House of Commons Hansard Debates for 13 May 1993

(a) the payment out of money provided by Parliament of such sums as may be necessary to enable the Secretary of State to meet such obligations of his as are mentioned in the Act ;

(b) the payment of any sums into the Consolidated Fund-- [Mr. Robert G. Hughes.]

8.16 pm

Mr. Bell : The Bill comes before the House as a result of the shortage of capacity in the worldwide reinsurance market and because of the fact that certain European reinsurance companies withdrew their support from our insurance market. It is therefore less to do with terrorism than with insurance.

Under clause 1, the power of the state comes in behind the insurance market and stands four square behind the market of the City of London. We welcome that.

Under clause 2, the Treasury will undertake any liability that may flow from the Bill. We welcome the involvement of the Treasury. We see that a mutual company is to be created, and we welcome that idea and urge all reinsurance companies in the country fully to involve themselves.

We see that the DTI will have certain responsibilities--two posts will be required. We know that the Department is responsible for oversight of our insurance market, so we welcome that aspect of the Bill too.

We commend the Third Reading of the Bill--

Madam Deputy Speaker (Dame Janet Fookes) : Order. Perhaps I should let the hon. Gentleman know that we are discussing the money resolution, not Third Reading--although they may be virtually indistinguishable.

Mr. Bell : Since they are virtually indistinguishable, I shall leave my comments at that.

Question put and agreed to.

The House, pursuant to Order [7 May], immediately resolved itself into a Committee on the Bill.

Bill reported, without amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.-- [Mr. Neil Hamilton.]

Mr. Bell : Having ensured that the money resolution and Third Reading are not mutually exclusive in lawyers' terms, I shall not repeat my earlier remarks. I shall say

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only that the final message from the Opposition, which is similar to that from the Government, is that there is no future in terrorism, destruction and death. No political solutions are on offer. The message to the IRA, or any other terrorist organisation, is that it is not worth it--it is not worth a bean. I hope that that message comes over clearly.

Question put and agreed to.

Bill read the Third time, and passed.

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Automated Credit Transfers

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Robert. G. Hughes.]

8.20 pm

Mr. Calum Macdonald (Western Isles) : I am grateful that Madam Speaker has chosen this subject for debate, because her choice recognises the social and economic importance of the effect of automated credit transfer upon rural sub-post offices nationwide. There have been six early- day motions on the subject over the past few months, attracting at least 200 signatures at the last count. It has been the subject of written and oral questions, including two in Prime Minister's Question Time, and a debate in the other place. There will be a debate on the subject, in Opposition time, next week.

Despite all the attention, the issue has not been resolved, nor have key aspects of it been made clearer. The issue is important, first and foremost, for the impact that it could have on the millions of pensioners who use their post office on a weekly basis to cash their pensions and benefits. For most pensioners, that weekly visit to the post office is the most convenient and desirable way to receive their benefits. It has many merits for them. It gives them an opportunity to catch up on news and gossip, and to find out what is happening in the local community and to friends and neighbours. That visit is also an opportunity to gather from the postmasters and postmistresses other information that may be useful and beneficial to them. The individuals who work behind the counters are, as most hon. Members--certainly all who represent rural

constituencies--will recognise, people who are made enormously knowledgeable by the very nature of their work, combining as they do the functions of Government clerk, small shopkeeper and occasional social worker.

Perhaps I may be permitted to quote a postmistress in my local village of Garrabost, Mrs. Joan Anne Campbell. Speaking to the local newspaper, the Stornoway Gazette , Mrs. Campbell said :

"Your local post office is more than just that--it is a public service. It is a place to get forms filled in, a place to meet and have a chat and, sometimes for those behind the counter, it's almost like being a social worker. A local sub-post officer is really the centre-point of a community and has a very important part to play." That may have been said by someone working in a local post office in the Western Isles, but it will be recognised as valid and true throughout the rural areas of Britain.

