Automated Credit Transfers

HC Deb 13 May 1993 vol 224 cc1012-40

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert. G. Hughes.]

8.20 pm

Mr. Calum Macdonald (Western Isles)

I am grateful that Madam Speaker has chosen this subject for debate, because her choice recognises the social and economic importance of the effect of automated credit transfer upon rural sub-post offices nationwide. There have been six early-day motions on the subject over the past few months, attracting at least 200 signatures at the last count. It has been the subject of written and oral questions, including two in Prime Minister's Question Time, and a debate in the other place. There will be a debate on the subject, in Opposition time, next week.

Despite all the attention, the issue has not been resolved, nor have key aspects of it been made clearer. The issue is important, first and foremost, for the impact that it could have on the millions of pensioners who use their post office on a weekly basis to cash their pensions and benefits. For most pensioners, that weekly visit to the post office is the most convenient and desirable way to receive their benefits. It has many merits for them. It gives them an opportunity to catch up on news and gossip, and to find out what is happening in the local community and to friends and neighbours.

That visit is also an opportunity to gather from the postmasters and postmistresses other information that may be useful and beneficial to them. The individuals who work behind the counters are, as most hon. Members—certainly all who represent rural constituencies—will recognise, people who are made enormously knowledgeable by the very nature Of their work, combining as they do the functions of Government clerk, small shopkeeper and occasional social worker.

Perhaps I may be permitted to quote a postmistress in my local village of Garrabost, Mrs. Joan Anne Campbell. Speaking to the local newspaper, the Stornoway Gazette, Mrs. Campbell said: Your local post office is more than just that—it is a public service. It is a place to get forms filled in, a place to meet and have a chat and, sometimes for those behind the counter, it's almost like being a social worker. A local sub-post officer is really the centre-point of a community and has a very important part to play. That may have been said by someone working in a local post office in the Western Isles, but it will be recognised as valid and true throughout the rural areas of Britain.

Unlike banks, sub-post offices are easily accessible to the vast majority of elderly people who use them. As is not the case with banks, there are sub-post offices in the majority of villages throughout Great Britain. I have been quoted the figure of 60 per cent. of villages having a sub-post office. Those who run post offices are familiar with, and familiar to, their elderly customers. They provide a point of reassurance for the pensioners who use them. The Government should see them as an invaluable asset, rather than as an encumbrance or a drain on money that they have to stop.

The non-appearance one week of a pensioner who usually uses the post office will immediately be noticed by the local sub-postmaster or sub-postmistress. If a pensioner appears but looks a bit peaky, that will be noticed and observed. That kind of contact, that kind of relationship between people, is unique to the post office network of Great Britain. It could not be duplicated by the banking service.

The system is not an archaic hangover, a traditional aspect of British national life that is best done away with. On the contrary, with the advent of care in the community, the social role of sub-post offices as dispensers of advice and services, as well as of pensions and benefits, ought to be enhanced, not diminished. If they had not had that network of 20,000 post offices and sub-post offices, the Government would have had to invent it when they came to implement care in the community.

It is a foolish economy for the Government to be considering closing rural sub-post offices, whatever the purported savings of a switch to automated credit transfer. What savings there will be may be at the financial expense of the pensioners, because of the charges that may be deducted by the banks or the loss of interest on delayed payments, which may be retained by the Government.

If the move goes ahead, it will be greatly to the detriment of pensioners, who will be much inconvenienced. The switch to ACT will mean that pensioners will lose the right to receive their pensions on a weekly basis. Payments will be made monthly In arrears. That may be convenient and financially attractive for the Government, but I cannot for a moment believe that it will be convenient for the pensioners. Many pensioners—perhaps even a majority of them—are relatively well off, but many live a hand-to-mouth existence. For them, it is impossible to conceive of budgeting other than on a weekly basis. It would make their lives still more difficult to have to be constantly a month in arrears because of the switch to ACT.

Pensioners also need to have cash ready to hand to buy the little odds and ends that they need on a day-to-day basis—groceries, newspapers and so on. Where can they obtain that ready cash if the Government go ahead and succeed in switching benefits to direct payments into banks? Pensioners will often have to cope with the fact that there will be no bank in their locality, and they will have to travel many miles to go into town to withdraw money for the week or the fortnight, on buses or even by hiring a taxi if the bus network is not there or the service is not convenient. That will be enormously inconvenient and troubling to many pensioners.

We must also bear in mind the fact that pensioners will have to visit the bank in person to draw money, whereas someone who is elderly, who is ill that week, or who is partially sighted or disabled, can send a representative to the local post office to pick up his or her pension. With banks that is not possible.

I have already mentioned the invaluable social role of the rural post office, and there is no doubt that the sub-post office network will be badly hit by the loss of the business that pensions and benefits represent. Inevitably, many will close as a direct consequence of the switch to the payment of pensions and benefits by automated transfer into bank accounts. Almost 13 million people visit their local post office each week to pick up their pensions, and that business from the Department of Social Security represents one third of the turnover of Post Office Counters Ltd. That is a greater proportion of business than comes from the Royal Mail, which represents only one fifth of the total turnover. Of that enormous benefits turnover, about 18 per cent. is drawn through sub-post offices.

Clearly the loss of the pensions and benefits business will have a direct impact on the viability of local sub-post offices. Moreover, the loss of that business will cause the loss of other business, on which sub-post offices rely to make them financially viable. We must remember that post offices are often shops as well, and that the people who come in to pick up their pensions also stop to buy newspapers, groceries, stationery and a variety of other goods.

If those people did not come in to pick up their pensions and benefits, they would not buy the groceries and newspapers either, and the loss of that secondary business would be a massive blow to rural sub-post offices. If offices had to close because the loss of that business meant that they were no longer viable, many villages would lose not only their post office but their only shop. That would be a severe blow to many villages.

The Government talk about offering their customers choice. However, if local sub-post offices close many people who would have wished to exercise that choice will be denied the opportunity to do so. They will be forced against their will to use automated credit transfer. The Government must take on board the fact that the exercise of choice by a minority, by making the sub-post office network no longer viable, could have a knock-on effect on the majority of people and in effect remove the choice that they would have exercised if the post offices in their communities had still been open.

There is another point to make about consumer choice. If the Government were merely offering information to pensioners about the existence of automated credit transfer, there would be little objection from either side of the House. The Government already provide the option of automated credit transfer, and there can be little objection to making that option widely known to pensioners and to others who might want to choose it, so long as the choice is offered in a neutral and even-handed way. But clearly, that is not happening.

Both the Secretary of State and the Under-Secretary of State for Social Security, the hon. Member for Maidstone (Miss Widdecombe), have made it clear that the Government are actively encouraging pensioners to switch to automated credit transfer. On 12 March this year, the Under-Secretary said: Our policy is to encourage the use of automated credit transfer".—[Official Report, 12 March 1993; Vol. 220, c. 751.] In other words, the Government are not neutral or even-handed; they are peddling a particular option for their own self-interested reasons.

