details; of course you can pay my money into my bank account." Some 1.2 million people have said that they want a Post Office card account. Similarly, with regard to Jobcentre Plus, 2.5 million letters have been sent out, eliciting 1.3 million responses. Of those, about 800,000 have said, "Here are my bank account details", and 600,000 have asked for a Post Office card account.

The Department's latest statistics show that we have already had 2.5 million requests for a Post Office card account. The Government's limit was to be 3 million, and they have already received 2.5 million, so does the Secretary of State accept that their statistics are, first, evidence of a widespread preference for a Post Office card account rather than bank account, and secondly, very different from the Government's forecast? In the light of that clear evidence about what real people in the real world prefer, what is her new forecast for the use of the Post Office card account?

The evidence about people's preferences is even more powerful in the light of the clear bias at every stage in the system against people having a Post Office card account. Those people have expressed their preferences for Post Office card accounts despite every attempt by the system to push them in a very different direction.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

Does the hon. Gentleman accept that, even after the initial stages, the procedure for obtaining a card account is complex and difficult for many elderly people?

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

The hon. Gentleman is quite correct, and that is a point to which I will turn in a moment.

The evidence of the bias in the system that I was about to cite is from a report in The Sunday Telegraph of 7 March, in which a member of the DWP staff quoted an instruction received from head office, which is devastating evidence that the Government have not stood by their assurances that there will be equity and fairness in the system. The instruction states:

"We need to pay most of these customers into bank accounts which cost 1p rather than into Post Office card accounts which cost up to 30 times more. You should be aiming to get 9 out of 10 new claimants (to use) bank accounts, with a small proportion paid through Post Office card accounts."

That was the aim set for benefit claimants. I hope that either the Secretary of State or the Under-Secretary will say whether that is an accurate record of instructions sent out by the Department.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

Is the hon. Gentleman being disingenuous? Does he understand that people who seek work need to be job-ready, and that the Post Office card account, although it has many favourable characteristics, does not allow the payment of wages into it? Does he not, therefore, understand that it would be quite irresponsible for Jobcentre Plus to advise people to take out a Post Office card account, which would not leave them job-ready? May I underline the fact that the 3 million figure is not a limit on the number of Post Office card accounts? We have never said that there is a limit. If people want the Post Office card account, they can have it.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

Was the 3 million figure a forecast then? The Government themselves put that figure into circulation, so if it is no longer accurate, what is their forecast? Not only the Opposition but many people working for the Post Office would wish to know where the Government think things now stand. Of course I accept the Minister's point about wishing people to be job-ready, but assurances have been given that the system will not be biased. Nevertheless, the evidence is that it is biased, and the Minister has just cited a reason why it should be so. That is a very different position from the one that they have taken so far.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

The system is not biased. It is a matter of choice for the customer. Customers must know their full range of choices, and that is what we provide. It is not for the Government or the Opposition to tell people whether they should have a Post Office card account, a current account, a basic account or a building society account. It is for the customer to decide and it is our responsibility to ensure that they fully understand their options.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

It is, of course, for the customer to decide, and that is what we believe. Contrary to the claim made by the Under-Secretary of State for Work and Pensions, Mr. Pond, that the Government allow the customer to decide, we all know that they are trying to push customers in one direction rather than the other. All we are asking him to do is to ensure that the Department of Trade and Industry and the Department for Work and Pensions stand by their assurances that all they are doing is extending choice. Conservative Members want to see fair and open choice, which is not available at the moment.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

Does my hon. Friend agree that the Minister is talking nonsense? I visited 28 post offices last summer, and I shall briefly quote three postmasters. The first said:

"The Benefits Agency is bullying people to change. The Government has not been fair."

The second said:

"The Benefits Agency has been very difficult. The forms are designed not to help."

The third said:

"The initial letters give a clear idea that customers must go direct. They are misleading. The bank section is deliberately put before the card section."

The Minister should apologise.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

My hon. Friend is absolutely right. His point is repeated by Labour Back Benchers in early-day motion 648, which was tabled by Mr. Connarty. Many hon. Members support early-day motion 648, which recognises the problem—we can all see the problem, our constituents experience it and people who run post offices are concerned about it. It is not good enough for the Minister to come to the House and say that the system is fair and even—it is not, and that is the nature of the problem.

Photo of Mr Nick Hawkins Mr Nick Hawkins Conservative, Surrey Heath

One of the things that most concerns pensioners in my constituency, where Ash Vale Station and Mytchett post offices have closed, is that if they even inquire about the system, as a result of Government instructions, their inquiry is treated as a request for automatic payment. That is part of the Government's dishonesty. Does my hon. Friend recognise that one of the problems is that the Government are not putting any pressure on the many banks and financial institutions that will not allow cheques to be cashed at post office counters? Only three of the banks currently allow their cheques to be cashed in that way. Does my hon. Friend agree that all banks should allow cheques to be cashed at all post office counters, which would reintroduce footfall into post offices and help sub-post offices to survive?

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

Both my hon. Friend's points are absolutely right. First, we are all concerned about the insidious process whereby people are pushed towards the bank account option rather than the Post Office card account at every stage. Secondly, Conservative Members do not want to subsidise post offices; all we want is people to enter post offices because that is the service they want to use. We seek increased footfall, which is the best way to ensure that as many post offices as possible are viable in the future.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Is my hon. Friend aware that the Work and Pensions Committee visited the telephone call centre for the Pension Service last year? We were shown the script that the call centre operators use when new pensioners request a pension. The script made it clear that the Post Office card account is the last option. Does my hon. Friend think that it would be useful if the Minister were to ensure that a copy of that script is placed in the Library?

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

Yes. I recall that that important point came up in the Select Committee, where my hon. Friend Andrew Selous does sterling work. Yet again, the evidence that the system is biased is building up. All we are asking for is fairness for the millions of people who want their benefit to continue to be paid at the post office, which is not too much to ask of the Minister.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

The House will have noted the hon. Gentleman's statement that the Opposition do not want to subsidise post offices. Are the Opposition confirming their opposition to the Government's £2 billion investment in the post office network? I shall quote Postwatch research—the research was conducted on a small scale, but it was, nevertheless, conducted by Postwatch—to those hon. Members who suggest that the process is biased to encourage people in one way or another. The vast majority of pensioners said that advice from the customer conversion centre

"was given in a clear and unbiased manner".

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

I began my speech by saying how much I regret the absence of the Secretary of State for Work and Pensions to answer on behalf of the benefits system, which is why we called the debate. The junior Work and Pensions Minister has intervened on me three times, but so far we have heard nothing from the Secretary of State for Trade and Industry. The Secretary of State for Trade and Industry did not turn up when we debated the issue from the point of view of the post office network, and now she is silent when we discuss the subject from the point of view of the claimant—instead, it is a Minister who has intervened.

My response to the Minister's challenge is to examine the seven-stage process to open a Post Office card account, which clearly shows the bias:

"1. Wait for the letter from the Pension Service or the DWP saying your benefit will in future be paid direct.

2. call the helpline number on the letter and say you want a post office card account

3. the DWP then will send you a 'Personal Invitation Document' to open an account

4. This document must be taken to your local Post Office. They will give you an application form".

By stage four, one has obtained an application form.

"5. That application form must be filled in and handed back to the Post Office

6. The Post Office will then post you two letters—one containing your PIN, the other called a Pick Up Notice

7. The Pick Up Notice must be taken to the local Post Office to collect your card. The account is then activated."

That is not skilled mass marketing. The system has not been designed to be customer friendly in order to maximise people's opportunities to obtain Post Office card accounts. The process contains a set of bureaucratic hurdles that are designed to put off the millions of people who want to receive their payments at the post office.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

The hon. Gentleman missed out a stage. After the form has been taken to the post office, one must obtain information from the post office to fill in on the original letter from the Pension Service, and return that letter to the Pension Service before the account is activated.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

I am happy to be corrected by the hon. Gentleman, and I apologise to the House for having made the system sound simpler than it really is.

Photo of Alan Reid Alan Reid Opposition Whip (Commons)

The hon. Gentleman is right that it is difficult to open those accounts. I draw his attention to the fact that if an elderly person writes outside the correct box when they fill in the form, the whole form is rejected. As he says, the system is biased against the Post Office card account.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

The problems with the computer recognition system form a whole subject, and there have been many such cases. One gentleman wrote his sevens in the continental style—Conservative Members do not object to the continental method of writing seven—and the computer could not recognise them, so his benefit claim could not be processed, which is not a good way to operate.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

The hon. Gentleman may know that I am a member of the Select Committee that made some observations about the complexity surrounding the Post Office card account. Given what he said about order books, does he want to improve the Post Office card account or does he want to abolish it?

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

I do not want to abolish the Post Office card account—we accept that we are too far down the track for that. We want a user-friendly system that allows people to choose a Post Office card account, which is a way to maximise footfall through the post office. In a moment, I shall turn to the important subject of the exception service, which is needed to supplement the Post Office card account.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I want to clarify the Conservative policy. The hon. Gentleman says he wants to improve the Post Office card account system, but he has not said that he wants to return to an order book system.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

The Post Office card account does need to be improved, but I am also talking about the form that the exceptions service should take.

I intended to cite evidence from a range of charities about the problems involved in opening a Post Office card account, but so many of my hon. Friends have intervened with evidence of their own that I need not detain the House with it, save to quote Age Concern, which says in an appendix to the Select Committee report:

"We are concerned at the considerable hurdles that seem to be being put in the way of opening a POCA. One cannot simply go to a Post Office and open an account."

The Secretary of State must tackle that fundamental charge regarding the bias in the system.

Does the Secretary of State recognise the problems that particular groups face? We have all heard sad stories about the problems that many disabled people have experienced when using the new post office devices. It is a sad irony that the House is finally considering the draft Disability Discrimination Bill at the same time as the Government are introducing a measure that is the most hostile to disabled people, and in respect of which their interests and views have been least well considered, in many years of public policy. The Secretary of State knows about the problems, because the Government have already had to admit that the PIN machine will have to be changed. Some people find it difficult to reach the keypad and others—for example, blind and visually impaired people—find it difficult to manipulate. Will the Secretary of State tell the House where the redesign of the keypad stands and when we will see the user-friendly keypads in our post offices for which many disabled users are crying out?

The Secretary of State must deal with the problem of multiple users, which arises where, for example, claimants are housebound and receive support from carers and social services. In an ideal world, those people might have one carer or social services support worker who is with them all the time, but, sadly, it is not like that in the real world. Many of our housebound constituents face an ever-changing cast of support workers coming to their houses to assist them, which makes it very difficult for them to access the system that has been designed by Ministers and the Post Office. Citizens Advice says:

"Direct payment will bring few advantages to claimants who need someone else to collect their benefit for them, or to help them operate an ATM or pinpad. This is a significant issue that needs a solution".

It believes that in order to resolve such practical problems, the DWP should allow housebound people and those who cannot cope with a PIN to choose the exceptions service as their normal method of payment and that it should be accessible for claimants who do not have a permanent collector.

I do not blame the DTI for failing to understand this, but I do blame the DWP—after all, it is responsible for delivering benefits and should understand claimants' needs—for failing to put up the Secretary of State to respond to the debate and for failing to ensure that such problems were tackled as the system was being designed. I am afraid that that has done much damage to the Department's reputation for understanding the needs of disabled or housebound people.

In response, the Government have proposed an exceptions service. I should be grateful if the Secretary of State could give us some reliable information about how that will work. So far, Ministers have failed to inspire confidence when offering us assurances about that. The Minister for Pensions sounded like Corporal Jones from "Dad's Army" when he told the Select Committee on Trade and Industry:

"The advice to people at the moment is do not panic."

I am afraid that that is not good enough as a piece of serious ministerial advice on how the new exceptions service will work. The only response to, "'Do not panic', says Minister" is, "Panic!". He advised people to hold on to their pension books and not to worry. He also said that the exceptions service is not being offered as a "fourth option"—in other words, that it is not an option for anyone dissatisfied with the other three options. Will the Secretary of State tell us more about who will be able to access it, on what terms they will access it, and for how long they will have to wait?

The Select Committee's report is highly condemnatory on this point. It states:

"It is clear from the evidence presented to us that the failure of the DWP to develop its ideas for the Exceptions Service in advance of the introduction of Direct Payments has led to uncertainty and confusion over the means by which some groups of disabled people will receive their benefits in future. At the very least, the Government should take steps to allay their concerns by making clear that claimants do have the choice of continuing to use order books until 2005 or until such time as the Exceptions Service has been developed."

There is widespread concern about this issue, and I hope that the Secretary of State will deal with it.

Standing back from this individual disaster, we see a wider picture of a catalogue of problems and failures going right back to the original decision in 1999 to abandon the Horizon project and go for this option instead. I think we all know what happened then. Ministers thought to themselves, "There is this hidden subsidy coming into the Post Office from the benefits system. We can save money by paying the benefits in a different way and we will remove the hidden subsidy for post offices." That is what they thought they were doing. Instead, they have ended up putting even more money into post offices than they would otherwise have had to, because they have taken away the footfall of benefits claimants, while finding that many benefits claimants are deeply distressed because they have been unable to continue with the reliable system for claiming their benefits. During those five years, the Government have not taken us forward—instead, they have managed to perform the extraordinary double trick of weakening our post offices and leaving many people who wish to claim benefits with a less adequate system than they had before.

