Post Office Card Account

Business of the House – in the House of Commons at 12:28 pm on 13 November 2008.

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions 12:28, 13 November 2008

With permission, Mr. Speaker, I shall make a statement on the future of the Post Office card account.

The Government created the Post Office card account in 2003. We announced that there would be a successor in 2006. On the basis of the legal advice that we received at the time, we put the contract out to tender. During that process, I have been unable to comment publicly or privately on the matter. I know that that has been frustrating for hon. Members, and I thank them for their patience and understanding. [Laughter.]

I also know that all hon. Members would agree that the Post Office is at the heart of their communities. It reaches the places and people that no one else reaches. That is why the Government have invested £2 billion in the Post Office since 1997; why we have, for the first time, set out access criteria to preserve its reach; and why we will invest another £1.7 billion between now and 2011.

There is no doubt that the Post Office card account is central to maintaining a viable post office network. It not only generates a key part of the Post Office's income, but brings with it a footfall that is vital to individual sub-postmasters. Post Office card account customers have shown how much they value the service through the postcard campaign that has resulted in large postbags for hon. Members over the last few months.

It is also clear that maintaining a viable Post Office network is even more critical now than it was two years ago. The financial turbulence that began in America and the string of consequences that followed it have understandably made many people, particularly the most vulnerable in our society, more concerned about financial transactions. The Post Office, with its trusted brand, is seen as safe, secure and reliable as a provider of financial services.

So I believe that now cannot be the time for the Government to do anything that would put that network at risk, particularly as post offices are often the only providers of banking services in both rural and deprived urban areas. The Post Office also has a proven record of being able to move billions of pounds in cash safely around the country and prides itself on meeting the needs of vulnerable customers. Sub-postmasters know their customers and provide a social service as well as a banking service. Delivering this vital social service for groups in our communities who need it most is not only an objective of the Post Office. It is an objective that the Government share passionately as well. To safeguard that service, we must help and support a viable post office network.

For that reason, I can announce today that the Government have now decided to cancel the current unfinished procurement exercise and to award a new contract for the continuation of the Post Office card account directly to Post Office Ltd, within the terms of the relevant EC regulations. The contract will run initially from April 2010 to March 2015 with the possibility of an extension beyond that.

I recognise, of course, that this decision will disappoint those other bidders who had reached the final stage of the competition. I want to emphasise to the House, as I have done to them personally, that my decision does not reflect in any way on their ability to have provided the services in question. Nor is it a step we have taken lightly. We recognise the importance of competition in the awarding of public contracts, but we have concluded that, in these circumstances, protecting vulnerable groups by preserving a viable Post Office network justifies the award of a contract outside the competitive process. These are exceptional times and we believe that this is a proper and proportionate response. The Post Office considers that this decision, along with the extra money invested by this Government, will ensure a commercially viable future for the post offices that will be in place after the modernisation and network change programme is complete.

I said that I would make a decision as soon as I could. I said that I would not rush the decision. I said that what was important was that we made the right decision. I believe this is the right decision. It is good news for our constituents, good news for Post Office Ltd and good news for sub-postmasters. I trust that it will be welcomed by hon. Members, and I commend it to the House.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State

May I thank the Secretary of State for an advance copy of the statement?

Although this is a work and pensions contract, it of course has massive implications for the Post Office. My hon. Friend Chris Grayling is in the midlands today, so I am pleased to take his place at the Dispatch Box.

Today's statement is disarray dressed up as decision. The announcement is long overdue. We expected it in July, we were promised it for October but we have it only now. It is clear that the Government were looking for every possible way of giving the contract to someone other than the Post Office, but in the end, they simply did not dare. Today marks a great success for those who have campaigned for the Post Office and a humiliating climbdown for the Government who have done everything they possibly could to find a way of awarding it to somebody else.

The Government insisted on having a tender, and today, after months of an expensive process, they have simply binned that tender altogether. Why did the Government not do from the start what the Irish did and award it without a tender? What has changed since the beginning of the process? How much did the aborted process cost? Will the Secretary of State be compensating those other bidders who were not successful?

Is it not the case that the tender terms were a complete mess and opened up the award of the contract to great confusion? Can the Secretary of State confirm that the legal status of the decision is 100 per cent. watertight? Can he tell the House that there is no risk of or scope for any legal challenge from anybody who was not awarded the contract? What is his estimate of the revenue that Post Office branches will enjoy from this new contract compared with the one that currently exists? Is it not the case that the POCA is absolutely essential to some of the most vulnerable, and as unemployment rises—in large part thanks to the Government's incompetence—even through the 3 million mark, that POCA will become even more significant during the economic downturn?

We have proposed expanding POCA so that it can be used by account holders to pay their utility bills by a form of direct debit, not only ensuring lower tariffs for the most vulnerable customers but giving a £20 million boost to Post Office revenues. Will the Secretary of State pledge to look again at this sensible proposal and undertake to adopt it?