That fact is borne out by a trial of three new forms being sent to 24,000 people who are due to receive their pensions for the first time. The forms are designed to tell the pensioners what pension they are entitled to and how they may collect it. I have obtained copies of the forms, and each one of the three types is being sent out to a sample of 8,000 new pensioners. The first form is the most even-handed, because there is a section, part 9, headed: How you want to be paid—you can choose". That is fair enough. The form lists two options, the first of which is: Straight into a bank account or building society account". Then various details are given about that option.

The second option is described as: By order book—at a post office". Slightly fewer details are then given about that option. Later in the form, there are two sections for pensioners to fill in, one of which will provide for payment of the pension straight into a bank or building society account, and the other of which will provide payment by order book at a post office. The pensioner can choose simply by filling in the form and sending it off.

That form provides the pensioner with a clear choice, although there could be objections about the way in which the two choices are described, because the first choice—payment straight into a bank or building society account—is accompanied by a list of its advantages, such as the fact that interest can be gathered on the money paid into such accounts. We might think that it was a bit disingenuous of the Government not to mention that they will be gathering interest from the money that they pay out, not weekly, but monthly in arrears. But we can leave that point to one side.

We might also complain that the option of the order book is described, but does not have any corresponding list of advantages appended. Nevertheless, there is enough information there for the pensioner to make a fairly clear, well-informed choice between the two options.

The second form, however, falls well short of offering the pensioner a clear choice between the two options that are available. In the equivalent part 9 of that form it says again, How do you want to be paid? You can choose. However, it does not give two options. It starts by listing Straight into a bank account or a building society account. Then it gives the same list of advantages and procedures.

At the bottom of the form it says simply: If you want any more information, get in touch with your Social Security office. There is no mention whatsoever of the post office option.

Also at the bottom of the form there is provision for a form to be filled in by the pensioner in order to get the pension paid straight into a bank or building society account. It then, finally, mentions payment by order book at a post office and asks the question: Do you want to be paid by order book at a post office? It does not mention any advantages or give any details. There are simply two boxes, one to be ticked for "no" and one to be ticked for "yes", and it says: We will write to you about this. So hardly any information is made available to the pensioner. The pensioner has to tick a box and send the form off, and the DSS will send the pensioner further information about the post office option.

That form is bad enough, but the third form that is being tested with 8,000 pensioners is even worse. It is similar to the other forms. It has a section headed: How you want to be paid", and, as in the second form, the option of having the pension paid straight into a bank or building society account is described in great detail. All the supposed advantages are listed, but again there is no mention of the post office option. It simply says at the bottom of the form that if the pensioner wants any more information he or she should get in touch with the social security office.

At the bottom of the coupon that has to be filled in by the pensioner in order to take advantage of the option of having the pension paid straight into a bank or building society account there are the words: Do you want to be paid by other means? It does not say whether those other means are through the post office or any other way. There are again two boxes, one to be ticked for "no" and the other for "yes", followed by the words: We will write to you about this. So the first of these forms points out the advantages of using automated transfer and describes to some extent the option of using a post office. The second form gives information only about banks and building societies; it mentions post offices, but gives no information whatsoever about that option. The third form does not even mention the fact that there is a post office option; it simply says that there are other options available.

The Parliamentary Under-Secretary of State, Lord Henley, made what I regard as a pretty astounding and breathtaking statement about these forms in the other place. He said: The simple aim behind what we are doing is to test the effect of each of those forms."—[Official Report, House of Lords, 17 March 1993; Vol. 543, c. 1544.] It would not take an Einstein to figure out the effect of these forms. Obviously, the more automated transfer is talked of, and the less the post office is mentioned, the more the pensioners will opt for the former. That will clearly be the effect of these three forms.

This is really a dodgy way to go about informing pensioners of their rights and options in receiving their pensions. Surely the Government should be trying to make their forms for pensioners more, rather than less, helpful.

I expect that the Minister is a fervent exponent of the citizens charter, and I ask him how it is consistent with that charter deliberately to withhold information from pensioners, DSS customers, as the last two forms do. I believe that the Government have no right to be steering and manipulating pensioners in this way. They should be offering genuine choice to pensioners, not a fake version of it.

I am looking for two things from the Minister, on behalf of the Government, when he replies. The first is a retraction of the Government's statement that it is their intention to encourage pensioners to use automated transfer. I want the Minister to be able to say on behalf of the Government that pensioners will be given genuine freedom of choice in this matter, without constraint or manipulation of any kind. The second is to ask his colleagues in the DSS to give a commitment that these trial forms will be shredded and thrown away, and new ones produced—forms that will provide proper comprehensive, unbiased information for pensioners.

The 20,000 post offices and sub-post offices of Britain are not just local centres of community life; they are also, I believe, a manifestation and a symbol in each town and village of Britain, whether in the Western Isles or Tunbridge Wells, of the wider national community, the country to which we all belong. A genuinely Conservative Government would have as one of its foremost priorities the preservation and enhancement of these symbols, these centres, of our national life.

But this Administration is not, of course, Conservative in that traditional and worthy sense. This is an Administration of libertarian dogmatists and cheeseparing accountants, who know the price of everything and the value of nothing. I fear that rural post offices are intended to be the latest in the long roll call of their victims.

Madam Deputy Speaker (Dame Janet Fookes)

Before we continue, I remind hon. Members that an Adjournment debate normally lasts only half an hour. It is understood that only the hon. Member raising the subject and the Minister may speak unless both grant their permission to other hon. Members. I know that the hon. Member for Western Isles (Mr. Macdonald) has allowed one hon. Member to come into the debate. I am sure that neither he nor the Minister will mind if others come in. Nevertheless, I believe that we should maintain the tradition.

8.49 pm

Mr. Bill Olner (Nuneaton)

I thank and congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on choosing this subject for the Adjournment debate. Before the general election, there was much talk about a double whammy. I do not know whether the wording of the advertisement was correct, or whether it had the intended impact. It certainly created a great deal of confusion. On this issue, there is a genuine double threat which pensioners have rightly picked up. I have had more letters in my postbag this past fortnight about the threat to post offices than I have had during the whole of the Maastricht debate, which trundled on here for a considerable time. This is a tremendously important issue. I am a little dismayed by the fact that the Government must have realised the fear that was felt by pensioners about the threat to their post offices and the threat to their ability to draw at post offices the benefits to which they were entitled.

My hon. Friend the Member for Western Isles mentioned post offices in rural areas. My constituency has a fairly extensive rural area and the post offices there are as my hon. Friend describes. In the urban areas, sub-post offices are also canters of the communities in which they are located. I am sure that many hon. Members have gone past post offices on pension day. One certainly knows which day is pension day when one passes a sub-post office. The pensioners have a ritual of queueing there fairly early. I do not know whether it is because they think that the Government will cause a run on the pound. Sub-post offices are an important and integral part of most communities, whether urban or rural.

It is not only pensioners who go to sub-post offices. If sub-post offices are forced to close because of a lack of business in terms of benefits being paid out, there is no other place within the immediate area where people can get television licence stamps, television licences or saving stamps, and there is no other place where they can pay their water rates or their council tax bills. The sub-post office outlet is an important part of our communities.

