House of Commons Hansard Debates for 14 Dec 1992

Madam Deputy Speaker : I call Mr. Chris Smith.

Mr. McLeish : That is close, Madam Deputy Speaker. It is 4.40 am, so there may be some excuse.

Madam Deputy Speaker : Please accept my apologies.

Mr. McLeish : I should not mind the mistake if you had not mistaken me for a London Member. Scots may take some umbrage, but we shall continue.

My hon. Friend the Member for Midlothian (Mr. Clarke) should be congratulated on winning this debate. It is a subject that the Government would not bring before

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the House, partly because of the embarrassment it would cause even to sections of the Conservative party in Scotland, including councillors and some of the Minister's hon. Friends on the Back Benches, who I am sure will join us at a later date in criticising the proposal heavily.

It is also important to say that this has been an excellent debate. My hon. Friends have focused sharply on the issues. There has been passion and knowledge, and my hon. Friends have demonstrated the outrage that is felt throughout Scotland about the ultimate absurdity, even for this Government. To talk about the "ultimate absurdity" involves taking into consideration some offences and injuries to the Scots over the past 14 years which are themselves pretty dramatic and pretty terrible.

The debate has highlighted three particular points. First, the Government's attitude has shown that there is a compelling case for the issue to be debated in Scotland in a Parliament of Scots where it can be debated by Scots for Scots. It could be given appropriate time and importance there, and such a Parliament would enable Scots to view the proceedings, rather than our having a debate at this time of the morning 400 miles away from the scene of activity.

The second point that has emerged is that there is no compelling case for water privatisation. It is an absurdity and I look forward to listening to the Minister trying to justify such a measure. We shall, of course, be told that local government reform and water privatisation are the subjects of consultation.

The second point leads me on to the third. Who can believe any consultation process started by this Government? Both consultation processes end on 29 January next year. Is not it the case--the Minister would agree if he was being honest--that local government reform in its simplest form is a paving measure for water privatisation? The two are inextricably linked. The consultations finish at the same time. The Prime Minister goes one step further. He sees local government reform as a substitute for significant constitutional change. My hon. Friends and I disagree with that viewpoint.

It seems curious to me that when the Government are taking stock after the 9 April election, in which they were heavily defeated in Scotland, they are still pursuing a matter that seems not only to outrage Scots, but to insult them. As my hon. Friends have said, why do the Government listen to no one at any time?

The feeling of outrage, as my hon. Friends have suggested, goes well beyond party political differences. It is reaching areas that I have never seen involved, and people of all parties and of no party. The vexed question is when the Government are going to put the public interest of Scotland before the political ideology of the Conservative party.

My hon. Friends have raised a number of important issues and I will highlight some of them. My hon. Friends have mentioned the curious position of Quayle Munro. It was the consultancy company that was commissioned on 4 August to carry out a study on the options for water. The study cost the taxpayers £50,000. The Government refused to publish the brief. They have also refused to publish the report. From the Government's report that was published in the House, it is clear that there is no reference to that study, which cost £50,000 and which is supposed to be the basis for this debate and the debate that will continue until 29 January.

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The Government must be asking some searching questions. Why does Quayle Munro seem to be the flavour of the month, every month in Scotland, in relation to Scottish Office work? Why has that company been given £563,000 in only a few years in relation to the Scottish Bus Group, the Skye crossing and now Scottish water and sewerage services?

It is widely known in Scotland that the firm has no technical competence or technological experience. On what considerations do the Government base their commissioning of work from that company? When the Minister responds, I hope that he will tell us why Quayle Munro seems to be favoured when most of its competitors, which are losing contracts against that firm, regard that with dismay and disbelief. How on earth can the Opposition take seriously a report published by the Government, based on a report commissioned by the Government which has not been published or discussed, but which has cost the taxpayers of the United Kingdom nearly £50,000? That is a key issue to which we want an answer. This is a shabby and tawdry affair. The Government are simply not coming clean about what they are doing with taxpayers' money. We demand answers to those questions-- hopefully tonight, or on the other occasions when the issue will be debated. The necessary investment has also been highlighted in the debate. Most of my hon. Friends know that the Government are arguing that investment equals privatisation, but that is simply a smokescreen. My hon. Friends have pointed out that we do not need to go into the private sector to be privatised and to win the £5 billion-worth of investment.

Most people accept that some £5 billion may be needed over the next 15 years to tackle the Community directives about clean water and waste. That should be the basis for reasonable discussion, but we do not have such a discussion. Instead, the Government use the pretext of the necessary investment to argue for privatisation.