This is a classic example of a failure of public policy; yet another example of this Government's failure to deliver; and, even more significantly, a failure to understand the needs of millions of people, especially elderly people, who wish to carry on being paid in the same reliable way. [Interruption.] The Under-Secretary of State for Work and Pensions is giggling. I have to tell him that it is no accident that this policy was decided in 1999. If we date it from the geological fault lines of this Labour Government, it is a classic "cool Britannia, modernising Britain" policy, which says, "Let's get rid of the old order books: we're going to have spanking new systems and gleaming new technology." It is a classic example of a policy cooked up by people who had no understanding of the views of disabled people or of pensioners. It comes from the time when Mr. Mandelson said that what he really thought about pensioners was that there was "no mileage" to be had from them, and when the chairman of the Labour party denounced them as "racist", then, as a final insult, as "predominantly Conservative". That is why they took no account of the interests of the many people using the post office, and that is why it is Conservative Members who are pressing for their interests today.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry 1:48 pm, 24th March 2004

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"supports the Government's strategy to modernise the way benefits and pensions are paid, and to provide customers with a choice of accounts;
welcomes the fact that with Direct Payment customers will still be able to collect their cash from the Post Office if they wish using a current account or basic bank account with Post Office access or the Post Office Card Account;
notes the Government's plans for a cheque payment, cashable at post offices, for people who cannot be paid through an account;
recognises that Direct Payment is a more modern, efficient and secure method of payment which will also help increase financial inclusion;
welcomes the fact that more customers are now paid through an account than by order book without problems, including nearly six million pensioners;
notes the previous government's attempt to introduce a Benefit Payment Card, which wasted millions of pounds of tax-payers' money;
notes the fact that the Post Office had not until recently kept up with changes in customer demand and so had seen transaction volumes dropping and losses increasing;
recognises the need for change and congratulates the Government for taking decisive action to help turn the business around;
welcomes the record £2 billion investment in the Post Office network over a five-year period, including £450 million for the rural network and £210 million to modernise the urban network;
and believes that this will help ensure a viable Post Office network that people will want to use."

I am delighted to join Mr. Willetts in a debate entitled "Post Office Services", and to respond to his opening speech. As Secretary of State, with the privilege of being shareholder on behalf of the public in the Royal Mail and in Post Office Ltd., I regard it as entirely appropriate that I should have this opportunity to respond to his increasingly absurd statements.

Let me first deal with the issue of benefit payments and the shift to direct payment that is taking place. The hon. Gentleman talks about choice. He appears to have ignored everything that has been happening about customers making their own choices over the past decade and more. For many years, well ahead of the decision by my right hon. Friend the Secretary of State for Work and Pensions to switch to making all payments by direct credit, more than half of benefit recipients were already having their benefits cash paid directly into their bank accounts.

Let me underline that point by saying that nearly two thirds of recipients of child benefit and nearly six out of 10 new pensioners already get their benefits paid directly into their bank accounts. Those claimants and customers are exercising choice, yet we heard nothing about them from the hon. Member for Havant.

Photo of Gregory Barker Gregory Barker Opposition Whip (Commons)

The Secretary of State makes great play of the issue of choice, but where is the choice for my constituents who want to use a post office in their village, but find it closed?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I shall come to post office closures in a moment, but if the hon. Gentleman will forgive me, I want to start with the issue with which the hon. Member for Havant started—benefits payments and the introduction of the Post Office card account. Let us remember that the Government of whom he was a member introduced their own plan for a benefit payment card. It was supposed to use the latest technology of the time, and it was part of a public-private partnership. When we came into office in 1997, we discovered that their benefit payment card programme was a shambles. It was well overdue, the technology was not working—because the programme was so overdue, that technology was also out of date—and the costs were overrunning.

We spent a year and a half trying to make that programme work. In the end, however, we decided that there was no point in rescuing that absurd out-of-date Conservative proposition for a benefit payment card. Instead, we invested the best part of £500 million in the Horizon platform—on which I shall elaborate in a moment—which forms the basis for universal banking, which is extending the benefits of banking and financial inclusion to millions of people.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

If the right hon. Lady wants to extend universal banking to all people, why cannot the job-ready unemployed have their wages paid into one of those accounts?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

Because the card account was never designed to do the entire job of a bank account. Basic bank accounts and regular cheque accounts are available for people to have their wages paid into; the Under-Secretary of State for Work and Pensions, my hon. Friend Mr. Pond has already dealt with that point.

Photo of David Drew David Drew Labour/Co-operative, Stroud

I am sure that I was not the only Member who went to see ICL to talk about the Horizon system, which came out of the ideas of the previous Conservative Government. When I did so, ICL made it clear to me that the system was full of capability but was being underused. It was also made clear that there was a need to invest in it because it was going to be the saviour of the Post Office. Will my right hon. Friend point out to all concerned that that was the clear message? The Opposition do not seem to be able to remember that.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend is right, and I am grateful to him for making that important point. Thanks to the investment and the decisions that we have made, the Horizon platform and the automation of the post offices have now modernised post offices to enable them to offer new banking services to millions of customers who did not previously use the post office. That is extremely important.

We are now phasing out the order book system. It is out of date, and it uses systems that, frankly, belong to the era of the ration book. It is inefficient, costly to administer, and open to fraud and abuse. That is why we were right to decide to phase it out and extend benefit claimants' choice, which includes maintaining and strengthening choice for claimants who wish to get their benefits in cash at a post office.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

As my right hon. Friend said, the order book system is open to fraud and abuse. Will she confirm that 100 pensioners a week have their order books stolen?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend is right—and that is a disaster for the individual pensioners who are robbed, with all the distress that that entails. It is also enormously costly to the taxpayer, who has to foot the bill for this kind of fraud. I would have expected the hon. Member for Havant, who is so against waste and inefficiency in the public sector, to support rather than oppose our efforts to get rid of a system that makes elderly people and taxpayers vulnerable.

Our commitment to financial inclusion, universal banking and the introduction of the Post Office card account has been welcomed by Citizens Advice, Mind and Help the Aged. Indeed, Citizens Advice's excellent recent study on financial inclusion stated:

"The government, the banking industry and the Post Office should be commended for the progress they have made in establishing Universal Banking Services. The ambition to enable all people to own the most basic of financial services—a bank account—is one we share."

I commend Citizens Advice on the way in which it has helped us to put universal banking in place.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

I am pretty certain that, having seen the post offices at St. John's, Lesbourne road and now Holmesdale road close, and with a threat hanging over the main post office in Reigate, Citizens Advice and Help the Aged would be less than impressed by the accessibility of post office services to the elderly in my constituency. Those closures are happening at exactly the same time as the Government are going through the automation process. The conjunction of those two things, plus the £50,000 incentive to sub-postmasters to take their businesses out of service—which places them in an impossible position—is causing a collapse in the availability of services in Reigate and elsewhere. It was the concern about all those issues that generated the petition that was presented to me by hundreds of my constituents this morning.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am not surprised that the hon. Gentleman and his party want to go back to the days of the Conservative Government, when post offices were closing in their hundreds and thousands in an entirely unplanned and unmanaged way, partly because, with fewer customers cashing benefit cheques at post offices, it was simply not possible for sub-postmasters to make a decent living. I am not sure whether the hon. Gentleman is suggesting that people should be forced to carry on in businesses that are no longer viable.

I shall return to the issue of urban reinvention in a moment, but I want to deal first with the series of allegations made by the hon. Member for Havant about the alleged difficulties involved in opening a Post Office card account. He made great play of the difficulty of the process, the seventh and eighth steps and all that nonsense. Let us be clear: there are three steps that individual claimants need to take. First, they ring the customer conversion centre. I looked extremely carefully at the script to be used there before I approved its use, to ensure that it was neutral in its presentation of the options. Secondly, they discuss the options. Thirdly, if they want to open a Post Office card account, they wait for their personal invitation document to arrive and they take it to the post office branch, where they get and complete their application form. They then send those account details back to the Department for Work and Pensions.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

It is my recollection—and that of the Chairman of the Select Committee—that, when the Committee visited the new pension call centre, we found that the script was not neutral on that matter, and that the Post Office card account was very much the last option. Would the right hon. Lady agree to place that script in the Library of the House?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I do not agree with the criticisms of the script that have been made by members of the Select Committee, but I should be happy to place it in the Library. I shall do so in the knowledge that Postwatch, which conducted some small-scale research with actual customers, has reported that almost all the pensioners to whom it spoke felt that the advice given by the customer conversion centre

"was given in a clear and unbiased manner".

Most of them described the DWP customer information material as being of "good quality", and most of the people ringing the centre had their questions answered satisfactorily. Most of those who had rung the centre to open a card account felt that the information that they had been given was "clear and unbiased", and most did not feel that staff were seeking to persuade them to choose one option over any of the others.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

I am amazed. Has the Secretary of State talked directly to any postmasters? As I said in an earlier intervention, I have visited 28, and every one said how difficult it is for people to apply for cards. I can tell my hon. Friend Mr. Willetts that the National Federation of Sub-Postmasters would say that he underestimates his case. It says that there are 22 steps in the process of getting a card. When I visited the Minister for Energy, E-Commerce and Postal Services, taking a delegation of postmasters along, it was explained clearly to him that those who manage to get through that thicket of measures do so only with the specific help of the postmaster himself. I urge the Secretary of State to come to North Shropshire to visit some postmasters.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The position of Conservative Members becomes more and more absurd as they keep inflating the number of steps that supposedly need to be taken. Let me stress to the hon. Gentleman that about 2 million Post Office card accounts have already been opened. That scarcely bears out the absurd allegations being made about how we are biasing the system, driving people away from the Post Office card account and making it impossible for anyone to open one. That is complete nonsense.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

The Secretary of State calls those claims absurd, but all Opposition Members know how true they are. Is she saying that the National Association of Citizens Advice Bureaux is absurd when it reports that

"clients who want to open a Post Office card account feel that there are obstacles placed in their way . . . We consider that this process acts as a barrier to opening a card account, particularly for vulnerable people"?

That is what NACAB is saying, and that is what we all know to be the case. Why does the Secretary of State continue to deny what everybody knows to be true?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am going by what customers have told Postwatch and, more importantly, by the fact that about 2 million people have opened a Post Office card account. The eventual number of card accounts is expected to exceed the original operating assumption of 3 million; none of that is evidence that people are finding it hard to open an account.

The hon. Member for Havant also raised a number of important issues involving people with disabilities. The first to be raised, quite properly, was the problems that people who are blind or have difficulty in seeing have in using personal identification number pads. That issue has been recognised by the Post Office, which has already improved the PIN pad by putting a key guard over it to make it easier to use, and adding a dot to the No. 5 key. The Post Office is working with the Royal National Institute of the Blind to make further changes to the PIN pad to make it easier for that group of customers to use the system.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

Why was it necessary to make those changes? Why were those things not thought of in the first place?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I agree that it would have been better if the original PIN pad had been designed with full regard to the needs of people with different disabilities. The technology is still developing, and was not available at the right price and at the right time when the service was introduced. It is being introduced now, and I pay tribute to the RNIB, which not only raised the issue, but has helped the Post Office to resolve those problems in a practical way, as we readily acknowledge.

The hon. Member for Havant also asked about people who are housebound. I think that he accepts that there is no problem for those with a regular carer who use a Post Office card account, because they will have their own PIN number. However, housebound people may have different people caring for them in different weeks. Of course that is a problem: under the existing system, the claimants can simply sign an order book counterfoil, which provides great flexibility, but I am afraid that that practice is wide open to fraud and abuse. We are saying that where claimants need people to collect their money for them, they will, for the time being, simply continue to use their order book while we work with the various organisations to design the exceptions service.

The exceptions service will be based on a cheque system, which will be much more secure than the order book system. It will be introduced and available from October this year, in plenty of time for the ending of the order book system in May next year. I am delighted to say that, exactly as we would expect, my right hon. and hon. Friends at the Department for Work and Pensions and their officials have been working extremely closely with Citizens Advice, Help the Aged and many other groups representing vulnerable customers to ensure that there is full understanding of the needs of different vulnerable groups that cannot have their benefits paid directly into an account. That new system of payment by cheque will all be in place to ensure that there is no trouble in getting benefits for those vulnerable claimants.

Photo of David Drew David Drew Labour/Co-operative, Stroud

Does my right hon. Friend agree that it would be useful to give Members a full briefing, given that people are likely to question us on how the system will work? Before the system goes live, will she arrange for us to see how it will operate?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

That is an excellent suggestion, and my right hon. Friend the Secretary of State for Work and Pensions and I will ensure that such a briefing is provided.