Most of the pensioners to whom I have spoken and most of the letters that I have received from pensioners say that they do not want pensions to be paid into banks or into building societies by automated credit transfer—ACT. They want to retain the right to go to the post offices to draw their pensions, or, if they cannot draw their pensions themselves, to he able to have their families or nominated people to draw the pensions there for them.

The majority of pensioners do not have bank accounts or building society accounts, but that is not the only point. As a result of the banks' meanness in many respects, the fear has crept in that once pensioners are trapped into having their pensions paid into those establishments, they will start charging pensioners for the transactions into and out of the accounts. If money is paid into the account, it must come out of the account at some time. I understand that banks are looking closely at their charges to customers.

There is the twin fear about the monthly payment, which has been much mooted as a replacement for the weekly payment. Monthly payments are wrong in two respects. First, they will be paid in arrears. Pensioners already struggle in many respects. How on earth can they be expected to live for three weeks without a pension? It may be nice for people on large salaries to receive payments in arrears, but it is not good for people on low incomes, such as pensioners. Secondly, monthly payments will accelerate the closure of sub-post offices. Instead of a sub-post office doing four transactions a month, it will do only one. The position of sub-post offices is based on their throughput. If the throughput is on a monthly basis, it will obviously be very much reduced.

Sub-post offices are in communities, they serve communities and they are very much at the heart of communities. It would be a terrible loss to communities if they were closed. I should like the Minister to remove some of the fear that pensioners genuinely feel: that they are being thrust into the option of having their pensions paid by direct payment or paid monthly. That fear is being transmitted to pensioners who fear that their sub-post offices will be lost. I should like the Minister to give an assurance that no Government action will bring that about.

8.55 pm

Dr. Michael Clark (Rochford)

Like the hon. Member for Nuneaton (Mr. Olner), I congratulate the hon. Member for Western Isles (Mr. Macdonald) on succeeding in having this Adjournment debate tonight, which is important and most timely. I thank him not only for allowing me to take part in the debate, but for inviting me to take part in it. In his letter of invitation, he said that there was a significant point that we should all make and that it was important that it had cross-party support. I am delighted that he has been so generous and I thank him very much.

Although it may be true that technically I was the first to raise the matter in the House when I raised it last Thursday at Prime Minister's Question Time, I readily concede that the hon. Member for Western Isles must have applied for the debate before I put my question. Technically, I was the first, but I concede that he was the first in mental attitude, and I gladly make that point.

The hon. Member for Western Isles spent some time going through the forms which many of us have. I am glad that he did so, because there is little doubt that the forms are an attempt to encourage pensioners and others on benefits to use banks and building societies rather than the post offices. I have no wish to stop anyone using a bank or a building society if that is what they wish to do. I am sure that the hon. Members for Western Isles and for Nuneaton agree with that. That is all right if it is people's free choice and if they are not being led by the nose in another direction. One can imagine that for people who are a long way from a post office and for people who pay most of their bills by cheque, it might be an advantage for the pension to be paid into a bank and to be used to settle their bills by cheque. It could be a positive advantage for people who are housebound. But to lead the beneficiaries of payment to believe that there is only one major choice, a bank or a building society, is quite wrong.

I will not repeat what the hon. Member for Western Isles said about the forms—he went through them comprehensively. I just add one point. On the third form, the post office is not mentioned. At the bottom it says "By other means". At the top of the form, and on the other forms, when they want the pensioner or the person collecting benefit to use a bank or building society, the bank or building society comes first in the hope that the pensioner will tick that first. On the third form there are two blocks. One is How often do you want your Retirement Pension paid? Every four weeks? Every 13 weeks? We know that most people want it every four weeks, so that comes first and every 13 weeks comes second, because it is the option that is less likely to be used. But when it comes to the bottom, if one can find the post office on the second form that the hon. Member for Western Isles referred to, what is the first question? Do you want to be paid by order book at a post office? No, Yes. It is not very often in English that we suggest the answer in this form. It is usually "Yes or No". It is the same on the third form: Do you want to be paid by other means? No, Yes. It is a rather strange use of English and it is attempting to lead in a certain direction.

If people want the money paid into the bank, there is little doubt that sooner or later they finish up with bank charges. Even if a charge is not made for collecting benefit, we all become overdrawn from time to time. Once that happens, the charges escalate out of all proportion. It will happen to people who are least able to pay bank charges.

The idea that people should be paid benefits three weeks in arrears is no inducement to having benefits paid into a bank or building society. Perhaps somewhere on the form it should say, If you do choose a bank or building society, you understand, do you not, that for the first month you will receive nothing at all? Now, do you want it paid into a bank or building society or would you like it paid by other means? But I do not see that anywhere on the form, which is less than completely honest and open.

There is another consideration. If anyone should choose payment into a bank or building society, it is possible that the account will be a joint one. Money will then be paid into an account over which the beneficiary does not have total control. This is particularly significant when it comes to child benefit. The whole philosophy behind child benefit as promulgated by the Department of Social Security is that it should be targeted on the mothers. In many cases it goes straight into the mother's purse and into the housekeeping for looking after children without the father having anything to do with it. That is essential in some instances, for reasons that we all know about, but if this benefit were paid into a joint bank account mothers would lose control of money that is meant to help them look after their children.

There have been several references to the fact that the forms seem designed to lead people to choose banks or building societies. That is the whole presumption. But it is not a true choice. The choice is there if one looks very hard for it. It is there in the first form; it is there, if one looks hard for it, in the second form; but in the third form one could be excused for thinking that there is no choice at all and, even if there is one, it is extremely well hidden. The Conservative party prides itself on offering choice, but in this regard we are not following the philosophy and manifesto of our own party.

We have heard that the post office network has 20,000 branches, but how many people realise that there are more post office branches than there are branches of the four major banks and the six major building societies combined? It is a marvellous network and an asset to the whole country, whether we live in the Western Isles, John o'Groats or Land's End. In those post offices, 40 per cent. of the business comes from the benefits and 50 per cent. of customers are there to collect the pensions or benefits. There is little doubt that if those receiving pensions and benefits are forced to have them paid into banks and building societies, the post offices will lose 40 per cent. of their business and 50 per cent. of their customers. That will undoubtedly lead to the closure of some post offices. I can see no alternative.

I do not suggest to the Minister that he removes the possibility of people having their benefit paid into a bank or building society—far from it, because I believe in choice —but the choice should be free and open, not guided.

A very strong campaign is going on at present and most hon. Members will have seen the leaflet put out by the National Federation of Sub-Postmasters. The campaign is slightly exaggerated, but I do not criticise it for that because any campaign worth its salt will be slightly exaggerated. One exaggerates to make a point and sometimes campaigns that are too modest fail to make their point at all.

I do not complain about the slight exaggeration, but I am concerned that, as a result of the campaign, many elderly, infirm and sick people are now worried sick that, in future, they will be unable to collect their pension in the normal way. The sooner we squash that anxiety and a categorical statement is issued from the Government to say that choice will remain, the sooner we can put at ease the anxieties and fears of many of our senior citizens in constituencies up and down and east and west of the country.

To deny choice will remove business from post offices and that will result in closures. Closures would, in due course, eliminate any choice for those who are in most need of it.

