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Mr. Letwin: May I press my right hon. Friend a little further on his ingenious exegesis of new clause 1(1)? Is he suggesting that it would give powers to the Secretary of State to make payments to the sub-post offices in order that they should make payments to the banks for the service of providing cash tills, or that the same route should be followed for the purpose of paying the banks for providing the connection so that sub-post offices may deliver money across the counter? Finally, is he suggesting that they might be able to make payments to the banks to subsidise them for taking on customers whom they do not want?
Mr. Lilley: My reading of subsection (1)(b) is that the Secretary of State is taking powers that will enable him to subsidise the provision of services provided from
public post offices, but that he need not pay the subsidy direct to the post offices. He could subsidise the banks for providing that onward transmission to the sub-post offices. The new clause is phrased in a way that would allow him to do that, and it may be necessary for him to do so if the scheme is to be viable and he is not to end up with bankrupt post offices, with pensioners and others being refused bank accounts.A whole array of questions remain unanswered about how the Government propose to deal with the problems of people who do not have, do not want or are not legally permitted to have bank accounts. That is a separate issue, and I appreciate that you, Mr. Deputy Speaker, would urge me to return to it on another day if I attempted to deal with it at length. I shall not try your patience. I have demonstrated that the Government have taken a route that may necessitate subsidising banks as well as directly subsidising sub-post offices.
What is the alternative to the mess that the Government are in? We could provide post offices with an income, not a subsidy. The Department of Social Security has always felt--rightly--that if the sub-post office did not exist, we would have to create it. The DSS, unlike banks, deals with people who are often immobile, who may not own cars and who cannot easily travel long distances to pick up their money. Those people want to be able to collect their money from a reasonably close outlet--namely, the sub-post office. Banks, by contrast, want people to be rich, have cars and be mobile. Banks expect people to go to a bank in town or use the internet or some other means. Hence, banks are closing branches.
Bank branches have always been fewer in number than the branch network of the Post Office. The sub-post office has been unique in dealing with the most vulnerable, immobile and often disabled people who need us to get money to them. That does not mean that we should not seek the most efficient and cost-effective ways of getting money to people. We must pay the sub-post office network to exist as an outlet in most of the parishes of this country, but if we can cut unnecessary costs in getting the money to the sub-post offices, we can make significant savings for the taxpayer.
As I recall, half the cost of the annual £400 million contract between the Benefits Agency and Post Office Counters Ltd. went on the latter's costs for warehousing, storing, printing and distributing order books, which are the most inefficient and insecure means of distributing money known to man. That is why we began a project to automate that element of delivery, so that money could go electronically to the post offices and be delivered to benefit recipients who would hold a benefit payment card. That would have cut out £140 million of fraud a year, which would have gone a long way to paying for the change.
That is a big task, but not unprecedentedly so. A similar project was successfully introduced in Ireland, which, for historic reasons, has a network of sub-post offices and a benefits system rather like ours. The people who introduced the system in Ireland were in fact contracted as part of the consortium to introduce it in the UK. Parts of the scheme are complicated, such as the so-called CAPS programme--the customer automatic payment system--that the Benefits Agency has been developing in-house. Although that was the most complicated part of the scheme, I am told that it is not what has gone wrong with it. Commercial add-ons are being retained.
Problems allegedly arose at some stage of the contract. It would be astonishing if that were not so. No major computer project anywhere in the world has not had problems of some sort. However, problems must be managed. It is the responsibility of Departments and, ultimately, of Ministers to sort them out: to simplify the system, if need be; to remove unnecessary complexities; and to deal with the apparent management quagmire that--rather than any technically insurmountable difficulties--lay at the heart of the matter. Ministers did not do that; indeed, they denied that there were any problems serious enough to delay the completion of the project by 2001. They told the House repeatedly that the project would be finished on time.
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The then Secretary of State for Trade and Industry, now the Secretary of State for Northern Ireland--doubtless he was sent to Ireland to find out how things really work--told the Select Committee that he was confident that the project would be satisfactorily completed. The Government were subsequently condemned by the Select Committee for being less than candid--a pretty damning criticism. Their defence was that it was commercially difficult for them to tell the truth. That might be described as the BMW defence, which, paradoxically, the present Secretary of State for Trade and Industry uses to excuse his predecessors for not having told the House the truth.
It would be interesting to hear from you, Mr. Deputy Speaker, or from Madam Speaker, whether it is acceptable for Ministers to say that, in future, they will deceive the House if they believe that it would be commercially inconvenient not to do so. Will we be able to accuse Ministers of misleading the House, of telling lies, or of being less than candid for commercial reasons? After all, that is what they said they did and it is what the Select Committee accused them of doing.
Ministers should have sorted out the problems that arose, rather than pretending that they did not exist. They could have introduced a newer project to deal with the problems of automation so that the money got through to the sub-post offices and savings were made during the interim process, thus ensuring that we had a network of sub-post offices that were paid an income for performing a valuable social service--the provision of benefits in their communities to those people who cannot be expected to travel long distances to collect them.
Mr. Bercow: As the debate progresses, it seems increasingly clear that the new clause represents a bale-out for the Secretary of State, rather than support for the post office network. Given that point, does my right hon. Friend agree that it would be helpful to know the exact nature and scope of the Treasury's day-to-day involvement with the proposed subsidy scheme, and in what circumstances it would be open to the Treasury to stop or restrict the application of the scheme?
Mr. Lilley: That would indeed be helpful. Of course, the new clause includes the bare-faced assertion that the Treasury has the right to prevent its implementation--there are no caveats in that provision. It would be interesting to know the modus operandi that was agreed between the Secretary of State and the Treasury.
I am grateful to the hon. Member for Stroud for endorsing the idea of a benefits payment card--a smart card to ensure the payment of benefits through a post
office. I am glad that he supports the Opposition on that. I hope that he persuades Ministers to go back to that scheme.Will the subsidy be worth while? We should subsidise sub-post offices only if the money is available and if the cost of the subsidy does not exceed the savings that were expected under the policy that made its introduction necessary in the first place. It is unlikely that the net savings--after giving the post office network enough subsidy to maintain it--will be significant; they could even disappear entirely.
Is the money available to make such subsidies? From the Prime Minister's response the other day, we got the impression that there is as much money as necessary to bale out the Government from the problems that they have created through their policy. In Westminster Hall last Wednesday, I asked the Minister whether those who were required to have their payments made through banks after 2003--pensioners and everybody else--would be subject to the same terms as those who currently volunteer to have such payments made through a bank. The payments are made monthly, four weeks in arrears.
The Minister looked distinctly fraught when I asked that question and he did not answer it. He was well aware that if millions of pensioners had to wait for four weeks to receive their pensions, instead of collecting it weekly, the poorer pensioners would experience a large gap in their cash flow. That is why the bulk of low-income pensioners, who depend primarily on the state pension, do not opt for payment through the bank, but collect their money weekly from a sub-post office.
Mr. Desmond Swayne (New Forest, West): My constituents have pointed out that the forms are not clear. Because of their design, many elderly people do not realise that they have a choice--they think that once they have opted for the ACT system, there is no way back.
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