Can the Secretary of State also confirm that the proposed new contract fully complies with all the requirements and stipulations laid down by the EU and that the EU has already signified that this is the case? [ Interruption. ]

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. The House listened with courtesy to the Minister and I think it should do the same for the Opposition spokesman.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State

We are still waiting for the results of the Hooper review into the future of the Royal Mail, which will have serious implications for the whole network, but this keeps being delayed too. Will the Minister confirm when the Hooper report will be published?

Over the last two years, the Government's handling of the Post Office has undermined its business, and caused painful turmoil and growing pain for postmasters and communities. We have seen the compulsory closure, on a highly arbitrary basis, of thousands of branches. The new Secretary of State for Business, Enterprise and Regulatory Reform, who is unaccountable to this House, has spoken recklessly of privatising the Post Office. His letter to the Prime Minister has been leaked, The Guardian has been briefed and the talk of opening up the post office to greater financial services is exactly the policy we have been advocating for two years, but which at every turn the Government have opposed.

Post offices, communities and many of the country's most needy people will today be breathing a sigh of relief that the card account has been re-awarded to the Post Office, but they will know that the Government have been shamed into taking this decision from a mixture of internal weakness and division in their own ranks. This is not a success for the Government, but a triumph for which campaigners deserve the credit.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I wish that, just once, the Opposition would come to the House and say that a decision is the right one; they could have said they supported this decision and that they would now get on with supporting post offices. The hon. Gentleman took churlishness to new levels, I think, but I will nevertheless try to answer his questions.

This is the right decision for our customers and for communities around the country. Unfortunately, I thought that the hon. Gentleman was trying to unpick the decision rather than saying that it was the right one and moving forward. I am glad to be able to say that the decision will not be unpicked, and I will answer his points in order.

The hon. Gentleman asked whether the decision required EU clearance. We do not believe that it does, and we believe that it complies with EU law. The decision has been properly and legally taken. He asked whether we would be compensating the companies that were not the successful bidders. We will compensate their reasonable costs. That is the appropriate thing to do and there is no reason why we would not do it. It is a good deal for taxpayers and means a better service for customers. The exact amount is commercially confidential and that is exactly the way in which these things are done.

The hon. Gentleman spoke about direct debits. I am reliably informed that if we had moved towards the policy of the Opposition, this decision would not have been possible. The point that he has made would have made the award of the contract to the Post Office much more difficult. It is because of our policy that we are able to award the contract to the Post Office. He accused us of disarray, so I shall tell him what the disarray was—the situation that we inherited from his Government, whereby the only policy was the benefit payment card, which was millions over budget and years behind schedule, so we had to cancel it.

When one hears the hon. Gentleman speak, it sometimes sounds as if the POCA is a venerable British institution that has been around for decades, but as my right hon. Friend Sir Gerald Kaufman pointed out earlier this week, it is something that this Government created. We have now renewed it and we are awarding it to the Post Office, and I just wish that the hon. Gentleman had supported our decision.

Photo of Kate Hoey Kate Hoey Labour, Vauxhall

The Secretary of State will know that although some people will feel that this decision could have been taken a lot earlier, it will result in widespread relief across the country—relief felt by sub-postmasters, the national pensioners action group, members of the Communication Workers Union and the all-party group on post offices; we have all campaigned so much for this to happen. Does he agree that although the decision provides a breathing space for the Post Office, now is the time to get government business and local authority business back into our post offices, and to have the Post Office as a proper bank?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

My hon. Friend is right to say that this is a vital decision for customers, particularly vulnerable customers, who depend most on the Post Office. She is also right to pay tribute to the campaigning done by Labour Members, who have been making their point in the appropriate way. As she said, we are examining how we can find further services for the Post Office to provide, and as I said to my hon. Friend Mr. Hoyle earlier this week, we will bring together a group of MPs to do exactly that.

Photo of Jennifer Willott Jennifer Willott Shadow Secretary of State for Work and Pensions

I thank the Secretary of State for advance notice of the statement. I wish to make it clear from the outset that the Liberal Democrats are delighted at today's decision. It is good to see that the Department for Work and Pensions has listened to the vociferous opposition to the possible loss of the Post Office card account that has come from all parts of the House and from outside it. I understand that 2 million people signed a petition requesting that the POCA remained with the Post Office. Today's decision could also be seen as a response to the Liberal Democrat Opposition day debate on Monday.

Today's statement is a strange way of going about the decision. Cancelling the procurement exercise raises huge questions, some of which have been asked by Alan Duncan. I should be grateful if the Secretary of State clarified why the Department decided to cancel the contracting exercise rather than award the contract to the Post Office. Does it mean that the terms of the tender would not have allowed the Department to award the contract to the Post Office? To enable us to make our own decision on that, will he release the specifications, the invitation to tender or negotiate, and the descriptive documents, which the Government have refused to release up to this point—indeed, on Monday, he again said that he would not be able to release them. I would be grateful if he made them public now.

