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Mr. Gummer: Does my hon. Friend agree that often post offices are unable to open to replace those that have closed because of the exorbitant terms that the Post Office forces upon new sub-postmasters? Is it not odd that although we can have a machine that is tied directly into a terminal in connection with the lottery, we still do not have similar machines that would enable people to obtain their normal social security benefits in post offices?
Mr. Whittingdale My right hon. Friend makes an extremely good point. I hope that the Post Office will do everything it can to encourage the opening of new post offices. Indeed, I hope that that is already happening.
The sub-post office network is under threat because of the decision taken by the Government to scrap the proposed benefit card system and to move instead to compulsory electronic transfer of benefits into bank accounts from next year. That poses the greatest threat to the network's survival. It is well known that the biggest source of revenue for sub-post offices is the
administration of benefit payments. That is worth some £400 million to the network, or about 35 per cent. of its income. The loss of that money will jeopardise the future of thousands of post offices.In addition, there is likely to be another devastating effect on the businesses' retail side. Many pensioners and benefit recipients go to the post office to draw benefits in cash, and often spend some of the money on purchases in the same location. Stopping benefit payments in cash across the counter will cause sub-post offices to lose the income that the Benefits Agency pays them, and to risk losing a sizeable proportion of their sales income.
The Government have pledged repeatedly that anyone wishing to receive benefits in cash at the post office will still be able to do so. We are assured that post offices will be able to offer basic banking facilities to people with bank accounts and that those who do not have banking facilities will be able to set up a Post Office card account, yet just over a year away from the beginning of the switch to automated credit transfer, there is no sign of the universal bank being put in place.
Four months ago, it was reported that the Government were considering scrapping plans for the universal bank, as a result of rows between the Treasury and the Department of Trade and Industry over cost. Then it was announced that the Department of Trade and Industry was no longer to be responsible for the universal bank, and that the Secretary of State for Work and Pensions had taken it over. One report said that that was a
- "fresh effort to make the troubled project work."
Mr. Blizzard: I am grateful to the hon. Gentleman for giving way a second time. Will he set out his solution to the problem that he has outlined? I recall that the previous Conservative Government came up with a smart card solution that was not very smart.
Mr. Whittingdale: The scheme proposed by the previous Government would have preserved people's ability to receive cash across the counter. In addition, it would almost certainly have boosted sub-post offices' income and thus assured their future. However, this Government scrapped that scheme and replaced it with another that shows no sign of being operational in time. The problem for the hon. Gentleman is that we do not have time to wait until the election of the next Conservative Government, as this Government intend to scrap the cash payment of benefit in just over a year. They are failing to put in place any alternative scheme.
Mr. David Heathcoat-Amory (Wells): Is not my hon. Friend being too kind to the Government? Most of the necessary efficiency savings and anti-fraud measures would have been achieved under the Horizon project, which has been scrapped at a cost of £571 million—a sum that has to be written off by the Post Office. In place of the Horizon proposals, post masters and their customers
have been offered the vague hope of a universal bank that no one believes will be brought in on time. The result was last year's record number of closures, which have been a financial and social disaster.
Mr. Whittingdale: My right hon. Friend is entirely right. I accept his criticism; I shall do my best not to be so kind to the Government in future.
Mr. Howard Flight (Arundel and South Downs): Does not my hon. Friend agree that, even if the universal bank is introduced, the payment of benefits and tax credits through it will still depend on there being enough post offices in existence for people who wish or need to collect the cash to be able to do so?
Mr. Whittingdale: Of course my hon. Friend is right. Although the universal bank may, if it ever happens, allow the Government to meet their undertaking that cash payments will still be available over the counter, it will not fill the gap that will be left once the sub-post offices lose the revenue that they currently enjoy from the administration of benefit payments.
I should like to press the Secretary of State a little further on some of the details of the scheme. Reports have suggested that the Government are working on an estimate of 3 million customers who may wish to take out post office card accounts. The Secretary of State will know that the potential number of customers is far greater than that. The Minister for E-Commerce and Competitiveness has said that there will be no cap on the number of accounts, so the right hon. Lady will understand that there is therefore some confusion about the number that the Government are working on.
I hope that the Secretary of State will make it clear whether all those who wish to take out a post office card account will be able to do so. In particular, can she guarantee that the choice available will be a genuine one, and that those who already have bank accounts but would prefer to use a post office card account will be able to do so? What agreement has been reached with the high street banks on their contribution to the cost of the universal bank? How much do the Government intend to invest in it?
If the Secretary of State is in a position to give those assurances, how does she explain the letter that has gone out from Paymaster, the body that pays the armed forces' pensions, which says that weekly payment of war pensions by order book will be withdrawn from April of this year? Instead, payment will be made electronically into bank or building society accounts or by voucher to home addresses. Can the Secretary of State explain how war pensioners will be able to continue to obtain benefits in cash at post offices, as the Prime Minister has promised, once the system changes in eight weeks' time? Or is she able to say that the universal bank will be up and running within that time?
As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) rightly pointed out—[Interruption.] I am delighted to see the hon. Member for Scarborough and Whitby (Lawrie Quinn) seeking assistance and look forward to hearing the answer. As my hon. Friend said, even if the universal bank is put in place in time for the switch to ACT, it will not make up for the huge loss of
revenue that sub-post offices will suffer as a result. To fill that gap, the Government have promised to create new business opportunities for sub-post offices to attract new customers. The performance and innovation unit report, which is a very good document, specifically identified a number of ways in which sub-post offices could modernise and attract new business. However, 18 months after the publication of the PIU report, almost nothing has been done.In the urban network, there is widespread acceptance of the need for streamlining and for investment and modernisation of the branches that remain. However, no indication has been given of how many branches are likely to close. One recent report suggested that anything up to 8,000 sub-post offices could close. That has subsequently been denied, but no indication has been given of how many will remain, nor of what compensation will be available to those who decide to give up their business.
Another key way that we were told would bring new custom into sub-post offices was through the training of sub-postmasters as government general practitioners. Last year, a pilot project in Leicestershire and Rutland involved the installation of "Your Guide" terminals in more than 250 locations. I understand that the report which has been delivered to the Secretary of State said that the pilot project has been very successful. Indeed, I have no doubt that "Your Guide" will help people to access Government services and could, at the same time, provide a boost to sub-post offices. Yet since the pilot was set up, almost nothing more has been heard. Indeed, the only additional "Your Guide" terminal to be installed is the one that has just been made available in the post office in Portcullis House. Although that is an extremely welcome additional service for Members, surely the priority should be to install terminals where they are most needed—in the rural network; and to begin training sub-postmasters as quickly as possible. We are told that the Government have money available to do that so why has it not happened?
There seems little doubt that whatever new business can be won for sub-post offices will not be in time to replace the business that will be lost next year. The Government said that they will provide a subsidy to support the rural network and that money for that has been set aside. However, once again no details have been given as to how that subsidy will be determined or of the method whereby it will be paid. All we have heard are vague assurances from Ministers that everything will be all right on the day.
Time is running out. Thousands of businesses are being blighted as a result of uncertainty and gloom as to what their future holds. Unless action is taken to implement those measures, there is a real danger that many businesses will not survive.
The Post Office provides a public service, but like every public service in this country it is failing to deliver—literally, in the case of the Post Office. It is not good enough for the Government to wash their hands of the problem. They created the crisis that is affecting the Post Office and it is now up to them to say what action they propose to take to deal with it.
5.31 pm
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