The successful introduction of the Post Office card account is only part of a much bigger—[Laughter.] They are very slow over there this afternoon. [Interruption.] The card is extremely successful—about 2 million people have already opened a Post Office card account, because they have decided that that is what they want. However, that account, which many Opposition Members said would never see the light of day—let me remind them of that—is part of a much bigger programme of universal banking. Thanks to the £500 million investment in the Horizon platform, the Post Office can become the high street bank for millions of other bank customers.

The Post Office is providing banking services on behalf of the Alliance & Leicester, Barclays, the Co-operative bank, First Direct in Scotland, Lloyds TSB and two internet banks—Smile and Cahoot. Customers of all those banks, with their ordinary bank accounts such as cheque accounts so on, can get cash at post offices free of charge.

Photo of Alan Reid Alan Reid Opposition Whip (Commons)

The Secretary of State knows that she has not mentioned any of the three main Scottish banks, which means that pensioners and benefit recipients in Scotland do not have the same choice as those in other parts of the country. What progress is she making in negotiations with the three main Scottish banks to reach agreement with them?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am happy to say that the Scottish clearing banks and other major financial institutions, as well as those I mentioned, already provide access at post offices. Those services—for instance, access to a basic bank account—were launched on schedule on 1 April last year. Access to the other current accounts—the cheque accounts—is a matter for commercial negotiations between the Post Office and the various banks.

My point is that because of our investment in it, the Post Office can offer that service to all the commercial banks, and therefore to all their customers. It is involved in those negotiations at the moment. I have repeatedly urged all banks to provide all their customers with access to their various accounts through the post offices, but obviously that is a commercial decision for the individual banks.

The result of that programme of investment and universal banking is that there are 20 million current account customers—not Post Office card account customers, but current account customers—who can use the new electronic systems and undertake banking transactions at Post Office branches. The result of that is that since April last year there have been nearly 25 million banking transactions at post offices. That is a huge success story, which the hon. Member for Havant completely ignored. That is why Citizens Advice welcomed this expansion of banking at post offices. It is a significant step forward in financial inclusion. Above all, from the point of view of this debate, it brings more people into post offices and gives sub-postmasters a new source of revenue.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

How much income has the Post Office lost through the changes in the card payment system and how much income will be replaced by the new banking arrangements on which the Secretary of State and her colleagues—as was repeated to me when I saw the Minister for Energy, E-Commerce and Postal Services—are hanging so much?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

Sub-postmasters have seen a reduction in their income from benefit payments over the last 10 years and more, for the reasons that I set out earlier, as customers have moved away from that. The choice to which the hon. Gentleman is not willing to face up was to enable the process of customer choice and seize the opportunity to have a much more efficient and fraud-proof system of paying benefits, and to make post offices attractive to customers through expanding their range of products, such as financial services and so on. Alongside the decline in income from benefit claimants, we are seeing an increase, which will continue, in income from other sources, such as home insurance, travel insurance, travel exchange products and so on. All of those are hugely popular with sub-postmasters, and all provide the prospect of continuing increases in new sources of income.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

The Secretary of State's vision of an integrated post office and banking system is impressive, but does she accept that there is a problem in many rural areas, because over the last two decades many banks have pulled out of rural areas and closed small branches? I cite the case of Friockheim in my constituency, where the last bank closed a few years ago. The post office has now closed, so there is neither a bank nor a post office to enable people to use any of those services.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The hon. Gentleman makes an important point. It is perfectly true that many of our rural communities no longer have a retail outlet, bank or post office, because none was commercially viable. I shall refer in a moment to the investment that the Department has been making to prevent all avoidable closures of rural post offices and our work with the Department for Environment, Food and Rural Affairs to try to expand in new ways the availability of services for people in rural communities.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

No, I want to make progress.

I want to underline the point that there is still a view, which I regret that some sub-postmasters share, that the only way to keep post offices viable is somehow to force customers to use them by maintaining an out-of-date order book system that gives those customers no choice at all about where they get their cash. That is not the way forward for our sub-post offices. I am glad that, in its evidence to the Select Committee, Age Concern said:

"Although we are aware that a number of organisations"— it may have been referring to the Conservative party—

"and individual sub post masters are promoting the POCA on the basis that this is the way to save the post office network, Age Concern does not subscribe to this view."

Nor do we.

That brings me to the second set of issues raised by the hon. Member for Havant and other Opposition Members, about the number of local post offices and the restructuring. We want a viable national network.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

Will the Secretary of State take this opportunity to apologise to the constituents of those Members who raised cases with the Minister for Energy, E-Commerce and Postal Services the last time that we debated this subject, when we said that the consultation process was a sham? He assured us that it was not. The "Westminster newsletter", which was sent out by the Post Office after he made his announcement on 5 February, referred to new developments, one of which, it said, guaranteed that the Post Office will

"not make a decision until after the public consultation period"

The Minister of State's statement included the following provision:

"No contract binding on Post Office Limited is signed before the public consultation process has ended."—[Hansard, 5 February 2004; Vol. 417, c. 50WS.]

That meant no binding closure on that particular post office. That proves the point that many of us made before 5 February—the whole consultation period was an absolute sham.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am not sure whether the hon. Gentleman is complaining that my hon. Friend the Minister responded to the concerns raised in that debate and took full account of all the individual complaints that have been brought to him. As a result of individual complaints, where the process has apparently not been followed as it should have been, he discussed matters with David Mills, the excellent chief executive of Post Office Ltd., and put in place stronger measures to ensure that in every case, and in every part of our country, the consultation process is properly followed and the area plan is finalised only after that consultation has been finished.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

To be absolutely clear, is the Secretary of State saying that she is grateful to Her Majesty's official Opposition for the debate on 13 January, which highlighted issues on which we were supported by Members across the House, not one of whom was in favour of the Government? Do not the Opposition therefore deserve thanks for having prompted the Government to take the right decisions, which then came forth in the Minister of State's statement?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am congratulating my hon. Friend, who is an excellent Minister, on taking account, as he always does, of constituency issues raised by Members on both sides of the House. I should have thought that the hon. Gentleman would have been less churlish on that point.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

I thank the Secretary of State for her answer. There is one group with a particular problem—those for whom the network reinvention programme and the so-called consultation and decision-making processes were already under way. It is no comfort to my constituents or those of other hon. Members to find that their consultations were so flawed that matters would be put right in future but that closures would go ahead as was clearly planned from the outset in their constituencies. Why has the Minister failed to put a halt to those processes?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am sure that that is a point on which my hon. Friend the Minister of State has had discussions or communication with the hon. Lady. If not, I shall ensure that he does so.

Let me stress the need for a planned reorganisation of the post office network. In the previous financial year, Post Office Ltd., not the whole of the Royal Mail, made losses of £194 million before exceptional items. In the year before that, it made losses of £163 million, and the half-year results that have just been reported show significant losses again of £91 million. What has been happening over many years is a process of completely unplanned post office closures. Indeed, the Conservative party presided over 3,500 post office closures during its period in office.

As a result of such unplanned closures, as sub-postmasters gave up the unequal struggle of trying to make a living out of too few customers, we ended up with a pattern of provision that had no basis in rational response to what customers needed. Let me give the House the example of my city, in which one post office branch, in the constituency of my hon. Friend Mr. Marshall, has 12 other post offices within a one mile radius. Indeed, it has 15 others within a radius of 1.1 miles. That is an impossible situation, in which none of the sub-postmasters can make a decent living, none can afford to invest in their shop or post office to make it more attractive to customers, and all are chasing and competing for a hitherto dwindling band of customers. Before the Post Office began its urban reinvention programme, more than 1,000 urban post offices had at least 10 others within one mile. Either we allow that to continue and let the decline go on—which is what the Conservatives were doing, and presumably would still do today—or we face up to difficult decisions and invest to ensure a planned restructuring of the network.

The problem is not unique to the United Kingdom. Customers in developed countries all over the world have been changing their patterns of banking, using the internet more and so on. In Germany, the number of post office branches has been reduced from 30,000 to 13,000 as a consequence of changes in customer behaviour.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I agree that it is vital for us to plan the changes that are necessary, but does not the way in which Post Office Ltd. is going about a number of the reorganisations fall short of expectations? In south Birmingham, for instance, the closure of 29 out of 90 sub-post offices is being suggested. Is not one of the problems the excessively inflexible view adopted by Post Office Ltd. of the assistance available to Government, which often leads it to maximise its chances of closing post offices and minimise the opportunities to create sustainable businesses? Will my right hon. Friend assure me that in future Post Office Ltd. will be encouraged to look at the opportunities for post office business, and not just the threats?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend makes an important point. I know that he and other south Birmingham Members have been enormously active in engaging in the current consultation on the area plan with Post Office Ltd. and Postwatch, and representing the views of his and others' constituents on what the restructuring should involve. If necessary, I will convey what he has said to David Mills, the chief executive of Post Office Ltd., whose entire vision for the Post Office is based on maximising opportunities for new products and much better, brighter urban post offices, thanks to the programme of restructuring and investment. We have invested a substantial financial commitment to providing compensation for sub-postmasters who are leaving their businesses, as well as investment for those who are staying, to ensure that the remaining post offices are better and more attractive to customers. That is essential.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

The Secretary of State makes all the changes sound rather exciting. If she were to lose her seat at the next general election, would she consider opening or taking over a post office and running it? I wonder whether she really understands the pressure that some of our postmasters and postmistresses are under. Would she consider being a postmistress?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I certainly would, given the example of the wonderful Mrs. Patel, who runs an urban post office in a disadvantaged community in my constituency. Like most successful sub-postmasters, she combines it with a retail outlet. She welcomed "Your Guide", but welcomes much more the opportunity to have an automated teller machine in her shop. She has one of several thousand ATMs that have now been installed, thanks to our investment in sub-post offices. That is helping to bring new customers and more business into her post office. Along with many other sub-postmasters and sub-postmistresses, she provides a great example of entrepreneurial commitment—which is what Labour wants to encourage, even if the hon. Gentleman does not.

Photo of David Willetts David Willetts Shadow Secretary of State for Work and Pensions

I was going to encourage the Secretary of State to consider a job swap. She is clearly keen to be a postmistress, and we would greatly appreciate a Secretary of State who knew something about the business. Would the Secretary of State consider a swap, even just for a week?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am grateful for the suggestion.

Let me end by saying something about our investment in Royal Mail—a total commitment of some £2 billion over several years. It includes £480 million to rescue the Horizon project and ensure that we have a platform for universal banking, £450 million for the rural network to stop avoidable closures, £210 million to support the urban network reinvention, £15 million to keep open post offices in disadvantaged urban areas that would not otherwise be viable, and £750 million to repay historic debt to Royal Mail so that the renewal and restructuring plan can proceed. It is an extremely successful plan that is significantly reducing Royal Mail Group's losses and returning it to the path to profitability.

That is the commitment—£2 billion over five years—that the Government have made to Royal Mail and, in particular, to the post office network. What do we have from the Conservatives? We have a commitment to grow public spending

"about 1 per cent. more slowly than the Treasury view of the trend rate of nominal GDP growth."

I am, of course, quoting from the medium-term expenditure strategy document recently published by the shadow Chancellor. What the Conservatives offer us is a freezing of the overall total of public spending for the first two years—in other words, a cut of £18 billion in public spending.

I understand that, on top of that, the Conservatives are now considering abolishing the Department of Trade and Industry—abolishing the Department that is making the investments that are beginning to turn Royal Mail around, have saved rural post offices from unnecessary closure, and are supporting an absolutely necessary restructuring of urban post offices.

I hope that when Mr. O'Brien winds up the debate, he will tell us how much of the £2 billion that we have committed to Royal Mail and Post Office Ltd. he intends to cut. If, as appeared to be the case from the speech of the hon. Member for Havant, the Conservatives are saying that they want more money to go into the post office network, perhaps he will tell us how many child care centres he will close to pay for that, how many cuts will be made in the transport budget or how many police officers are to be sacked. Where precisely will the cuts fall? If they are to fall on Royal Mail and the post office network, everything we have heard from the Conservatives this afternoon amounts to crocodile tears, hot air, words with no commitment of resources behind them.

If the Conservatives intend to sustain the investment that we have been making in Royal Mail and post offices, in all honesty, the hon. Gentleman will have to confess to the House that, under his own shadow Chancellor's public spending plans, the cuts will fall somewhere else—on services that, in a different debate, he and his right hon. Friend will be busy defending and crying crocodile tears over.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

No, I will not. I have reached the end of my speech. I just want to make the point that Labour has faced up to tough decisions as his party was never willing to when it was in government. We have backed those tough decisions with the necessary resources, against the Conservatives' commitment to public spending cuts and decline in our public services.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 2:29 pm, 24th March 2004

I am glad that the Opposition proposed this subject, because it matters to Members from urban constituencies who have seen a programme of closures, and to those who represent rural and market town constituencies and, over many years, have seen one closure after another taking post offices out of villages and small towns up and down the land.