The Secretary of State said that he has decided to award a contract for the continuation of the POCA within the terms of the relevant EC regulations. If he can do that now, why could he not have done it before or why did he choose not to do so? I would be grateful if he clarified that point. The reasons that he gave for the decision relate to the current economic climate. What is it about that climate that means that the Government can now reconsider? This situation leads to the suspicion that as 1,500 jobs are being lost every day in the UK, he knew that the Government could not afford to close a further 3,000 post offices—at least—with all the accompanying job losses. Will he tell us exactly what has changed?

The Secretary of State also said that he believes that it is not the time to do anything to put the network at risk, particularly as post offices are often the only provider in rural and deprived urban areas—that is what the Liberal Democrats have been saying for the past two years, as have a number of Labour Members. As that was the case when the Government decided to put this out to tender—it remains the case—what has brought him around to our way of thinking and to deciding that now the Post Office does need to be saved? Why did he think last week that it was okay to risk the only providers in those deprived areas, but that now it is not okay to do so?

As Kate Hoey said, the DWP has behaved appallingly so far on this matter; there has been delay after delay. This has been going on for nearly three years and the decision was 11 months overdue. That has caused huge stress for POCA customers, sub-postmasters and all who are concerned for their community facilities. Why has there been such a delay? It also raises issues about the cost of the process and the waste of money involved. Legal questions have already been posed about changing the competition rules halfway through the process, but this has been a waste of money not only for the bidders that did not receive the contract, but for the post offices and the Government. The Secretary of State has said that he will be providing compensation, but will he finally give us an estimate as to how much money has been wasted? Why is the amount of compensation considered to be commercially confidential? Nevertheless, I welcome today's announcement and the saving of post offices.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I think that that was the sound of "Focus" leaflets being pulped in their thousands. This is the right decision, and I am glad that, at the very end of her questions, the hon. Lady acknowledged that. We all know that the Liberal Democrats will want to take credit for this. She says it is their way of thinking, but the truth is that they were so confident of their way of thinking that they tabled a motion that was written by my hon. Friend Mr. Hoyle. It was not their way of thinking at all, but that of Labour Members. We were glad to see the Liberal Democrats voting in support of his motion this week, but as we know, it had been overtaken by the changes that we had made in response to the lobbying and campaigning on behalf of their constituents carried out by my Labour colleagues.

The hon. Lady asked me what has changed. What has changed is that there has been a significant reduction in confidence about financial transactions, and people have turned to the Post Office because of its trusted brand. The Post Office provides a service that is not only a banking service, but a social service, and that becomes even more important when people are worried about financial circumstances. In the light of that, we commissioned legal advice, which has said that this is the right way for us to proceed. The truth is that for all the heat and bluster, everyone in this Chamber agrees that this is the right way forward.

The hon. Lady asked whether we would release the information about the tender, but as the tender has not been completed, it would be inappropriate to do so. As she knows, the advert in the Official Journal of the European Union has been placed in the Library, and she is welcome to look at that. I am sure that she will enjoy reading it. As I said to Alan Duncan, this is value for money, and it is the right decision for our customers, for taxpayers and for post offices. It gives them certainty to plan up until 2015 and allows Labour Members to concentrate on building a viable post office network.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

This is a great day for common sense, and I wish to thank the Secretary of State for taking the right decision. I thank him on behalf of my constituents, and the vulnerable and the pensioners who use the POCA, and I thank the sub-postmasters and sub-postmistresses throughout the breadth of the United Kingdom for the campaign that they have led. Of course, the Select Committee on Business and Enterprise report has done a lot to advise the Government on the role that they have played. I welcome the decision and look forward to the setting up of the taskforce, which will take us beyond 2015 to ensure that post offices in the United Kingdom have a viable and sustainable future.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I thank my hon. Friend for his kind works, and I pay tribute to his campaigning, along with that of many Labour colleagues. I also pay tribute to the Chairman of the Business and Enterprise Committee, as it has played an important role in examining this issue, and to the Treasury Committee and its Chairman, as it, too, published an important report. My hon. Friend is right to say that we should also pay tribute to the campaign run by sub-postmasters; they have left nobody in any doubt about the importance of this account and of the network. I reassure him that my colleagues in the Department for Business, Enterprise and Regulatory Reform will be writing to him shortly about the task group that we agreed.

Photo of Peter Luff Peter Luff Chair, Business and Enterprise Committee, Chair, Business and Enterprise Committee

I hope that the Secretary of State will not think that I am being churlish if I say that the words that are haunting me today are the powerful words from St. Luke about there being more joy in heaven over one sinner that repenteth. I genuinely welcome today's announcement, and I am glad that the right hon. Gentleman has listened to the advice of my Committee, the Treasury Committee and the whole House on this matter. Kate Hoey is right: we now have the opportunity to debate the future of the post office network and put it on a sustainable footing.

Does the Secretary of State understand that his Department still has one very important responsibility—to ensure that its agencies get fully behind the POCA? Many of us are very concerned by the attitudes taken, especially by the Pension Service, in that respect.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I thank the hon. Gentleman for his kind words. He is right to say that this service is vital to my Department and we want to ensure that people take it up appropriately. He has brought to my attention a few instances in which that was not the case, and we have addressed them and ensured that our training is appropriate. We now have a good basis on which to move forward and ensure that the POCA serves the most vulnerable people in our community, as well as that the post office network can grow on the basis of the certainty that it provides.

