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Mr. David Heath (Somerton and Frome): I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker: With this it will be convenient to take the following amendments: No. 15, in page 16, line 20, at beginning insert—
'Subject to section (Means of payment of tax credits to recipients)'.
No. 13, in page 16, line 30, at end insert—
'subject to employers consulting with their employees as to whether they would prefer working tax credit payments to be made by the Board directly.'.
No. 16, in page 16, line 30, at end insert—
'(1A) Regulations under this section shall not apply to an employer with fewer than 15 employees'.
No. 14, in page 17, line 42, at end insert—
'(8) The Board will refund to employers their costs incurred in making payments of working tax credit to employees.
(9) No employer with 20 or fewer employees will be bound by the regulations set out in this section.'.
Mr. Heath: Amendments Nos. 15 and 16 were tabled by the Liberal Democrats. Should my hon. Friend the Member for Teignbridge (Richard Younger–Ross) catch your eye later in the debate, Mr. Deputy Speaker, he will speak to amendment No. 16. Amendment No. 15 is simply a paving amendment for new clause 2.
The new clause deals with the payment of tax credits through the sub-post office system. It is a great delight to engage the attention of yet another Department on the matter of sub-post offices, as we are already talking simultaneously to two Departments. Nothing would please me more than if the new clause were to be unnecessary when events reach their conclusion next year.
We greatly welcomed the performance and innovation unit report and its comments on the universal banking service. We hope that it will be put in place satisfactorily, but we do not share the Government's confidence that that will necessarily be the case. In that view, we have allies, not least the National Federation of Sub-Postmasters, which has serious concerns about the readiness of the Government systems to implement what the NFSP sees as an important part of the strategy for the future survival and development of the sub-post office system. As we know—I will not go into a long history of sub-post offices, as that would be unnecessary to the prosecution of the argument for the new clause—
Mr. Deputy Speaker: Order. That would not only be unnecessary, but it might take us outside the scope of the discussion that we should be having.
Mr. Heath: Absolutely right, Mr. Deputy Speaker. I obviously phrased my comment badly. I meant to say that to widen the scope to include the history of sub-post offices would be inappropriate to the debate. However, to deal specifically with the payment systems within sub-post offices, which is the substance of the new clause, is necessary.
As we know, three forms of bank account are to be offered by sub-post offices. I need to deal with only two: the basic bank account, which will provide basic banking services through the clearing banks but situated in the sub-post offices, and the Post Office card account. That baseline provision is the most critical element. It is designed for those who have not had or do not want a bank account, but still need to receive their benefits through the sub-post office system, and for whom we would suggest that the tax credit is also a relevant factor.
The Government were tardy in getting arrangements under way for that basic payment system. There seems to have been almost no progress under the aegis of the Department of Trade and Industry. Perhaps for that reason some rattling of the cages was necessary in autumn last year, when the Secretary of State for Work and Pensions was appointed as a sort of universal bank tsar. We know that, last October, the contracts had not been placed with the companies that were to put in the infrastructure.
In a letter to Mr. Colin Baker, the general secretary of the NFSP, on 19 October, the director of postal services—network and markets—in the DTI commented:
- "There is a lot to do to put in place these sophisticated, if commonplace, banking arrangements".
Since then, I have had a number of meetings with representatives of those companies and with representatives of IT companies on a wider front. The one word that keeps coming back to me about the project is "challenging". We can assume that that means well nigh impossible to deliver on the date on which Ministers still assure us it will happen. One of the leading IT manufacturers told me that the industry norm for such a project would be to have it developed and operational at least 12 months before it was to go live. That time would be needed to identify difficulties, to train the personnel who were to install the system and use it and to ensure that it was working to everyone's satisfaction.
Twelve months before the new payment system is to go live is the beginning of April this year, yet we know that the contracts have only just been let and that progress on development is limited. We are at a loss to know how personnel are to be trained, as the Government tell us nothing about that. We are at a loss to know what the migration policy is—what its objectives are, let alone how it is to be implemented. Again, the Government will not tell us. They will not tell us anything at all about the project. They merely repeat that it will be all right on the night and that the system will be ready in April.
Nothing would delight me more than if that were the case, but if not, there is an argument that for other benefits, there is a period of migration which allows for flexibility, but the child tax credit is not a mobile target. It is to come into effect in April 2003, so there is a fixed deadline for that element of tax credit. There are serious fears that the system will not be ready. The new clause would provide a plan B for the Government. They may well need such a plan to allow people to receive their payments through the Post Office on the specified date if they do not have a bank account.
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What is the argument against such an alternative? The only argument against the ability to make such arrangements if the Post Office card account is not ready is that the Government want to move people towards basic bank accounts instead of towards the Post Office card account. That is what the clearing banks think. They feel that they have been sold a pup and coerced into providing the services, while the Government do not intend the card account to be ready on the day. If it is not ready, people will be pushed into basic bank accounts, irrespective of their wishes. The post offices share that suspicion and see such a move as very retrograde, as people who have bank accounts may well opt for the bank rather than the Post Office. All the benefits that would accrue to the Post Office system would then be nugatory. Clearly, the Government have an argument in terms of reducing costs, but not in terms of providing the choice that they have always maintained to be the basis of their proposals. That is why the new clause would provide an appropriate safety belt for the Government and for the system.
The new clause has another separate purpose. Subsection (3) would extend the payment system for working tax credit into the same payment framework as
the other payments. That is another very important aspect of the new clause. I understand that the Government's argument against the proposal is that they want to preserve the linkage of working tax credit with work, but they take the deeply patronising view that recipients can make the connection only if two lines to that effect are written on their pay cheque, rather than on their bank statement. That view is wrong.The arguments for providing the option proposed in the new clause—it is not a compulsory course of action—are threefold. First, it would reduce costs for employers. That is a valuable objective and I know that my hon. Friend the Member for Teignbridge will amplify that point in terms of small employers if he can catch your eye, Mr. Deputy Speaker. Secondly, it would extend control to the recipient, which is right in itself. Thirdly, it would help to safeguard our post office network—something that hon. Members in all parts of the House would see as a key objective.
David Cairns (Greenock and Inverclyde): Surely the proposal would achieve a significant reduction in an employer's costs only if all the employees in a company opted to take their payment through their payment book at the Post Office. If one employee did not take the option—the hon. Gentleman said that it is an option and is not compulsory—the employer would still have to set up the system, fill in the forms and cross a certain cost threshold. A significant saving will be secured only if all the employees of a firm opt to go to the Post Office. How will he make that happen?
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