Unlike banks, sub-post offices are easily accessible to the vast majority of elderly people who use them. As is not the case with banks, there are sub-post offices in the majority of villages throughout Great Britain. I have been quoted the figure of 60 per cent. of villages having a sub-post office. Those who run post offices are familiar with, and familiar to, their elderly customers. They provide a point of reassurance for the pensioners who use them. The Government should see them as an invaluable asset, rather than as an encumbrance or a drain on money that they have to stop. The non-appearance one week of a pensioner who usually uses the post office will immediately be noticed by the local sub-postmaster or sub- postmistress. If a pensioner appears but looks a bit peaky, that will be noticed and observed. That kind of contact, that kind of

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relationship between people, is unique to the post office network of Great Britain. It could not be duplicated by the banking service. The system is not an archaic hangover, a traditional aspect of British national life that is best done away with. On the contrary, with the advent of care in the community, the social role of sub- post offices as dispensers of advice and services, as well as of pensions and benefits, ought to be enhanced, not diminished. If they had not had that network of 20,000 post offices and sub-post offices, the Government would have had to invent it when they came to implement care in the community.

It is a foolish economy for the Government to be considering closing rural sub-post offices, whatever the purported savings of a switch to automated credit transfer. What savings there will be may be at the financial expense of the pensioners, because of the charges that may be deducted by the banks or the loss of interest on delayed payments, which may be retained by the Government.

If the move goes ahead, it will be greatly to the detriment of pensioners, who will be much inconvenienced. The switch to ACT will mean that pensioners will lose the right to receive their pensions on a weekly basis. Payments will be made monthly in arrears. That may be convenient and financially attractive for the Government, but I cannot for a moment believe that it will be convenient for the pensioners. Many pensioners-- perhaps even a majority of them--are relatively well off, but many live a hand-to-mouth existence. For them, it is impossible to conceive of budgeting other than on a weekly basis. It would make their lives still more difficult to have to be constantly a month in arrears because of the switch to ACT. Pensioners also need to have cash ready to hand to buy the little odds and ends that they need on a day-to-day basis--groceries, newspapers and so on. Where can they obtain that ready cash if the Government go ahead and succeed in switching benefits to direct payments into banks? Pensioners will often have to cope with the fact that there will be no bank in their locality, and they will have to travel many miles to go into town to withdraw money for the week or the fortnight, on buses or even by hiring a taxi if the bus network is not there or the service is not convenient. That will be enormously inconvenient and troubling to many pensioners. We must also bear in mind the fact that pensioners will have to visit the bank in person to draw money, whereas someone who is elderly, who is ill that week, or who is partially sighted or disabled, can send a representative to the local post office to pick up his or her pension. With banks that is not possible.

I have already mentioned the invaluable social role of the rural post office, and there is no doubt that the sub-post office network will be badly hit by the loss of the business that pensions and benefits represent. Inevitably, many will close as a direct consequence of the switch to the payment of pensions and benefits by automated transfer into bank accounts. Almost 13 million people visit their local post office each week to pick up their pensions, and that business from the Department of Social Security represents one third of the turnover of Post Office Counters Ltd. That is a greater proportion of business than comes from the Royal Mail, which represents only one fifth of the total turnover. Of that enormous benefits turnover, about 18 per cent. is drawn through sub-post offices.

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Clearly the loss of the pensions and benefits business will have a direct impact on the viability of local sub- post offices. Moreover, the loss of that business will cause the loss of other business, on which sub-post offices rely to make them financially viable. We must remember that post offices are often shops as well, and that the people who come in to pick up their pensions also stop to buy newspapers, groceries, stationery and a variety of other goods. If those people did not come in to pick up their pensions and benefits, they would not buy the groceries and newspapers either, and the loss of that secondary business would be a massive blow to rural sub-post offices. If offices had to close because the loss of that business meant that they were no longer viable, many villages would lose not only their post office but their only shop. That would be a severe blow to many villages.

The Government talk about offering their customers choice. However, if local sub-post offices close many people who would have wished to exercise that choice will be denied the opportunity to do so. They will be forced against their will to use automated credit transfer. The Government must take on board the fact that the exercise of choice by a minority, by making the sub-post office network no longer viable, could have a knock-on effect on the majority of people and in effect remove the choice that they would have exercised if the post offices in their communities had still been open.