Photo of John McFall John McFall Chair, Treasury Committee, Chair, Treasury Committee

In the light of the equivocation from Opposition Members, I wish to welcome this proposal clearly and unambiguously on behalf of the Treasury Committee. Two years ago we called for the successor to the POCA to be run by the Post Office, so this is excellent news for rural and low-income communities. I have spoken to Post Office executives, and they believe that these funding proposals should be the last and that, by 2015, the service should be a universal, stand-alone bank. I am looking for a commitment from the Government to that, as well as a recommendation for a cross-departmental approach to financial inclusion, so that the Post Office can play its part in that.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I know that that is the intention of the Post Office, and it will make it clear that this decision provides the basis on which it can plan for that future with certainty. My right hon. Friend makes an important point about financial inclusion, and we will work closely—especially with the Treasury, but also with other Departments—to ensure that both the Post Office and credit unions can play their part, alongside the banks, in improving financial inclusion. We want to ensure, especially in the run-up to Christmas, that people are not vulnerable to the excessive loan rates charged by credit companies.

Several hon. Members:

rose —

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Many hon. Members are seeking to catch my eye. I will endeavour to accommodate as many as possible, but it would be helpful if we had one brief question from each Member and hopefully a brief answer from the Secretary of State.

Photo of David Curry David Curry Conservative, Skipton and Ripon

This is exactly the right decision for the large rural constituency that I represent, and I am sure that we are all grateful to Lord Mandelson for it. Does the Secretary of State recognise that it comes against the background of a significant post office closure programme and that if there is constant attrition, it will not matter what services are offered because there will be no post offices to offer them? Will he ensure that the longer-term programme is based on a minimum level of post offices? If not, it simply will not be viable.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I believe that the right hon. Gentleman's Front-Bench spokesman said in March that he fully expected the network to shrink, and that is the reality that people recognise. It has been a difficult but necessary process that has put the Post Office in a viable position from which it can make progress. As I made clear in my statement, the Post Office believes that the decision will enable it to preserve a level of post office provision after the network change programme is completed. It is also worth saying that this Government introduced access criteria for the first time, and they provide exactly the sort of undertakings that the right hon. Gentleman seeks.

Photo of Ann Clwyd Ann Clwyd Special Envoy to PM on Human Rights in Iraq

This is the right decision and thousands of people in my constituency who wrote to me about this issue—especially pensioners—will be delighted by the news. It is a pity that the Opposition were caught on the back foot and cannot even bring themselves to say that it is the right thing to do. I can think of other political parties that will have to pulp their literature on this subject.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

My right hon. Friend has campaigned very hard on behalf of her constituents, and I am glad that she welcomes the decision. I am sure that various parties will have to pulp all sorts of materials.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art

Yes, this is the right decision, but it was a waste of time and money to have the tender in the first place. The most important aspect of the Secretary of State's statement was about protecting vulnerable groups by preserving a viable post office network. That represents a sea change in Government thinking and is a welcome response to the poverty of imagination that has surrounded the future of that network. Given that the Secretary of State now recognises the vulnerability of many—especially the elderly—in these changed financial circumstances, is it not time to revisit the recent round of closures and allow some post offices that have been closed by the Government to make a new case?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

It is not a sea change. What has changed is the approach taken by the hon. Gentleman's Government, which the Chairman of the Select Committee outlined. That approach led to under-investment in the network in the 1990s. Money was taken out of the network then, but this Government have invested in it to ensure that it is viable. That is why we put in £0.5 billion into the IT system, which has enabled post offices to expand their services—for example, they are now the main provider of currency services. This Government introduced the POCA, and we have now awarded the contract to the Post Office. I wish that the hon. Gentleman had welcomed that.

Photo of Lynne Jones Lynne Jones Labour, Birmingham, Selly Oak

Sometimes it has appeared as though my right hon. Friend's Department was seeking to close down the Post Office card account for short-term gain, so I very much welcome today's announcement, especially as it will enable me to use my Post Office card account to receive my state pension in 2012. It is not just vulnerable people who use it—I do not think of myself as vulnerable, despite my position on the Back Benches. Can my right hon. Friend assure the House that the Government will seek to expand the services available at post offices along the lines recommended by the watchdog, Consumer Focus, which I raised with the Prime Minister yesterday?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Yes, I can give an assurance that we will work to expand the range of financial and other services that are available. I know that that is something that the Post Office also wants to do.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (International Development)

We on my Bench welcome this decision, however much we regret disappointing our printers. [ Laughter. ] What steps will the Government take to persuade the BBC, the Driver and Vehicle Licensing Agency and others to return their business to the Post Office?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

The decision by the BBC was its decision, and I am glad that that the hon. Gentleman acknowledges that—unlike the Liberal Democrats earlier this week. As a way of supporting the Post Office, perhaps he could mail out some different leaflets to his constituents over the next few weeks.