9.5 pm

Mr. Paul Tyler (North Cornwall)

Hon. Members are extremely grateful to the hon. Member for Western Isles (Mr. Macdonald) not only for choosing to debate this issue on such a timely occasion, but for his foresight in doing so on an evening when we have the time to do it justice. I am also grateful to him for allowing me to intervene briefly in the debate. I hope not to cover those matters which have already been mentioned.

I agree with the argument advanced by the hon. Member for Rochford (Dr. Clark), but I take issue with him on one small factual point, because this is not a problem that has just been mentioned in the House in the past few days. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) and I were in the House some months ago before Christmas at 5.30 in the morning to discuss it. You, too, were present, Madam Deputy Speaker, and you were, as always, wide awake while some of us were feeling rather sleepy.

My hon. Friend and I had looked forward in that debate because my hon. Friend had already received some answers from the Department that suggested that the Government were to pursue precisely the experiment that is now before us. We have now learnt the lesson to look at such proposals with a jaundiced eye. My hon. Friend the Member for Gordon (Mr. Bruce) also raised this subject with the Prime Minister this afternoon.

We all agree that this is a matter of all-party concern. I am also pleased, as I am sure you are, Madam Deputy Speaker, that at least one Member representing the south-west is here to ensure that the concern felt in the Western Isles is reflected from the other end of the country. This matter concerns all of us who represent rural constituencies.

The concern that has already been made clear by other hon. Members is that, if discrimination and pressure are to be exerted, this proposal is a step in the wrong direction. If we are to have positive discrimination, it should be towards the essential, public social service that is provided by the sub-post office network.

The difference in attitude between the service that pensioners and other beneficiaries receive from sub-post offices and that which they could expect to receive from a bank or building society was revealed by the experience of one of my constituents. She had an occupational pension and, for reasons best known to her former employer, it was decided that it should be paid by ACT into a. bank account. My constituent opened an account specifically for that purpose. Because she could not always get to the bank because of the distance involved and ill health, she made arrangements for someone to go there and cash a cheque on a weekly basis on her behalf.

My constituent found, however, that because the calculations were based on the 52 weeks of the year, the amount from the pension was never exactly the same to the nearest penny each week. That meant that when one cheque was presented for cashing and the sum was paid, she was 1p overdrawn. She then discovered that she was subject to bank charges. It is that difference in attitude between the traditional support and services that the sub-post office network has given and that offered by the only alternative, the banks and building societies, which is causing us so much concern.

Some 10 per cent. of sub-post offices have disappeared from the network in the past decade, and the proposal that the Department is apparently pursuing would turn that trickle into a veritable stream.

Hon. Members have said that about 40 per cent. of sub-post office turnover is for benefits of various sorts. In some parts of the country, notably rural areas with high levels of unemployment and perhaps above average numbers of retired people, it reaches 55 or even 60 per cent. of turnover. So the discrimination against rural areas, which can least afford the change, will be that much stronger.

In conjunction with the National Federation of Sub-Postmasters, my Liberal Democrat colleagues in the south-west and I have undertaken a number of surveys of the impact of the changes on the sub-post office network. It is clear from our work that upwards of 50 per cent. of village sub-post offices—we recognise that the same situation may not apply in the suburbs or more central areas—would be at risk if the proposals became so persuasive that large numbers of people switched to ACT.

In those circumstances, the domino effect to which hon. Members have referred would become dramatic. There would, first, be the removal of a slice of benefits. That would be followed by the sub-post office being reduced to community hours, because the number of units would not justify the full number of hours. That would make it less convenient for people in the local community. Finally, because the sub-postmaster or sub-postmistress found that it was not viable, not commercial, not worth the effort and perhaps not worth training or keeping staff for that purpose, the post office would go.

Of those in that category in Cornwall, 45 per cent. have the only village store alongside, in the same building and as part of the same business. So the removal of post office business puts at risk the only general store in the village. I can speak only from experience in the south-west, but in those circumstances, almost invariably the store will go, not only because of the reduction in turnover as the result of the removal of post office business itself but because if people are not drawing their cash over the counter at one side of the building they will not be spending it on the other side. So the store goes.

In Cornwall in those circumstances, the nearest general store will be, on average, two miles away. The people of whom we are speaking tonight, bearing in mind the limited access to public transort these days, and with only limited access to private transport, will be badly cut off. I recently received a letter from a gentleman who was being persuaded to switch his Government occupational pension to a bank account. He explained that to get to his nearest bank would mean a £15 return taxi fare, which would remove a fair slice from any money that he received. The average distance in Cornwall from some villages to the nearest bank branch is more than 10 miles.

I hope that we shall hear from the Minister tonight not just that the Department will take seriously the criticisms that hon. Members in all parts of the House have made, but that they are prepared to open a dialogue again wth the Post Office. In recent days, Bill Cockburn, the Post Office's chief executive, has drawn attention to the fact that about 5,000 rural post offices are at stake as a result of the proposals and that many thousands of people would be affected by their closure. He said: If such a thing were to happen, the entire network of post offices would be on the line". He put forward a practical, sensible, up-to-date and modern suggestion. He said that the Post Office should work with the Department to develop a high-tech solution in the form of plastic cards which would, he claimed, enable customers to have their payments swiftly dealt with without difficulty through terminals in sub-post offices and with electronic links to the Department. He pointed out: A third of the PO's income is generated by DSS payments at 20,000 outlets. I do not intend to repeat points that have already been made, but for the benefit of all concerned—sub-postmasters and sub-postmistresses, pensioners and all those who live in remote areas or in any village that could be affected—we need a clear statement. I hope that the Minister's reply will offer opportunities for dialogue with the management of the Post Office and reassurance for all those who would be affected by a switch to ACT.

I hope, too, that the statement will show clearly that the Department and the Government recognise the value of a national network of post office outlets. As the hon. Member for Rochford said, it is unique to this country and is widely appreciated. If the Minister and the Department are able to do that, I am sure that it will be welcomed in all parts of the House. This, I hope, is the last that we shall hear of this preposterous proposition.

9.15 pm

Mr. Nigel Evans (Ribble Valey)

I, too, am grateful to the hon. Member for Western Isles (Mr. Macdonald) for initiating this Adjournment debate. As the hon. Member for North Cornwall (Mr. Tyler) said, we have heard the voice of the north and the south. The Ordnance Survey map shows that the Ribble valley is in the centre of the United Kingdom, so we are covering almost every part of the country in the debate.

My constituency is extremely rural and contains many rural post offices. In some villages, the post office is the only shop. It would be absolutely insane of me to say that post offices should be allowed to survive on their own. Some of them would be unable to do so. Nevertheless, we have to wake up to the reality that many of our rural post offices were under attack well before the introduction of automated credit transfers.

The opening hours of some village post offices in my constituency have been greatly reduced over the years. The hours have been so contracted in one rural post office that one wonders whether it is worth its remaining open. In another village, the post office operates from a pub. It is in Pendleton. The pub is the "Swan with Two Necks". Customers have to go to the pub for their postal requirements. That is an imaginative compromise.

