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Benefit Payment Methods
5. Andrew Selous (South-West Bedfordshire) (Con): If he will make a statement on the future arrangements for paying pensions and benefits at post offices. [57320]
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): The Government are committed to ensuring that benefits and pensions are paid in the most secure and efficient way. That is why we made the successful switch from order books to direct payment. The Government have always said that we will make it possible for anyone who wishes to collect their benefit from the post office to do so. We will fund the Post Office card account until 2010, as was always planned. Anticipating what should happen thereafter, we have been having discussions with Post Office Ltd. for a number of months. I understand that Post Office Ltd. is developing new banking and savings products.
Andrew Selous:
In 2004, the Prime Minister said that direct payment customers would still be able to collect their cash from the post office. Given that the Post Office card account is to be scrapped, that high street banks are threatening to kill off the basic bank account, and that
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not all banks allow their customers to withdraw cash from the post office, will that continue to be the case, and what effect will the current changes have on post offices?
Mr. Plaskitt: As I said, we stand by our commitment to enable those in receipt of benefits or pensions who wish to collect them from the post office to continue to do so. The Post Office card account is one way to do that, but there are 25 other accounts that are also accessible at post offices. As I have said, we understand that the Post Office is developing new products, which may well serve as successors to the POCA when it expires in 2010.
Huw Irranca-Davies (Ogmore) (Lab): The Minister will recall that when the POCA was introduced, it was much derided; however, it has served a useful purpose through its simplicity as an in-and-out account in the post office. Does he share my frustration at the slow speed of development of alternative products that will not only allow in-and-out cash transactions of benefits and pensions but, for example, give people the benefit of standing orders, thus making their bills cheaper? What can we do to put more pressure on Post Office Ltd. and the banks to introduce a far better product when POCA is phased out?
Mr. Plaskitt: My hon. Friend makes an important point. He is right to say not only that POCA has served a useful purpose, but that its functionality is limited. One cannot, for example, attach a direct debit to the account. All of us have pensioner constituents expressing concern about increasing bills for gas and electricity, and one way to reduce that cost is to pay those bills by direct debit, but that cannot be done through a POCA.
Mr. Philip Dunne (Ludlow) (Con): Is the Minister aware of the Post Office's reaction to the Government's unilateral decision? I have a letter from Mr. Alan Cook, the managing director of the Post Office—a letter that I believe several other hon. Members have received today—in which he points out that the Post Office is "disappointed" at the decision and that the Post Office currently loses £2 million a year, after a £200 million revenue contribution, from the POCA. The consequences will be extremely damaging, especially in rural areas. Last week I surveyed the 42 post offices in my constituency, and 100 per cent. of those who responded said that the change either would or probably would jeopardise the viability of their business. Will the Minister respond to that?
Mr. Plaskitt: The Government have not made a unilateral change. I draw the hon. Gentleman's attention to the jointly signed contract between the Government and the Post Office, the introduction to which says:
"A POCA will complement the range of Bank Accounts available to customers; in particular, to promote a service to those who do not have or cannot otherwise obtain a Bank Account."
"The POCA is intended to be an interim step for Account Holders who will be encouraged by both Parties to migrate to Bank Accounts which provide services and opportunities not available through the POCA."
The Post Office and the Government have both honoured that contract. If the hon. Gentleman is concerned about rural post office closures he should
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note that the Government have made available £700 million to support the rural network, and the rate of rural post office closures has slowed considerably from the rate under the previous Administration.
Contracted-out Rebates
6. Mr. Andrew Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): What his proposals are for contracted-out rebates from April 2007. [57322]
The Minister for Pensions Reform (Mr. Stephen Timms): The proposals are set out in the draft order laid before Parliament on 1 March. They include an increase in the flat-rate rebate for defined benefit schemes from 5.1 per cent. to 5.3 per cent., and an increase in the rebates for defined contribution schemes together with a reduction in the cap.
Mr. Slaughter: I am grateful to my hon. Friend for that reply, but as he knows, the contracted-out rebate that he has announced is less than the sum recommended by the Government Actuary. Many of us have received representations from the pensions industry and others about that sum. Is that my hon. Friend's final offer, or is he prepared to look at it again?
Mr. Timms: The proposals keep the cash value of the contracted-out rebate broadly unchanged. We are required to review the rebate at least every five years, so we had to make an announcement this month to take effect from April next year. However, we need to look at the rebate again, as my hon. Friend suggested, in the light of the pensions White Paper. We would not need to wait another five years if we decided to make a further change, as it would be possible to change rates again from April 2008 if we thought that it was right to do so.
Benefits System
7. Greg Clark (Tunbridge Wells) (Con): If he will make a statement on the complexity of the benefits system. [57323]
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): We recognise that over time successive piecemeal changes to benefits have led to undue complexity in the system, but unlike previous Administrations we are addressing that. We have already introduced major design reforms such as easements for the poorest pensioners to claim housing and council tax benefits and the piloting of the local housing allowance. From this April, we will simplify the social fund budgeting loans scheme, making it easier to access, more transparent and more responsive. Longer-term proposals for more radical simplification were set out in the welfare reform Green Paper published in January.
Greg Clark:
Is the Minister aware that the National Audit Office says that the complexity of the benefits system has deterred people from saving for retirement? That was illustrated graphically to me on Saturday, when a constituent told me that for 15 years he had saved 10 per cent. of his modest salary for retirement, but has now stopped doing so, because he understands
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that the impact on his income in retirement will scarcely be worth while. Does that not illustrate that the real problem is the message sent out to our constituents across the country, and is the Minister happy to preside over a system that causes people to behave in that way?
Mr. Plaskitt: First, we should put the record straight about what the National Audit Office said about the Department's record on tackling complexity in the benefits system. It recently published a report on the matter, in which it said:
"Overall, the Department has made some progress in tackling the complexity of the system and in designing ways of managing it to protect staff and customers, but it recognises that there is considerably more to be done."
We accept that there is more to be done. That was addressed in the White Paper, and of course there will be more to say when we respond to Lord Turner's report.
Mr. David Ruffley (Bury St. Edmunds) (Con): Because of the Government's confused and confusing benefits system up to 340,000 vulnerable people who are entitled to income support do not receive it, and up to 500,000 people entitled to jobseeker's allowance do not receive it. At the same time, however, existing claimants are overpaid those benefits by nearly a third of a billion pounds a year because of official error, fraud and incompetence. Are not vulnerable people and the British taxpayer the victims of simple ministerial incompetence?
Mr. Plaskitt: Levels of error and fraud in the system are falling. The Conservative Government did not even attempt to measure fraud and error, but this Government do. I do not know why the hon. Gentleman continues to scaremonger and dig away at the issue. He needs to explain matters to the pensioners he has frightened over the weekend with his stories. He is trying to suggest that, because of overpayments, somehow hundreds of thousands, or millions, of pensioners will have to hand money back. That is not the case. As was explained in answer to an earlier question, we are not clawing the money back. We have contacted only the small number of pensioners—76—to whom duplicate payments of pensions were made. He really should desist from scaremongering.
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