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ESTIMATES DAY

[1st Alloted Day, 2nd Part]

Department of Trade and Industry

People, Post Offices and Pensions

[Relevant documents: Eleventh Report from the Trade and Industry Committee, Session 2002–03, on People, Pensions and Post Offices, HC 718, and the Government's response thereto, HC 1102; and the Department for Trade and Industry Departmental Report 2003, Cm 5916.]

Motion made, and Question proposed,

That resources, not exceeding £2,101,186,000, be authorised, on account, for use during the year ending on 31st March 2005, and that a sum, not exceeding £3,749,956,000, be granted to Her Majesty out of the Consolidated Fund, on account, for the year ending on 31st March 2005, for expenditure by the Department of Trade and Industry.—[Mr. Heppell.]


[This Vote on Account is to be considered in so far as it relates to the modernisation of the post office network, with particular reference to the impact on post offices of the direct payment of pensions (Resolution of 2 December).]

Mr. Deputy Speaker (Sir Alan Haselhurst): Before I call the hon. Member for Ochil (Mr. O'Neill), may I say that a great many hon. Members are seeking to catch my eye in a limited time? The 10-minute rule does not apply to the hon. Gentleman whom I am about to call and Front Bench spokesmen. Hon. Members will understand what a difficult situation that creates, so I hope that they will be tolerant and sympathetic to their colleagues' needs.

3.58 pm

Mr. Martin O'Neill (Ochil) (Lab): I hope that I shall speak for less than 23 minutes, Mr. Deputy Speaker.

When preparing for our debate, I went through my files and discovered that the Trade and Industry Committee, which I have chaired for eight years, has been looking at this issue since the mid-1990s. On about seven occasions we have taken evidence and reports have been produced, and we shall doubtless revisit the issue in the coming weeks and months. Our 11th report for the Session 2002–03, HC 718, was published on 17 July and the response from the Secretary of State appeared on 23 September. That response identified our two main areas of concern. For the purposes of debate, it may be better to focus on the concerns that the Government identified rather than on those that we identified, but I am sure that other Members will seek to widen our discussion.

The Government identified two main areas of concern—the unnecessarily complicated procedure for opening a post office account, and the character of the customer information provided by the Department for Work and Pensions, which was considered insufficient for people who were applying for a card account.

I recognise that in some respects, therefore, the responsibility for answering these charges lies at the door of the Department for Work and Pensions, as much as with the Department of Trade and Industry. I entirely understand the reason for the absence abroad of my hon. Friend the Minister for Energy, E-Commerce and Postal Services, and I welcome the Under-Secretary

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of State for Trade and Industry, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), to the minefield that is this topic.

There is a degree of consensus about offering the option of direct payment of welfare benefits. It is technically possible to pay salaries and private pensions into people's bank accounts, so why not extend that to state pensions and a range of social security benefits? Since the proposal was first mooted in the past decade, the practice has become more common as more recipients have come to recognise the advantages of automatic teller machines and the like.

The Government have long felt that the cost of providing benefit books is excessive, and as theft, forgery and general fraud have increased, the need to counter them has become ever more expensive. It has been suggested that that represents a cost to the taxpayer of some £80 million. It should be stressed, however, that there is no ministerial statement, and no consensus, on how much will be saved by the introduction of swipe cards, direct payments and so on.

A sizeable number of people find it convenient to take their books to the post office and receive their benefit in cash over the counter. They include mothers who receive child benefit and who, although they may have a bank account of their own or have joint arrangements with their spouse or partner, may prefer to have access—for example, on a Saturday morning—to money that they have earmarked for specific purposes, such as children's clothing.

The late Barbara Castle, as the Minister introducing the measure in the 1970s, stressed that the nature of the payment was important, as it would go exclusively to the mum, and would be spent independently of the rest of the family income. As I know from experience in my constituency, there are still men who do not tell their wives how much they earn, and who have a bank account of their own and hand out the money with a teaspoon at irregular intervals. Child benefit is important because it gives young mothers financial independence.

There are others who just like going to the post office. It is an outing. Pensioners meet their friends and contemporaries there, and they can buy post office goods, such as stamps for their TV licence, and make utility payments.

Mr. Nigel Waterson (Eastbourne) (Con) rose—

Mr. O'Neill: I do not have much time, but I shall take the hon. Gentleman's intervention.

