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Jenny Willott: The main problems clearly lie in rural constituencies and communities, although there are also difficulties in deprived urban areas where no choice between financial services is available.

As others have pointed out, when the Post Office card account was established in 2003, despite the difficulties that people encountered in opening accounts, the initial contract was set to run until 2010. However, it was clear to all involved that it was expected to continue well beyond that time. By January 2006, not even halfway through the contract period, the Government had already decided to take the business away from the Post Office. Despite the early stage at which the decision had been made, this further step has been delayed and delayed.

Rob Marris (Wolverhampton, South-West) (Lab): What is the evidence?

Jenny Willott: The evidence is in a debate that took place in the House of Lords. There is plenty of evidence to show when the Government decided that the Post Office card account should be removed.

The Government cannot get their act together, and apparently cannot make up their mind about the future of the Post Office card account. Others are doubtful about whether the Government really cannot make up their mind, or have already made the decision and are waiting for an opportune political moment at which to make an announcement.

Mr. Frank Field (Birkenhead) (Lab): Does the hon. Lady not think it somewhat ironic that the Government’s only IT success in the past 10 years has been the Post Office card? Is not the fact that we are debating the possible scrapping of the card in its present form slightly surprising?

I hope the hon. Lady accepts that if some of us do not join her in the Lobby tonight, it is not because we are not full of apprehension about the Government’s stance. There may, unfortunately, be another occasion on which we shall have to use our votes.

Jenny Willott: I certainly agree with the right hon. Gentleman’s first point. As for his second point, I hope that those who support the motion will consider voting with us later to make that clear.

As for the earlier point of the hon. Member for Castle Point (Bob Spink), there are estimates of at least 3,000 branch closures if the Post Office card account is taken away from the Post Office, although some suggest it could be worse, with 6,000 post office branch closures, which is more than half the current network.

Mr. David Heath (Somerton and Frome) (LD): I hope Members do not decide that they cannot vote with us tonight, because they will not have another opportunity to express their support for their post offices. My constituency has already lost nine sub-post offices through the last tranche of closures, and sub-postmasters were ringing me throughout the past weekend saying how worried they were that the Government, having dithered for so long, are now coming to a conclusion that will take the contract away from the Post Office, and that that will have a disastrous effect on their businesses.

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Jenny Willott: It is, indeed, the case that the removal of POCA from the Post Office would lead to a chaotic and messy series of closures, and it would also entail a string of personal tragedies, as my hon. Friend highlighted, because the closures would be the result of sub-postmasters facing bankruptcy. They would not be planned. I do not believe that we should be prepared to consider the prospect of sub-postmasters facing bankruptcy as a result of Government decisions. At a time of economic uncertainty, with increasing unemployment and increasing numbers of people needing to access benefits over the next few years, it is extraordinary that the Government would seek to pursue a policy that would actively destroy the livelihoods of at least 3,000 people. Those closures could be far worse for the long-term future of the post office network as a whole, because a chaotic series of closures across the network could leave serious gaps in provision, which would mean post offices would lose critical mass, and that would undermine the Post Office’s ability successfully to bid for future contracts, so this could be the first stage in a very dramatic decline in numbers.

Rob Marris: I served on the Work and Pensions Committee in the last Parliament, and six years ago paying benefits by giro was costing the Government £450 million a year. By how much would the Liberal Democrats subsidise the Post Office each year, given that the party leader’s position is to cut overall Government spending by 3 per cent.—not to increase it, but to cut it?

Jenny Willott: First, that is not factually accurate, and secondly, I shall return to that point later.

On average, POCA payments bring in about 10 per cent. of the net income of sub-postmasters.

Rob Marris: Will the hon. Lady give way on that?

Jenny Willott: No, I will not give way any more at present. However, POCA is worth significantly more than that in some deprived urban areas. On average, POCA payments bring in about £400 a month, which is 12 per cent. of net pay. That contrasts sharply with the proportion of income post offices receive from bill payment—only 5 per cent.—and from banking transactions, which is currently 1 per cent. It is therefore clear that removing POCA would leave a huge gap in the budgets of sub-postmasters.

This is not just about the income from the transactions themselves, because POCA brings people into the post office, and at that point they also spend money on other goods and services there. Each of the 3.8 million POCA customers pays on average seven visits per month to the post office, and in each visit they spend on average £6 on the retail side. Therefore, the loss of business that would follow from the removal of POCA could lose the Post Office much of its annual £2 billion retail income.

