Examination of Witness (Questions 960-972)
MS FIONA
PRICE
22 MAY 2006
Q960 Mr Breed: Turning to the issue
of loan sharks, which is a pejorative term for people who lend
at extortionate rates, probably under conditions that would not
be classed as a normal transaction, do you think that there are
sufficient powers to combat the problem of these illegal loan
sharks already available to the DTI in terms of the licence and
everything else? Do you think they need to be beefed up when getting
some new powers to ensure that proper control and regulation of
this sector is undertaken?
Ms Price: I think the powers are
adequate. It is quite clear that it is illegal to lend without
a consumer licence and there are adequate sanctions that Trading
Standards, who are the enforcers, can use. The difficulties are
that, by the nature of this, it is very difficult to catch the
loan sharks and it is difficult to get people to give evidence
against them. It takes a lot of effort and surveillance to bring
a case to court. What we have been able to do with the loan shark
pilots is put teams in place who can put in that effort and have
been successful in bringing people to court after a period of
over 10 years, when there were no prosecutions.
Q961 Mr Breed: It is not a matter
of new powers but perhaps additional resources to enable investigative
work and to bring cases to court under powers already there?
Ms Price: Yes. It is about putting
the resources into enforcement.
Q962 Mr Gauke: One of the issues
we have looked at is the need to develop some sort of method for
providing generic financial advice. Are there any lessons to be
learned from the Consumer Direct programme the DTI runs, obviously
not relating to financial advice, but are there any lessons we
can learn from that and can you tell us a little bit about Consumer
Direct?
Ms Price: Consumer Direct was
set up building on the advice services that local authorities
provided to consumers in order to give consumers a place they
could go to get advice on consumer problems or on transactions
that they were thinking of taking out. We have now rolled that
service out nationally so it is available everywhere and the responsibility
for managing the service has now transferred from DTI to the Office
of Fair Trading. The research has shown that the service is very
valuable and that it does lead to significant savings for consumers.
People who use the service also feel that they would be much more
confident about dealing with future problems so it is having an
impact there.
Q963 Mr Gauke: Do you have any figures
as to how many calls it has taken and what the cost of it is?
Ms Price: I do not have those
to hand but we could certainly send them to you.
Q964 Mr Gauke: Can I come back to
the issue of the Post Office? Assuming that the DWP goes ahead
and does not renew the contract, to use the terminology the Minister
would like, in 2010, will there be any additional costs with regard
to the social network payment which the DTI will have to pay to
the Post Office, given the reduction in footfall that is likely
to result from that?
Ms Price: We are too early in
the discussions to say what the impact is going to be but we are
working closely with the DWP and the Post Office on considering
what will happen going forward and discussing with the Post Office.
The Post Office is looking very closely at alternative sources
of business so I think we will need to see those discussions progressing
further.
Q965 Mr Gauke: Would you accept that
it is a possibility that, if the Post Office Card Account is abolished
in 2010, there will be a reduction in footfall and, as a consequence,
that will place a greater strain on some Post Offices and may
result in an increase in the social network payment from the DTI?
Is that a possibility that the DTI is considering?
Ms Price: It is certainly something
that would need to be considered along with all the other issues.
Q966 Mr Gauke: With regard to your
general relationship with the Post Office, to what extent is financial
inclusion a priority matter?
Ms Price: It is not essential
to the DTI's relationship with the Post Office. We tend to be
dealing with it rather more from the point of view of the shareholder
and the financial inclusion issues are largely within DWP's area.
Q967 Mr Gauke: How does it work when
you have the DWP and the DTI? Is there not a danger of running
into cross-departmental confusion?
Ms Price: We try to make sure
that we work closely together to avoid that.
Q968 Chairman: Could you take back
to your Minister the view that it would be good if ministers from
different departments met with the Post Office or others at the
one meeting because to date the information is that that has not
happened. It would be very helpful because we need a joined up
approach to financial inclusion.
Ms Price: I will certainly do
that.
Q969 Mr Mudie: I am sorry the Minister
is not here. Do not take this personally but I find all that very
"Yes, Minister" speak. We have had a round of Post Office
closures. Your department is responsible for the Post Office.
We have had a round that caused havoc in the country. There are
petitions in the Post Offices now about closures and the department
who is paying the Post Offices 200 million a year decides it is
not going to extend the contract which means that your department,
responsible for the Post Offices, inevitably is either going to
have to find 200 million to replace that income or close Post
Offices. Is there any record in the department of the department
objecting to the decision, commenting adversely on the decision
of the DWP or did the department, the protector of the Post Offices,
just say, "Oh, dear"?
Ms Price: Like the Post Office
and the DWP, we knew that the contract was due to come to an end
in 2010.
Q970 Mr Mudie: This was 2005. It
was not something that was pressing, where they had to take a
decision. In joined up government, did they discuss their intentions
with the department? Did you have the opportunity to say, "Hold
on. This is a very difficult political decision. It affects us
as a department. We are the lead department on Post Offices"?
Did any of that happen or did the DWP just say, "We are going
to save some brass. Aren't we clever?"?
Ms Price: We have always worked
closely with the DWP.
Q971 Mr Mudie: That is not disputed
but where are you on this issue? If you are saying that you work
closely with them, the people who run the Post Offices, the sub-postmasters,
would think that you have not safeguarded them sufficiently. You
have been supine in the face of a very strange decision from the
DWP. Which is it?
Ms Price: The Post Office Card
Account was always seen as a stepping stone to financial inclusion,
not something that we wanted people to be on for ever.
Q972 Mr Mudie: Why? We are just talking
about method of payment. People were happy with their books. For
financial reasons, the DWP saved 100 million by withdrawing books.
There were hurdles to get a Post Office Account. Four million
people chose it. Now they are saying it is going. That is a matter
for the pensioners. That is hard lines, but it also affects 14,000
Post Offices and, unless there is some brass coming in from the
DTI, it is down to 4,000 Post Offices. 10,000 Post Offices are
going to close before 2010. You are responsible for those Post
Offices. Are you telling us that the department did not object
to this decision by the DWP?
Ms Price: We knew that the contract
was coming to an end in 2010 and what was important was to think
early about what was to replace it. What will be important to
the Post Office and to those customers are the arrangements that
replace that.
Chairman: You can detect that there is
a concern here on that issue. Can you take that back to the Minister,
if you do not mind, because we are going to keep a watching brief
on it. Can we thank you for your attendance and for stepping in
so quickly for the Minister. We are very grateful.
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