In many recent articles, and in terms of the comments made by my hon. Friends, the £5 billion can be won because, at the present time, the Government do not contribute a penny to the water service in Scotland. Can the Minister deny that? Does he not accept that that is true? The Minister does not seem to be sure. Do the Government accept the view that not a penny comes from the taxpayer towards the provision of water services in Scotland?

Mr. Allan Stewart : As I will explain to the House shortly, the hon. Gentleman is talking the most absolute nonsense.

Mr. McLeish : Will the Minister confirm that, in Scotland, apart from the borrowing consent--

Mr. Stewart : That is right--the borrowing consent.

Mr. McLeish : I hope that my hon. Friends will forgive the digression, but I think that the Minister may want to know something about how capital expenditure operates. Does he not accept that the Treasury allows Scottish local authorities, by way of a signed piece of paper and a bottom-lined activity, to borrow that money? Every penny of the debt and the service comes from the consumer. Therefore, the taxpayers of Britain do not provide a penny towards the provision of the water service.

Mr. Stewart indicated dissent.

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Mr. McLeish : The Minister can shake his head all morning.

Mr. Stewart : Will the hon. Gentleman explain why such borrowing consent has been consistently classified as public expenditure by every Labour Government?

Mr. McLeish : This is an interesting diversion, but let us return to the key issue. The Minister will not accept that, at present, Scottish local authorities and their consumers pay for every penny of expenditure on the water service.

That is the conclusion of experts, and it is obviously right. Does not the Minister accept that the £5 billion can be found? Calculations suggest that, at the moment, capital expenditure for water and sewerage is more than £200 million a year. The figure of £5 billion over 15 years is about £340 million a year. We are talking about the possibility of servicing the debt on an additional £100 million of capital expenditure. That is simply a smokescreen. We do not need privatisation to win such investment ; at present it can be done comfortably by Scottish local authorities.

My hon. Friends have also highlighted the experience of England and Wales. I feel sorry for people in England and Wales, because they are the victims of a disaster : first the sell-off ; secondly, the rip-off ; thirdly, the pay-off, in the form of the Thames Water contribution to the Conservative party. What a disgrace!

The Government heap insult on injury by not only privatising the most precious asset that any community can have ; they then create what my hon. Friends have described as a new batch of water millionaires. In 1988-89, the 10 chairmen of the water companies paid themselves £400,000. In 1991-92, the same 10 chairmen paid themselves £1.2 million. What about wage restraint? What about ripping off the consumer? What does that do for efficiency, value for money, effectiveness and cleaning up our dirty beaches and sewage-laden sands? Nothing whatever : it is simply a licence to print money. I hope that the Minister will address that matter.

My hon. Friends have also mentioned disconnections. "Barbarism" and "obscenity" were two words that I heard. Most Scots agree. They are simply outraged that, although in a culture which values a precious asset we have no disconnections, in England and Wales the ultimate test of the marketplace is to disconnect people.

Despite being given every opportunity, as my hon. Friend the Member for Dundee, East (Mr. McAllion) said, the Secretary of State for Scotland refused to rule out disconnections in his vision of water and sewerage services in Scotland. Perhaps the Minister will want to address that problem and reassure the House that there will be no connections, regardless of the option selected. He is a charitable man. I am sure that every sinew of his body is tingling with embarrassment, outrage and concern at the possibility of disconnections taking place in his constituency of Eastwood. He has an opportunity to go one step further than the Secretary of State and tell us that there will be no disconnections, regardless of which option he selects for the future.

The debate has been good because it has highlighted, I think conclusively, the fact that the Government must be deeply embarrassed. The Scots are outraged. There is no justification for privatisation and no case on investment. What we see is the bidding of the Treasury, leading Ministers in the Scottish Office once again to bend the

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knee. When will the Ministers in the Scottish Office stand up for Scottish interests and tell the Treasury and the ideologues of Smith square and No. 10 that we simply will not have a scandalous privatisation of the water service?

Let us keep the service public, let us invest what is required, and let us make it clear that every pound spent by consumers is returned to them in value for money, instead of water millionaires, disconnections and the whole paraphernalia of the disastrous privatisation in England and Wales.

4.53 am

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart) : One must congratulate the hon. Member for Fife, Central (Mr. McLeish) on at least managing to work himself into a considerable lather at 4.53 in the morning. I join him and other hon. Members who have spoken in the debate in congratulating the hon. Member for Midlothian (Mr. Clarke) on his success in the ballot and on providing us with this opportunity to debate the closely related subjects of local government and the future structure of water in Scotland.