This subject is perhaps the most acute example of how those who govern are completely out of touch with those whom they govern. It is the one matter on which, when hon. Members from all parties give case after case of constituents who have received biased information or who have been pressurised or messed around, Ministers just smile benignly and tell us that there is no bias or pressure, but that there is free choice. We wonder sometimes what planet they are living on. Hon. Members from all parties have made those points, but the Government have decided to close their ears.

What the Liberal Democrat amendment calls for, which in many ways is similar to what the Conservative motion calls for, is respect for people's choices. The statistic that the Secretary of State cited in defence of the Government's position—that six out of 10 new pensioners opt for payment into a bank account—was striking. That is an extraordinarily low figure. One would imagine that of people just arriving at state pension age, eight, nine or nine and a half out of 10 would opt for payment into bank accounts. The fact that four out of 10 new pensioners think that an order book suits them best should tell the Government something: that people like that way of receiving their money.

If that is the case for four out of 10 people who have just retired, it is even more so for people who have been retired for 20 or 30 years, and who have been receiving their pensions in that form very happily. That works for them, so why can their choices not be respected? Every pensioner at any point could have opted for payment into a bank account. The Government have not invented that as a new choice. Pensioners have always had the option of payment into a bank account, so the fact that they have gone on getting money through an order book suggests that that is their positive choice. Why are the Government now telling millions of those people that they do not respect their choice and that they do not think that they have the right to choose the method of payment that suits them best?

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

The hon. Gentleman may be interested in a briefing from the House of Commons Library last year, which said that two thirds of benefits paid in Britain were paid over a post office counter, which meant that 18 million benefit recipients were using post offices to access their benefits. I am sure that he will agree with that.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

The hon. Gentleman is right. The use of order books at post offices is very extensive, and reflects people's positive choice. The Government should respect that.

This is a classic case of a lack of joined-up government. One can imagine the day on which the Department for Work and Pensions felt the Chancellor leaning on it to save some money and, after sitting down to think about how to do that, came up with the idea of getting money paid into accounts rather than through giros because it was less expensive. I accept that that is less expensive, but let us guess what happened then. The DWP saved £400 million a year and the Department of Trade and Industry had to find hundreds of millions of pounds to deal with the subsequent mess in the post offices. I sometimes think that if Departments talked to each other, we would be saved many difficulties.

We have many questions to ask about how the system is going to proceed, because millions of pensioners have yet to make a decision and respond to the letters that they have been sent. The Secretary of State has cited customer satisfaction surveys, but I strongly suspect that the pensioners who are most worried about the system do not phone. They receive a letter and are anxious about it because they like the way things work and do not want anything to change, so it is put behind a mantelpiece and not responded to. The people who reply to the customer satisfaction surveys are a biased sample. They are the people who are willing to play the game and respond to the Government, so it is not surprising that they are less likely to be dissatisfied with what they get. We all know, however, of people who are being leaned on. The Government should come clean about that.

We are told that the infamous Post Office card account has been a great triumph and very successful, but I bring to the House's attention a couple of the cases now building up in my constituency in-tray. I am sure that many other hon. Members have similar examples. One constituent, whom I shall call Mrs. P, has had a card account for five weeks but cannot get her money. One does not ask much of an account, but it would not be a bad idea if it paid out money. The postmaster said that the card had not arrived, so she applied for another. He then said that that had not come, but when the lady insisted on checking through, he found both of them. However, the first PIN number was out of date and the second did not work, so she rang the helpline. It told the postmaster to use a blank card from the vault with Mrs. P's PIN number, but that did not work either. She then rang the Pension Service, which said that it would send her something, but that has never arrived.

That is just one example of the way in which people who have played the game and gone along with the Government have found that the system is not working. All those people wish that they had just kept their giros, because they were never told that their giro did not work, or that a PIN number was needed. They just had their giro and got their money.

Mrs. P is not alone. Another lady who has had real problems with the Post Office card account said to me:

"I went to the local Post Office today only to find a notice notifying PO account cardholders that they would be unable to make a withdrawal since the computer had failed."

She wondered how people were going to get their weekly money, and commented:

"If they could not get their money, I fear that some would go without essentials."

If someone has a giro in their hand, they get their money even if a computer is down, but what happens if they have a plastic card and the computer is not working?

I had a helpful reply on that from the Under-Secretary of State for Work and Pensions, Mr. Pond, which said that although the matter was not really anything to do with his Department, it had contacted the Post Office,

"which has confirmed that the branch in question did not follow the correct emergency payment process . . . because the regular subpostmaster was off duty and the branch was being covered by a relief, who did not fully understand the process."

However, the post office staff involved had now been contacted and had the correct process explained to them. So what is supposed to happen if computers go down and people cannot get their money? The Minister's reply continued:

"If the customer needs to access their funds immediately"—

I presume that people quite like to have their pension—

"the Post Office may authorise an instant payment of up to £20."

I know that the pension is not generous under Labour, but allowing people only £20 is pushing it a bit. For how long might the computer be down? Or do those people have to go back the next day for another £20? The letter continued:

"If the customer requires more money, it is possible to get an emergency payment"— not from the Post Office, but

"from the Department. Customers would need to contact the office that normally pays their benefits for this to be arranged."

I can just imagine the process.

None of those complications is necessary. This is not a matter of free choice for people. People ring me up to say that they want to keep their giro, but that they have filled the form in anyway because they are afraid that their giro will just be taken away from them and they will not get their pension. People are responding out of fear, not because they have a free and positive choice. The Secretary of State has given a misleading impression of a free, open choice.

Just to give an example of how the system is not working, the Government have said that people can get all their benefits paid into their Post Office card account, but that is not true. People cannot get their housing benefit paid into their Post Office card account. I have a Department for Work and Pensions document here: the riveting publication "Housing Benefit Direct—March 2004". It says:

"Currently, it is not possible to pay Housing Benefit into a Post Office card account, due to technical and contractual constraints."

So all the pensioners who have had letters asking them to move over to a Post Office card account, and who have played along with the Government, have then found that they cannot get their housing benefit paid into it. Presumably, they receive a giro for that, and go along to the post office with a giro in one hand to get that payment and a plastic card in the other, with their PIN number, to get another one. We can just see the mess, the bureaucracy and the complications.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I am a little puzzled. I might have missed something, because I have been in this job only since June, but did pensioners previously get their housing benefit paid into their pension book?

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

No, they did not. What a crushing intervention. However, I presume that the whole point of this new integrated system is to give people a single point of access. It is about bringing benefit recipients into the mainstream; it is financial literacy, a one-stop shop. Instead, we find that people will receive one of the principal benefits, which they use to pay their rent and council tax, in the form of giros, when they have to have a plastic card for other payments. Presumably, the Government want this system to be put in place or they would not be having contractual negotiations. If they think that the scheme is an irrelevant waste of time, why are they having contractual negotiations on it? They cannot have it both ways.

When Mr. Willetts quoted from an internal memorandum, which he was quite right to do, the Secretary of State responded by saying that the Government were pushing people away from Post Office card accounts to ensure that they were job-ready, which meant that they needed a proper bank account. However, there is no suggestion in the memorandum that that is remotely what has been going on. The memorandum says:

"In order to meet Business Case requirements"— not to help to serve clients—

"we need to move quickly toward getting 9 out of 10 customers who make a new claim onto Direct Payment. Any further delay will"—

Will what? Undermine claimants? No. It will

"cause overwhelming backlog in 2004/5, impacting on field performance."

That is nothing to do with serving the public. It is to do with saving money, and the Government should come clean about it.

My hon. Friend Mr. Reid has already said that the situation in Scotland is very different, and that none of the major banks there will allow customers to access mainstream bank accounts at post offices. The Secretary of State's rather glib reply was that basic bank accounts in Scotland could be accessed through a post office. That is great. People have to open a different bank account—one with rather limited features—if they want to get their money from a post office. That is totally unsatisfactory.

When I asked why it is that people will be unable to pay wages into these accounts, I was told that they are not really regarded as proper accounts. But if the point is to support the post office network, these accounts should surely be made as good as, not as limited as, possible. So I hope that the Minister will recognise in his response that people want these accounts to be proper accounts that are accessible at post offices.

We have heard about the position of people with disabilities, whom the Government seem to have treated as an afterthought. They have rushed out this proposal, and the idea that a PIN pad with nine keys constitutes new technology is astonishing. These issues must have been dealt with before; why were the Government so slow to take them on board?

We have heard a little about the important issue of the exceptions service, and I hope that the Minister is listening at this point. The service will be available from October 2004, we are told, and so far as we can tell it will provide people with a cheque. From April 2005, when the use of order books ceases, anybody who has not replied will presumably be on the exceptions service, so they will be sent a cheque in the post. Into where can they pay that cheque? Presumably, they will be able to pay it into a post office; otherwise, the system would be absurd. So instead of being sent a giro that specifies their name and the amount, which they take to a post office, they will get a cheque that specifies their name and the amount, which they will take to a post office.

What is the point in generating an entirely new system when a perfectly good one already exists that people know and trust? I genuinely cannot fathom this one. Spot the difference between a cheque received in the post that specifies one's name and the amount, and an order book that contains the same information. Why is one system better than the other? I really cannot understand the difference. The millions of people who probably have not responded will want to know what their position will be after April 2005.

The consequence of the Government pushing people into using such accounts and away from post offices is that the latter have suffered. Indeed, 1,000 post offices have closed in the past three years. This is a long-term phenomenon that has existed under Governments of both of the two largest parties. However, even though the rural post office network has supposedly been bolstered, 74 rural post offices have closed in the year to September 2003—a figure that is net of the number that have opened. Indeed, the problem is getting worse. So as has been said, the promise that people's money can be paid into a post office is not worth the paper it is written on if the post offices are not there.

We have heard about the so-called consultation process. It has been acknowledged that it is a shambles, and I shall cite one example from my own constituency. One of the two post offices in the town of Thornbury came up for closure. All the local residents objected and everyone pointed out that the idea would not work, but the Post Office ignored them and shut it. The one remaining post office has people queuing outside the door, and the health and safety people are worried because they cannot fit in the staff needed to deal with all the customers. That does not sound to me like a town that cannot support two post offices, but did the Post Office listen? Of course it did not. I am not convinced that the new, so-called consultation process will be any different from the old one. Frankly, we know what the Government and the Post Office want to achieve, and if an individual post office gets in the way consultation will not make a blind bit of difference. If they are determined to shut it, they will shut it anyway. There has to be an alternative vision, which must be a positive one.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Does the hon. Gentleman share Postwatch's concern that some senior Post Office managers are on commission in terms of the number of post offices that are closed in their areas? Is he aware of that development?

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

If that is so it is truly shocking, because it rather suggests that a careful, case-by-case assessment of the merits of individual post offices is not the issue. No one is suggesting that the entire system should be set in stone, but the idea that managers should be rewarded for closing as many post offices as possible as fast as possible is totally unacceptable. It makes a mockery of the suggestion that serious attention is being paid to consulting the public.

There can be, and has to be, a positive future for the post office network, but the key point is that it needs time to adjust. The Government are denying it that time by forcing the pace of transferral to payment into bank accounts. We recognise that people's views change and that, over time, there will be a gradual increase in the number who use bank accounts, with fewer using giros. If that gradual process were allowed to continue, post offices would have time to adjust to taking on the new services about which the Secretary of State has talked. Post offices could give people access to banking services in any case; there is no need to introduce direct payment, or to take away pensioners' right to payment by giro. The two elements are quite separate. We need to boost the post office network, to respect people's choices and to have genuine consultation. So far, the Government have failed to deliver on any of those fronts.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield 2:45 pm, 24th March 2004

At the end of February, Post Office Ltd. announced the proposed closure of 29 of the 90 sub-post offices in the south Birmingham area. Five of the 14 post offices in Birmingham, Northfield were among those slated for closure—in other words, 35 per cent. of all the local post offices in my constituency.

I do not dispute the fact that we need to recognise that Post Office Ltd. is going through a period of change. Its trade and the pressures to which it is subjected are massively different from those that existed 20 years ago. Not all post offices are sustainable, and as Conservative Members know, 3,500 unplanned closures occurred under the previous Government. So the current Government are right to require Post Office Ltd. to plan for the future. It needs to assess what is sustainable and to maintain those post offices that are sustainable, but it also needs to consider the available opportunities rather than simply focusing on the threats facing individual post offices.

Such an assessment is what the urban reinvention programme was supposed to be about, and we members of the Select Committee were certainly assured that the area plans were supposed not only to look at post offices in isolation, but to consider the needs of entire communities and how the post office service should fit into them. I have difficulty in relating that vision to the slating for closure of 29 of the 90 sub-post offices in south Birmingham.

A number of problems have led to the way in which Post Office Ltd. is currently behaving. It uses a modelling system called Netspec to produce its area plans. Netspec has some strengths, but it is important to put it on the record that Postwatch has said that Netspec has been

"a useful tool for assessing where customers will migrate once their 'old' post office has closed", but says that

"it cannot be used as the only tool, as there are occasions when other factors—local geographic or social—may not have received due attention, and customers therefore migrate elsewhere or in different proportions than expected."

