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Baroness Byford: My Lords, I rise to support the comments made by the noble Earl, Lord Russell.

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I know that the Minister will be truly relieved that I am not going to go through my 19 and 20 points that I have been working through on this Bill and the Post Office Bill at the same time.

Baroness Hollis of Heigham: My Lords, I sent a written reply to the noble Baroness, and to the noble Lord, Lord Higgins, and also the noble Earl, Lord Russell.

Baroness Byford: I thank the Minister for that reply which arrived today. It helps, but I have questions as a result of it.

In supporting the noble Earl, Lord Russell, I refer to waiting for the PIU report. My latest information is that it will be available as soon as tomorrow. If that is true, I am sure that the Minister and I will be delighted. On Thursday this week we have amendments down for the Postal Services Bill. It would be enormously helpful to have the PIU report beforehand.

I am sure that I followed the Minister's argument that the Government, in trying to persuade people to have their benefits paid through banks, will save the DSS some £500 million. However, when I realise that this year, for the first time, the Post Office made a loss because it had to spend money on upgrading its Horizon facility in post offices, I wonder whether or not we are in danger of taking money from Peter to pay Paul. That would not be wise.

My questions to the Minister tonight will be fewer than previously and I am sure that she will appreciate that. First, following on from what was said by the noble Earl, Lord Russell, it has previously been the responsibility of a person to opt into having benefits paid through the Post Office. I would rather see people being able automatically to collect benefits from the Post Office rather than see them having to opt into another system. However, the Minister may not agree.

Secondly, if more post offices disappear as a result of the change in the system, and if more banks close--many banks have withdrawn their facilities from rural areas and those on the edges of inner cities are seeing the closure of local banks--it will be as difficult to collect benefits from banks as it will from post offices. Fewer post offices will mean that many people will have a problem in collecting their benefits.

As I said during previous stages, 40 per cent of the income of sub-postmasters comes from handling the payment of welfare benefits. In Committee, we argued long and hard about what might happen when the present system ends, whether a smart card might be introduced and what that would cost. I do not want to repeat those arguments because the Minister has answered many of the questions I asked and I am grateful her. However, although I have queries about one or two of her answers, rather than press her tonight, I want to wait until publication of the PIU report tomorrow or on Thursday.

It may be that there is information in the report which the Minister cannot announce tonight because it is not yet published. Perhaps the Government can go

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some way towards helping the sub-postmasters as regards the service they provide to people who receive benefits. I understand that the Government want to prevent money being wasted in fraud and all noble Lords would support that. However, many people who have bank accounts and other facilities still choose to collect their benefits from their local post offices. I am not pushing hard tonight, but because we have not received the PIU report we remain in limbo over one or two issues.

Finally, although the Minister answered my many questions, I still do not know what the cost of the smart card will be. We talked about the transactions costing as little as 1p, but, if the Government intend to do away with the book which identifies the claimant, a smart card must be introduced and that must have a cost implication. The Minister suggested that it would not cost much and I should be delighted to hear that. It would be brilliant news. However, ongoing costs will be involved and I should like to know who will pay them.

I shall not take any more of your Lordships' time tonight. I thank the Minister for her contribution in answering my many questions. I shall not go through them all now, but questions still remain to which we need answers. I suspect that the Minister may have inside information and may be able to share a little of that with us. Certainly, I should be grateful if she could tell us a little more about where the Government are going and answer the crucial point as to whether the report will hit our desks tomorrow morning or whether we shall have to wait for some time to come.

9.30 p.m.

Baroness Gale: My Lords, each year many people choose to receive payments by ACT. That is their preferred method of payment. For example, 50 per cent of all new pensioners choose to use that system, as do 54 per cent of new claimants of child benefit. Of course, some people still want to be paid in cash at the Post Office, but that trend is moving towards payment by ACT, with 500,000 people each year now moving to that system. Over 80 per cent of claimants already have a bank account. However, the Government have made it absolutely clear that the choice of receiving payment in cash will remain available. The Prime Minister said in another place that no one will be prevented from continuing to receive benefits in cash at the Post Office if that is what he or she wants; and not only monthly but weekly, if that is what they choose.