Tim Farron (Westmorland and Lonsdale) (LD): My hon. Friend may be aware that in my constituency many of the more popular Lake district towns has a post office. One of them, which I will not name for commercial reasons, has 8,000 people going through it every year because of POCA. Its postmaster reckons he will lose 7,000 of those customers every year, and that could lead to the closure of one of the most popular post offices in
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the Lake district. Will not losing POCA simply lead to otherwise viable post offices closing down?

Jenny Willott: My hon. Friend is right, and that shows how worrying this situation is.

Albert Owen (Ynys Môn) (Lab): The hon. Lady mentioned other transactions. Does she agree that extra business can be generated by local authorities encouraging council tax payers to pay their bills in a local post office, and is she aware that in my constituency, where the Liberal Democrats are part of the council coalition, it is the policy of that council to discourage people from doing so and to encourage them to pay by direct debit because it is easier and more convenient? Is that not an example of the Liberal Democrats saying one thing when in opposition and another when they get into government?

Jenny Willott: I find it ironic that the hon. Gentleman is criticising a policy that his own Government pursue. It is, indeed, the case that we should encourage local authorities to support the residents in their local areas to access post offices, and that they should broaden the range of services that are available.

Richard Younger-Ross (Teignbridge) (LD): The hon. Member for Ynys Môn (Albert Owen) talks about people saying one thing and doing another, but Members should remember that a year ago Ministers said from the Dispatch Box that there would be no more closures. There could, however, be another 3,000 closures, so how hollow are those words Ministers uttered from that Dispatch Box, and how can we trust anything they say today?

Jenny Willott: If some of the estimates of the number of post offices that could close as a result of POCA being taken away prove to be true, that could be devastating to the post office network, so the Post Office is in a very worrying situation. It is also clear, however, that, as has been made clear from some of this evening’s interventions, Labour party Members are fighting among themselves.

Mr. Jim Devine (Livingston) (Lab): Will the hon. Lady give way?

Jenny Willott: Not at present. Card accounts are the responsibility of the Department for Work and Pensions, whereas post offices are the responsibility of the Department for Business, Enterprise and Regulatory Reform. This POCA episode has been a prime example of how far from the ideal of joined-up government we sometimes stray. DBERR is committed to forcing the Post Office to make a profit, but how can that be possible without the footfall that POCA brings?

Mr. Devine: Will the hon. Lady give way?

Jenny Willott: Not now. However, the DWP wants to save money, moving all benefit recipients into basic bank accounts no matter what the consequences. It has shown that it will use any means necessary to ensure that vulnerable people are left with the impression that after 2010 they will have no option other than a bank account. My concern is that the DWP is not considering how best to service the needs of its customers. It has to
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decide whether benefits should be administered in a way that helps the vulnerable customers it is supposed to be supporting or just administered in the easiest way possible for the DWP.

The loss of POCA could have a huge impact on some of the most vulnerable in society. More than a third of all pension credit payments and more than one in four income support payments are paid into POCAs. In total, 23 per cent. of all benefit claims are paid through POCA.

Although the pain will be felt across the whole of the UK, several Members have already highlighted the fact that rural areas will be particularly badly hit. Although 60 per cent. of rural areas have a post office, fewer than 4 per cent. have banks, so this will clearly have a disproportionate effect on those areas. In many villages, the post office is crucial to the survival of other businesses in the village. Pensioners and benefit recipients collect their cash in the post office and spend it in both the post office and other village shops.

Mark Williams (Ceredigion) (LD): Will my hon. Friend give way?

Jenny Willott: Not for the moment. If such people have to travel for miles into a nearby town to access their cash, they are more likely to spend their cash in that town rather than supporting businesses in the area where they live, so this could have much wider implications.

Paddy Tipping (Sherwood) (Lab): The hon. Lady is rightly making a strong case for a planned and sustainable post office network, but will she tell us this: does she oppose all post office closures? If she does, what resources will she make available to sustain the post office network into the future?

Jenny Willott: The issue we are discussing today is how the Post Office can make itself viable, and one of the main issues is the fact that the Government are removing provision and services from the Post Office. If POCA remains, it will enable more money to pass through the Post Office without the need for extra subsidy.

Mr. Devine: I am grateful to the hon. Lady for giving way; she is being very generous with her time. She is making an excellent speech, but she is not dealing with the motion, which clearly states that it wants to

Is the hon. Lady in favour of ignoring the tendering process: yes or no?

Jenny Willott: I have made the position clear and addressed all the issues that the hon. Gentleman has just raised. I have talked about the provision of services through the Post Office and about the impact on customers—a point to which I shall return.

Mr. Alan Reid (Argyll and Bute) (LD): Will my hon. Friend give way?