I credit Postwatch for the way in which it has represented local views and acted as a watchdog over Post Office Ltd. In doing so, it has cast considerable doubt over the way in which Post Office Ltd. has used its modelling system.

Post Office Ltd. has got the demographic characteristics of my constituency wrong, and has not checked its facts properly. It said that there was virtually no rented housing in one particular area, but it had looked behind the post office in question because of the ward in which was located, rather than across the road to the houses in front of it—presumably because they are in a different local government ward. That side of the road is stacked to the rafters with high-rise blocks of flats, and it is also a large council estate.

Under the terms that Post Office Ltd. has agreed with the Government, it is also required to look properly at deprivation. In planning its changes, it is supposed to consider the 10 per cent. most deprived wards in the country, and the 20 per cent. of wards that contain pockets of severe deprivation. I do not believe that it has looked at the issue of deprivation in my area with sufficient rigour, and I have no reason to think that the situation is different anywhere else. It certainly has not considered the issue of pockets of deprivation. Members on both sides of the House will understand that the word "pocket" is something of a misnomer. The pockets of deprivation in each ward in south Birmingham probably consist of thousands of people, because the wards are very big. There is no sign that Post Office Ltd. is looking at the issue of deprivation sufficiently clearly.

As a result of all this, Post Office Ltd. is not meeting the targets that it is required to meet, at least in the case of south Birmingham. It has promised that more than 95 per cent. of customers should be within a mile of a post office, and that most customers should be within half a mile of one following a closure. The calculation is made not on the basis of where the customers are—I recognise that that can, for all sorts of technical reasons, be quite difficult—but on the basis of the distance between the closing post office and the so-called receiving branch. According to the figures, there is no receiving branch within half a mile of the closing branch in my constituency—not one, but most should be within that distance. About 60 per cent. of the receiving branches are a mile or more away from the closing branches. The required targets have simply not been met.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

I should like to draw attention to the report of the performance and innovation unit of 2000. It states:

"The PIU believes it would be better for the Government to dispense with the idea of numerical access criteria . . . Distance based access criteria take no account of the ability to reach a post office . . . The post office should adopt policies which are more closely targeted at achieving its aims in relation to the post office network."

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

The hon. Lady has a point. I presume that she, like me, welcomes the fact that the Government commissioned the PIU to examine the future of the Post Office. The report, which I believe the Liberal Democrats supported, made several important points. I believe that distance-based criteria are overly inflexible. My point is that, even according to those criteria, Post Office Ltd. has not met the targets that it is required to meet.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

Perhaps I did not make my point clearly enough. Everything that flowed from the PIU report was supposed to be carried out, but it is clear that Post Office Ltd. has not followed the guidance that the report offered.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

It would be fair to say that some of the actions taken by Post Office Ltd. have been consistent with the PIU report, but not others. My point is that, even where the recommendations were followed, there has been severe doubt about the extent to which they have.

Why does Post Office Ltd. get it wrong? There is not too much fundamentally wrong with what the Government have requested, so why does the organisation seem to get things so wrong? One reason is the consultation procedure. I tabled an early-day motion last year on the subject and the Minister for Energy, E-Commerce and Postal Services guaranteed what Post Office Ltd. would be required to do: to consult local communities throughout the process of change, not just at the end of it. That has not happened.

Area plans are constructed on the basis of discussion between Post Office Ltd. and local sub-postmasters. Communities and local authorities are not involved in drawing up the plans: they have their say only at the end of the process, when the plan is published. That is a fundamental flaw, because we could avoid many of the problems if we asked the experts—effectively, the people who live in or represent the area—at an early stage. I certainly welcome the fact that the leader of Birmingham city council, Sir Albert Bore, made that point very clearly to the Post Office in his response to the plan to close 29 sub-post offices in the area.

Another problem is that only the threats not the opportunities for business are considered. It is right for the Government to provide compensation for sub-postmasters where they are losing their business and the post office is simply not viable. However, as I said earlier, the Post Office's approach to the problem is so inflexible that it effectively forces a local sub-postmaster to quit the business and get out, because it makes more financial sense for the sub-postmaster to do that than to sell the business to another business person who might have a sustainable plan to keep it going. I believe that that is not only wrong but uneconomic.

That position arose in my constituency, and I shall use mythical figures to illustrate the point. If a business is worth about £50,000 on the market, it is possible for the sub-postmaster to be offered £70,000 in compensation to get rid of the business, yet another business person could be willing to take it over on the basis of a viable business plan. In those circumstances, the sub-postmaster would have to be mad to sell to the new business person for £50,000 when he could receive £70,000 for shutting the branch down. The Government should know that that is how the Post Office is operating the plan, which I do not believe conforms to the spirit of what was agreed. I ask the Government to encourage Post Office Ltd. to be more flexible and to examine how it might be possible to save public money and sustain viable businesses on that basis.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

To illustrate the hon. Gentleman's very good point further, does he share my upset on learning from Postwatch that the Post Office has been instructed to reject other sources of funds that might have been available to keep a post office going? The concern was that there was a danger of establishing a precedent that might keep post offices in business. Does that not reinforce his point?

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

The problem is the approach of Post Office Ltd., which is not in keeping with the spirit of what was agreed with the Government. A closure of a sub-post office is properly a matter for Government intervention, the use of Government funds and so forth. The improvement of the funds of certain receiving branches may also be relevant. Post Office Ltd. regards someone knowing that a sub-postmaster wants to leave a business but believing that he, instead, can make a go of it as a matter only of a transaction between the sub-postmaster who is getting out and the new business person who wants to come in. It acts in a wholly hands-off way in that respect, which can lead to the crazy position described by the hon. Gentleman, whereby potential sources of funds are effectively ignored by Post Office Ltd.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

Is the situation not rather worse? Under the Post Office procedure, no one knows before the closure announcement is made that the business may be up for sale. That might be for good, confidential reasons, but by the time it becomes public knowledge that a post office may be going, it is too late for anyone to make an offer to take over the business.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

The hon. Gentleman makes a fair point, which underlines the fact that the consultation should be structured differently. If Post Office Ltd. recognises the need for change in a particular area because not all the post offices are sustainable, it should be prepared to sit down and work out who wants to stay and who wants to go, and to decide the right pattern of post office provision. Perhaps in one area all the sub-post offices should be closed and another one opened. It is theoretically possible that they are all in the wrong place to serve local people. If there were a willingness properly to plan the needs of an area, those problems could be tackled, but the way in which Post Office Ltd. goes about it means that that does not happen.

Furthermore the Post Office approach undermines the laudable objectives that the Secretary of State mentioned earlier. She and the Government should be applauded for their searching and ambition to open up new business for the Post Office. They should also be applauded for their investment in making the Horizon project work more effectively. They are right to say that the Post Office should be trying to find new business, provide outlets on the high street for clearing banks, look towards the possibilities for insurance and so forth. All that is right but difficult to reconcile with the strictures that Post Office Ltd. has put on itself in carrying out the urban reinvention programme.

I therefore ask my right hon. Friends to talk to Mr. Mills and his colleagues again to remind them that they are supposed to be reinventing the network on the basis of a vision, not simply implementing closures. I know that Ministers do not want the latter. They want a reinvented and sustainable network, but I have to say that Post Office Ltd. is not living up to that vision at present. That explains why there is a major campaign in my area of Birmingham against what Post Office Ltd. is proposing. I am pleased to say that the local paper, the Birmingham Evening Mail, is spearheading the campaign very effectively.

Photo of David Cairns David Cairns Labour, Greenock and Inverclyde

It is why my hon. Friend is making his speech.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

Indeed; it is why I am speaking in the debate. Some of my right hon. and hon. Friends in the area have tabled an early-day motion to ask Post Office Ltd. to think again. The only Birmingham Labour Member who has not signed the motion is the Minister for the Arts, my right hon. Friend Estelle Morris, who has told me that she supports it and is on record as a supporter of it, but as a Minister is unable to sign it. There is unanimity among Birmingham Labour MPs that Post Office Ltd. should think again.

Concern about the proposals crosses the political divide in Birmingham, so it is with some regret that I must report that the leader of the Liberal Democrats on the city council has taken the opportunity to spread what I have to call untruths about what I and other Labour Members have been doing. He has alleged that we voted for the closures in south Birmingham, on 13 January this year and on 20 October 2002. However, the calendar shows that the latter date was a Sunday. As far as I know, Parliament does not sit on a Sunday: if that vote took place, I missed it.

There may be differences of view about the urban reinvention programme, the handling of the Post Office card account and the compensation issue, and it is right to debate them, both in the House and elsewhere. However, people are worried about the loss of local post offices and have real fears about what the future holds. They expect local politicians to join together to represent their interests. It is not acceptable, therefore, to spread untrue allegations about members of other parties, when in fact we are all on the same side.

If the leader of the Liberal Democrats on Birmingham city council acts as he has previously, I expect that a leaflet will be distributed in the next few days saying that, when I vote against the Conservative motion and in favour of the Government amendment tonight, that means that I have once again voted for post office closures. As the House knows, post office closures are not voted on in the House, so no hon. Member of any party can vote either for or against such closures.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I can understand why the hon. Gentleman is frustrated and cross with the Liberal Democrat leader on his local council, but the Opposition motions of 13 January and today have attracted Liberal Democrat support. Moreover, and more importantly, today's debate gives the hon. Gentleman an opportunity to vote in line with his campaign. He may not want to join Opposition Members in the Lobby—although he would be more than welcome to do so, as a way to back up the rhetoric that he has used in his speech—but it is difficult to take his rhetoric at face value when he supports a Government amendment that is both self-congratulatory and uncritical. At the very least, he should consider abstaining.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

The Opposition have blown it when it comes to the motion. It makes some reasonable points about how Post Office Ltd. has gone about the restructuring programme, but the punchline can be found in the motion's final couple of lines. They state that the House

"condemns the Government's failure to deliver benefits and tax credits in a simple, easy to understand manner while at the same time jeopardising the future prosperity of the Post Office."

I understand that the Opposition believe that, but they are wrong. As my right hon. Friend the Secretary of State said earlier, either we face the future by trying to plan for it and by requiring Post Office Ltd. to consult properly, or we opt for the free-for-all evident under the previous Conservative Government, when 3,500 sub-post offices closed.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Earlier, my hon. Friend mentioned the Horizon project. Does he recall that it was introduced by the previous Conservative Government, and that its aim of paying pensions and benefits by smartcard caused all sorts of problems? The difficulties faced by post offices stem from the actions of that Government, and Opposition Members will not get away with rewriting history. Does my hon. Friend also accept that the Horizon project cost £500 million, and that £50 million was needed to put it right?

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

My hon. Friend makes a very important point. That is a salutary lesson for Opposition Members. If they want to throw stones, they should realise that they do so from a rather fragile glasshouse.

It is important to put on the record the actions of the Liberal Democrat leader on Birmingham city council. Some modes of behaviour are acceptable in politics, and some are not. I believe that he has transgressed the line. Local people do not want politicians to behave like that. It is important for south Birmingham that politicians of all parties band together on this matter. We do not want to mislead people by claiming that every post office in every corner of Birmingham can be saved, but we can say that Post Office Ltd., in drawing up the plan, has fallen short of what the Government's requirements set out. It has identified the threats to local post offices, but not the opportunities open to them. It has also got its facts wrong, in a variety of ways.

As I said, I am a member of the Select Committee on Trade and Industry, which has announced that it is to undertake another investigation of post offices and the urban reinvention programme. Given that, it would be madness for Post Office Ltd. to go ahead with the planned closure programme for south Birmingham. The plan should be withdrawn, and Post Office Ltd. should think again. It needs to sit down with people from the local communities, elected politicians and others to determine what sort of post offices people in south Birmingham need, and to decide how to plan for the future. Post offices that are not sustainable should be closed, but high-quality services to local people must be maintained. Post offices should be encouraged to take on new business, so that they can provide a much better service for local people in the future.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley 3:07 pm, 24th March 2004

I have been a Member of Parliament for 12 years, and have taken part in many debates on the importance of post offices. This is a vital subject. The Post Office is a recognised brand, for which people have great affection. I grew up in Swansea, very near to a post office. I used to go in with my mother, and it was probably one of the first shops I ever entered. Even then, I knew the importance of the post office network.

When Ministers talk about restructuring, they are using an Orwellian code that means closure—a word they dare not use. In that context, using the word "restructuring" is like using the term "rightsizing" to explain why an employee has been sacked. What is happening is that the post office network as we understand it is being culled.

I am the first to accept that post offices have been closed by previous Governments, of all political complexions. However, I remember sitting on the Government Benches—and I will sit there again very shortly and without crossing the Floor—and the then Labour Opposition of 1992–97 telling us that post offices were closing. They said that that was callous, and that the Government of the day needed to do something about it. There was a suggestion at that time that the Government were going to change the benefit system, and that benefits would be paid by means of a card.

The Conservative Government considered the matter and listened to what the public had to say. Our proposals for the card system were never implemented, but this Government are going ahead with introducing their own version. Labour Opposition Members at the time said that the urban and rural post office networks were both vitally important, for different reasons.

