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Baroness Byford: I do thank the Minister for the detail in which she has gone into matters. I take the latter point first. She has suggested that we might meet with Alan Johnson, which is very kind of her, but the afternoon she has chosen is actually the afternoon of the Committee stage of the Postal Services Bill in this House. If it is, could we please have another date, because we cannot be in two places at once?

The Minister said that, obviously over the years money has been lost through the use of Giro and books. For those using ACT, if I remember correctly--and I do not have my Hansard with me--I thought the response her honourable friend Mr Alan Johnson gave was that his understanding was that there were no direct fraud losses from ACT. What did he mean by the use of the word "direct"? Does that suggest that there have never been any frauds using the other payment method or is it just that they cannot be identified?

Secondly, I am grateful to the noble Baroness for her explanation in relation to the use of the smart card or the Post Office card. If a third person is collecting for someone else, that would need to be very carefully supervised because I suspect that that is sometimes the point at which fraud creeps into the system.

I turn to the question of costs, which may be slightly outside the noble Baroness's brief. Who will meet the costs in relation to those people who are unbanked? Will it be the Government, the Post Office or the bank? I have not had an answer to that.

The same relates to the use of the switch card. The Minister said that using the old-fashioned books is an expensive method. But there will be a cost arising from the new cards. Will the Minister give us an indication of those costs? If that is not possible, we shall have to carry forward that matter to the next stage of the Bill. But those are practical issues which the noble Baroness has not yet answered.

10.15 p.m.

Baroness Hollis of Heigham: Perhaps I may try to help the noble Baroness. On the point of "direct" fraud, what I assume that my honourable friend was saying, in terms of ACT, was that the process--that is, the method of payment--had not produced fraud. That does not mean that people may not have inappropriately acquired benefits into their accounts

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through fraud but that has not been done through the process; that is, the direct payment method has not itself engendered fraud. That is the difference. There may be fraud which is not through the payment method but by manipulation of the benefit system; for example, people claiming benefit while working.

Secondly, the noble Baroness asked me whether it is possible to run up an overdraft and I did not reply to that question. Unless the proposals change, no cheque book is envisaged. Therefore, it will be impossible, under the universal bank method, to run up an overdraft in that way.

The noble Baroness asked me how people who are not banked at present will be so in the future. At present, such people are not receiving benefit in the form of the Post Office acting as an agency for other banks. In future, they will receive their benefits through the universal bank and they will have a card. The only difference for those people is that they will have a Post Office card rather than a book. In that sense, they will be in the same position as they are now but there will be a more secure and convenient method of payment.

Baroness Byford: I accept what the Minister says but the provision of that card will cost money. We are getting rid of a book, which costs money, but it is to be replaced by a card, which also costs money.

Baroness Hollis of Heigham: Clearly, the DSS has paid and will continue to pay for the costs of the payment of benefit. Some of those negotiations will be part of what the DSS and POCL will be discussing over the next year or so. But we are determined that nobody who receives payment through the universal bank method will receive a reduced benefit in the form of a bank charge by virtue of that method of payment. That seems to me to be the important issue.

Homeless people too will have better protection than they have at present. The identification of people who have information in evidence to set up their entitlement to benefit, including homeless people who are eligible for income support or whatever, will serve them to acquire a bank card, a Post Office card, on which to draw their benefit. The advantage for them is that they can use their card at a range of post offices and will not just be tied to one. I hope that I have now answered the noble Baroness's questions.

Baroness Byford: I am grateful to the noble Baroness for her extremely good attempt at doing so this evening. I shall read Hansard with interest but I thank her for her answers.

Lord Higgins: The first point that one needs to make is that the report of the Trade and Industry Committee, published last September, seems to be rather at variance with what the Minister said this evening. In its report it said that the image presented of a flood of new entrants opting for ACT is exaggerated. Most pensioners are not, in fact, opting for ACT.

Baroness Hollis of Heigham: I was very clear in saying that it was the new pensioners. Something like

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50 per cent of new pensioners and something like 54 per cent of new people coming into child benefit use ACT. I tried to suggest there was a generational cohort effect. I also pointed out that 93 per cent of all pensioners have either a current or a savings bank account.

Lord Higgins: If the noble Baroness had allowed me to finish, it would have been apparent that what she has just said is also inconsistent with what the report said, which was that fewer than one in 10 income support recipients elect for ACT and that fewer than one in three of new benefit recipients opt for ACT. The fact remains that for a variety of reasons most new benefit recipients still opt for cash in hand from a post office and that choice must be respected. Clearly, there is some dispute about the figures.

Baroness Hollis of Heigham: I am talking about child benefit and pensions as being the two universal benefits. Indeed, it is likely that many people, particularly young people receiving JSA or, in some cases, loan parents on IS, do not use that method and disproportionately use the post office payment method.

One, not exactly shocking, but slightly surprising fact that may be more familiar to the noble Lord, Lord Mackay, is the number of people who have a bank account when they are employed but when they become unemployed choose not to use it. One can speculate on the reasons for that. Instead they prefer to be paid cash in hand through order books. One may wonder about that.

Certainly, the statistics that I gave the noble Lord were about retirement benefit, new entrants to retirement pension and new entrants to child benefit. Taking the current state across all the population, that is partly a generational thing.

Lord Higgins: We shall need to go into the statistics further, other than across the Floor of the Committee. My impression still is that the situation portrayed by the Minister is exaggerated. Be that as it may, I believe that the Committee would be grateful if the Minister could clarify the distinction between the system that the Government abandoned and the system they now propose. As I understand it, the only difference is the distinction between a smartcard, on which all the data are embedded, and a Switch card which does not have the data on the card but allows the data to be read once it has been through the slot. I believe that is the only difference between the two systems.

The noble Baroness has enlightened the Committee a little on how the cash is to be paid. We shall need to read carefully what she said. No doubt, we can clarify that in the way that she has described--in a meeting. However, like the noble Baroness, Lady Byford, the date suggested is not convenient for me, but no doubt something can be sorted out. It would certainly be helpful to have that clarified over the table, so to speak.

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One crucial point, as far as the post offices are concerned, is that estimates suggest that there will be a loss of something like 40 per cent of existing post offices. The Minister has said that they will consider a subsidy as needed. I am not clear about the purpose of that subsidy.

Baroness Hollis of Heigham: I do not know from where the noble Lord produced the figure of 40 per cent of post offices. He may be confusing that with 30 to 40 per cent of the revenue of some post offices being derived from the payment of social security benefits. I was about to intervene because I was unsure whether the noble Lord meant what he said.

Lord Higgins: It was a slip of the tongue. What does the Minister suppose will be the reduction in post offices if there is no subsidy? What does she envisage is the purpose of the subsidy?

Baroness Hollis of Heigham: I cannot go into that. In the recent Bill in the other place a power has been taken by the Government to pay subsidy if they believe it appropriate; in other words, they may pay subsidy. That would be a matter of negotiation with POCL, and so on. The intent behind it is simple: I believe that we all share an appreciation of the importance of the post office, particularly in rural areas and in deprived inner urban areas, as the centre for offering cash and other facilities to local people. The Government, no more than the previous administration, do not wish to see that network shrink. That does not mean to say--as I tried to say earlier--that individual post offices may go on to close and not be re-opened when someone running it retires because it has not been possible to cross-subsidise it.

One other power may be of interest to the noble Lord. I understand that in the Postal Services Bill extra powers are given to POUNC--which I believe will be renamed as the post office users council--to take on board, to query and to interrogate the need for any local post office closure. So we actually strengthen the ability to ensure that the post office network, as far as is possible, remains to serve the communities which are so heavily dependent upon it.

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