Photo of Linda Gilroy Linda Gilroy Labour, Plymouth, Sutton

Many good ideas have recently come from our constituents, and I warmly welcome the decision on behalf of the 14 post offices and all their customers in my constituency. However, it will be important to understand the exact nature of what can and cannot be done, especially when it comes to water poverty and fuel poverty, and the advice that can be given to constituents. Will my right hon. Friend undertake to meet a group of Members of Parliament to explain from his Department's point of view what can be done, so that we can rule out what cannot be done and get on with supporting the post offices in our constituencies?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Yes, from my Department's point of view, we will be happy to have such meetings, and I am sure that other Departments will also be happy to do so. I certainly recognise that my hon. Friend has campaigned assiduously for her 14 post offices.

Photo of James Arbuthnot James Arbuthnot Chair, Defence Committee, Chair, Defence Committee

I am delighted that when the Prime Minister yesterday said "in due course", he meant tomorrow. Will the Secretary of State accept that many of us do not mind U-turns, however screeching, as long as the car ends up pointing in the right direction, but because of the uncertainty of the past many months, many post offices have faced increased difficulties? What can he do to help them by pointing new business the way of the post offices?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Had we not wanted to have a contract, we would not have had a process to create it and we would not now be awarding it to the Post Office, so this is the opposite of a U-turn. It is precisely because we are committed to the POCA that we decided to create the contract and now to renew it. The right hon. Gentleman is right that we should now look at how we can bring other services into post offices, and that is exactly what the task group will do. If he has any suggestions, we would be happy to look at them.

Photo of David Drew David Drew Labour, Stroud

This is welcome news in rural areas. Although it has taken a long time to come, it is entirely the right decision. Can we now look at ways in which we can advertise and encourage the use of the Post Office card account? Those of us who have a Post Office card account find it a useful way of being able to draw out money. I am sure that all postmasters and mistresses would now want to see a full-scale campaign to show that the account is the right way for many people to draw out their money.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

As my hon. Friend will know from the debate on Monday, we have agreed to look at our literature to ensure that exactly that is done. However, advertising Post Office services is primarily a matter for the Post Office. As an account holder, my hon. Friend will be glad to know that the new Post Office card account will offer improved services and functionality, so it will be even more helpful than it was in the past.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

I warmly welcome the decision announced today by the Secretary of State and thank him for listening to many millions of people up and down the country, not least the vulnerable and elderly. Can I urge him to look speedily at the expansion of financial and other services that will be made available through the post offices and to come to this House with some real decisions as quickly as possible?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Yes, the hon. Gentleman can do that. That decision would be primarily for the Department for Business, Enterprise and Regulatory Reform, but if his party has any suggestions, we would be happy to look at them.

Photo of Andrew Miller Andrew Miller Chair, Regulatory Reform Committee, Chair, Regulatory Reform Committee

In welcoming my right hon. Friend's statement, may I refer him to his mention of the vital social service offered by post offices? There are a number of examples up and down the country of post office staff who have gone beyond the call of duty to ensure that a real social service is delivered, particularly to the elderly and infirm. Will he discuss with his hon. Friends in the Department for Business, Enterprise and Regulatory Reform how we can develop that expertise and identify best practice so that we can expand on that incredible social service?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

That is absolutely right. Many of our constituents look forward to their visit to the post office as a key part of their week. For example, one of my constituents, Idu Miah, who runs the post office in Mossley, is right at the heart of his community. It is important that we should develop that, and I am sure that the Post Office will want to spread the already very good practice as widely as possible around the network.

Photo of Andrew Stunell Andrew Stunell Liberal Democrat, Hazel Grove

On Monday, the Secretary of State spoke strongly in favour of a Government amendment that said that all Government Departments should give publicity to how their services could be accessed at post offices. Will he give an undertaking that what he has said today applies to other Government Departments and agencies, particularly the Driver and Vehicle Licensing Agency, which has a conflict between its internal target of getting people to use its electronic system and the need to support the Post Office?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Of course, people can renew their tax discs through 4,000 post offices. That approach applies to the whole Government.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I very much welcome my right hon. Friend's announcement. When he looks at extending services, will he look in particular at allowing women to access child trust funds through the post office? That would mean that isolated young mothers could take their baby bond vouchers to the local post office to get their child trust fund, instead of having to go into town to a bank. It would make a big difference to social exclusion and child poverty figures.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

My hon. Friend has been an ardent campaigner for her post offices, and we will certainly consider that suggestion. I shall respond to her about whether that can be done.

Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

Postmasters, postmistresses and customers in the remaining post offices in my constituency will be relieved at the announcement, although they are owed an apology for the months of uncertainty that they have had to endure. The Secretary of State talked about increased functionality. Will he allow people who do not have a bank account to make direct debit payments for their utility bills through the Post Office card account, thereby allowing them to access cheaper tariffs that could save them £100 a year or more on their energy bills?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I do not know whether the hon. Gentleman was in the Chamber during my statement, but if we had done that, this decision would not have been possible or at least would not have been so easy to take. Today's decision would have been made more difficult, rather than easier. I am not sure that he wants to argue for that. It is perfectly possible for people to have bank accounts at the post office that offer direct debits, and obviously that choice is open to them.