In my Ribble Valley constituency, the towns of Clitheroe and Longridge have vibrant post offices. A number of villages still have post offices but, sadly, some have closed since 1997.

Photo of John Horam John Horam Conservative, Orpington

I am interested to hear what my hon. Friend says about the rural scene in his constituency. Does he recognise that in a suburban area such as Orpington, which I represent, the little parades of shops are dependent on the local post offices as a central component? If the post office goes, the parades often fold.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

With my retail hat on, I accept that point completely. To the grocer, butcher, fishmonger, pharmacist and other small retailers, the post office is part of the community of services available to the public. When a vital part of that community is taken away, the others start to struggle. When the boards go up outside the post office, it is often not long before the boards go up outside other retail outlets.

We have always been told that the post office network is important. I was depressed when I saw in the Lancashire Evening Post the other day the headline "Nine post offices to shut". That included five in Preston, two in Chorley and two in Penwortham. Postwatch wrote to me on 18 March about those closures, and about the proposed closure of five post offices in Rotherham and 13 in Bury. Today we have heard about 29 closures in south Birmingham—from a Labour Member. Irrespective of party, if we wish to see a post office network of any worth survive into the future, we should speak up about it now and do something before it disappears completely—otherwise, a vital asset will be lost to this country for ever.

Several hon. Members have mentioned the growth in the elderly population and how important the post office network is to that sector of the community. Some of them do not have access to cars or other transport, especially in rural areas where the bus service is not what it used to be. That is why they need local post offices, which often sell other items. They also enjoy the opportunity to chat to post office staff and meet other members of the community.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk

Has my hon. Friend come across the problem that my elderly and rural constituents face because Powergen, with only three weeks' notice, has withdrawn the electricity token service from post offices? People without transport, and of necessity on low incomes—and many of them not very mobile—had been able to purchase tokens at the post office to feed their meters at home. However, after scant consultation, Powergen has decided to withdraw that service. Does my hon. Friend agree that that action weighs most heavily on the elderly and less well-off in rural areas?

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

Of course it does, because the token system is designed to ensure that the less well-off are able to eke out their resources and maintain their supplies of power. I hope that Powergen will think again. I hope that it will consult properly with the post office network and their customers to see whether the service should continue. I hope that Powergen will also listen closely to what my right hon. Friend has said today. I suspect that we are talking about another nail in the coffin. The withdrawal of that service might not, by itself, be the reason for closure, but alongside all the other changes that the Government have made it will make post offices less viable.

I asked the Secretary of State for Trade and Industry whether she would consider becoming a postmistress and she said gleefully that she would if she lost her seat. I think that was a hollow reply, because the profitability of post offices is part of the problem. I agree with Richard Burden about the incentives offered to postmasters and postmistresses to give up their post offices. If people are not making any money from their post office and somebody offers them a pot of cash, they will probably take it, because they are frightened of the future. They have seen the profitability of their post offices decline because of the withdrawal of services such as Powergen's, and the lack of footfall because so many benefits are now paid into bank and building society accounts. They take the cash and get out of the business, thus reducing the number of post offices further.

I encourage the Government to consider what new services post offices might be able to provide, but some post offices in smaller areas are unable to expand. Will postmasters and postmistresses who see their profitability falling risk borrowing more money—if they even can—to expand the goods and services available in their post offices? If a post office is run by a husband and wife team, they are chained to it from the time it opens in the morning until it closes in the early evening. Because of the lack of profitability, they cannot afford to employ anyone to give them some time off. We have to consider the profitability of post offices, but as we have heard today fewer people are going into post offices and fewer transactions are taking place.

The Secretary of State mentioned 25 million banking transactions, but how much profit do post offices receive, compared with the old system? The reality is that they are making less profit. There are fewer post offices, and they are not as viable as they used to be. Running a post office is also a huge responsibility, because it is a cash-based business. We heard about the introduction of ATMs to post offices, but many people resent the charges they impose for withdrawals. In the past, withdrawing money was free of charge, but now it costs £1.25 or £1.75. I can understand why people on fixed incomes feel so strongly about having to pay those charges.

I pay tribute to one of my local post offices in Bolton by Bowland. It has added tea rooms to diversify its services, although that is a lot more effort for those in charge. During the rugby world cup, the post office opened at unsocial hours so that people could come together and enjoy England's great victory.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

Well, we helped England to that great victory in some of the games we played in the world cup.

As I was saying, opportunities for diversification are limited. I hope that the Minister, when he winds up, does not treat this as just another debate on post offices that has to be got through before the next debate on the same issue in a few months' time. In the meantime, we will see yet more closures and more services withdrawn. I welcome the fact that banks are using the post offices as a resource. Banks used to have branches in villages, but they have now withdrawn from villages and smaller towns. I hope that all the banks will join in, including the Scottish banks, so that all customers benefit.

This whole subject boils down to the question of choice. Some elderly people have received phone calls about how they would like their benefits to be paid, and they have been discouraged from opening a post office account. They are told that it is better for their money to be paid directly into their bank or building society, but that is no choice.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I note that the Minister is shaking his head. Is he suggesting that the hon. Gentleman is lying? I do not understand why, given that all hon. Members have had constituents come to us about post office closures. What does it take to get the Government to realise that this is actually happening?

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

The hon. Gentleman makes an important point. As he asked in his speech, what planet are the Government living on? Frankly, they are in a parallel universe. I have taken part in public meetings with pensioners in my constituency, and they told me that, when they sent back the forms that they had filled in, someone phoned them to encourage them to go to a bank or building society. Pensioners have stood up in a public meeting to tell me that that has happened.

Towards the end of our period in government, we became arrogant—we stopped listening—but that took us 18 years. It has only taken a few years for that lot to succumb to the arrogance of power. They must listen to the facts. I am certainly not lying to the House when I say this, and I cannot believe that pensioners are lying to me when they say that they have received phone calls encouraging them not to take up Post Office accounts, but to go to banks and building societies.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

Does the hon. Gentleman not think that it is very important that pensioners are given personal advice when they make an important decision such as how to draw their benefits or how to bank their money, and that it is difficult to apply one-size-fits-all rules to everyone? Surely he should welcome the fact that people are being telephoned and offered a personal and helpful advice service.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

I suspect that, if people choose banks and buildings societies, they do not get a phone call saying, "Have you perhaps considered opening a Post Office account?" No one has told me that that is part of the problem. Yes, I welcome the fact that they are given advice, given that they are taking an important decision, but they ought to be told as well that, if too many of them pull out of post offices completely, they will become less viable than they are currently and that the current post office network will completely disappear. Yes, by all means let us give people information, but let them make the decision. Let us not take the decision away from them or try to goad them into a direction that may be against their own long-term interests. I hope that the Minister will accept that those things are going on, although they are anecdotal stories, and certainly that no one in the House today is lying when we say that those things are happening.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I am not accusing any hon. Member of lying, either verbally or by my body language. I ask hon. Members to understand that we have a responsibility to help people to understand the full range of their choices. I ask them to consider what happens when a pensioner makes or receives a call and is told—perhaps after listening to this debate—by the sub-postmaster or mistress, "Look, they won't let you have a Post Office card account." The pensioner then makes a call to say, "I want a Post Office card account," and the person on the other end of the line rightly says, "Let me tell you about the different range of options first." That may be perceived as encouraging the pensioner away from the Post Office card account, but the person on the end of the line is simply making sure that the pensioner knows the full range of options.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

As I say, I very much hope that, when people are considering their options for banks and building societies, they receive similar phone calls to ensure that they know all the options. I look forward to the call-centre scripts being made available in the Library, so that we can see whether that goes on. However, perhaps it would be beneficial if the Minister were to issue guidelines to ensure the integrity of the system, so that elderly people or those in receipt of benefits are not led one way or the other before making an informed decision. I hope that he will consider the system again to ensure that there is no goading one way or the other.

I have been an MP for 12 years and have been attending debates such as this throughout that time. The acceleration in the number of urban post offices that closed last year is a great worry, as is the number of rural post offices that are still closing, including in my constituency. We have seen rural banks close. We have seen the pubs in rural areas go into decline, and some of them have disappeared. Pharmacies have been mentioned. Small retail stores in villages are no longer profitable. Post offices are the last shops left in some villages and, when they go, a whole way of life—the rural community spirit—will completely disappear from those areas.

We need to ensure that the consultation on such issues is fair. As the hon. Member for Birmingham, Northfield said, there must be options for other people to take over post offices. The Post Office must be far more vigorous in looking for fresh people to take them over. Perhaps people should be given an incentive to bring in new ideas about how those post offices can work. The consultation must not be rigged or prejudged. It must not be carried out with the intention that those involved were thinking of closing seven post offices, so they will do so irrespective of what the people say.

Frankly, the supposed managed closure programme represents set-aside for our post offices. They are being put to one side. They are being put into the long grass. The post office network that we all love has become something of a Titanic: it is sinking fast, and instead of the Government shoring up the ship to try to ensure that it will not disappear, they have made the hole bigger. I call on the Minister today to give a guarantee that he will do what he can to find ways to preserve the current network. No managed disappearance of post offices, please. Let us ensure that post offices—whether urban or rural—are valued for what they are. Let us look for ways to ensure that they have a future well into this century.

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk 3:26 pm, 24th March 2004

The motion refers to

"the significant role played by local post offices in both rural and urban areas".

My hon. Friend Mr. Evans has told us about the situation in rural areas, and Richard Burden made a thoughtful speech about the situation in south Birmingham. Like my hon. Friend, I wish to concentrate on rural areas, and in doing so, talk about the problem facing people in Norfolk because of Powergen's actions, which my right hon. Friend Mrs. Shephard mentioned briefly in an intervention.

People sometimes underestimate just how different things are in rural areas compared with urban areas. My constituency covers 350 square miles: Greater London, which contains 74 parliamentary constituencies, covers 650 square miles. My constituency is more than half the size of Greater London. My right hon. Friend, whose constituency neighbours mine, has a constituency some three times the size of mine—at about 1,300 square miles, I think. Post offices in rural areas are part of the social fabric of local communities, as the hon. Member for Birmingham, Northfield acknowledged when he was dealing with urban areas.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk

I thank my hon. Friend for referring to the entirely different problems faced by people in far-flung rural areas. I have a letter from the postmaster at Banham in my constituency, who says that as a result of Powergen's decisions, residents will now have to travel nine miles to the nearest pay-point outlet and nine miles back. For many elderly, disabled or less well-off people, that is not an option.

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I agree with my right hon. Friend. Such a journey is not an option for many people. That is why I have taken up the issue with Powergen and with the Post Office, to ask whether they can renegotiate. Indeed, I have also taken it up with Ofgem, to see whether it thinks that Powergen is acting against the public interest. I, too, represent constituents who will have to travel some distance to get electricity swipe cards topped up—to a neighbouring market town, in this case—as a result of Powergen's decision to withdraw the contract from the Post Office.

People in Roydon in my constituency, some of whom are on limited incomes and do not have cars, can knock on the doors and Mr. and Mrs. West will open up after hours, even at 9.30 at night, so that a young mother with two children who has suddenly run out of electricity can be reconnected. Effectively, that is a social service, and there seems to be no reason why Powergen should unilaterally remove the contract from the Post Office.

I received from Powergen a letter of the sort that we all receive from time to time, explaining how it was enhancing its service. There is a German word, "Verschlimmbesserung", which, loosely translated, means the process by which, as things are improved, they get worse. We are familiar with that process from many different aspects of life, and it is certainly applicable in this case. I look forward to receiving a sensible reply from Powergen and hearing about a reconsideration of this ill-considered and ill-thought-out policy.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

Is my hon. Friend aware of another relevant German expression that is difficult to translate into any other language? What is happening displays that Powergen has anything other than "Fingersptizengefühl"—a fingertip feel.

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I am aware of that expression; my hon. Friend makes a good point, and Powergen needs to reconsider the issue with some care.

The second issue that I want to raise involves a specific problem that arose some three years ago because of the decision of Mrs. Rogers, the then sub-postmistress at Coldham Green, Deopham, to retire from running the post office in Pie lane. As she was retiring, she requested that the post box in her front garden be taken away. Indeed, the parish council suggested that the box should be resited somewhere else, which seemed perfectly reasonable. It also seemed reasonable that Mrs. Rogers should no longer have a post box in her front garden when she was no longer running the post office.

The problem that subsequently arose has endured for so long because of Royal Mail's failure locally—I stress the word "locally"—to understand, recognise or acknowledge the difference between resiting and removing. Thus, the local Royal Mail manager's response to concerned local residents, to the parish council and to me has been to ask why residents of Coldham Green should have an additional post box. In fact, all that local residents are asking for is the relocation of a previously existing box in a slightly different place. The local Royal Mail manager has gone so far as to allege that there is a post box in a place where there is none.