The hon. Member for Midlothian and some other hon. Members have raised the issue of the Scottish Parliament. Madam Deputy Speaker, you would not wish me to dilate on that matter. I repeat my view that if the people of Scotland wish to have a Scottish Parliament, they have and have always had an opportunity to obtain that by voting for the Scottish National party in sufficient numbers.

Mr. Davidson : Does the Minister agree that at the last election the Labour party stood on the basis that it would introduce a Scottish Parliament? It is not reasonable to say that the only choice is Unionism and the status quo or independence. Indeed, the range of people who want a Scottish Parliament of some sort stretches across all the Opposition parties ; it is not solely the reserve of the SNP.

Mr. Stewart : I do not dispute for a moment that the hon. Gentleman and his hon. Friends want a Scottish Parliament. But, as I understand it, the Labour party's position is that it accepts that the Government of the United Kingdom should be made up of that party which commands a majority in this House. That is not the position taken by the SNP and it never has been.

I congratulate all hon. Members at least on their stamina in being here at 4.55 am and, indeed, on their impassioned and--I certainly would go so far as to say--on occasion, knowledgeable speeches. I look forward to seeing them all--as I am sure does their Whip, the hon. Member for Paisley, South (Mr. McMaster)--at the Scottish Grand Committee at 10.30 this morning.

The first of the two related subjects which the hon. Member for Midlothian brought to the attention of the House was local government reform. Since October, there has been tremendous interest in the consultation paper on local government reorganisation. We have sent out more than 18,000 papers as well as the consultation video and leaflets. The message that continues to emerge from those within local government, members of the public and other organisations is that we now have a considerable opportunity to improve things. Although, of course, the 1975 reorganisation served its purpose, we now have a chance to develop a sense of

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identity between communities and local authorities. That identification has been weakened in many cases. I hope that Opposition Members who did not concentrate--I do not criticise them for that--on the wider debate about local government will take the opportunity before the end of the consultation period to put in their constructive comments on the structure of local government they want to see. We believe that the process has got off to an excellent start. It is engaging many thousands of people across Scotland, whose input will be invaluable in the decision-making process.

Opposition Members made the general point that there was some hidden agenda about local government reorganisation ; they suggested that it was about moving power and responsibility from local to central Government. It is specifically not about that. We have said that we believe in the enabling rather than the providing role of local government, but that does not take away the responsibilities of local government for ensuring that services are provided. If we intended to move power and responsibility from local authorities, we would hardly have announced recently the transfer of responsibility for care in the community to local authorities in Scotland. So I assure Opposition Members that there is no hidden map or agenda for the reorganisation of local government, and that it is not about the transfer of responsibility from local to central Government.

Mr. Davidson : Can the Minister give us a cast-iron guarantee that none of the powers or activities presently given to local authorities will be removed and given to central Government?

Mr. Stewart : I can repeat the general assurance. However, there are some aspects-- [Hon. Members :-- "Ah!"] I shall give an example. At the moment there is a division in the responsibility for trunk roads, and the responses to the original consultation paper showed that there was widespread dissatisfaction with the present arrangements. There is no general thrust behind the proposals to move the major responsibilities of local government to central Government. That is not the objective.

Mr. McLeish : On a lighter note, if the Secretary of State selects any of the options that do not include Eastwood as a separate entity, will the Minister assure us that he will not resign from the House?

Mr. Stewart : I assure the hon. Member that my right hon. Friend the Secretary of State is a wise and objective man, who will consider all the representations that he receives in his customary, objective way-- [Hon. Members :-- "All the representations?"] My right hon. Friend will consider all the representations from hon. Members and from everyone else at the end of the consultation process.

Mr. Wray : The Minister mentioned the nationalisation of housing to my hon. Friend the Member for Paisley, North (Mrs. Adams). Is there to be any reform of housing? Is he aware that 37,500 people were registered homeless last year and that 11,500 of them involved families, which means that 84 children were made homeless every working day of the year?

Mr. Stewart : The debate is about local government and I can assure the hon. Gentleman that we envisage that

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local authorities will continue to have a responsibility as housing agencies, along with others such as Scottish Homes and housing associations.

My time is now very limited, so may I deal with hon. Members' remarks about water and sewerage? There is an inescapable need to study the structure of the water and sewerage services in Scotland. Local government reorganisation makes that necessary.

