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15 Jul 1999 : Column 631

Post Office

Mr. Deputy Speaker (Sir Alan Haselhurst): Madam Speaker has selected the amendment in the name of the Prime Minister.

4.14 pm

Mrs. Angela Browning (Tiverton and Honiton): I beg to move,

Last week's statement that the Government intend to turn the Post Office into a public limited company ended a long period of speculation. We supported the liberalisation of the Royal Mail and freeing it up so that all packages over 50p could be subject to competition--something for which the Royal Mail itself asked. Indeed, the Minister received far more support for his proposals from my hon. Friends on the Conservative Front Bench than he did from the glum faces that surrounded him last Thursday.

We have some reservation about the Government's timidity in holding on to 100 per cent. of the shares, but no doubt we shall see some disposals in due course once Labour Members have come to terms with the fact that anything is now a candidate for privatisation--the Post Office, British Nuclear Fuels Ltd. or air traffic control. It is simply a matter of adjusting to their party's new policy.

Today's debate has been called because during last week's statement many questions were asked and, as usual, too few answers were given about the future of the network of some 19,000 post offices, the majority of which are small, independent businesses. I represent a large rural constituency and fully understand the fragility of rural post offices. Some have a thriving general store attached to them which is open seven days a week, while others are part time and may just have room to sell a little stationery and a few greetings cards. Until now the core of their income was the remuneration they received from administering some 20 benefits on behalf of the Government. On average that accounts for 30 per cent. of their revenue. As a result of the Government's abandonment of the Horizon project to introduce magnetic strip card payments of benefits, the post offices are now reliant on the proposals in the White Paper to make up that 30 per cent. drop and identify other opportunities through automation to secure their future.

On 24 May the Government abandoned the pathway project in favour of encouraging benefit claimants to open bank accounts and receive payment by automated credit transfer.

Mr. David Rendel (Newbury): This subject has been of great interest to me for some time. In fact, I made my maiden speech on the subject of post offices. Does the hon. Lady accept that the abandonment of this

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programme, like the abandonment of so many other computer programmes that have gone wrong recently, is down to the Conservatives, because they introduced the programme in the first place and set up the contract in the wrong format?

Mrs. Browning: For one glorious moment I thought that I was going to agree with something said from the Liberal Democrat Front Bench, but how disappointed I was. Although I would certainly agree with the hon. Gentleman about the Government's competence when it comes to anything to do with automation, I certainly do not agree with him about the genesis of the problem. I shall come to that in some detail shortly.

The Government scrapped the policy of automated payment by card on 24 May this year. Every hon. Member was circulated with a "Dear colleague" letter from the Secretary of State, and we are grateful to him for his courtesy in bringing us all up to date with the fact that the Government had decided to abandon the project. We are now told that by 2003 all post offices will be fully automated and people drawing benefits will be required to have a bank account, but this will also involve the Post Office.

If, for example, someone banks with a high street bank, they will have their benefit paid straight to that bank, but so that they can still enjoy receiving that benefit in cash through their local post office, there will need to be an arrangement between the Post Office and the clearing banks. In that way the money can be transferred and people can access it in cash from their local post office. Naturally, there will be attendant costs in the administration of the transaction.

The Government's record on automation is not good, as anyone in need of a passport will know. It is ironic that the Government have turned to the Post Office to sort out this problem at the peak of the holiday season. The hon. Member for Newbury (Mr. Rendel) started to talk about the genesis of this and, as is characteristic of the Liberal Democrats, blamed the Conservatives. We are quite used to that. I am tempted to say that it is like water off a duck's back, but perhaps "quack, quack" will suffice.

On 5 May this year, ICL, which was piloting the project in some 200 post offices, said that

as regards ditching the programme. That is reported in the press. Yet only three weeks later every Member of Parliament received a personal message from the Secretary of State to say that the project had been abandoned. We have never had a proper explanation of why that should be.

Yesterday, the Select Committee on Trade and Industry took evidence on the subject of the Post Office. It became clearer why the Department of Social Security, having examined the costs of transactions through the Post Office, has decided in such short order to abandon the Horizon card. In giving evidence to the Select Committee, the Secretary of State for Social Security identified the transaction costs to the DSS of the processes that the Post Office has carried out. A giro cheque costs the DSS 79p; a transaction involving an order book costs 48p; had the Horizon project gone ahead, the payment card transaction would have cost 67p; but by insisting that people have their payments made by automated credit transfer through their bank account, the cost to the DSS is 8p.

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The Secretary of State is nodding in approval at that comparison of costs. He is a former Treasury Minister, so no doubt he is impressed by that menu. I put it to him that the reason why the Government abandoned the card system through the Horizon project was not what they inherited from the previous Conservative. Right up to the last minute, nothing in parliamentary answers, as confirmed by ICL, suggested that there was a problem so serious that the project had to be abandoned. It was a Treasury-driven decision, to which yet again the Secretary of State succumbed willingly.

The Secretary of State for Trade and Industry (Mr. Stephen Byers): For the benefit of the House, will the hon. Lady confirm that the Horizon project was three years behind schedule when we cancelled it, and that the key milestone of a live trial last autumn was failed by ICL?

Mrs. Browning: No, I will not, because in every parliamentary answer given by the Secretary of State and his colleagues during the two years of the Government's stewardship of that project, no indication was given that there was a problem. Indeed, they launched the pilot schemes, and ICL confirmed that there were no known problems. I have checked Ministers' written and oral answers in Hansard, and they gave no indication of any problems. This is a Treasury-driven decision, and it has put in jeopardy half the United Kingdom's sub-post offices.

Mr. Bob Laxton (Derby, North): Only yesterday, at the Select Committee on Trade and Industry, of which I am a member, I tried to elicit some information about the Horizon project. I am unclear about an issue on which evidence was not forthcoming. [Hon. Members: "Ask the question."] I shall get round to the question in due course.

Mr. Deputy Speaker: Order. The hon. Gentleman must get round to his question precisely and quickly.

Mr. Laxton: Thank you, Mr. Deputy Speaker. Can the hon. Lady tell me why the automation contract under the Horizon project was signed with ICL in May 1996, yet soon after, in February 1997, the contract was renegotiated by the previous Government?

Mrs. Browning: Like most hon. Members, I have served on Select Committees. People are brought before Select Committees to answer questions. If the hon. Gentleman had an opportunity to question expert witnesses yesterday and did not get an answer to his question, perhaps he should consider transferring to another Select Committee.

Mr. Tony Baldry (Banbury): Is my hon. Friend aware that, as recently as November last year--this belies the Secretary of State's point--the then Secretary of State, the right hon. Member for Hartlepool (Mr. Mandelson), confirmed to the Select Committee in oral evidence that he envisaged that all post offices would be automated for the Horizon scheme smart card by 2000? As recently as

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just before Christmas last year, the Government were determined to introduce the smart card. That was clearly Government policy.

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