House of Commons Hansard Debates for 17 Jan 2000 (pt 32)

9.46 pm

Mr. Alan Johnson: With the leave of the House, I shall conclude the debate.

The debate has been wide ranging and, as in the debate last week, the amount of participation by hon. Members reflects the importance of the matter to them and to their constituents in urban and in rural areas. Hon. Members have raised many specific issues and expressed many concerns, to which I shall respond.

First, I reiterate the Government's firm commitment to the protection of postal services for all customers now and in the future. Although much the focus of the debate has been on the future of the counters network, its subject extends to other vital facets of the Post Office's operation--the provision of letter and parcel services.

In my opening speech, I dealt with the balanced package of reforms, set out in the White Paper, to enable the Post Office to meet the major challenges that it faces in a rapidly changing communications market. Key elements to underpin the Post Office's crucial social obligations include the enshrining in law for the first time of the universal service obligation of daily mail deliveries to every postal address in the country and of the uniform domestic letter tariff--a matter of special relevance and importance in rural areas.

We shall establish a new independent regulator, the Postal Services Commission, to promote and protect customer interests. We shall set a high quality of service standards; regulate prices; promote competition; and strengthen consumer representation through a revamped Post Office Users National Council. We provided additional financial resources to the Post Office for

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investment by reducing the proportion of post-tax earnings to be paid to the Government. We have a commitment to a nationwide network of post offices and to the setting of access criteria, against which the evolution of the network can be closely monitored and under which ways of maintaining reasonable access can be investigated.

Hon. Members have raised a wide range of issues. I shall respond to as many of them as I can. However, first I admit that the Government make no pretence of being able to answer every question at present. The study of the post office network by the performance and innovation unit at the Cabinet Office was commissioned by the Prime Minister last October. That was before any campaigns by rural newspapers and even before any Adjournment debates had been held on the matter--apart from one honourable exception, initiated by a Liberal Democrat Member. It is expected that the report will be completed in the spring. It will inform our thinking on setting the future objectives, role and contribution of the network and on setting access criteria.

The performance and innovation unit will closely examine issues related to the migration of benefits to ACT.

Mrs. Browning: I am sure that the House is delighted that the Prime Minister has taken that personal interest. Can the Minister promise us that, when the report is available, the Prime Minister will stand at the Dispatch Box and present it to the House?

Mr. Johnson: No, I cannot. However, I can assure the hon. Lady that there will be a debate on the contents of the report.

The hon. Member for Twickenham (Dr. Cable) tabled a short motion. I can clarify the issues that it raises. It is based on a false premise.

First, the motion says that changes by the Government

"will lead to further large scale closures".

At the start of the debate, I and other hon. Members pointed out that, in whipping up such concern, the Liberal Democrats are devaluing the properties of some sub-postmasters and sub-postmistresses and creating the very circumstances that all hon. Members are determined to avoid.

The motion says that ACT

"will deny freedom of choice".

It will not. Any benefit recipient who wants to continue to draw their benefit payment in cash across a post office counter before and after the changes will be able to do so.

The motion asks the Government to postpone ACT

"until the Post Office has developed its own automated platform".

The Post Office will have developed its own automated platform by spring 2001. The migration to ACT will not even start until 2003.

The motion says that, as part of the universal service obligation, we are to

"require Post Office Counters to maintain a sub-post office network which satisfies broad social and economic as well as narrow financial criteria of viability."

We have said that we will enshrine access criteria in law for the first time and ensure that an independent regulator and a revamped consumer body have the obligation to

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police them. I do not doubt that the hon. Member for Twickenham and the Liberal Democrats have people's best interests at heart, but we really must be careful about the messages that are sent about the post office network.

The hon. Member for Tiverton and Honiton (Mrs. Browning) spoke about the deal that we inherited from the previous Government. As I have said before, the benefit payment card system proposed by the previous Government was well intentioned. They sought to computerise the network. To draw an analogy with television programmes, I would prefer to talk about "Tomorrow's World" than about "All Our Yesterdays", but that particular private finance initiative was based on the developer also being the financier. Anyone who reads the report of the Select Committee on Trade and Industry will agree that we had no alternative but to pull out of that contract and to set up a new computerisation contract that was capable of being achieved.