Photo of Clive Efford Clive Efford Labour, Eltham

Will my right hon. Friend confirm that this contract does not start until 2010 and that those people who are accusing him of having delayed the decision need to understand the process in which we have been involved? It is imperative that Government agencies and local government direct services through the post offices if they are to be sustainable in the future. Can my right hon. Friend say whether today's announcement means that there is a moratorium on planned closures? Will any sub-post office managers who want their post offices to remain open get an opportunity to restate their case? Many communities could benefit from the future arrangements for the Post Office that my right hon. Friend envisages if those post offices remained open.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

My hon. Friend is right that this provides the post office and sub-postmasters with certainly through to 2015 and, potentially, beyond that. That is exactly what Labour Members have been calling for. He is also right that local government has a key role to play, and we would encourage councils to make their services available through post offices. On his final point, the Post Office has said that this announcement, along with the subsidy, will allow it to preserve the network after the network change programme. Any individual decisions are clearly part of the process that has already been set out.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I was proud to be on the Select Committee on Business and Enterprise, which played a major role in encouraging the Secretary of State to change his mind. I am grateful that he has done so. However, he announced greater functionality for the card. Will he explain a little more about that, on the basis that we have been pushing for greater functionality throughout this exercise?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

As I have said, if we had listened to the Conservative party, we would not have been able to make this decision—or it would have been difficult. I am happy —[ Interruption. ] If the hon. Gentleman will listen, I will answer his question. There will be a simpler opening process for Post Office card accounts. There will also be a facility to correct mistakes, for example if too much money is taken out. The exact decisions about how that should be done are for us and the Post Office to negotiate. That is exactly what we will do, and the Post Office will take forward.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

I congratulate the Secretary of State on a decision that will be of great benefit to my sub-postmasters and to the above average number of people in the POCA-using category in Blackpool. In the interests of being more proactive about future use of the Post Office, will he ask his officials to consider the possibility of the use by the Post Office of new and innovative products that are brought forward and marketed by his Department? That should also include discussions on any ideas that come forward from the trade unions.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Yes, we can absolutely do that. One new area of potential business is ID services. I know that the Post Office is interested in that. At this stage, no guarantee can be given by the Government, but we know that if either of the other two parties were in government, the Post Office would not have the chance to offer those ID services, because both main Opposition parties are opposed to that policy.

Photo of Anne Main Anne Main Conservative, St Albans

In my constituency, we have lost five post offices, and that was opposed by all political parties, so it is not something that only the Government have a handle on. I noted with interest that in his statement the Secretary of State said that the post offices give a vital social service. That was exactly the point that was made by my constituents, but it did not cut any ice when it came to the round of cuts that we are now seeing. If the Government are going to say that it is an objective to deliver a valuable social service via the Post Office, how will they support that?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

We are supporting it by putting £1.7 billion into the Post Office, which the hon. Lady's party never did, and through the decision that we have taken today. If she wants to be churlish, that is entirely up to her.

Photo of David Taylor David Taylor Labour, North West Leicestershire

As a member of a family who for several generations ran the post office in my village of Heather in north-west Leicestershire, I welcome the announcement, although that post office was closed in February because of the reorganisation proposals. Is the Secretary of State aware that a good number of post offices in rural areas remain on the financial brink and need greater support? Will he confirm that, although a good number of older people particularly are unable to use bank and Post Office card accounts, the option to have cheque payment will continue and will be better promoted?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I recognise and pay tribute to the role that my hon. Friend has played in this House in relation to post offices, and to his understanding of the subject. Paying by cheque has a number of disadvantages, and is particularly open to fraud. We are considering how we can have a system that will fulfil the same goals, but in a more effective way for the customer. We are working through the process to achieve that. We will commit to delivering that outcome, although it might not be done through cheques because of the particular problems that they cause.

Photo of Richard Taylor Richard Taylor Independent, Wyre Forest

May I add my congratulations to the Government on actually listening to people and taking the right decision? This is good news for many people, but not so much for those who can no longer cash their card account because a branch is closing under the network change programme. Is there any chance of an appeal against specific branch closures?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

As I am sure the hon. Gentleman knows, there is an appeals process in the network change programme, and indeed some decisions have been overturned. However, I thank him for his kind words, and I shall be happy to write to him to set out the appeals process if he is not aware of it.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

This is a very welcome decision, especially for rural areas such as my constituency of Staffordshire, Moorlands. I thank my right hon. Friend for listening to my constituents and to those of all hon. Members. The Post Office is a trusted brand in itself, but the people who run sub-post offices are seen as very trusted advisers to the elderly and vulnerable. My constituents tell me that they trust their sub-postmasters and sub-postmistresses as sources of advice who will do everything to help them with their bills. Will he therefore look at the possibility of encouraging post offices to help with the take-up of tax credits, and especially pension credits? Will he also extend the financial products that they are able to offer, especially to vulnerable people?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

That is a good suggestion, and I am sure that the task group will want to look at it. I shall also ask my officials to look at it, but I want to pay particular tribute to my hon. Friend for the campaigning that she has done on behalf of rural areas. We have listened to the views that her constituents have expressed to her, and I am glad that she welcomes today's decision.