There is another point to make about consumer choice. If the Government were merely offering information to pensioners about the existence of automated credit transfer, there would be little objection from either side of the House. The Government already provide the option of automated credit transfer, and there can be little objection to making that option widely known to pensioners and to others who might want to choose it, so long as the choice is offered in a neutral and even-handed way. But clearly, that is not happening.

Both the Secretary of State and the Under-Secretary of St Widdecombe), have made it clear that the Government are actively encouraging pensioners to switch to automated credit transfer. On 12 March this year, the Under- Secretary said :

"Our policy is to encourage the use of automated credit transfer".--[ Official Report, 12 March 1993 ; Vol. 220, c. 751. ] In other words, the Government are not neutral or even-handed ; they are peddling a particular option for their own self-interested reasons.

That fact is borne out by a trial of three new forms being sent to 24,000 people who are due to receive their pensions for the first time. The forms are designed to tell the pensioners what pension they are entitled to and how they may collect it. I have obtained copies of the forms, and each one of the three types is being sent out to a sample of 8,000 new pensioners. The first form is the most even-handed, because there is a section, part 9, headed : "How you want to be paid--you can choose".

That is fair enough. The form lists two options, the first of which is :

"Straight into a bank account or building society account". Then various details are given about that option.

The second option is described as :

"By order book--at a post office".

Slightly fewer details are then given about that option. Later in the form, there are two sections for pensioners to

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fill in, one of which will provide for payment of the pension straight into a bank or building society account, and the other of which will provide payment by order book at a post office. The pensioner can choose simply by filling in the form and sending it off.

That form provides the pensioner with a clear choice, although there could be objections about the way in which the two choices are described, because the first choice--payment straight into a bank or building society account- -is accompanied by a list of its advantages, such as the fact that interest can be gathered on the money paid into such accounts. We might think that it was a bit disingenuous of the Government not to mention that they will be gathering interest from the money that they pay out, not weekly, but monthly in arrears. But we can leave that point to one side.

We might also complain that the option of the order book is described, but does not have any corresponding list of advantages appended. Nevertheless, there is enough information there for the pensioner to make a fairly clear, well-informed choice between the two options.

The second form, however, falls well short of offering the pensioner a clear choice between the two options that are available. In the equivalent part 9 of that form it says again,

"How do you want to be paid? You can choose."

However, it does not give two options. It starts by listing "Straight into a bank account or a building society account." Then it gives the same list of advantages and procedures. At the bottom of the form it says simply :

"If you want any more information, get in touch with your Social Security office."

There is no mention whatsoever of the post office option. Also at the bottom of the form there is provision for a form to be filled in by the pensioner in order to get the pension paid straight into a bank or building society account. It then, finally, mentions payment by order book at a post office and asks the question : "Do you want to be paid by order book at a post office?" It does not mention any advantages or give any details. There are simply two boxes, one to be ticked for "no" and one to be ticked for "yes", and it says :

"We will write to you about this."

So hardly any information is made available to the pensioner. The pensioner has to tick a box and send the form off, and the DSS will send the pensioner further information about the post office option. That form is bad enough, but the third form that is being tested with 8,000 pensioners is even worse. It is similar to the other forms. It has a section headed :

"How you want to be paid",

and, as in the second form, the option of having the pension paid straight into a bank or building society account is described in great detail. All the supposed advantages are listed, but again there is no mention of the post office option. It simply says at the bottom of the form that if the pensioner wants any more information he or she should get in touch with the social security office.

At the bottom of the coupon that has to be filled in by the pensioner in order to take advantage of the option of having the pension paid straight into a bank or building society account there are the words :

"Do you want to be paid by other means?"

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It does not say whether those other means are through the post office or any other way. There are again two boxes, one to be ticked for "no" and the other for "yes", followed by the words : "We will write to you about this."

So the first of these forms points out the advantages of using automated transfer and describes to some extent the option of using a post office. The second form gives information only about banks and building societies ; it mentions post offices, but gives no information whatsoever about that option. The third form does not even mention the fact that there is a post office option ; it simply says that there are other options available.

