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Benefits (Post Offices)
7. Mr. Harry Barnes (North-East Derbyshire): What arrangements will be made for the establishment of bank or building society accounts under the automatic credit transfer system for those who wish to continue to cash their benefits at post offices. [115869]
The Secretary of State for Social Security (Mr. Alistair Darling): We want banks and the Post Office to offer banking services to people currently without bank accounts. We have already begun discussions with the banking industry on issues surrounding benefit recipients, charges and others matters, and discussions with the industry will continue. We have also made it clear in the past--I do so again--that people will still be able to collect their cash at post offices, both before and after the move to paying benefits by ACT begins in 2003.
Mr. Barnes: I realise that if pensioners take out accounts with certain building societies and banks, they will still be allowed to cash their benefits directly at post offices. The problem, however, is how they will be able to register. To establish accounts, will they have to search out a bank, turn up and take a great deal of paraphernalia with them to show who they are, or will there be provisions through the Post Office itself to make it automatic and easy for them to set up accounts? If it is
easy for them to set up accounts, they will continue to use the Post Office and it will remain the only organisation that they use.
Mr. Darling: My hon. Friend may be aware that almost half the new pensioners receiving their pensions now choose to have their money paid directly into their bank accounts. I do not think that there is an overwhelming obstacle against that. However, regardless of whether people receive their money from a bank account or from a post office, some formalities have to be followed because we need to be sure that the money is paid to the right person. As I said, we are in discussions with the Post Office and the Post Office will, in turn, discuss with the banks the formalities that are necessary. We want to make it as easy for people to be able to receive their pensions and other benefits provided that that is consistent with ensuring that the system is secure. That benefits individuals as well as the system as a whole.
Mr. Steve Webb (Northavon): Will the Secretary of State confirm that since his Government came to office, the rate of post office closures has accelerated and that this year looks to be the worst ever? Will he confirm that the move to ACT will undermine post offices? What steps is he planning to take to enable those pensioners who want to exercise the choice of going to the post office to do so? They will be unable to do so if post offices are closing all around them.
Mr. Darling: The hon. Gentleman has to accept that if we do nothing, as the Liberal Democrats advocate, more and more post offices will close because almost half the people coming into the system are opting to have their money paid into a bank or building society account. We are ensuring that the Post Office has the investment to set up banking facilities, which did not happen when the Conservatives were in power, to ensure that post offices can compete with banks and building societies.
The Liberals are being completely dishonest about their position and raising fears although they have no suggestions for securing the future of the Post Office. We are determined that the Post Office will have a future, so we are giving it the investment necessary to ensure that there is a network in years to come--something that the Liberal policy, whatever it happens to be from day to day and hour to hour, could never ensure.
Mr. Simon Thomas (Ceredigion):
May I assure the Secretary of State that the concerns to which he refers are genuine concerns in a constituency such as mine? Will he consider another type of bank account, which could prove to be a valuable way to deliver not only ACT but the Government's social exclusion strategies? I refer to the credit union method--a third way, if he likes. Will he ensure that, in his discussions with the Post Office and the banks, credit unions are not closed out? If he has any doubts about the ability of the credit union movement to deliver a highly secure system, he can look to Ireland, where millions of pounds are held in credit unions. Will he consider that as an alternative way of building communities and delivering social security payments?
Mr. Darling:
The hon. Gentleman makes a good point, and credit unions are popular. They are not as well developed in this country as they are in others, but some are successful and well supported. He latches on to the important point that it must be in the whole country's interests to ensure that as many people as possible are included in the banking system, rather than having a section of society that is completely excluded from that system.
The object of our reforms is to take account of the fact that people are choosing to receive their benefits in different ways, and choice ought to be supported, but at the same time we want to ensure that the Post Office and other institutions have the means to receive those payments so that they can pay them out to members of the public. It is precisely because we are facing up to the problems that we inherited of years of under-investment, indifference and neglect that we can ensure that there will be a post office network in future.
Mr. Frank Roy (Motherwell and Wishaw):
In my constituency, 80 per cent. of post offices depend on the Benefits Agency for over 50 per cent. of their business. Will my right hon. Friend confirm that when ACT is introduced those who receive their money through the bank will be able to go to a post office to collect their money? People who do not use a post office at present may therefore start to use it, which would help post offices.
Mr. Darling:
The object is to make sure that people have a choice as to where they receive their money. I repeat that it behoves all those who oppose the Government's proposal to come up with an alternative that will work. The Liberals and Conservatives are now saying, opportunistically, that they would do absolutely nothing, which would mean that more and more people would ask to have their money paid into their bank account, and more and more post offices would close. We are ensuring that people have a choice, because we believe that people should be allowed to choose where they receive their pension or their benefit, and at the same time we are giving the Post Office the additional investment that it needs to ensure that there will be a viable network in future.