We may have to look at innovative ideas so that new life may be breathed into our post offices to ensure that they survive. Some people may prefer ACT instead of having to go to the post office every few weeks. Given the choice, many pensioners may start to drift away from the post office. We must take a realistic look, therefore, at how we are to breathe new life into rural post offices and village stores. Some post offices sell other goods. The turnover of some of them is low and the profits marginal. They work right on the edge between profitability and loss.

Stamps can now be bought in virtually any shop. That was not the case 15 or so years ago. Stamps could be obtained only from the post office and between certain hours, which was nonsense. Nobody would argue today that stamps ought to be sold only by post offices.

If we are to attempt to breathe new life into post offices, we ought to consider freeing up post offices so that they can become agencies for banks and building societies. In some small towns and villages, banks and building societies are closing. A building society branch has recently closed in one village in my constituency.

We should also look at beefing up the Giro bank so that those pensioners who decide that they wish to take their pensions via ACT can do so easily through post offices. The hon. Member for North Cornwall suggested that we should also consider the use of hi-tech in post offices so that they are able to retain their customers.

Fraud related to pensions and social security payments is running at £100 million a year, and the current administration costs amount to £400 million, so it is clear that something must be done. At the same time, I support the general thrust of the idea that pensioners must be given a choice. Those who want to have their pensions paid by the traditional method are entitled to that facility. However, fresh and lively ideas must be considered so that post offices in outlying regions may be given a new lease of life well into the next century.

9.20 pm

Mr. Elliot Morley (Glanford and Scunthorpe)

I, too, congratulate my hon. Friend on bringing this matter before the House. Many hon. Members, from all parties and from many parts of the country, have been given an opportunity to express their concern—concern which has been expressed also in the very many letters that hon. Members, including myself, have received. The constituency that I represent includes urban and rural areas. Of course, this debate is about the rural aspect of the problem, and because its communities are scattered the Western Isles area is very vulnerable. But even in urban areas, many small and distinct communities, such as Riddings in the borough of Scunthorpe, are very concerned about the future of their post offices.

If we encourage measures as a result of which people do not have a clear choice, many post offices will no longer be viable. Indeed, many rural offices are under considerable threat already. I recently had an opportunity to discuss with the Minister the closure of the sorting offices in the villages of Messingham, Winterton and Burton upon Stather, which very nearly lost their postal delivery staff as well. Fortunately, we managed to have that facility saved. There is no doubt that privatisation in particular has introduced a new element of ruthlessness into the Post Office. If the viability of sub-post offices is in question, they will undoubtedly fail to survive.

The Minister is not responsible for the Department of Social Security or its policies, but he is responsible for the future of sub-post offices. Many of those who run these offices are small business people. The offices are privately run on a franchise basis, and the businesses are liable to be wiped out. It is ironic that a party which claims to be for small businesses is putting the knife into many people who already face very great difficulty. When one talks to small business people, one discovers that they no longer believe that the Government are for them.

Many villages—even larger ones like Messingham—have had the experience of their one and only bank closing down and departing due to lack of viability. When the nearest bank is several miles away, it is not sensible to suggest that it would be convenient for people to have benefits paid into bank accounts. Post offices provide other very important services to many people, particularly the elderly. For example, a constituent of mine who is blind relies on people in her sub-post office to help her to fill in forms. No doubt many banks would be willing to provide such a service, but in terms of community care and support there is a distinct difference between a bank and a sub-post office. There is also the social dimension. Many people meet weekly at the post office and, as has been said, they tend to buy goods and services. That is very important for the viability of these establishments. All those are under threat. I hope that the points about monthly payments will be noted. Many pensioners on limited incomes would find it difficult to budget with monthly payments and should have the choice of weekly payments. That provision should be protected.

Bank charges have been mentioned. It is inevitable that the major banks will impose charges on personal accounts. There has been talk of that for some time. We have heard about the dreadful charges made to people who slip into overdraft, including excessive charges for the letters telling them that they are overdrawn.

People should have a choice as to how they are paid and whether payment is made monthly or weekly. The forms should not be bullying; they should not suggest to people who are not used to filling in forms, and who find them intimidating, that they will not have a choice.

Above all, we want to hear from the Minister that he will defend our system of sub-post offices. Without doubt, the proposed change would rip the heart out of many communities because it would remove an essential facility which provides community support and is convenient for many people, particularly in isolated rural areas. The change would also undermine the position of many families who have put much investment into their sub-post office businesses and who have given enormous support and commitment to the people whom they know and serve well. Consideration must be given to those people, and choice on the method of payment must be protected.

9.26 pm

Mr. Eric Clarke (Midlothian)

I want to add my weight to what has been said. I too congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on achieving the debate. I represent an area in the southern part of Scotland. My constituency of Midlothian is made up of small towns, villages and hamlets. It borders the southern uplands of Scotland, with the Moorfoot hills on one side and the Pentlands on the other.

I do not want to repeat other speeches, but I support most of what has been said. I am worried about the lack of mobility of the people we are talking about. We have already heard that there are no bus services in some rural areas. The geographical spread of post offices is ideal. If we wanted to start from scratch to provide a post office system, we would probably place them where they are. Banks and building societies are inclined to cluster around one another. In a small town, they are all in the same street, next door to one another. That provides a choice for those who are mobile, but there are no banks in many hamlets and villages. That must be taken into account when the Minister revises Government policy, which I hope he will do.

I do business with banks in Scotland, and they are no worse than other banks. Sometimes they ask for a minimum of, say, £50 to be kept in an account to keep it in credit. Some pensioners could not afford to leave £50 in a bank account. With our salaries, we may not be concerned about other aspects concerning cheques, but when people have small, fixed incomes, every pound and every penny count.

Opening times are also important. Post offices are open longer and have more convenient opening times than some banks. That is another aspect that must be taken into cognisance when we are talking about this problem.

I shall end with this plea, because I do not want to repeat what has been said—although I endorse everything that has been said. I want to add my weight to the debate, because the problem is not peculiar to rural areas. Obviously, the constituency of my hon. Friend the Member for Western Isles could not be more rural. Some of the sub-post offices are in small towns. I was approached by a sub-postmaster in Dalkeith, which is a small town, who is worried that his income will drop and he will have to close. Will we see huge queues in the few sub-post offices that will be left? When payments are made, people form huge queues. If those payments are spread out, it is done in an amicable way.

I hope that the Minister will take on board what has been said. We sincerely mean what we say—it is not a matter of scoring points. We are not here to be clever, and we are not in a position to score political or any other points. We are making a plea on behalf of the people who need our help. I am sure that we all care for the people in our communities who need help.

9.30 pm

Mr. Bill Etherington (Sunderland, North)

I should like to pay my respects on the death of Robert Adley. As a railway enthusiast all my life, I regarded him as a doyen of the railway world. As well as the loss to his family and the House, he will be a great loss to the railway industry at a time when people with his knowledge have never been more needed.

I do not want to repeat what has been said by other hon. Members. When Baroness Thatcher was Prime Minister, I remember her saying that there was no such thing as community. I am pleased that the hon. Members for Rochford (Dr. Clark) and for Ribble Valley (Mr. Evans) have shown that she was wrong in this, as she was in so many other things. I hope that this debate will be a precursor to debates that will save post offices. Much has been said about the deprivation of pensioners and so on, but the real issue is the loss of sub-post offices in rural areas. That is the most important aspect of the matter.