I have gone to the chief executive and chairman of Royal Mail, who have been helpful, and I look forward to receiving a sensible response. I have walked the route that people must now take, and I can see how dangerous it is. Without a post box in their area, local people must walk to the other end of the village down a road that has a 60 mph speed limit—although it certainly should have a lower limit. Young mothers with prams must push their small children down the lane to the post box at the other end of the village, but there is no verge and there is nowhere for them to hide. That is not a practical option, and many people refuse to take it and are thus deprived of a service. I hope to get a sensible answer out of Royal Mail in due course, and also some indication that it will encourage its local managers to take a slightly more helpful and interested approach. Postwatch is also escalating the priority attached to the local complaint, and I hope that there will be a resolution.

As for the so-called neutral position on the Post Office card account, a number of hon. Members have referred to the apparent difference between what we, and our constituents, are experiencing in our daily lives and what is happening over there on Planet Hewitt, where there seems to be no difference between the treatment of the options on offer, and they are apparently being laid out in a neutral way. How can Age Concern, Citizens Advice, the National Consumer Council, the National Federation of Sub-Postmasters, the Communication Workers Union and the National Federation of Women's Institutes all have expressed concern about the obstacles and difficulties in opening a Post Office card account, yet the Government and Ministers on Planet Hewitt do not seem to think that there is a problem? The Minister should be careful before he takes on the National Federation of Women's Institutes. He should recall what happened to his boss when he tried to do that.

It is absolutely clear that there is an issue. Indeed, the guidance given to Department for Work and Pensions staff, contains this statement:

"We need to pay most of these customers into bank accounts which cost 1p, rather than into Post Office card accounts, which cost up to 30 times more. You should be aiming to get nine out of 10 new claimants into bank accounts, with a small proportion paid through Post Office card accounts."

That does not sound very neutral to me.

That prompts another question. Quite apart from the fact that there is not the neutrality that the Government allege, why should the card accounts cost so much more than bank accounts? After all, lottery terminals have been put into convenience stores, post offices and small shops throughout the country. The proposed payment system is relatively simple, and ought not to cost 30 times more than bank accounts. If one looked into the problem, I suspect that one would discover that, as is often the case with Government IT projects, the Government's IT advice has cost more than it should.

As hon. Members, including my hon. Friend Mr. Willetts, who introduced the debate, have said, the key issue is choice. Theoretically, at least, the Government are in favour in choice. Indeed, the Prime Minister's Office of Public Services Reform, in the pamphlet, "Principles into Practice", published in March 2002, said:

"Choice acknowledges that consumers of public services should increasingly be given the kind of options that they take for granted in other walks of life."

Amen to that. The Government should back up their rhetoric and give our constituents in both urban and rural areas the kind of choice that they expect.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley 3:36 pm, 24th March 2004

This is an important debate, in which we can air our views about the future of postal services—a subject that matters to older people, younger people and others who use post offices. In Chorley we face two closures—the Moor Road post office in Pall Mall and the post office on Eaves lane. I am worried about the criteria used for closure, and I would like genuine consultation. Anyone who has been through a closure programme knows that consultation is usually a charade. As we head into a consultation on those two crucial post offices in Chorley, I hope that there will be genuine dialogue, and that geographical considerations will be taken into account. There is no post office in Chorley to the south of either of those post offices, and we cannot expect people who have to walk half a mile to use them to walk another half mile to use the next one. Older people cannot walk that far, and a journey of that distance is certainly not feasible for young mothers who may want to call at a post office on the way to school.

I regret that the Post Office is considering closing those post offices, and there must be full genuine consultation. It should listen to local elected representatives and the people who use those post offices. If the Post Office listens to us and takes our views on board, I do not expect it to close them. If the sub-postmaster wishes to get out of the business, the Post Office should approach shopkeepers in the area and nearby supermarkets and say that, rather than allowing a local facility to be lost, it would like them to consider taking on the franchise. The Post Office should go out and look at other shops to try to see if they can facilitate a replacement. We do not want a Post Office that is determined to close sub-post offices but one that is determined to keep them open. That is a crucial point, and I hope that it will be taken on board.

We have heard a lot of rhetoric today from the Opposition, and they have shed many crocodile tears. Under the previous Government, 3,500 post offices closed, but not once do Conservative Members refer to that. If they are genuine—and I expect people to be genuine in the Chamber—they should not try to make political gains but should make genuine arguments on behalf of their constituents. That is how debates should be conducted—[Interruption.] Hon. Members might ask, "Which way are you going to vote?" but that is not the way to proceed. We ought to tell the Minister that there are problems, and that we expect a listening Government to take our views on board. They should propose a solution, refine it and use their vote as shareholder in the Post Office to tell it that they do not like the way in which it is doing business, and they expect it to change. The Post Office should listen to hon. Members, and take our views on board.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Does the hon. Gentleman accept that every Opposition Member who has spoken, as well as his hon. Friend Richard Burden, has asked the Post Office to be more flexible and more creative and to look at the issue from the point of view of the whole community? That is the central point that has been made this afternoon.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

I understand what the hon. Gentleman is trying to say. He is slightly embarrassed because he knows the debate is a political one. I would have liked to believe that we could genuinely express our views and concerns, but apparently, the real purpose of the debate is to make political points. That is wrong. It should be an opportunity for Members to make our voices heard.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

I do not know whether my hon. Friend's experience is the same as mine, but I discovered that when post offices were facing closure, surveys carried out among the local population made it clear that many people did not realise the full extent of the services that post offices offer. The Post Office could do a great deal more to advertise the services that are available and would be of benefit to people.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

My hon. Friend is spot on. We ought to be telling people not only how good post offices are and how vital they are to a community, but about the services available to them. People have forgotten how many services post offices offer. I believe that the Post Office should offer even more services, and that they should be franchised.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

I hope that neither of the post offices in the hon. Gentleman's constituency is being incentivised to close. I agree that the consultation must be carried out properly, not rigged. The Lancashire Evening Post reports that there will be a six-week consultation, and that

"Royal Mail bosses say the proposals are a direct reaction to declining custom and changes in the benefits system where cash is paid into the bank."

Does the hon. Gentleman recognise that that is a problem, and that we must ensure that customers have the choice of collecting their benefits from the post office?

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

Of course the hon. Gentleman is correct. I intended to come on to that point and say that my hon. Friend the Minister may not be aware of the difficulties faced by people who wish to keep to the old system. It is true that the legislation provides the right of choice for them. But somewhere in the bowels of the administration it is made difficult for people not to go into the banking system. That is what worries me.

I do not believe there are many MPs who have not been approached by constituents—older pensioners—who say, "I don't want the new system. I want to stay with the old system." They fill in form after form, and as Members of Parliament, we get involved. It seems that somebody somewhere is blocking the system and not clearing the forms as quickly and effectively as they should. They are looking for a minor point on which to reject our constituents' requests. The Minister may not be aware of that. We need a thorough investigation to ensure that the process runs smoothly once people fill in the form, and that they do not have to go without the money they are entitled to for any length of time.

A further issue on which I appeal to the Minister concerns people who may not be able to get to the post office because of illness. Someone has to collect the money for them, and that is a worry if they are ill for four or five weeks. We need to recognise that as a genuine concern and see how we can improve the situation. We all deal with big problems relating to post offices, but we all recognise that sub-postmasters and sub-postmistresses offer a superb service. The post office is the focal point of a community, urban or rural. It provides a service that we love and have enjoyed over many years. We want future generations to be able to enjoy the post office, as we have. I hope that the service can become more flexible and more creative, recognising that post offices should remain open and offer their services to the community.

We do not want people to look at a map and say, "Let's take these post offices out, because we think there are too many." That is wrong. They should examine the demographics of the area and the age profile of the people who live there. They should listen to the Member of Parliament and other local representatives in each constituency where closures are proposed. Please let us take that on board, and tell the Post Office that its ambitious plan to close so many post offices is unacceptable. Let us listen to the community and put the community interest first.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People 3:45 pm, 24th March 2004

We have heard so much this afternoon, and I have spoken before on the matter in the Chamber, about the huge flaws in the network reinvention programme as it applies not just to my constituency but to those of my hon. Friend Mr. Stunell and Ms Coffey. Flawed information was given to us on 17 December— which some of us did not receive until 18 December—the process itself was flawed, decision making was flawed and secretive, and the sum total of all the work that was put in was that four post offices were closed. Today and this week, post offices are closing and elderly and disabled people are being left without access.

Of the respondents to our consultation, which we thought supported that of Post Office Ltd., 80 per cent. were over 55, and 40 per cent. had mobility problems. I was astonished at that figure. I expected it to be 10 or 15 per cent. I had no idea that it would be so high.

To add insult to injury, as I said in an intervention earlier, we ended up being told during the decision-making process that, because it was recognised that the process was flawed, it would be altered for the future. But despite letters to Postwatch, Post Office Ltd. and the Minister, I have been able to obtain nothing other than sympathy, which is lovely but does nothing about the real problem. The process for my constituency and others involved in the same period should have been halted. I requested that of the Minister and Post Office Ltd., and I made my final appeals last week before the closures took place, but I have had no substantive response from either on those last-minute appeals. Postcomm and Postwatch told me that neither of them had any powers to halt the process even though it is recognised that it was flawed from beginning to end.

The performance and innovation unit report, by which we are guided in the whole procedure, at chapter 8, page 2 on delivering objective 1, states that there should be convenient access for all to post offices—not just some of the population, but all. It states:

"The Post Office network should offer people in all parts of the country convenient access to the services available in post offices."

I highlight one of the post offices in my constituency that closed on Monday this week. The main receiving office is not on a bus route, the car park close to it is always full during daytime hours, and it is at the top of a steep hill. I do not understand how all the community can possibly have access to that receiving office.

It has become clear that the process is being driven not by the strategic overview that we had all expected, but by a wish to close as many sub-post offices as possible as quickly as possible. It has been a case of the devil take the hindmost. The deal offered to sub-postmasters and mistresses has been one that many have simply been unable to refuse. The Government made available £180 million for compensation. I do not argue with that. On average, £55,000 was paid out in the last quarter to December 2003 to individual sub-postmasters and mistresses. That is £38 million in one quarter of last year, and the figure is likely to be higher for the current quarter. What checks have been made on those payouts? Why is the payout based on takings six months before closure, when the closure information presented to Postwatch and others is based on takings including the past six months? Is that not an incentive to run down the business in the final six months?

How many of those sub-postmasters and sub-postmistresses have owned their businesses for less than two to three years, having taken them on knowing that this process was in place? I am not suggesting that that is a factor in all cases, but I would like to think that the Government seek to ensure that taxpayers' money is spent on the purposes for which it was intended, and not simply used for handouts to close post offices that should be kept open because the sub-postmaster or sub-postmistress wants to go.

My experience of Postwatch has not been as good as that of Labour Members, and I suspect that there are variations between different parts of the country. We have held four public meetings in my constituency, which were attended by Postwatch representatives. My constituents want to know Postwatch's purpose. Why does the Postwatch representative in the north-west, who attended the public meetings, report to Postwatch in London rather than to Postwatch in the north-west? Who authorises him to make derogatory remarks about public campaigns, or did he think of that for himself? Whose side is he on?

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

My experience of Postwatch has been extremely positive. Postwatch has done everything possible to help me to fight inappropriate post office closures in my area. In order to try to save a post office in my constituency, one case has been escalated up the ladder to the top of Postwatch. I cannot praise Postwatch highly enough, and I hope that the hon. Lady's experience is not replicated elsewhere.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

I am happy to acknowledge that my experience occurred in my area. It was not only my experience, but that of members of the public, who asked, "Why did Postwatch bother to come?" I understand that time is short and that the summing-up speeches must begin shortly.

I shall reiterate the health benefits of a vibrant post office network. It may seem a jump from this debate to health impacts, but the health of communities is a determinant of the health of individuals within those communities. Removing an important asset such as a post office has a huge impact on the health of a community. The other day, I heard that the best treatment for leg ulcers is to put three or four people with leg ulcers together to allow them to talk to each other, which makes them get better, along with the necessary medical work.

Elderly people should not be left alone in our communities, but they are. A huge percentage of the public spend most of each week alone, and visits to the post office and local shops make a big difference to their lives. The long-term cost to the community of post office closures will be huge. The PIU report states that "supporting vulnerable people" and

"acting as a focal point for the community" are important parts of what a post office has to offer.

I agree that there is an opportunity to reverse years of decline. In particular, it should be possible to offer post offices that open longer and that serve a broader customer base, but that is not the experience in my area, where there has been no attempt to combine retail with a post office to create a thriving local business. It could have been done, but it was not even tried. The question I have to ask is: where is the strategic vision? Those customers will not simply move from one place to another, mainly because they are not capable of doing so. If we turn post offices into banks, they compete with the banks—what about their customer base then? Network reinvention is destroying the customer base, tearing the heart out of communities, increasing car use and adding to social exclusion.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire 3:55 pm, 24th March 2004

I realise that time is short, so I want purely to repeat that it is extremely regrettable that Powergen has decided to discontinue selling electricity tokens. I quote from an e-mail that I received yesterday from an ever-alert South Bedfordshire councillor, who said:

"There appears to have been no consultation about this . . . They have given only one week's notice and having spoken to PayPoint it will take about 1 month to set up a new Paypoint station. Apart from this being another nail in the coffin of Village Post Offices if you examine the list of outlets within the Hockliffe vicinity there are 6 in Dunstable and 8 in Leighton Buzzard. None of these are on a direct bus route. Once again this will affect the elderly in particular."

