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Mr. Johnson: As I said last week, we are confident that we will negotiate agreements with the clearing banks that will ensure the provision of the services that we want to be provided. We gave a clear commitment in last week's debate that benefit claimants will continue to be able to withdraw all their benefit cash across a post office counter, both before and after the change.
Increasingly, benefit customers choose payment by bank account as their preferred method. One third of benefit recipients already choose to access their benefits payments via their bank account, and the trend is bound to accelerate. Working together, the Benefits Agency and Post Office Counters will ensure that, from 2003, payment by ACT will offer an attractive and secure choice to benefit customers and to pensioners.
Payment by ACT will open up access to a wider range of banking services and other financial services, while continuing to offer access to cash at Post Office Counters. Other bank customers, especially those in rural areas, will benefit from the wider availability of banking facilities, and the taxpayer will benefit from the fact that such a system will be much cheaper to operate and will virtually eliminate fraudulent encashment.
The move to paying benefits direct into bank accounts via the existing automated credit transfer system will not start before 2003, as I said, and it will be phased in over two years. The Government will not take active measures to move customers on to automated credit transfer before 2003. With automation completed by spring 2001, Post Office Counters will have a further two years to grow new areas of work to compensate for what has always been an unhealthy and fragile over-reliance on Benefits Agency work.
Given developments in banking technology, and with new simple banking products being introduced, we believe that it will be possible to cater to individual circumstances and provide accounts that will answer individual needs. The majority of benefits recipients--more than 80 per cent.--already have access to bank accounts. However, we recognise that some may still be unwilling to make use of a bank account. It is not our intention to compel them to do so. For such people, we are considering what alternative simple electronic money transmissions systems using ACT which could also be accessed at post offices may be commercially available. We recognise that benefits recipients will expect to be able to withdraw the exact amount of their benefits and to do so without incurring bank charges.
I emphasise again that there will be no change to existing methods of benefit payment before 2003, and that all benefits recipients and state pensioners who wish to do so will be able to continue to access their benefits in cash, at post offices, both before and after the change.
By moving to ACT, we will merely be replacing outdated paper-based methods of payment, which have scarcely changed in the past 50 years with a modern, more secure and more cost-effective system. Ensuring that
individuals will continue to be able to access their benefits and pensions in cash at post offices is fundamental to our plans.
The Post Office network, with its nationwide reach, represents a valuable channel for the delivery of Government and other services, and will continue to do so in the future. The early progress with the Horizon automated platform now in prospect should enable Post Office Counters to offer substantial enhancements to the services that it can offer clients and customers, which in turn will increase the attractiveness of post offices compared with other channels.
The network's extensive reach and the sense of trust and familiarity that many customers have in carrying out transactions in their local post office should, in conjunction with the Horizon system, ensure that the Post Office is well placed to deliver modern applications for central and local government and other public sector organisations. That is crucial in the light of the fact that the Government are committed to providing all Government services on-line by 2008.
The Post Office has had some success in recent years in diversifying into new areas of business. The success of the lottery business carried out in post office outlets, the establishment of bureaux de change facilities--the Post Office is now the biggest dealer in the country--and personal insurance are notable examples.
The strength of the Post Office's business lies in its ability to reach customers in all corners of the United Kingdom, but such an extensive network can prosper only if it continues to be used by the local community which it serves in rural and urban areas. If local communities value the presence of a post office outlet, as so many clearly do, their best guarantee of retaining it lies in making full use of the facilities on both sides of the business. To give credit where it is due, the Post Office continues to make every effort, particularly in rural areas, to keep a post office service operating. I shall look into the case raised by the hon. Member for Twickenham (Dr. Cable) about his constituent.
Where suitable applicants to take over a post office cannot be found, community offices, based in village halls, pubs, and private homes are set up to maintain at least a range of key services.
Mr. John Smith (Vale of Glamorgan):
On the point about the Post Office striving to maintain rural post offices in our communities, does my hon. Friend share my concern over the decision just last week of the Post Office in Wales to withdraw an offer of a sub-post office franchise to Julie Morgan of Garregwen in Bonvilston, just a few weeks after it had made the initial offer? We now do not have a post office between Cowbridge and Ely in south Wales--a distance of some 20 miles.
Mr. Johnson:
I will look into that important point. It reminds me of the fairly disparaging remarks made about the appeals process. As we discussed in Westminster Hall last week, the problem too often with post office closures and conversions from Crown offices, sometimes centrally located, into the back of hardware shops well out of the centre of town, is that the local community believes that there is no sufficient appeals procedure giving them the time and the opportunity genuinely to offer alternatives to that post office closing.
Mr. Norman Baker (Lewes)
rose--
Mr. Johnson:
I must come to a conclusion.
We have repeatedly made clear our wish to see a thriving nationwide network of post offices. We understand the difficulties involved in transition, but the way to tackle the issue is not, as some local newspapers have suggested, to cling to the status quo. There is no surer route to stagnation and decline, as the National Federation of Sub-Postmasters fully and wisely recognises. The future of the Post Office Counters network depends to an important extent on the skills and dedication of its managers and staff. Above all, it depends on its continued attractiveness to clients and customers as a channel for accessing products and services, and to sub-postmasters, who have invested more than £1 billion in the network, as an attractive business proposition.
Through early progress with the Horizon platform now in prospect, the Post Office will continue to maintain a nationwide network of outlets which will provide customers with convenient access to its services and help counters to retain existing custom and attract new business. The establishment of access criteria will, for the first time, set out in law a Government commitment to monitor what is happening to the network and a requirement to act where necessary.
The revamped consumer body and a new independent regulator will monitor the new arrangements and provide an effective voice for communities which fear that access may be impaired.
Mr. Kirkwood:
Will the Minister accept a helpful intervention?
Mr. Johnson:
If it is helpful, yes.
Mr. Kirkwood:
I was encouraged because the Minister was good enough to reply an Adjournment debate that I secured on the subject. He mentioned that the Prime Minister had just set up, through the performance and innovation unit, a committee to look at the social value of post offices. Many of us are hanging a lot of hope and expectation on that. Can the hon. Gentleman add to his speech two or three sentences about the committee's remit, and does it have any opportunity for considering alternative sources of income that might sustain some of these businesses in future?
Mr. Johnson:
That was helpful but premature--I am just coming to that point. The legitimate concerns expressed by hon. Members are being addressed by the performance and innovation unit study commissioned last autumn--on the very day of the Adjournment debate, I believe--and due to report directly to the Prime Minister. In that way, we can ensure the viability of a network that depends partly on Government but essentially on local communities continuing to make sufficient use of their post office and village shop.
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