Perhaps I have been fortunate in my life, in that I have lived in many areas where there were post offices. I have lived in rural, semi-rural and extremely rural districts—I have seen it all. I have always been struck by the fact that, the more rural an area, the more important the sub-post office. I must declare a slight interest because, in my younger days, I had aspirations to own and run a sub-post office. It seemed to be an admirable way to serve society. Although I imagine that it would not be profitable, it would be a worthwhile life.

Although my constituency is mainly urban, some sections are semi-rural. The loss of post offices in my constituency would diminish the quality of life for the people who live there. The village where I live, which is not in my constituency, is a good example of the problem. If there were no post office in my village, people would need to take a bus ride costing £1.07 each way into Durham city to get to a post office—the bus service runs hourly. I am talking not simply about pensioners but about disabled people, unemployed people—there are many of them in my part of the world—and young mothers with children, who greatly appreciate and rely entirely on the post office for many things.

The hon. Member for Ribble Valley referred to post offices in business. Post offices often provide services that are only marginally profitable. Such services would not be acceptable as a business in their own right. A post office in my village sells wool—it is the only place that does—and provides a clothes cleaning service. Those are valuable services.

There is nothing new about the threat to close sub-post offices. To my knowledge, the same threat has been made for the past five or six years. There were rumours that sub-post offices would be drastically cut because of the expenditure involved but they were retracted. However, they continue to come back in different guises. I am sure that Conservative Members represent more rural communities than Labour Members. We represent many towns and cities.

The Post Office has operated a wonderful service for more than 100 years, and it is now more vital than ever for old people to have a post office service close at hand. In years ahead, a larger percentage of the population will be old; moreover, they will be living even longer. Some people do not live within 10 miles of a bank—not just those living in the back of beyond; bank branches are now closing at a fair rate of knots, as are some building society offices.

My hon. Friend the Member for Jarrow (Mr. Dixon) represents a constituency adjoining mine. Although, as a Whip, he cannot speak in the debate, in many ways he could make a better speech than any of us, given that his constituency contains remote villages without good bus services. It is vital for all hon. Members affected by the proposals to listen to what their constituents have to say, and to impress their views on the Government.

I am always very wary of the "balance the books" mentality. It is all very well to say that excessive expenditure is at the root of a problem, and that specific action can be taken to solve it; it is all a bit like the oxo game—having dealt with one square, we find that there are eight more, each of which affects the one adjoining it.

The Government may hope to obtain short-term relief in the form of savings on the cost of benefits, but the long-term deprivation and the social costs involved could far outweigh any savings. Not many hon. Members are present tonight, but I hope that those who are present will try to persuade their colleagues of the importance of retaining what is perhaps the most important service enjoyed by villages, semi-rural areas and, often, urban areas.

9.36 pm

Mr. John Spellar (Warley, West)

I thank my hon. Friend the Member for Western Isles (Mr. Macdonald) for introducing the debate, and for allowing others to speak.

Pensioners currently feel that they are under siege. They face a rise in fuel bills as result of the application of VAT and its extension to standing charges; the pressure on council finances poses a threat to their concessionary fares; crime is escalating in their neighbourhoods, and they feel that they are prisoners in their own homes. Now, on top of all that, their local post offices are threatened. They are being pressurised to leave a system that they have known for many years, and to pay money into their bank accounts. Of course that should be an option, but it should not be pressed to the extent that it has been, to the detriment of many post offices.

Hon. Members on both sides of the House have cited many reasons to oppose the Government's plans, but there are others. It has been pointed out that bank branches are far less accessible than local post offices; that trend is increasing as the main banks close many of their outlying branches in a process that they describe as rationalisation. "Closure" would be a better description. Many pensioners will find it even more difficult to reach their branches if their concessionary bus passes are taken away.

The weight of correspondence received by hon. Members illustrates the difference between the relationship of banks with their customers and that of post offices with theirs. Does anyone seriously imagine that the banks could have mounted the campaign mounted by sub-postmasters in defence of their system? Pensioners clearly appreciate that—if, that is, they have an account at all. Yesterday, a parliamentary written answer revealed that 30 per cent. of those in receipt of benefit have no bank account. Indeed, I doubt whether many banks would be keen on such accounts: they seem to be putting great pressure on small account holders, and—as has been said—imposing charges.

We know the worry caused to pensioners by official letters from bank managers. There have been some tragic cases of suicide.

Pensions will be paid either four or 13 weeks in arrears. The pensioners and many others on benefit in my constituency are having trouble living from week to week and from day to day. If they have to budget one month at a time, some will be able to do so, but for a considerable number that will be a major burden and pressure.

For all those reasons, I hope that the Minister will admit that the Government have been found out and will give in on the forms with good grace. I hope that they will scrap the experiment and tonight give a message of good news to pensioners and their friends, the postmasters.

9.40 pm

Mr. Jimmy Boyce (Rotherham)

Like other speakers, I want to thank my hon. Friend the Member for Western Isles (Mr. Macdonald) for tonight's debate, and all hon. Members who have spoken in it. It has been a constructive debate; I think that the House performs at its best when we listen to other speakers. I am as guilty as anyone of baying and braying across the Chamber, but it has been extremely edifying to sit quietly and listen to other hon. Members make their speeches.

The debate is not about right and left, but about right and wrong. The proposals are out of order and wrong. They benefit nobody except the Exchequer. Therefore, the Government's proper role of looking after people—certainly as they become older—is being denied.

I do not know who first raised the matter in the House. Before last Thursday, I received letters from pensioners in my constituency. Some of them expressed anger, some frustration and others total disbelief at the proposal. I wrote back to them saying that I would support their campaign to keep open the sub-post offices where they collected their pensions. My letter was fairly standard because one cannot say much more than that one will or will not support the campaign.

Last Thursday, the hon. Member for Rochford (Dr. Clark) asked the Prime Minister a question: Is my right hon. Friend receiving letters, as I am, from pensioners and others receiving benefit who are concerned in case that benefit should be paid exclusively into banks and building societies? Will he confirm that benefit will continue to be available from post offices and sub-post offices, thus giving the customers a choice in line with Conservative policy? The Prime Minister replied: This is a matter on which concern is raised from time to time. We have made no proposals to make those changes. If we had any firm proposals to make those changes, we would bring them before the House."—[Official Report 6 May 1993; Vol. 224, c. 283.] I was immediately relieved and, by telephone, arranged for the standard letter to be altered, because letters were still arriving for me. I changed the standard letter to say that the Prime Minster had given an assurance that the House would debate the matter before the changes took place. As it is not a right and left issue, but a right and wrong issue, I believed that the House would not support the proposal. I am most grateful to the hon. Member for Rochford for obtaining that reply from the Prime Minister, with which I was delighted. I am now receiving "thank you" letters for removing some of the anger, frustration and disbelief that people felt.