The Parliamentary Under-Secretary of State, Lord Henley, made what I regard as a pretty astounding and breathtaking statement about these forms in the other place. He said :

"The simple aim behind what we are doing is to test the effect of each of those forms."--[ Official Report, House of Lords, 17 March 1993 ; Vol. 543, c. 1544.]

It would not take an Einstein to figure out the effect of these forms. Obviously, the more automated transfer is talked of, and the less the post office is mentioned, the more the pensioners will opt for the former. That will clearly be the effect of these three forms.

This is really a dodgy way to go about informing pensioners of their rights and options in receiving their pensions. Surely the Government should be trying to make their forms for pensioners more, rather than less, helpful.

I expect that the Minister is a fervent exponent of the citizens charter, and I ask him how it is consistent with that charter deliberately to withhold information from pensioners, DSS customers, as the last two forms do. I believe that the Government have no right to be steering and manipulating pensioners in this way. They should be offering genuine choice to pensioners, not a fake version of it. I am looking for two things from the Minister, on behalf of the Government, when he replies. The first is a retraction of the Government's statement that it is their intention to encourage pensioners to use automated transfer. I want the Minister to be able to say on behalf of the Government that pensioners will be given genuine freedom of choice in this matter, without constraint or manipulation of any kind. The second is to ask his colleagues in the DSS to give a commitment that these trial forms will be shredded and thrown away, and new ones produced--forms that will provide proper comprehensive, unbiased information for pensioners.

The 20,000 post offices and sub-post offices of Britain are not just local centres of community life ; they are also, I believe, a manifestation and a symbol in each town and village of Britain, whether in the Western Isles or Tunbridge Wells, of the wider national community, the country to which we all belong. A genuinely Conservative Government would have as one of its foremost priorities the preservation and enhancement of these symbols, these centres, of our national life.

But this Administration is not, of course, Conservative in that traditional and worthy sense. This is an Administration of libertarian dogmatists and cheeseparing accountants, who know the price of everything and the value of nothing. I fear that rural post offices are intended to be the latest in the long roll call of their victims.

Madam Deputy Speaker (Dame Janet Fookes) : Before we continue, I remind hon. Members that an Adjournment

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debate normally lasts only half an hour. It is understood that only the hon. Member raising the subject and the Minister may speak unless both grant their permission to other hon. Members. I know that the hon. Member for Western Isles (Mr. Macdonald) has allowed one hon. Member to come into the debate. I am sure that neither he nor the Minister will mind if others come in. Nevertheless, I believe that we should maintain the tradition.

8.49 pm

Mr. Bill Olner (Nuneaton) : I thank and congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on choosing this subject for the Adjournment debate. Before the general election, there was much talk about a double whammy. I do not know whether the wording of the advertisement was correct, or whether it had the intended impact. It certainly created a great deal of confusion. On this issue, there is a genuine double threat which pensioners have rightly picked up. I have had more letters in my postbag this past fortnight about the threat to post offices than I have had during the whole of the Maastricht debate, which trundled on here for a considerable time. This is a tremendously important issue. I am a little dismayed by the fact that the Government must have realised the fear that was felt by pensioners about the threat to their post offices and the threat to their ability to draw at post offices the benefits to which they were entitled.

My hon. Friend the Member for Western Isles mentioned post offices in rural areas. My constituency has a fairly extensive rural area and the post offices there are as my hon. Friend describes. In the urban areas, sub-post offices are also centres of the communities in which they are located. I am sure that many hon. Members have gone past post offices on pension day. One certainly knows which day is pension day when one passes a sub-post office. The pensioners have a ritual of queueing there fairly early. I do not know whether it is because they think that the Government will cause a run on the pound. Sub-post offices are an important and integral part of most communities, whether urban or rural.

It is not only pensioners who go to sub-post offices. If sub-post offices are forced to close because of a lack of business in terms of benefits being paid out, there is no other place within the immediate area where people can get television licence stamps, television licences or saving stamps, and there is no other place where they can pay their water rates or their council tax bills. The sub-post office outlet is an important part of our communities.

