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Mr. Byers: I was rather confused by the hon. Gentleman's question. There will be a choice. The Government are not prepared to compel people to have their benefits paid in cash at a post office. We are not in the business of compulsion. When we move to ACT between 2003 and 2005, people will retain the choice that they have now. Benefit recipients will continue to have a genuine choice.
Mr. Byers: I have a choice; I must give way to the right hon. Member for South Norfolk (Mr. MacGregor) first.
Mr. John MacGregor (South Norfolk): What choice will pensioners have if by 2003 many sub-post offices have closed and there is no longer one nearby?
Mr. Byers: The right hon. Gentleman raises an important point. Post office closures have nothing to do with the move to ACT in 2003. However, changes to the network have continued for decades. Over the years, some post offices close and others open.
The hon. Member for Tiverton and Honiton made great play of the fact the number of sub-post office closures last year doubled compared with the year before. The figures show that closures have not doubled, although 383 sub-post offices closed last year. If she looks at the record, she will realise that the highest number of closures in the past 20 years was back in 1984-85, under a Conservative Government. Closures happen because
sub-post offices are businesses and people have to take business decisions. It is only right and appropriate that they do so. Any closures that happen today are not because of ACT, as that will not happen until 2003. In the period leading up to 2003, the Government intend to identify a new way forward for the network.
Mr. Patrick Nicholls (Teignbridge): Will the Secretary of State give way?
Mr. Byers: I must make some progress, but I shall try to give way to the hon. Gentleman a little later, when I have explained the new role that we believe the post office network can play.
The clearest demonstration of the way in which we want to develop the post office network is the fact that we are investing £500 million in equipping all post office counters with modern online computer facilities. We are giving the Post Office the commercial freedom that it needs to develop new services. Our Postal Services Bill allows for social and environmental guidance, providing the vehicle for guidance on access to post office services. That is why the performance and innovation unit in the Cabinet Office is carrying out an extensive study on how we can ensure a viable future for the post office network.
Mr. Patrick McLoughlin (West Derbyshire): I remind the Secretary of State of what he told the House on 15 February. He said that it was a question of viability and added:
- The Government will consider very closely the need to include a provision that would enable a subsidy to be provided where appropriate to do so. Indeed, there will be a Government amendment to that effect.--[Official Report, 15 February 2000; Vol. 344, c. 805.]
Mr. Byers: We have been considering the detail of such a proposal. I shall address the question of providing a subsidy a little later in my speech. I hope that I shall be able to give some comfort to sub-postmasters about the Government's intentions. There was never a subsidy under the Conservatives. Later this afternoon, I shall announce that when we consider the Bill on Report next week, we shall introduce the provision that I promised the House. We are doing that because we consider it such a significant development that we feel that it is appropriate to deal with it in front of the whole House, rather than in Committee where only members of the Committee can consider it. It will go a long way to reassure many of the sub-postmasters who are in London today that we are listening to their concerns and prepared to respond accordingly.
Mr. Byers: I want to make some progress. I have given way many times and I want to put on record the Government's approach to these important matters.
Many people, including those in the federation, recognise the importance of modernising the network. The Conservatives did nothing to help the Post Office to prepare for the challenges ahead. From 1992 to 1997,
they frequently announced their policy to sell off Parcelforce and review the status of the rest of the Post Office business; but they did not even do that.This is an important point, because it strikes at the heart of the money that has been made available to the post office network: by 1995, the Treasury had taken £1 billion from the Post Office. Over the next two and a half years, an additional £1 billion was taken from the income received by the Post Office. That money could have been used to invest in the network, but the Treasury came first with the Conservatives.
Under this Government, £500 million is being invested in the Horizon project and computerisation. We are helping the Post Office to adapt to the changes that are taking place, but that means taking what are often difficult decisions. We have heard the concerns about our decision to cancel the benefit payment card and move progressively to ACT as the norm for benefit payments between 2003 and 2005. That is the sensible way forward.
I want to explain the background to our decision. The previous Government committed themselves in 1994 to modernising how benefits are paid, and in May 1996 an eight-year contract was awarded under the private finance initiative to ICL Pathway. The aim was to automate post office counters and provide a secure and more efficient way of paying benefits, through a card.
By early 1997, still under the Conservative Administration, it was clear that the project was in difficulties. We inherited those difficulties. In late 1997, the project was incurring cost overruns of £600 million and was three years behind schedule and we had to consider whether it could be continued. We undertook a detailed review and in 1998 we tried to put the project back on course, but slippages continued. In October 1998, the key milestone for the start of live trials of the system was missed yet again. There were real and increasing concerns that, even if the card could be delivered, the technology was becoming increasingly out of date.
Mrs. Browning: Why, then, as late as November 1998, did the Secretary of State's predecessor say:
- I feel confident that the project will be properly completed..?
It is worth reminding the House that ACT was introduced and extended by the Conservative Government, for good reasons, not to threaten the Post Office network but to ensure that payments went to those who needed them in the most secure way possible.
Mr. Miller: My right hon. Friend should not attack the hon. Member for Tiverton and Honiton (Mrs. Browning) in such a way, because at least what she said contained more sense than the comments of the Leader of the Opposition, who said earlier that he wanted to reintroduce the system as originally planned. That would be crass stupidity. The previous Government told us on numerous
occasions that we could not introduce new services for post offices through Government because those were commercial decisions for the Post Office.
Mr. Byers: My hon. Friend is right and there is a conflict at the heart of the Conservatives' position on the issue. They introduced and extended ACT as a way of delivering benefits, for what were good and legitimate reasons. People have voted with their feet and have chosen to have their benefits paid into bank accounts. In November 1999, 50 per cent of new retirement pensioners chose ACT, and 54 per cent. of new child benefit customers did so. People are making that choice and the Government cannot and should not ignore those trends.
Mr. Nicholls: On 29 March, I put it to the Minister of State that the Government's assurances about the continuation of cash payments after 2003 were on the basis that the recipients would have a bank account. Being the honest man he is, the Minister of State dodged that question and would not address it. Is the Secretary of State now confirming that everyone will have to have a bank account after 2003, and that the Government will fund that; or is he saying that the Government have received an assurance from the banking industry that it will provide free banking? It can be only one of those two--which is it?
Mr. Byers: No, we recognise that for some benefit recipients--those who do not want, for whatever reason, to have bank accounts--we will need to have an alternative method. For those people, we are considering what alternative simple electronic money transition systems could be introduced that could be accessed through post offices. We are having this debate in April 2000 and migration to ACT starts in 2003, so we have the time--because we have given plenty of notice--to put in place a mechanism that will ensure that all those who do not have or want bank accounts have an alternative means by which their benefits can be paid.
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