More importantly, I believe that today the Prime Minister stood on its head his message of only seven days ago—I shall have to read the Official Report tomorrow to make sure of that. I am extremely worried that the changes are to take place and that people are being encouraged, by stealth or subterfuge, to follow such a course of action. As the hon. Member for Rochford said, the forms are designed in such a manner as to obtain a particular result: "Would you like to win a million pounds—yes or no?" Of course we know the answer. I can remember working in Blackpool as a photographer some years ago. The spiel we gave people was, "Would you like a set of three or the half dozen?" Much the same principle applies here.

I believe that the Prime Minister today overturned what he said last week. If he did, I will have to tell people that I am sorry about the first letter saying that we needed a campaign, and about the second, saying that the campaign was off; but here is a third letter, saying that the campaign is back on again. That is no way to run a country. If the Government have proposals, let them come clean and bring them before the House. If they do so, the proposal will be defeated by the integrity of hon. Members on both sides of the House.

9.45 pm

Mr. Harry Barnes (Derbyshire, North-East)

Much of the case has been made already, so I shall be brief. We want the Minister to respond to the points that have been made so that we can intervene in his speech for clarification.

I was much taken by the speech of my hon. Friend the Member for Sunderland, North (Mr. Etherington). I know his constituency well; it contains Roker Park, the home of Sunderland football club. My father was born in the constituency, which contains a great many terraced houses and all sorts of different areas. My hon. Friend described the sub-post offices in those areas, some of which are urban, some semi-rural and some extremely rural.

My constituency, too, contains every category of area. To the north lie the outer suburbs of Sheffield—a highly urbanised place with good sub-post office provision. Then there are the semi-rural areas containing former colliery villages with adjoining fields and farms. All sorts of history and traditions are represented in my constituency.

The very rural parts are in west Derbyshire and the Derbyshire dales, where people have been devastated by some of the changes of recent years—changes which have led to a lack of community transport and many of the other problems that hon. Members have mentioned today.

My constituency contains a wide variety of political strongholds. It is divided into solid Labour areas and solid Conservative areas. On this issue I have received representations from both, particularly from the rural areas which should be natural Conservative strongholds. The Government should respond to the feelings of people in these areas.

Sub-postmasters are often important figures in local government, serving on parish and district councils. Amazingly enough, because sub-post offices have become communal centres on which people depend, these sub-postmasters can get elected either as independents or even as representatives of parties which would not do well in normal circumstances in a particular area.

We should bear that sort of loyalty and community feeling in mind, because it shows that there is something about sub-post offices of such importance that it needs to be preserved. Therefore, we want neither measures that would ruin sub-post offices nor the privatisation which might follow.

9.49 pm

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton)

The hon. Member for Rotherham (Mr. Boyce) referred to the number of letters that he has recently received on this subject. We have all received similar postbags. I sometimes ruefully reflect that if it were not for the scaremongering campaigns that occur at various times during the year and that generate large amounts of post, the position of the Post Office might be rather less viable than it is. Members of Parliament perform a valuable function in helping to support the Post Office network.

I am happy to join with hon. Members in congratulating the hon. Member for Western Isles (Mr. Macdonald) on drawing his place in the ballot and choosing this subject for debate. As has been said, he has been fortunate, and we have been fortunate in having an unusually extended debate on the Adjournment. As I was in charge of earlier business—the debate on the Reinsurance (Acts of Terrorism) Bill—I could have filibustered myself by keeping the debate on that Bill going so as to close off the Adjournment debate. I would not have wished to do that because this is an important matter for all our constituents, and it is right that we should debate it.

The hon. Member has stolen a march on his own Front Bench and anticipated the debate that will be held next Wednesday. We are just a warm-up act, and the star turns will have their opportunity next week. Let us compare the quality of the two debates. As the hon. Member for Sunderland, North (Mr. Etherington) said, the debate has been conducted in an unusual spirit for the House of cool, calm reflection without all the heat of the party battle. I venture to think that our debate will be rather more good tempered and good humoured, and perhaps will generate more light than heat, than that which will be held next Wednesday.

I am grateful for the opportunity to place on record the Government's views on this important matter. I share opinions on it with hon. Members who have spoken from both sides of the House. As an individual Member of Parliament, and as a member of the Government, I am particularly well aware of the great value placed on the local post office in smaller rural communities. I have some 35 post offices within my constituency, which has some substantial rural areas. I know the high regard in which they are held by everybody, from pensioners to young mothers, and by all the other groups mentioned by hon. Members.

I doff my cap in the direction of the hon. Member for North Cornwall (Mr. Tyler) and admit that my parents-in-law live in a small rural village in the depths of Cornwall, perhaps even more remote than the villages in his constituency because they live on the Lizard peninsula. I can also tell him that they are Liberal voters, but I have never held that against them, and even on that account I would not wish to close their local post office.

We all understand that the local post office is not just somewhere to buy stamps or collect pensions. As many hon. Members have said, it is often the focal point of the community. I hardly ever use a bank because I regularly cash cheques here in the post office of the House of Commons, which is open at much more user-friendly hours than any bank. Nobody can doubt our commitment, both collectively as a Government and individually as Members of Parliament, to this important national institution.

The Government's commitment to a nation-wide network of post offices is unequivocal. Hon. Members have asked me to place on record a commitment that we will maintain a viable national network of post offices. I am happy to do that. In so doing, I am not saying anything that the House will not have heard before. We wrote that commitment into our manifesto. None of the other parties did so. That is not to impute that they are not as committed to that aim as we are, but we thought it was useful and valuable to make that commitment during the election campaign. When my right hon. Friend the President of the Board of Trade announced the review of the future structure and organisation of the Post Office last July, he made it clear that that commitment was not negotiable, and I have great pleasure in repeating it this evening.

I should like to explode two myths about the Post Office which often surface to call that commitment into question. The first myth is that the Post Office is in steep and inexorable decline, and the second is that the Government are gradually destroying the viability of post offices by reducing the amount of business that is put their way. I am glad to be able to tell the House that there is no truth in either of those tales. The Post Office is one of a rare breed: it is a popular and relatively successful nationalised industry. Whether it could be even more successful in the private sector is another issue which I may touch on later in the debate.

As Government, we aim to open up new opportunities for the Post Office in order to support the viability of an institution to which we are all committed. The Royal Mail is flourishing today as never before, and is widely recognised as one of the best postal services in the world. Over the past decade, Post Office Counters Ltd. has been consistently profitable, with a growing turnover and rising standards of customer services. Rumours of its demise are greatly exaggerated and do not accord with the historical trend.

How have the misunderstandings that have been alluded to in the debate come about? As with other economic developments, we always hear about the bad news, but rarely about the steady improvements and the winning of new business. As so often with the media, bad news is good news and good news is no news. We hear not about steady improvements but about closures and other deteriorations. I do not know why that happens, but there have been a number of reflections on the subject recently as a result of some remarks by Martyn Lewis.