Most of the pensioners to whom I have spoken and most of the letters that I have received from pensioners say that they do not want pensions to be paid into banks or into building societies by automated credit transfer--ACT. They want to retain the right to go to the post offices to draw their pensions, or, if they cannot draw their pensions themselves, to be able to have their families or nominated people to draw the pensions there for them.

The majority of pensioners do not have bank accounts or building society accounts, but that is not the only point. As a result of the banks' meanness in many respects, the fear has crept in that once pensioners are trapped into having their pensions paid into those establishments, they will start charging pensioners for the transactions into and out of the accounts. If money is paid into the account, it

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must come out of the account at some time. I understand that banks are looking closely at their charges to customers.

There is the twin fear about the monthly payment, which has been much mooted as a replacement for the weekly payment. Monthly payments are wrong in two respects. First, they will be paid in arrears. Pensioners already struggle in many respects. How on earth can they be expected to live for three weeks without a pension? It may be nice for people on large salaries to receive payments in arrears, but it is not good for people on low incomes, such as pensioners. Secondly, monthly payments will accelerate the closure of sub-post offices. Instead of a sub-post office doing four transactions a month, it will do only one. The position of sub-post offices is based on their throughput. If the throughput is on a monthly basis, it will obviously be very much reduced.

Sub-post offices are in communities, they serve communities and they are very much at the heart of communities. It would be a terrible loss to communities if they were closed. I should like the Minister to remove some of the fear that pensioners genuinely feel : that they are being thrust into the option of having their pensions paid by direct payment or paid monthly. That fear is being transmitted to pensioners who fear that their sub-post offices will be lost. I should like the Minister to give an assurance that no Government action will bring that about.

8.55 pm

Dr. Michael Clark (Rochford) : Like the hon. Member for Nuneaton (Mr. Olner), I congratulate the hon. Member for Western Isles (Mr. Macdonald) on succeeding in having this Adjournment debate tonight, which is important and most timely. I thank him not only for allowing me to take part in the debate, but for inviting me to take part in it. In his letter of invitation, he said that there was a significant point that we should all make and that it was important that it had cross-party support. I am delighted that he has been so generous and I thank him very much.

Although it may be true that technically I was the first to raise the matter in the House when I raised it last Thursday at Prime Minister's Question Time, I readily concede that the hon. Member for Western Isles must have applied for the debate before I put my question. Technically, I was the first, but I concede that he was the first in mental attitude, and I gladly make that point.

The hon. Member for Western Isles spent some time going through the forms which many of us have. I am glad that he did so, because there is little doubt that the forms are an attempt to encourage pensioners and others on benefits to use banks and building societies rather than the post offices. I have no wish to stop anyone using a bank or a building society if that is what they wish to do. I am sure that the hon. Members for Western Isles and for Nuneaton agree with that. That is all right if it is people's free choice and if they are not being led by the nose in another direction. One can imagine that for people who are a long way from a post office and for people who pay most of their bills by cheque, it might be an advantage for the pension to be paid into a bank and to be used to settle their bills by cheque. It could be a positive advantage for people

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who are housebound. But to lead the beneficiaries of payment to believe that there is only one major choice, a bank or a building society, is quite wrong.

I will not repeat what the hon. Member for Western Isles said about the forms--he went through them comprehensively. I just add one point. On the third form, the post office is not mentioned. At the bottom it says "By other means". At the top of the form, and on the other forms, when they want the pensioner or the person collecting benefit to use a bank or building society, the bank or buildingc society comes first in the hope that the pensioner will tick that first. On the third form there are two blocks. One is

"How often do you want your Retirement Pension paid? Every four weeks? Every 13 weeks?"

We know that most people want it every four weeks, so that comes first and every 13 weeks comes second, because it is the option that is less likely to be used. But when it comes to the bottom, if one can find the post office on the second form that the hon. Member for Western Isles referred to, what is the first question?