Photo of Shailesh Vara Shailesh Vara Shadow Deputy Leader of the House of Commons

The Secretary of State has said that he will not disclose the amount of money to be paid in compensation to failed bidders, but his Department will have incurred considerable expense in the tender process. There is nothing commercially confidential about his Department's expenditure, so will he tell the House how much money it has spent in the tender process? If he does not have the precise figure to hand, I shall be happy to receive an undertaking that he will write to me with it.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

The point about expenditure is about the contract going forward, and the amount spent dwarfs any process issues. The deal is a good one for the taxpayer and for customers.

Photo of Kerry McCarthy Kerry McCarthy PPS (Rt Hon Douglas Alexander, Secretary of State), Department for International Development

I too welcome this announcement very much, as will the hundreds of my constituents who have written to me about it. I chair the all-party group on credit unions, and I have just written to Lord Mandelson to see whether we can explore how credits unions can use the Post Office network to make their services more available, especially to people in remote areas. Will my right hon. Friend undertake to talk to Lord Mandelson to see how we can move those issues forward?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Yes, that is a very important point. The Post Office's reach is clearly wider than that of credit unions, even after their growth under this Government. My hon. Friend is right that credit unions play a vital part in providing the services and advice that help people to get out of debt and improve their financial affairs. I have seen very clearly how credit unions in my constituency have literally turned around the lives of hundreds of my constituents. My ministerial colleague the Under-Secretary of State for Work and Pensions, my hon. Friend Kitty Ussher, will be happy to meet my hon. Friend to discuss exactly how what she proposes can be done.

Photo of Mike Penning Mike Penning Shadow Minister (Health)

I and thousands of my constituents have written in good faith to the Secretary of State over the past few months because we have been worried about the card account and the future of local post offices, both urban and rural. Sadly, while the decision was being made, three post offices in urban and rural parts of my constituency closed, but that decision has been made and I am now worried about the future service. Will the right hon. Gentleman give some indication of the revenue streams under the new contract? Will they be different from those under the previous contract? If so, is the new contract better or worse than the old one, as that will have an effect on the marginal post offices in our constituencies?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

Clearly, that is a matter for the Post Office, and it depends on how many card accounts are opened. I know that the hon. Gentleman cares about this issue, but the terms of the contract have to be confidential. Even so, it is important that we look at how we can get other services into post offices so that they can become viable. That is exactly what they have asked for, and it is what they are committed to achieving.

Photo of Katy Clark Katy Clark Labour, North Ayrshire and Arran

I warmly welcome today's announcement, and it is clearly the right decision. My right hon. Friend will be aware of recent media speculation about the possibility of an attempt to privatise Royal Mail, which would have a negative impact on the Post Office network. Is he able to give any reassurances today that no such proposals are being considered?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

As my hon. Friend knows, and as Lord Mandelson confirmed earlier in another place, the Hooper report, to which I think she is referring, will be published very soon.

Photo of Michael Moore Michael Moore Shadow Secretary of State for International Development

I hope that the Secretary of State will join me in paying tribute to Mervyn Jones, who is a constituent of mine—indeed, my next-door neighbour—and also president of the National Federation of SubPostmasters. He and his colleagues around the country deserve a great deal of recognition for their work in briefing Members of the House on this matter, and I welcome the decision that the right hon. Gentleman has taken.

However, notwithstanding the Secretary of State's answers to previous questions, all the sub-postmasters and sub-postmistresses who are grateful for today's announcement will now be worrying about how much they will get per transaction. Will he come clean about that, and put their minds at rest?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

We have yet to award the contract to the Post Office. Clearly, we will be in discussions and negotiations about that, and that is the right way to proceed. We have made it clear that we will be awarding the contract, which will give people certainty between now and 2015, but the hon. Gentleman is right to say that we should recognise the work that sub-postmasters and sub-postmistresses do. I am sure that he will join me in congratulating George Thomson on the work that he has done as general secretary of the National Federation of SubPostmasters, along with all of his members.

Photo of Gerald Kaufman Gerald Kaufman Labour, Manchester, Gorton

May I thank my right hon. Friend for listening to his fellow Labour Members of Parliament and for deciding to extend a service that was created by a Labour Government? We have spoken on behalf of our constituents, who include sub-postmasters, and we hope that today's decision will foreshadow greater strength and more services in our post offices. May I thank him on behalf of the 8,000 of my constituents who are Post Office card account holders—and on behalf of the 6,000 constituents in the constituency of Manchester, Withington, whose Member of Parliament is once again absent from discussion of these matters?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

My right hon. Friend made a very good speech on this matter on Monday, and indeed pointed out that Mr. Leech was not present then. It is a shame that he is not here now, but I am sure that there is a good reason for that. However, my right hon. Friend is absolutely right to say that it was this Government who created the Post Office card account, and that is why we are so strongly committed to it.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Secretary of State for Wales, Shadow Minister (Environment, Food and Rural Affairs)

I welcome the Secretary of State's commitment to supporting POCA in the future, but one criticism of the scheme is that it is very difficult to open an account. Can the right hon. Gentleman give us a commitment that in future the POCA will be the easiest option rather than the last resort? If he can, there may be substance to his announcement today.