In Committee, the Minister said that three possible routes were available for payment in cash. The first was network banking with the Horizon system, which could offer potential for the Post Office to extend its arrangements with high street banks. Those arrangements appear to have worked well in areas where banks have disappeared. The second method was via cash machines. The Post Office will install 3,000 cash machines by the year 2001, many in rural post offices. The third option was the development of a universal bank, which could be available in all 18,000 post offices. In effect, it would be a Post Office bank. The Minister said that a switch-type card or banking

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card could be used to access money at the Post Office universal bank. People would be able to access their money at any post office in the country at any time. Therefore, I believe that there is a clear commitment for cash payments to remain for those who choose and want their payments in cash at the Post Office.

Lord Boardman: My Lords, I strongly support the amendment proposed by the noble Earl, Lord Russell. I have a slight reservation, in that, if the Government should be wise enough to accept the amendment, undoubtedly they would recover a substantial number of votes that they would otherwise lose in the next general election, and that would be a pity.

The Government seem unconscious of what is happening in the countryside as regards the effect on the local post office and its impact on village and rural life. The fact that they wish to destroy the local post office and not to support the amendment moved by the noble Earl seems to indicate that they are unaware that the post office is a centre of so much that affects country life.

Those who are aware of rural life will know that the local post office is the focal point of the local community. Unfortunately, rather than the church which provided the focal point for so many centuries, it is now the post office where people meet and chat, draw their pensions, buy their local bread and so on. And, by God, it is essential that the local post offices are kept alive if the nucleus of local communities is to be kept going. Therefore, I plead with the noble Baroness to give consideration to this amendment and to recognise that failure to pass it inevitably will mean the elimination of an extremely important part of local life.

Baroness Pitkeathley: My Lords, perhaps I may declare an interest. I may sit on the Government Benches but, as the past chair and current president of a rural community council, I declare a strong interest and support for rural post offices. However, I have more faith than the noble Lord in the ability of rural post offices to adapt to changing situations. I fully support what he says about their being a meeting place and so on, but how much more is a rural post office going to be a meeting place when it becomes a sort of Internet cafe so that people actually use that rural post office in that particular way? So I declare that one interest.

The other interest I have to declare is that of being a social worker. As to the issue of fraud, of lost books, of books being taken by somebody else, of books not arriving in time and so on, as the Minister said in her reply during a Committee debate, if we had wanted an efficient system we would not have started from here.

I do believe that we have to think about consumer choice. The fact is that whether we like it or not consumers are increasingly choosing to have their benefits paid by automatic credit transfer. I personally have a great deal of faith in the ability of the post offices to respond to those changes.

Lord Hylton: My Lords, I should like to say how much I agree with the remarks of the noble Lord, Lord

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Boardman. He put rather better than I could the kinds of points I was trying to make at the last stage of this Bill.

It so happens that I recently received a copy of the annual report of the Royal Mail. The thing that no doubt everybody noticed was that in this last year it made a large loss, after having made consistent profits over a number of years. It might be imagined that that loss was due to some kind of inefficiency. I would argue very strongly to the contrary: that it was due to making large capital write-offs all in one single year. One notices that the turnover of the Post Office and Royal Mail does in fact increase year by year.

The second point that emerged from the report was the very high proportion of the network of sub-post offices which depend on social security benefit payments passing through those sub-post offices. I stand open to correction, but I think the proportion is something like 30 per cent of the total. That alerts us to a very real danger. The network has been severely damaged already, and I would ask that we do everything possible to preserve it as it now stands for the benefit of future generations. Time will be required for sub-post offices to develop alternative sources of income, and that was the point so well made by the noble Baroness, Lady Pitkeathley.

On those grounds I am strongly in support of this amendment, or of its alternative, No. 122, whichever the Government would look upon more favourably.

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