Mr. Waterson: Does the hon. Gentleman agree that it is a matter not just of wanting to go to the post office but of finding one that is still open? Five post offices have closed in my constituency. Does he agree that we should examine the consultation process involved in such closures, which in my experience has been wholly inadequate?

Mr. O'Neill: The hon. Gentleman may have the chance to catch the Deputy Speaker's eye. Such interventions are helpful, but their helpfulness is limited.

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There is a more important group covering the entire range of benefit recipients, including pensioners and mothers, who are dependent on the post office as the source of their family or individual income. Anyone who passes a post office at 8.30 on a Monday morning will see those who need their benefits to buy the day's food, to heat their home, to pay their debt collectors or to get money to get to work. I have no problem with the Government's programmes to end child poverty, which we discussed in the previous debate, or to improve social inclusion. A number of people still live on the economic margins, however, and have no cushion of savings. Such people do not have money in an envelope behind the clock and do not have bank accounts or credit cards. For them, a hole in the wall is merely a hole in the wall, and they do not have access to ATMs and the like. I make that point because we contend that, for many people, the processes of securing alternative means of payment are at best daunting and at worst unhelpful. The agenda of the DWP-instructed call centre staff is unduly biased towards securing maximum take-up of direct payment.

Ms Joan Walley (Stoke-on-Trent, North) (Lab): Will my hon. Friend give way?

Mr. O'Neill: I am sorry, but I want to make progress.

Internal memos provided to me by the National Federation of Sub-Postmasters and the Communication Workers Union make it clear that the attitude is hardening. In respect of a Jobcentre Plus pay modernisation project, I have a document from a Mr. Alan Linton dated 7 October in which he states:

"This letter is to inform you how we are aiming to issue robust and consistent messages on the importance of Direct Payment as due to commercial and political constraints, previous material issued has contained many 'soft' messages."

I do not think that one has to be a textual expert or some sort of Noam Chomsky to get the feeling that there has been a step change in attitude. The document in question was issued in October, after the Secretary of State had given us his response, and it was produced within the confines of the DWP. There is a change in attitude, and it serves to underline the malign motives of the DWP in this matter. Some issues repeatedly arise:

"Paying by order book costs 30 times as much as paying into standard or basic bank accounts. Paying into a Post Office card account costs even more and was designed to meet the needs of those who cannot gain access to standard or basic accounts."

The last bit of information is:

"Order books will start to be phased out from October 2004."

The tone of those instructions does not suggest that they are an attempt to instruct people about how to help the disadvantaged. That serves to underline the fact that, in the seven months or so since we took evidence, things have not become better but have got worse—a view that is reinforced by the sub-postmasters and postal workers themselves. The objective is not to give an informed choice so much as to direct people to use existing bank accounts where appropriate, to say that they should acquire Post Office cards through a complicated procedure, or, last and least, to seek to discourage refuseniks by saying "It's going to go through anyway, so you had better get your act together and sharpen up."

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The Post Office card account is probably the best compromise, and I think that the DTI and Post Office Counters have sought to introduce it with reasonably good intentions. The DWP, however, has made applying for the account more difficult and complicated and has been able to load the choice system with active discouragement. Postwatch, the postal consumer watchdog, put it succinctly, saying that

"the POCA application process requires the customer to retain and assimilate documents they receive at different stages in the process. Duration between receiving these different documents is often quite long. It can be confusing and is potentially off putting."

Postwatch makes several suggestions. People can apply to the Post Office, avoiding any contact with the call centre, or they can take the migration letter from the DWP agency and go to their post office with identification such as a benefit book, which seems as good a means of identification as any, after which the form would be completed at the post office and sent on by post. Another option is to issue the Post Office card account instead of a new order book, so that once the customer tells—I had better get the name right—the customer conversion centre that they want a card, it can be issued at a nominated post office. Alternatively, it would be possible simply to use the existing bureaucracy, so that once the customer receives the POCA information she has to give the relevant DWP agency her details, and the Post Office can inform the DWP agency of the account details. That would streamline the existing application process by removing one stage.

The DWP's response to those suggestions by the consumer watchdog for postal services has been somewhat slow, or tardy—the vulgar among us might suggest other expressions—but suffice to say that it was, simply, "Get lost." A proposal by the body that is charged with protecting consumers at post offices is dismissed because it would probably result in too many people taking it up and undermine the cost-effectiveness of the grand design.

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