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Dr. Cable: Absolutely. That is why we need a system of appeals, and why we need to protect the security of postmasters and postmistresses who are basically
entrepreneurs in an insecure environment. I challenge the Minister to give us his own estimate of the impact of the loss of Post Office income. It may be that the figures that I have cited are implausible. However, they could be much worse.
Mrs. Linda Gilroy (Plymouth, Sutton): Does the hon. Gentleman agree that unnecessary scaremongering can undermine the post office network? I have visited post offices in my constituency, and the myths being peddled by both main Opposition parties are severely undermining them. Does he agree that he needs to be measured in his approach?
Dr. Cable: I do not know whether I am scaremongering. The figures that I have cited were produced in response to a perfectly fair question from a Labour Back Bencher. If those figures are wrong, the Minister might explain how the Post Office itself estimates the loss of income's impact on the network. There are reasonable grounds for believing that the impact will be a great deal worse. One of the reasons for that is that when people spend money in a post office, there is a footfall effect--they spend money on other things. It is not simply the loss of the benefit income.
Another factor is that it is not simply the benefit business that is at risk. Other fee transactions of the Post Office--such as drivers' licences--could disappear also. We have seen recently that the working families tax credit is taking another source of benefit income out of the Post Office. The impact could be much worse than the figures that I have quoted. That is the answer to the charge of scaremongering.
Mr. Paul Tyler (North Cornwall):
The constituency of the hon. Member for Plymouth, Sutton (Mrs. Gilroy) falls within the area covered by The Western Morning News, a well respected regional newspaper. The information that it carries from postmasters and postmistresses in her constituency is entirely supportive of the point that my hon. Friend is making. It has been suggested by a number of Government supporters that this problem will arise only in the future--from 2003 onwards. However, I have constituents who have been sent benefits information which specifically rules out the use of a post office account and demands information about their bank accounts.
Dr. Cable:
I thank my hon. Friend for his support. I wish to refer also to what will happen to those excluded people when ACT comes in. We are concerned not just with the impact on the branch network, but the impact on the individuals who receive their benefits.
What is involved here is a system of compulsion. There is voluntary ACT at present, and people do use their own bank accounts for the settlement of benefits. Roughly 48 per cent. of pensioners choose voluntarily to use their bank accounts. However, that figure is much lower for poorer people--under 10 per cent. of people on income support, for example. There will have to be considerable pressure to stop people using post offices and to get them to use bank accounts. That is the essence of the problem--the element of coercion.
The Government may reply that they are tying up deals with the banks, so that people will continue to be able to use the hole in the wall and their arrangements will not
be changed fundamentally. But if it is true that large numbers of branches have to close, the post office will no longer be there to be used as a bank, so choice will no longer be present.
Separate problems have been highlighted by groups such as Age Concern, the Townswomen's Guild--it is difficult to think of a less militant organisation--and the Retail Village Network. One could not accuse such responsible lobbying organisations of scaremongering. These groups are focusing on the problems of the 20 per cent. of people who use post offices but do not have bank accounts.
How will the Post Office identify the people who do not have bank accounts? How will the Post Office establish criteria for deciding who should continue to be paid in the traditional way because they cannot have a bank account--people who are bankrupt, for example--and those who choose not to have a bank account? How, in fact, will the distinction be made?
Another large group of people, for reasons of personal choice, have traditionally decided that although they have a bank account, they would much rather use post offices. Probably half of all those who use the Post Office system are in this category. Why do they choose not to use their bank accounts? One reason is geographic: only about 5 per cent. of rural parishes have banks and the number is declining as branches close, but 60 per cent. have post offices. There would be a high cost involved in going to the nearest town to transact the business.
Mr. John Bercow (Buckingham):
Is the hon. Gentleman aware that the view of the hon. Member for Plymouth, Sutton (Mrs. Gilroy) was roundly contradicted only last Wednesday in Westminster Hall by the hon. Member for Forest of Dean (Mrs. Organ), who rightly expressed the gravest concern for the future, under Government proposals, for people who do not have bank accounts?
Dr. Cable:
I thank the hon. Gentleman: that is indeed the case.
Why else might people choose not to use their bank accounts? There is legitimate anxiety about the costs of banking. What assurance is there that money paid into a bank account will not be offset against an overdraft? What hidden charges will go with the new arrangements between the banks and the post offices? How will the scheme fit with the plans of Barclays and others to start charging for using automated telling machines? Barclays and the Co-operative bank have already entered into arrangements, but will a pensioner using another bank who draws £10 for the weekend have to pay £1 for the transaction? There may be good answers, but we have not yet had them.
We need to be clearer about what happens to people who cannot collect their benefits in person. We all know people in that category. Their carers collect for them. There is no problem with that at the post office, where there is an established relationship, but we know that it is much more difficult in the banking system. I had to take all the way to the chairman of the Halifax the case of a blind lady with a carer who ended up paying £60 for a legal notary's signature to establish the authenticity of the person drawing the money. Banks can be highly inflexible, bureaucratic and expensive.
We need answers to all those questions before people can have any confidence that the arrangements can be sustained properly.
Dr. Jenny Tonge (Richmond Park):
It is also important for some mothers to collect child benefit direct from a post office or sub-post office, because their only other access to money may be via their husband in a joint bank account. It is terribly important for them to maintain that independence.
Dr. Cable:
That is a helpful additional point, and the welfare campaign groups have already drawn attention to many others.
The Minister may be able to help us with solutions to some of the problems, but we need to know what is driving the change in the first place. Why is it so urgent that we press ahead? Two important, possibly compelling, reasons are given. One is that the system is necessary to defeat fraud; the other is that it is very costly-- £400 million a year in transaction costs--to have a paper-based rather than an electronic system.
We need to deal with those serious challenges in turn. My understanding--I am open to contradiction by the Minister--is that the best way of dealing with fraud at the post office is to have bar-coded books. Why was that option never pursued? The previous Government expensively pursued the option of swipe cards. I am not sure who carries most blame for the sorry tale, but somehow or other £300 million of taxpayers' money slipped through the cracks and the whole project has been abandoned.
The Trade and Industry Committee produced a devastating report explaining the enormous waste of public money on that false lead in dealing with the fraud problem. The Committee's members will be familiar with the key paragraph that makes it clear that the swipe card system was abandoned at such heavy cost primarily because the Benefits Agency, which was driving the whole exercise, was determined to save on the transaction costs and would not let the project be seen through to a conclusion.
There is a real saving to be made on the £400 million transaction costs in moving from a paper-based to an electronic system, not merely a paper saving to the Benefits Agency, but what is the price that we will pay for that saving for the agency and, ultimately, for the Treasury? The Government may respond to the political pressure to compensate the Post Office for the loss of all the branches, and the payment, made through the deal with the banks or directly by the Treasury, could be large. If the network is to be preserved in that way, where will the saving come from?
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