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

The hon. Gentleman is right to say that we need to make opening an account as easy as possible. It is already easier than opening a bank account, but the new contract will make it even easier. Both the Post Office and the Government are committed to that, and will work together on it over the next few weeks and months.

Photo of Alan Reid Alan Reid Shadow Minister (Northern Ireland), Shadow Minister (Scotland)

I welcome the Secretary of State's statement and his commitment to ensuring that it will be easier to open an account, but I hope that we will not have a repeat of what happened in 2003 with the complicated migration process. Will pensioners who have an account at present keep it automatically without having to go through a migration process? Also, will the right hon. Gentleman make a commitment that he will write to those pensioners who applied for an account in recent months but who were refused and told that, unless they supplied their bank account details, they would not get their pension? Will he write to them and offer them the opportunity to open a POCA?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

We did not write to pensioners saying what the hon. Gentleman claims, and we have not asked any POCA holders for bank account details. One isolated letter was sent out by mistake, and we have apologised for that. However, I can give a commitment that we will ensure that people do not have to change their accounts. One of the virtues of this decision is that people already know how to use their POCA and are used to going to their post offices to do so. That is one of the reasons why we have taken this decision.

Photo of Malcolm Bruce Malcolm Bruce Chair, International Development Committee, Chair, International Development Committee

This is clearly the right decision, although I suspect that Lord Mandelson has cast a long shadow over it—assuming that he casts a shadow. Is it not time to end the attrition against the Post Office network and to start building it up with new services? May I suggest that the Government start by using their impending shareholding in the Royal Bank of Scotland to instruct that bank to use the Post Office network and to allow its customers to do so as well?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

The right hon. Gentleman made the same claim earlier this week, but actually the RBS already offers that through its accounts. [Interruption.] It does; I will happily write to him about it. One is a basic account, and the other is a current account. I am afraid that he was not in the Chamber when I wanted to make that point earlier this week. I am happy to be able to give him that information.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

This is the right decision, and the hundreds of residents in the Kettering constituency who sent in their campaign postcards will have played their part in changing the Secretary of State's mind. Will he ensure that all the social security benefit and pension application forms that his Department issues highlight the Post Office card account as an attractive means of payment of those benefits, instead of mentioning it in the small print at the bottom of the page?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

As I said earlier, we are looking at how we market the POCA. It is an important service, which is why we are renewing it. We have made exactly the change that the hon. Gentleman suggests in, for example, the leaflet that goes with our letters about cheque accounts. I hope that he will welcome that.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Energy and Climate Change

Will the Secretary of State clarify something about his statement? He said: "On the basis of the legal advice that we received at the time"—that is, in 2006—"we put the contract out to tender." He has now decided that he can cancel the tendering process. Either the advice that he received was wrong, or the legal position has changed. Will he clarify which it is?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

If I may dare to paraphrase Keynes, when the facts change, the legal advice becomes different. The facts have changed, as I explained in my statement. There has been a major change in people's attitudes to financial services. There has been a significant increase in people's concern about them. Given the vital social and financial importance of the Post Office, the legal advice is that we are taking the appropriate, legal way of proceeding. I am glad that the hon. Gentleman welcomes the decision that we are taking.

Photo of Andrew Pelling Andrew Pelling Independent, Croydon Central

Croydon residents will welcome this news. I am sorry to be churlish on a good news day, but they wait a very long time in queues that spill out of the very large post office in the centre of Croydon into High street, as so many post office branches have been closed. Bearing in mind that we are now taking a new, fresh, radical approach, would it be possible to spend just a fraction of the money spent on bailing out UK banks on post offices? As we have crossed the Rubicon and made a public sector investment in banking, surely this is the time to invest in post office branches, and to have a fresh, new bank, free of bad debts, and therefore better able to stimulate growth in our economy?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

The hon. Gentleman will be glad to know that part of the £1.7 billion that we will spend will be invested in the network and the post offices that are there to deliver services to his constituents and others. We have already said that we want to look at the other financial services that are provided, and indeed at other services that the Post Office could provide. He will be glad to know that access to 60 per cent. of bank accounts is available through the Post Office.

Photo of Philip Dunne Philip Dunne Opposition Whip (Commons)

It beggars belief that the Secretary of State can claim that his change of heart it is down to the credit crunch. All the so-called facts that have changed, which he identified in his statement, were known at the outset of the prolonged tendering process. So why did he put all sub-postmasters through the tortuous process, causing them concern about the viability of their business, and all their customers concern about whether they should continue to use the Post Office?

Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I will tell the hon. Gentleman where the contrast is: it is between the benefit card account that we had to cancel because it did not work, and because it was overrunning and over-budget, and the Post Office card account, which has been a great success, and which we are renewing.