"Do you want to be paid by order book at a post office? No, Yes." It is not very often in English that we suggest the answer in this form. It is usually "Yes or No". It is the same on the third form : "Do you want to be paid by other means? No, Yes."

It is a rather strange use of English and it is attempting to lead in a certain direction.

If people want the money paid into the bank, there is little doubt that sooner or later they finish up with bank charges. Even if a charge is not made for collecting benefit, we all become overdrawn from time to time. Once that happens, the charges escalate out of all proportion. It will happen to people who are least able to pay bank charges.

The idea that people should be paid benefits three weeks in arrears is no inducement to having benefits paid into a bank or building society. Perhaps somewhere on the form it should say,

"If you do choose a bank or building society, you understand, do you not, that for the first month you will receive nothing at all? Now, do you want it paid into a bank or building society or would you like it paid by other means?"

But I do not see that anywhere on the form, which is less than completely honest and open.

There is another consideration. If anyone should choose payment into a bank or building society, it is possible that the account will be a joint one. Money will then be paid into an account over which the beneficiary does not have total control. This is particularly significant when it comes to child benefit. The whole philosophy behind child benefit as promulgated by the Department of Social Security is that it should be targeted on the mothers. In many cases it goes straight into the mother's purse and into the housekeeping for looking after children without the father having anything to do with it. That is essential in some instances, for reasons that we all know about, but if this benefit were paid into a joint bank account mothers would lose control of money that is meant to help them look after their children.

There have been several references to the fact that the forms seem designed to lead people to choose banks or building societies. That is the whole presumption. But it is not a true choice. The choice is there if one looks very hard for it. It is there in the first form ; it is there, if one looks

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hard for it, in the second form ; but in the third form one could be excused for thinking that there is no choice at all and, even if there is one, it is extremely well hidden. The Conservative party prides itself on offering choice, but in this regard we are not following the philosophy and manifesto of our own party.

We have heard that the post office network has 20,000 branches, but how many people realise that there are more post office branches than there are branches of the four major banks and the six major building societies combined? It is a marvellous network and an asset to the whole country, whether we live in the Western Isles, John o'Groats or Land's End. In those post offices, 40 per cent. of the business comes from the benefits and 50 per cent. of customers are there to collect the pensions or benefits. There is little doubt that if those receiving pensions and benefits are forced to have them paid into banks and building societies, the post offices will lose 40 per cent. of their business and 50 per cent. of their customers. That will undoubtedly lead to the closure of some post offices. I can see no alternative.

I do not suggest to the Minister that he removes the possibility of people having their benefit paid into a bank or building society--far from it, because I believe in choice--but the choice should be free and open, not guided.

A very strong campaign is going on at present and most hon. Members will have seen the leaflet put out by the National Federation of Sub- Postmasters. The campaign is slightly exaggerated, but I do not criticise it for that because any campaign worth its salt will be slightly exaggerated. One exaggerates to make a point and sometimes campaigns that are too modest fail to make their point at all. I do not complain about the slight exaggeration, but I am concerned that, as a result of the campaign, many elderly, infirm and sick people are now worried sick that, in future, they will be unable to collect their pension in the normal way. The sooner we squash that anxiety and a categorical statement is issued from the Government to say that choice will remain, the sooner we can put at ease the anxieties and fears of many of our senior citizens in constituencies up and down and east and west of the country.

To deny choice will remove business from post offices and that will result in closures. Closures would, in due course, eliminate any choice for those who are in most need of it.

9.5 pm

Mr. Paul Tyler (North Cornwall) : Hon. Members are extremely grateful to the hon. Member for Western Isles (Mr. Macdonald) not only for choosing to debate this issue on such a timely occasion, but for his foresight in doing so on an evening when we have the time to do it justice. I am also grateful to him for allowing me to intervene briefly in the debate. I hope not to cover those matters which have already been mentioned.

I agree with the argument advanced by the hon. Member for Rochford (Dr. Clark), but I take issue with him on one small factual point, because this is not a problem that has just been mentioned in the House in the past few days. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) and I were in the House some months ago before Christmas at 5.30 in the morning

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