At a time when we should be encouraging the Post Office to take on an extra range of services to increase footfall, I hope that the Minister will take that matter seriously and speak to Powergen so that something can be done about it.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry 3:56 pm, 24th March 2004

During this debate, hon. Members on both sides of the House sought to express their views and concerns about post office services—as opposed to the post office network, which was the subject of the debate that took place, again in Opposition time, on 13 January. In doing so, we are motivated by our deep commitment to what characterises the communities that we are sent here to represent, be they rural, suburban or urban. As we know from our own experiences, from the representations that we receive day in, day out, and—ironically—from the volume of correspondence in our postbags, people in those communities feel that local post offices define not only their sense of belonging, but their ability to express that through their relationships with staff, particularly in terms of being known and identified. That gives great comfort to elderly and vulnerable people in particular.

That is the context in which we are considering post office services and the developments that have taken place as a result of the actions and omissions of this Government. The key element in the debate was identified by my hon. Friend Mr. Willetts when he so ably, expertly and cogently opened the debate—[Interruption.] I am sure that his objective assessment will be confirmed by Ministers, who are properly subject to it.

At the heart of the matter lies the element of customer choice, and the whole business of providing post office services must be motivated by what is right for them in making those choices. That is reflected by campaigns that have been going on up and down the land. In Broxtowe in Nottinghamshire, Councillors Sheila Foster, Joan Briggs and Tom Pettengell have raised petitions of more than 1,200 names to campaign against the closures of Chilwell and Attenborough post offices. Yet when we debated that matter on 13 January, Dr. Palmer chose not to join us in the Lobby, although the motion gave him a perfect opportunity to confirm by voting some of the rhetoric that he and others had expressed during that campaign.

The same could be said of the campaign to try to stop the closure of the Finchley Church End post office in the constituency of Finchley and Golders Green, and of the contributions of Richard Burden. However much Labour Members may not want to incur the wrath of their Whips, there comes a time when their votes must equal their rhetoric and campaigning in their constituencies. It is clear that the Conservative party spokesman in Finchley and Golders Green has been campaigning hard for the retention of that post office, having collected petitions containing more than 2,000 signatures. We are now offering the opportunity to Members across the House, in accordance with the campaigning sentiments that they have articulated both here and outside, to walk through the Lobby to give substance to those campaigns.

This is our second debate in Opposition time on this subject. The debate on 13 January led the Minister with responsibility for post office services to make an announcement on 5 February, of which the Secretary of State sought to make a virtue. Curiously, she declined to say that that amounted to a large vote of thanks to us for having raised the issue and creating the opportunity for that debate, from which that statement resulted, although that is clearly what happened.

That point was nailed by the intervention by my hon. Friend Mr. McLoughlin, who demonstrated that the "Westminster Newsletter" issued by the Post Office had stated, following the 13 January debate, that the Post Office would guarantee that it would

"not make a decision until after the public consultation period, and will provide"

Members of Parliament

"with an explanation of the decision".

That announcement resulted from the statement made by the Minister that there would be no contract to

"create any binding arrangement for closure until the public consultation has been completed."—[Hansard, 5 February 2004; Vol. 417, c. 50WS.]

By any definitional interpretation of that, it is difficult to see why that guarantee would have been presented as a new development in the "Westminster Newsletter", unless there had been no guarantee before then. That is precisely the argument that we have been making, and I am glad that the Minister responded to it at the time in relation to the post office network.

All that we ask of the Secretary of State is that she listen again to the issues raised in this debate. It is jolly sporting of her to be with us today—

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

Labour Members might consider that a cheap shot, but the Secretary of State chose not to turn up to the last debate, although I, as her shadow, was leading it. The Minister both opened and wound up the debate on that occasion. There was clearly a mismatch there. More importantly, the Secretary of State should listen to the points being made in this debate on the way in which people experience post office services. We have heard countless examples from Members on both sides of the House of the deep concern and distress and of the grave inconvenience that has often been increased as a result of Government policy.

It is important to recognise that this is not simply an attempt by Her Majesty's Opposition to oppose for opposition's sake, although I am sure that the Secretary of State and the Minister would like to portray it as such. There are now countless early-day motions on this subject. I fully expect all those Members of the Opposition parties who have signed early-day motions 58, 431, 375, 725, 814, 826, 850 and 859 to join us in the Lobby. I also believe that the tens, if not hundreds, of Labour Members who have put their names to early-day motions on these issues—namely early-day motions 236, 373, 389, 397, 628, 648, 689, 549 and 797—should now think very carefully. This is a genuine opportunity for them to give an honest earnest of their campaigning through early-day motions in the Lobby tonight, rather than attempting to curry favour with a Government whom they always wish to congratulate. They stand up to make speeches and suggest that they are campaigning on behalf of their constituents, but they usually vote for the Government who have caused the problem in the first place.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The hon. Gentleman is trying to entice us to vote for his motion, but it is really rather pathetic. It says nothing about post offices providing a vital public service or that they should be cross-subsidised in some kind of socialist way, which is what I believe. All that we have in the motion are proposals for more consultation and a bit of tinkering to try to make things work better. That is not enough.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am most grateful to the hon. Gentleman. Of course, we would have been interested to see his proposed amendment to the motion, suggesting that his Government should support, in all honesty, the essence of socialism, which he is so keen to promote. The most important point is that he has an opportunity to give expression to what he has been campaigning on.

We have heard from many Members and it would be invidious, given the shortage of time, to try to mention them all, although, interestingly, my hon. Friend Mr. Evans offered the Secretary of State a job swap. In the resulting exchange, she appeared keen to have the opportunity to be a sub-postmistress if she were not re-elected to this place. We are interested to hear of the candidacy of Mrs. Patel, her local sub-postmistress, whom we would much enjoy seeing in the House.

Apart from the community-led points and those on the criteria articulated by Mr. Hoyle—we hope that he will join us in the Lobby this evening—the most important point is that the Government have made a series of attempts to change the way that people get their services, which is convenient to and focused on them.

There is evidence of Government bias in terms of trying to force people to make a choice against their better instincts. Mr. Webb made a telling point when he showed that the ready-for-work unemployed are not allowed to have the card account because, apparently, they have to be on the same basis as those who are waged in respect of bank accounts. Again, that is a restriction of choice. Given that the Secretary of State had no answer, that point rather nailed her.

We are short of time and there are a lot of questions to answer in the 10 minutes remaining. Although many have referred to Planet Hewitt I am far from wanting to do so, given that the Minister will make the winding-up speech. We must consider the fact that in Pond World it is indeed dark and a bit creepy. Pond World is also very wet and blind to the world on earth, as the rest of us—our constituents and Conservative Members at least—recognise.

What we see with our own eyes, through our constituency postbag, is deep concern about the restriction of choice and the Government's attempt to railroad people into behaving in a way that they feel is best for those people, rather than allowing people to behave in a way that they want to behave in and which they feel is best for them. They want certain services for themselves, and it is time that the Government listened. I hope that full account is taken of the debate so that we get another revision of Government policy, reflecting the will of the constituents whom we represent.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions 4:07 pm, 24th March 2004

Never let it be said that Mr. O'Brien lacks either wit or wisdom.

We have had two parallel debates. The debate is entitled "Post Office Services", but almost all the contributions have been about direct payments. I want to address my initial remarks to that issue as we are going through a transfer to direct payment, which is a process of increasing customer choice, helping to address financial exclusion and improving access to financial services. That important point has hardly been mentioned this afternoon.

Before Christmas, I met with a number of groups representing those most vulnerable to financial and social exclusion, such as Help the Aged, Mind, Citizens Advice and the Royal National Institute of the Blind. I can tell the House that all welcomed our attempts to bring more people into the financial mainstream.

One of the main reasons that I came into politics was to combat the poverty and social exclusion that were made so much worse by the previous Government. Financial exclusion is an important aspect of those. I had to smile when Mr. Willetts paraded himself as the friend of the poor and the pensioner. Labour Members remember precisely what he and the Conservative Government did in office.

The nostalgia for the days of order books that we heard from Mr. Webb is far removed from the drab reality that left 3.5 million of our citizens financially excluded. That is why Citizens Advice, which a number of Members, including my right hon. Friend the Secretary of State, referred to, points out that financial exclusion is one of the main mechanisms for creating that social exclusion in neighbourhoods and communities and for making it so much more difficult to deal with the eradication of child poverty. It also points out that where people suffer from financial exclusion they also suffer from more general exclusion.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

No, I will make a little more progress.

That is one of the reasons why we are introducing a more modern, efficient and reliable service that increases customer choice, provides better value for the taxpayer—[Interruption]—yes it does, and cuts fraud and boosts financial inclusion. More customers have opted to have their benefits and pensions paid into an account than by order book and cheque, including 6 million people who are now having their pensions paid into an account without problems. Is any Conservative Member seriously suggesting that we now withdraw that choice from people in the vain hope that somehow it will keep local post offices open?

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Will the Minister be good enough to acknowledge that no Conservative Member, or any Member, has called for everyone to go back to order books? We are calling for choice. We are just saying that those who want them should be able to keep them.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

Good. We have that on the record then.

This Government believe very much in choice. We believe that post offices have a future as bright and welcoming places that provide high-quality services that people want to use and to which they want to return, not places to which people are tied in order to get their benefit or pension.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I am afraid that time is tight, and I cannot.

Several hon. Members, including my hon. Friend Richard Burden, Mrs. Calton, Mr. Evans and my hon. Friend Mr. Hoyle made points about the importance of their local post offices to their local communities, which we believe to be very important. That is why we are investing £2 billion in the post office network, with £450 million going into rural post offices.

My right hon. Friend the Secretary of State and I have heard the concerns expressed about the consultation process. We have strengthened it, as she pointed out, but we recognise that people still have real concerns about the way in which those processes are being pursued. I advise hon. Members who are campaigning to maintain their post offices, as we are, to make absolutely sure that people continue to use those post offices, to encourage them to do so and to help them to recognise—

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

I welcome my hon. Friend's comments. Will he please ensure that there is fair play over the proposed closures of the two post offices in Chorley, and that there is genuine consultation?

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

We want to see genuine consultation. My right hon. Friend has confirmed that she is in favour of that.

The challenge for post offices is to make sure that they can offer a range of financial services that allow them to have a vibrant future, which will encourage people to go back to them. By contrast, the Conservative motion is both misguided and opportunistic. Post Office card accounts can only be opened at post office branches—that is the fact. The Government have encouraged customers to use the account that best meets their needs and circumstances. Those who say that it is difficult for people to open a Post Office card account should explain why 2 million people have already done so. All of my Department's direct payment leaflets mention the Post Office card account and how to apply for one. The Post Office has its own leaflets—

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I have only two minutes and so am unable to do so.

We are making sensible changes, offering customers a genuine choice. We have listened to customers and their representatives to ensure that we provide a system that meets their individual needs. All customers who want to continue receiving their pension benefit or tax credit through the post office can do so, and they will be able to continue to do so just as now. In recognition of the fact that a small proportion of people will not be able to operate an account, we are developing and designing an exceptions service, and I have been discussing its characteristics with those organisations representing the groups most directly affected.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I cannot give way.

A number of Members have made points about Powergen. I know that both Powergen and my right hon. Friend will have heard them. [Interruption.]

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. The Minister is replying.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

Thank you, Madam Deputy Speaker.

My right hon. Friend and my hon. Friend the Member for Chorley suggested that there had been more crocodile tears from the Conservatives than would be necessary to raise the level of the Nile—

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 200, Noes 300.

Division number 107 Post Office Services

Aye: 200 MPs

No: 300 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 297, Noes 196.

Division number 108 Post Office Services

Aye: 297 MPs

No: 196 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly agreed to.

Madam Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House supports the Government's strategy to modernise the way benefits and pensions are paid, and to provide customers with a choice of accounts; welcomes the fact that with Direct Payment customers will still be able to collect their cash from the Post Office if they wish using a current account or basic bank account with Post Office access or the Post Office Card Account; notes the Government's plans for a cheque payment, cashable at post offices, for people who cannot be paid through an account; recognises that Direct Payment is a more modern, efficient and secure method of payment which will also help increase financial inclusion; welcomes the fact that more customers are now paid through an account than by order book without problems, including nearly six million pensioners; notes the previous government's attempt to introduce a Benefit Payment Card, which wasted millions of pounds of tax-payers' money; notes the fact that the Post Office had not until recently kept up with changes in customer demand and so had seen transaction volumes dropping and losses increasing; recognises the need for change and congratulates the Government for taking decisive action to help turn the business around; welcomes the record £2 billion investment in the Post Office network over a five-year period, including £450 million for the rural network and £210 million to modernise the urban network; and believes that this will help ensure a viable Post Office network that people will want to use.