I emphasise that the consultation paper sets out a range of possible options and we genuinely want people's well-considered views on them. I hope that respondents will approach the exercise with the same seriousness and open-mindedness as we do.

Frankly, all the options have advantages and disadvantages. It is a question of striking a balance and we want to get that right. It will require careful thought. Knee-jerk reactions against privatisation may make Opposition Members feel good at any time of the day or night, but we will need more than that. Such reactions are not a substitute for thought. We must ask a number of questions.

The changes resulting from the reorganisation of local government provide a good opportunity for asking the questions, but we must also consider financing the capital investment. Opposition Members made some well- considered comments on that. There is general recognition that major capital investment will be required and there is common ground across the House on the broad level of the sums that will be required. If a public sector agency is to undertake that capital investment, fewer resources will inevitably be available for other public sector projects. In any public expenditure, there is an opportunity cost.

I must tell the hon. Member for Fife, Central that the borrowing consent that has been given to the regional and islands authorities naturally counts as public expenditure. The fact that it has counted as public expenditure under this Government and all previous Governments, whatever their political persuasion, cannot be ignored. The hon. Member for Glasgow, Hillhead (Mr. Galloway)--

In accordance with Mr. Speaker's ruling-- [ Official Report, 31 January 1983 ; Vol. 36, c. 19]-- the debate was concluded.

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Sub-post Offices

5.5 am

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I am grateful for the opportunity to address the House in this short debate and apologise to the Minister for causing him some lost sleep.

The Minister for Trade (Mr. Richard Needham) : I am always awake at this time in the morning.

Mr. Kirkwood : I am pleased to hear that. The Department is obviously making the Minister earn his pay.

The subject is important and I do not apologise for detaining the House at this late hour because not just hon. Members are losing sleep tonight ; owners of sub-post offices throughout the country are losing sleep as a result of the future that they face. Small businesses, particularly sub- post offices, have had a tough time in recent years, partly because of the current economic context in which they must operate. The commercial world has been under considerable financial strain recently because the recession has been deeper and has lasted much longer than any of us expected.

Moreover, rural and peripheral communities have been under stress for many reasons. Agricultural subsidies have been, are being and will be reduced. Last week's announcement about the hill livestock compensatory allowances, for instance, will badly affect the sheep rearing industry, particularly in my constituency. The uniform business rate has had an adverse effect on small businesses and rural post offices. If my hon. Friend the Member for North Cornwall (Mr. Tyler) catches your eye later, Mr. Deputy Speaker, he may expand on that problem.

There have been significant reductions in the rural transport available in agricultural communities throughout the country. The changing character of villages in the past five or 10 years, as they become dormitories of bigger satellite towns rather than self-supporting communities, has contributed to the problem. It is not a new problem but has been an increasing trend in recent years. It is now becoming critical and it is worth while spending some time looking at the current position.

Sub-post offices and their future must be considered in the context of services provided by Post Office Counters. The Government's plans are clear : they intend to privatise the concern at some stage. That in itself creates the uncertainty with which owners of small sub-post offices must contend.

I have the 10th most rural seat in the entire United Kingdom, according to the reference books on those matters. It is therefore clear to me in my constituency work that sub-post offices provide a vital element in the existing rural framework. Hon. Members on both sides of the House have seen the closure of many Crown post offices. The network has been reduced and Post Office Counters as a business has been rationalising its structure and moving away from the provision of Crown post offices towards the provision of sub-post offices on an agency basis. There is much uncertainty.

My attention, and that of other hon. Members, was drawn to the subject by the benefit uprating statement made by the Secretary of State for Social Security on 12 November. He said that he was trying to save money by trimming administrative costs, which is a laudable objective. He said that it was more expensive to pay giro

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payments across post office counters than to make automated credit transfers, which is true. However, the Secretary of State made a worrying comment. He said :

"I therefore propose to encourage more customers to accept payment of benefits directly into their bank or building society accounts." In the exchanges following his uprating statement, the Secretary of State said :

"only those who have bank accounts and can be persuaded to use the facility will do so. There can be no question of claimants in rural areas who use the Post Office or whose bank is a long distance away switching from the Post Office. There is, therefore, no threat to rural sub-post offices."-- [ Official Report, 12 November 1992 ; Vol. 213, c. 1015-24.]