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Jenny Willott: I am not going to give way immediately.

A further issue concerns those who cannot open bank accounts and involves another group of people we should be considering today. Basic bank accounts do not make any money for banks, and it is becoming increasingly difficult for some people—those with poor credit histories, large debts, previous debt problems or no address, and people with certain mental health problems—to open one. In the current climate, banks do not want to take on additional risk, and the number of people in that group is actually increasing. Therefore, when the Government moved giros to direct payment and made people open basic bank accounts or Post Office card accounts, 40 per cent. of the people converting opened the latter—a figure far higher than expected. They could have chosen to open a bank account, but they did not want to or were not able to.

Mr. Henry Bellingham (North-West Norfolk) (Con): The hon. Lady is explaining the case very clearly. Does she agree that at a time of banking crisis, when many of our constituents are very wary of trusting banks, the one thing that they can trust is the Post Office card account and National Savings? Surely it is perverse that the one very safe area is now under threat.

Jenny Willott: The hon. Gentleman is absolutely correct, and the issue of trust is an important one. There are lots of reasons why people would choose to have a Post Office card account rather than a bank account, and one is that the post office is often an important community resource. It is a source of advice and information and a place where people meet and socialise, particularly in rural areas. Sub-postmasters play a very important role in many communities. They usually know their customers and they are trusted, as the hon. Gentleman said. I recently spoke to a pensioner in my constituency who relies completely on the postmaster in the post office where she collects her pension. She cannot remember her PIN. He knows it, and he tells her what it is every week—it is the only way that she can access her pension. Clearly, that gives rise to security issues, but it shows just how much postmasters are trusted by members of the community.

Mr. Oliver Letwin (West Dorset) (Con): I very much agree with what the hon. Lady has been saying. Does she agree with me that the problem really is that the Government have prevented themselves from taking account in the tender process of any of the long list of things that she is rightly adducing as reasons for keeping this account with the Post Office?

Jenny Willott: The terms of the tender is an important issue and I will deal with it later. The right hon. Gentleman is right to raise those concerns.

Ms Katy Clark (North Ayrshire and Arran) (Lab): Will the hon. Lady give way?

Jenny Willott: I am not going to give way any more at the moment, because I need to make progress. A number of Members want to speak tonight.

The physical accessibility of post offices is another reason why people choose to go to a post office, rather than a bank. Even after the latest round of closures, the
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Post Office, uniquely, has branches in most rural and in most urban areas, so it has a much wider spread than most other providers. Those using the Post Office card account as their main source of cash are particularly likely to have mobility or health problems and no access to a car, and they are more likely to rely on public transport. It is particularly difficult for that group of people to access a bank or another outlet, particularly in rural areas, where usually there are no banks or ATMs. Help the Aged has produced research highlighting particular concerns among those in this position. They are worried that if they have to travel a long way by public transport to get hold of their money, they will have to take out larger amounts each time they travel, which will lead to security concerns while they bring the money back home on public transport. They are also concerned about having more cash at home.

Access is a question not just of distance but of access to the outlet itself. Most post offices have been physically adapted to allow disabled access. For people in the customer group we are talking about today—it includes incapacity benefit, disability living allowance and pension credit claimants—the compliance of such properties with the Disability Discrimination Act 1995 is absolutely essential so that they can access their money. The Post Office has taken this issue seriously, but what guarantees do we have that any new outlets that people are forced to use would do the same? Have the Government done a DDA impact assessment on the closing of the Post Office card account and taking it away from post offices? Have they looked at people’s access to outlets and within outlets? If, as the rumours suggest, PayPoint takes over, what consideration has been given to the accessibility of PayPoint outlets? What control would the Government have over that, given that PayPoint operates on a franchise basis? How much control would the Government have, in order to ensure that people could access their money in disability-friendly properties?

Several Members have this evening mentioned that the Government’s indecision has already proved extremely damaging to the Post Office, but the decision to give the card account replacement contract to a different operator could be deadly. The Post Office is working toward an unsubsidised post office network by 2016, but that relies on people going through their branches and using banking and benefit services, and on the Post Office card account as a transition. If the Government continue on the destructive path that they are pursuing, the Post Office will not have enough time to recover from the damage caused by the withdrawal of Government business from the Post Office over the past five years and to rebuild itself. We have the perfect opportunity to use an existing network of well-trained, well-informed, trusted staff who are in offices in almost every corner of the country to deliver meaningful improvements in terms of financial inclusion. Post offices actually want and need the custom of the people the banks are turning down, so we should be building on that, rather than destroying it.

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