Post Office Card Account

Part of the debate – in Westminster Hall at 2:30 pm on 15 February 2006.

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Photo of George Mudie George Mudie Labour, Leeds East 2:30, 15 February 2006

I see from the numbers in the Chamber that the business in the main Chamber is obviously non-controversial and that hon. Members need somewhere to come out of the cold. The pleasure of seeing you in the Chair, Mr. Bercow, is lessened only by the realisation that you are not on the Front Bench, where you so obviously deserve to be. [Hon. Members: "Hear, hear!"] I hope that Hansard recorded that deserved applause. The Conservative party's loss is our gain.

I am delighted that the Speaker has chosen this debate, which is particularly welcome as it gives the Under-Secretary of State for Work and Pensions, my hon. Friend Mr. Plaskitt, the opportunity to explain current Government policy on Post Office accounts and the contract, and to settle genuine worries that there has been a change in policy in recent weeks. The debate also gives hon. Members and the Minister the chance to have a dialogue about the three pilot schemes that have come to our attention, although not through the House. A fair number of Members wish to speak, so I shall go through my speech as quickly as possible. I also hope that hon. Members will bear with me if I read my speech, because if I depart from it, I fear I shall lessen the number of those who can participate.

The history of the subject, briefly, is that since 1997 the Government have invested between £1 billion and £2 billion in modernisation of the Post Office. Most of that money went on IT, to enable the Post Office to get up to date and to compete for other markets. That allowed the Department for Work and Pensions to realise an objective that it had sensibly had in mind for a number of years, which was to introduce the plastic card and direct payments because pension books and giros were costly and open to abuse. Once the IT system was in place, the Department went ahead.

The obvious move from books to plastic cards directly affected pensioners, but it also called into question the viability of thousands of post offices. We all know the results: thousands closed, although not in every case because of the new payment method. However, a major source of income was affected. That proved to be the last straw for a number of post offices, and, where the offer was made, postmasters took the opportunity to depart the scene. Some 2,500 post offices disappeared in that tranche.

The customers also had a hard time. The Minister present was not at the Department then, so I can say without causing personal offence that its behaviour was slightly unpleasant. It wanted customers to give up their pension books and open bank accounts to facilitate direct bank payments. The Department was reluctant to tell pensioners that they could retain their books, and its literature was deliberately evasive on that point. It also frowned on the Post Office account and instituted a convoluted method of opening one, for which one needed a degree from Cambridge and the tenacity of a bulldog. I know from having spoken to those in the DWP who participated in early discussions that it wanted only banks to be involved, because they were the cheapest, and it set its stall out accordingly.