As a result of that statement, I wrote to the Minister of State at the Department of Social Security. In an interesting reply written on 11 December, the Minister helpfully explained that the new approach that the Department was adopting to giro payments was part of the move to a citizens charter. He said that it would make more choices and services available to the public, which is laudable. He also said :

"Nowadays around 40 per cent. of new pensioners, and 33 per cent. of new mothers claiming Child Benefit, ask to be paid by ACT." The Minister said that the research conducted by his Department showed that more than 70 per cent. of all claimants had suitable bank or building society accounts and that 74 per cent. of those approaching pension age had had their wages paid into their bank account. The implication is clearly that new generations of claimants and pensioners will take a different approach to accepting state payments, and substantial numbers of those who became accustomed to receiving direct payments might opt for the new service offered by the Department.

The Minister's letter said that the Department was continuing a system of research and that, after the appropriate research and piloting, in 1993 the Department would introduce its new system, with new forms and information. The system would encourage people to consider the possibility of using automated credit transfer. The letter contained two other items of significance to tonight's debate. The Minister mentioned the Government's commitment to post offices and the rural sub-post office network. He said :

"The Government remain committed to a nationwide network of post offices in which the rural sub-post offices will continue to play a very important part. Indeed the Post Office were consulted in advance about the proposal and I understand that they do not expect any post offices to close as a result."

The Minister also said :

"we do not expect a significant effect on the viability of rural sub-post offices as a result of this change."

That is an interesting letter, which makes it clear that the Government are founding their arguments on a series of propositions, one of which is that no significant effect on the viability of sub-post offices is to be expected from the changes. The Minister of State clearly stated that the Post Office had been consulted and did not expect any post offices to close. The Government seem to be committed to a national network of post offices. More people have bank accounts now, and it was clear from the Minister's letter that automated credit transfer provides more choice--that is the objective set out in the citizens charter. According to the Government, it is a more secure method of payment and it will save money.

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Will the change threaten the sub-post offices in any way? In my submission, it will, at least superficially. The Minister of State at the Department of Social Security does not admit to understanding the structure or finance of the post office network. There are 20,000 post offices, but only 1,000 of them are owned and run by the Post Office as Crown offices. The rest are run as agencies by sub- postmasters, who generally combine their post office activity with a retail business. Sub-postmasters undertake 70 per cent. of all business transacted across post office counters, so the vast bulk of the Post Office's work is conducted in that way.

According to the National Federation of Sub-Postmasters, services provided by the state--driving and television licences, and so on--account for more than 70 per cent. of all business. The work done for the Benefits Agency represents 34 per cent. of that work. The Government do not seem to allow for the fact that the future of rural offices is directly linked to the future of the urban offices, because the Post Office negotiates an overall fee with the Benefits Agency which it then redistributes to the sub- postmasters. The money is not distributed evenly ; larger urban post offices are paid less per transaction than are the small, mainly rural, offices. The smaller offices are paid almost eight times as much. That cross-subsidy ensures that the rural network survives.

Any action which threatens the urban post offices will directly or indirectly threaten the viability of the rural network. If the size of the cake is reduced, there will be pressure to change the payment ratio and to pay urban offices more because that is likely to be seen as a way of preserving the maximum number of offices, and the rural offices will be at greatest risk of closure. If the ratio is unchanged, a reduction in benefit transactions will clearly cost rural offices more per head.

The National Federation of Sub-Postmasters takes the view that any action that reduces the urban network will threaten the viability of the rural network, making it even more difficult to maintain it. I have consulted the Post Office on this matter. It takes the view that benefits payments in post offices act as a magnet for the customers who make the private business of the sub-postmasters viable. Thirteen million people visit post offices every week in connection with benefits payments. That represents nearly half the total number of Post Office customers. If the Government succeed in encouraging a large slice of Post Office business to move to banks, the continuing viability of thousands of post offices will be undermined. The Post Office's view contradicts the Minister's letter, which claimed that the viability of post offices would not be directly undermined. That might mean that the Post Office does not think that any of its own 1,000 Crown offices will close. Five per cent. of the network will be safe thereby, but it would help if the Government explained their statement that they do not believe that the viability of the post office will be undermined by this change.

The closure of post offices in small communities obviously has a knock-on effect on the whole local economy. If people have to travel to the nearest town to withdraw cash, it is likely that they will spend their cash there, thereby removing that cash from the local economy.

Will the change benefit the customer? The Government claim that the citizens charter, and all that it brings in its train, is motivated by a desire to offer greater convenience to the customer, as well as by savings. The Government claim that the increased use of automated credit transfer

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means more choice. The problem is that if increased use of ACT results in fewer post offices, that will present benefit recipients with less choice and convenience.