Mr. Bob Laxton (Derby, North): Does my hon. Friend agree that the Trade and Industry Committee received evidence to the effect that the recouping of the costs of the establishment of the ICL Pathway project--Project Horizon--would probably amount to more than 73p per transaction, for an almost indefinite period? That seemed to me a crazy contract.

Mr. Johnson: The point is well made.

The hon. Member for Tiverton and Honiton raised a point about transaction costs. That is a matter for commercial negotiation between the DSS, the Benefits Agency and the banks, and between the Post Office and the banks, but I believe that she is aware that even the benefit payment card proposed by the previous Government related to an eight-year contract with the Benefits Agency, which ran out in 2005. They made it perfectly clear--I had an interest in the matter at the time--that it was an interim measure on the route to ACT; it was not a for ever solution to the problem.

The hon. Lady will also know that the cost of girocheques is 79p per payment, the cost of payment for the benefit payment card was 67p per payment, the cost of the order book control system that we are using at the moment--the bar coded system--is 49p and the cost of ACT is 1p. Given that information technology is becoming more ubiquitous, the migration to ACT is bound to continue, no matter which Government are in power.

By holding this debate yet again, we are at last having a debate about the future of the Post Office. As my hon. Friend the Member for Chorley (Mr. Hoyle) said, year after year seeped away with no one showing any particular political interest in the subject.

The hon. Member for Tiverton and Honiton mentioned lottery tickets, with derision. We are not saying that the increase in lottery payments is a panacea for the problem. We are saying that it is very welcome new work to pass across post office counters.

My hon. Friend the Member for Forest of Dean (Mrs. Organ), in a very important speech, drew attention to the crucial fact that we do not advertise the services that are available across post office counters. She mentioned 160 transactions. There are actually 170; and, with

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computerisation, every office in the country will be able to provide every service. At the moment, some offices in rural areas are restricted in the services that they can provide because of the difficulty of training staff in 170 transactions. We need to deal with that issue.

My hon. Friend mentioned the performance and innovation unit report on rural areas and said that it did not mention the Post Office network. She also made that point last week and I shall write to her about it. The PIU team is offended by her comment. It says that there is a complete chapter on the network in the report, so I shall deal with that point in correspondence. My hon. Friend also raised some excellent ideas on how we could increase traffic across post office counters.

The hon. Member for South-West Hertfordshire (Mr. Page) said that I had been dealt a poor hand by the Treasury and that I had to do something about it. He was a member of a Government under whom the Treasury screwed the Post Office for £1 billion over 10 years. They attracted stern criticism from the Tory-dominated Select Committee on Trade and Industry. The right hon. Member for Henley (Mr. Heseltine) said that that system would stop and that they would introduce a dividend system based on 40 per cent. of pre-tax profits. Three months later, a Conservative Chancellor of the Exchequer hiked the external financing limit to £1 billion over three years, and the hon. Gentleman tells me that this Government have been dealt a poor hand by the Treasury.

My hon. Friend the Member for Braintree (Mr. Hurst) said that we needed to take active measures and he referred to the Benefits Agency letter, as did the hon. Member for Lewes (Mr. Baker) in his wind-up speech. We are in contact with the Benefits Agency about the letter that was sent to the 370,000 of the 7.5 million child benefit recipients who get their payments weekly. Since 1982, the system has been that child benefits are paid monthly unless someone meets certain criteria. It is a regular procedure for the Benefits Agency to write to the minority who still receive weekly payments to remind them of the criteria. The Department has concerns about the absence of certain words in that letter. The matter has been taken up with the Benefits Agency and, as I have said before, we are working with it in complete partnership to ensure that any misunderstanding caused by the letter is eradicated and so that people understand--I say it again--that they have the right to draw benefits in cash.

The hon. Member for Weston-super-Mare (Mr. Cotter) also referred to struggles with the Treasury. I have mentioned the struggles that the previous Government had, and we are having an easy time compared to them. Over the past few months, the Treasury has agreed to the Post Office keeping more of its money. The external financing limited was 50 per cent. last year and it will be 40 per cent. in future years. By putting £480 million of investment into the computerisation of the network, the Treasury has done a great deal to lift the dead hand that has fallen on the Post Office from across the road at the Treasury buildings since at least the time of Rowland Hill.