Mr. Tim Boswell (Daventry):
Pensioners account for a significant number of the 8 million disabled people in this country, and many of them suffer from mobility problems while others find administrative procedures increasingly perplexing. In the light of that, will the Secretary of State give the House an absolute and unequivocal assurance that those who want to receive their pension in cash at the post office will be able to do so? Furthermore, and in the spirit of that pledge, will he assure the House that there will be a network of post offices that are reasonably convenient for those people, where they will be able to draw that pension?
Mr. Darling:
I remember that, during the previous Parliament, the Conservatives tried to sell off the entire postal network, which would not have enabled such guarantees to be given. My colleagues and I have made it clear that people will have a choice as to whether they receive their benefits and pensions at a post office or in a bank account. I should have thought that those who are disabled and unable to go out would quite like their money to be paid into a bank account, instead of their having to queue up at a post office to get it.
8. Mrs. Sylvia Heal (Halesowen and Rowley Regis):
What steps he is taking to help low-paid people to provide for their retirement. [115870]
The Minister of State, Department of Social Security (Mr. Jeff Rooker):
The state second pension will help low and moderate earners to build up increased pension entitlement. Low earners--by which we generally mean those earning less than £9,500 this year--will receive a dramatic boost to their additional pension entitlement; under the state second pension, that will be more than double their entitlement under the current system. In addition, carers and long-term disabled people with broken work records will, for the first time, be able to build up a second pension.
The state second pension will help 18 million people to build bigger pension entitlements. Those people include 4.5 million low earners, 9.5 million moderate earners and 4 million carers and disabled people with broken work records. That is something in which the Government and those sitting on the Benches behind me can take extreme pride.
Mrs. Heal:
Does my right hon. Friend acknowledge that one of the problems with SERPS is that it provides least to those who earn least? Is he aware that many of those low-paid people are women in low-paid, part-time jobs? Will he assure me that the Government's proposed state second pension will ensure that such women will have access to a decent state pension in their retirement?
Mr. Rooker:
Yes. Most part-time workers and low-paid workers are women. To someone earning £9,500 this year--the upper limit of the low-earners category--the state second pension will be worth double the sum that SERPS currently pays. SERPS was and is good: it delivers excellent pensions to those retiring today, despite the fact that in 1986 and 1995, the Conservative Government cut into it. However, because SERPS is earnings related, it gives least to low earners; the state second pension will correct that.
Mr. David Willetts (Havant):
May I remind the right hon. Gentleman of the document on which he fought the last election--the Labour manifesto? It states:
Mr. Rooker:
I note that the hon. Gentleman does not deny the fact that there will be 18 million gainers under the state second pension. Nobody earning up to £20,000 a year will lose--that cannot be contradicted. He claims
As for the remarks of the hon. Member for Havant (Mr. Willetts), we have been consistent with our manifesto commitment: even when the state second pension becomes flat rate, as it will after a number of years, the contracted- out rebates will be earnings related and will go toward the second pension of the people involved. To that extent, we are fulfilling our commitment.
Dr. Lynne Jones (Birmingham, Selly Oak):
In 1980, the basic state pension was worth 23 per cent. of average earnings. According to Government figures, by 2051 the combination of what is left of the basic state pension and the new state second pension will be about 21 per cent. of average earnings. It will be set by the Government at about £85 a week at 1999 figures. The figures suggest that there will be more pensioners reliant on means-tested benefits. Does my right hon. Friend consider that that is a satisfactory aim for pension reform by the middle of the 21st century in one of the richest countries in the world?
Mr. Rooker:
If we do nothing and abandon the pensions reform package, one in three pensioners will retire straight on to the means test in the middle of the century. With the package of reforms of the stakeholder pension, the state second pension and other changes, we can reduce that ratio to one in five. I know that the number of pensioners will increase from nearly 11 million to nearer 15 million, but we want to keep pensioners off the means test. We do not want a system that automatically puts millions of people on to it. We have not quite reached the stage where we can say that our package will eradicate the means test, but we shall be on our way in that direction.
Labour will retain Serps as an option for those who wish to remain within it.
The proposals are clearly a breach of that manifesto. The Minister claims that everyone will be better off under the state second pension, but he must know that certain groups--those caring for children aged six to 16, who will not receive the promised home responsibilities protection; people with earnings from self-employment and employment; and people in receipt of working families tax credit--will lose out as a result of the changes that he is introducing. He is clearly in breach of his manifesto promise and is clearly disadvantaging many people as a result.
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