How are recipients in rural areas to obtain cash? They will have to travel to the nearest branch of their bank, which will nearly always be farther away than their local post office. Many of the people forced to do that will be pensioners and mothers with small children.

The reduction in the number of rural post offices comes at the same time as a rapid reduction in the number of bank branches. The latest available figures show that sub-post office closures in 1991-92 totalled 288--nearly one every working day. However, that rate was surpassed by the number of bank closures. In 1990, 304 local bank branches closed--again, one nearly every working day. In 1991, 664 closed--nearly two every working day. In the first six months of 1992, 542 bank branches closed--nearly 3.5 every working day.

Mr. Needham : If the hon. Gentleman is right about that, surely the effect will be to strengthen sub-post offices. If there are fewer banks, more business will go to them.

Mr. Kirkwood : I am talking about communities that are 20 miles from the nearest bank. Bank closures might increase the distance to 40 miles.

Mr. Needham : Exactly.

Mr. Kirkwood : The Minister can develop that point in his own speech.

Most banks envisage further cuts and closures--and most of them will occur in smaller communities. If those closures are compounded by the closure of rural post offices, customer service will be substantially cut.

Increased automated credit transfer could lead to more inconvenience in other respects. Many sub-post offices are the only shop in their community. Those businesses are already under threat, for reasons that I explained earlier. If they go bust because of increased ACT, that will hardly improve convenience. The front page of yesterday's Daily Mirror reported that the village shop in the Prime Minister's own village has gone bust, with debts of more than £150,000. Mr. and Mrs. Doug Belcher in Great Stukeley, near Huntingdon in Cambridgeshire, have quite a lot to say about the economic situation in the Prime Minister's constituency. I thought that was a very apposite report in the context of this debate. If the Prime Minister cannot save small village shops in his own constituency, what hope is there for the rest of us in the current economic climate?

Another sector to lose out in convenience terms will be mothers. At present, they collect child benefit from post offices, but in the absence of a local post office, they will be forced to switch to automated credit transfer. When that happens, there is less of a guarantee that the benefit will be used for the correct purpose. If a mother has a joint bank account or must receive the money via her partner, she could lose the valuable direct control over her child benefit that the current systems offer.

Also, a great deal of information about benefits and other Government services is distributed via local post offices. How will the Government replace that facility? Will they pay the banks to do that work, or for large-scale advertising or direct mailings to those whom they think need the information? Or will they not supply the information?

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The Minister of State's letter mentioned reducing the time that people spend queueing in post offices. First research shows that 90 per cent. of post office customers are served within three minutes ; secondly, and perhaps more important, many people whose benefits are paid by automated credit transfer will still have to queue to withdraw cash at their banks. According to the September issue of the Consumers Association's magazine Which? , independent research has shown that queueing times in post offices are shorter than those in banks and building societies.

How much could the Government save through the new technique? At present, 95 per cent. of benefits are paid by order book or giro through the post office and 5 per cent. by automated credit transfer. Use of ACT is increasing as more new recipients opt for it. It offers three methods of saving. First, savings can be achieved by combining the payment of different sorts of benefit that may be going to the same recipient. Secondly--I do not underrate the importance of this--the incidence of fraud can be reduced, because fewer cash order books can be stolen. I know that the DSS worries about fraud, and it is right to do so.

Thirdly, ACT payments are made four or 12 weeks in arrears rather than weekly in advance, like giro payments. That last saving is clearly made at the cost of claimants, who will lose five or 13 weeks' use of their money, depending on which system they choose. According to an article that I read on, I think, 25 September, payment in arrears is already saving the Government some £40 million a year.

Other Departments' responsibilities overlap those of the DSS : the Ministry of Agriculture, Fisheries and Food is an example. A series of Departments are involved in supporting the rural economy, and they must address a number of important questions. New uncertainties have arisen as a result of the benefit uprating statement made by the Secretary of State for Social Security. The two questions that I am asked most often are "Who is the new policy supposed to benefit--the Treasury or the recipient?" and "How will the Government fund their commitment to the national network if they are to remove some of the income that they provide?"

I think that the answer to the first question is that the Treasury will gain : a significant increase in ACT will certainly result in less choice and convenience for the customer, and in damage to rural economies in particular. Only the Government can answer the second question, the Minister of State's letter to me of 11 December states categorically :

"The Government remain committed to a nationwide network of post offices in which rural sub-post offices will continue to play a very important part."

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