There has been a steady improvement in the Post Office, and new business has been won. The effect of the automated credit transfer system, which gave rise to the debate, is a case in point. There was a time when the only way in which to collect a state pension or other state benefit was over the post office counter. Then, in 1982, we introduced the option of having pensions or child benefits paid directly into personal bank or building society accounts. Nearly half of new pensioners now choose that option, but when it was first introduced it was widely feared that it heralded the beginning of the end for the Post Office. That fear was widely expressed in the House at the time. My hon. Friend the Member for Rochford (Dr. Clark)—or was it my hon. Friend the Member for Ribble Valley (Mr. Evans)?—mentioned the diversification of post office services into other shops in the rural community. That development too gave rise to the claim that it heralded the end of the Post Office.

In fact, by a combination of options that have been introduced over the years, we have improved the delivery of services to the consumer. That may not necessarily involve the use of the post office or the sub-post office, but the consequence has not been the disappearance of post offices, especially rural sub-post offices, as an important part of local communities. In spite of the gradually increasing proportion of business going to banks and building societies, the total volume of DSS business, and hence of Government business in total, transacted through post offices has increased. The share of the pie may be smaller, but as the pie itself is bigger, the Post Office has not lost out.

The hon. Member for Western Isles mentioned the citizens charter in his opening speech. In the citizens charter we made it clear that we would extend the range of choice open to recipients of other benefits by giving them the option of having their benefits paid into bank or building society accounts. Last November the Secretary of State for Social Security announced that he would encourage more people to use that method of payment, which is cheaper to administer than post office order books, and also more secure.

It is true that there is a cost attached to different methods of payment, and in so far as we use less efficient or more costly systems of payment, the sums expended on those are not available to be spent in many other socially useful ways. Although I am saying this in a neutral way, we ought to consider as a background to this debate what the costs are.

The total cost to the DSS of paying child benefit by post office order book is currently nearly twice as high as the cost of paying it through ACT. With pensions, it is about 10 times as high. If the Post Office payment system were to be automated, the difference in cost would be considerably smaller. The point was made in the course of the debate, I think by the hon. Member for North Cornwall, that Mr. Cockburn's recent remarks about improvements in service delivery through post offices could reduce costs without reducing the degree of usage of the post office. I happily tell him this evening that we are—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Question again proposed, That this House do now adjourn.—[Mr. Arbuthnot.]

Mr. Hamilton

I happily tell the hon. Gentleman that of course we will consider that, and any other proposal which has the effect of improving the service delivery to consumers and making it more efficient, because those efficiency savings can be passed on to the community in a variety of other valuable ways. It cannot be right for us to close our eyes to these opportunities, because it is opportunities that we are talking about.

I fully understand the nature of the fears that have been expressed in this debate, and I want to deal with them this evening.

Mr. Macdonald

The Minister took up the reference to the citizens charter. Does he accept that, as a matter of principle, full information about the choices available to pensioners should be given to them; that, as a matter of principle, it should be as easy for them to choose one option as to choose any other? There should be a level playing field available to pensioners when these options are presented to them.

Mr. Hamilton

As the hon. Gentleman knows, the forms to which he referred in some detail in the course of his speech are part of a trial which the Department of Social Security has been engaged in in an attempt to test the popularity of the different methods of payment. I have heard the criticisms that he and other hon. Members have made, and the Secretary of State for Social Security will, of course, in evaluating the response to the different forms which have been issued, bear all those criticisms in mind.

It is not for me, as a Department of Trade and Industry Minister, to second-guess what my right hon. Friend in the DSS will say in due course, because the evaluation exercise has not yet been completed. But the fears that have been expressed by hon. Members this evening will, of course, form the backdrop to the evaluation, along with all the other responses that are received.

Mr. Olner

A few moments ago the Minister used the word "encourage". I get the impression that the Secretary of State for Social Security is doing more than encourage people with market testing and making people choose between one form of payment and another. People throughout the country can see that they are being coerced, not encouraged, to have their benefits paid through ACT or on a monthly basis. It is time that the Government came clean about this. This is why the pensioners are fearful of what is going on.

Mr. Hamilton

I cannot say any more than I have said already. I can only repeat that this is a trial. Each form has been issued to about 8,000 people, I believe. When the responses have been evaluated, the Department will be able to see the popularity of each option. Of course, if there is a design flaw in the forms and that view is accepted by the Department, that will form the backdrop to the decision. I am not in a position this evening to agree with hon. Members who have expressed their fears on this subject in the House and elsewhere, but I can say that their criticisms have been heard.

Dr. Michael Clark

It gives me no pleasure to disagree with my hon. Friend, but I shall do so for a second. My hon. Friend said that the forms were designed to test the popularity of different methods of payment of benefits and of pensions. I take issue with him on that. The forms are not designed to test the popularity of different methods of payment. If they were, we should have the level playing field that the hon. Member for Western Isles (Mr. Macdonald) mentioned. The forms are designed to discover how effectively the wool can be pulled over the eyes of those who receive pensions and benefits. They have nothing to do with the popularity of the form of payment.

Mr. Hamilton

My hon. Friend and the hon. Member for Western Isles have explained the nature of the three forms, each of which I have here this evening. Their comments have been heard. I have made my own comments and I have explained the reason for the issuing of the forms. I have also explained that, when the results are complete, the Department of Social Security will take a view on the basis of everything that has been said as part of the whole debate on the matter.

Mr. David Harris (St. Ives)

I apologise for not having been here for most of the debate; I had another engagement. I entirely agree with the two points just made. No one in the House believes more fervently in freedom of choice than my hon. Friend the Minister. However, to test what people want, they must be told that they can continue to receive their benefits through post offices. I suspect that in many cases there are advantages for them in doing so, certainly in a remote rural constituency such as mine. Surely, if there is to be proper market testing, we must tell people that it is not a question of their having to be paid through the banks and building societies, but that there is also the option of their continuing to be paid through sub-post offices, especially village sub-post offices. That is the only fair way to test this.

Mr. Hamilton

I do not accept that the third form mentioned, which seems to have generated the most controversy, precludes the use of post offices from the delivery of the service. However, I shall draw my hon. Friend's words to the attention of my mother-in-law, who is one of his constituents. Whether the consequence will be that she votes for him at the next election, I cannot say.

Mr. Tyler

The Minister said just now that he could not second-guess the views of his colleagues in the Department of Social Security and we understand that. I wonder whether he will be quite so specific on the next point. A week ago, the Prime Minister appeared to say unequivocally that the Government were not committed to pressurising people towards the ACT method with which we are all concerned this evening. However, this afternoon, in answer to my hon. Friend the Member for Gordon (Mr. Bruce), he appeared to be ambivalent; he appeared to equivocate. The Minister mentioned the political allegiance of his mother-in-law. For her benefit, for my benefit and for the benefit of the House, will the Minister tell us whether the Prime Minister was correct last week or whether he was correct this afternoon? I do not expect him to answer on behalf of the Department of Social Security, but I am sure that he has been fully briefed this evening on the views of No. 10.

Mr. Hamilton

Beauty, like ambivalence, is in the eye of the beholder. All I can say is that the Government are perfectly consistent at all times. I do not have here the words that my right hon. Friend the Prime Minister uttered in the House this afternoon. I heard them at the time, but I admit that I cannot now remember exactly what he said. All I can say is that, whatever words were used in the House this afternoon, the commitment is exactly the same as that given last week.

I was making a point about the effects of ACT on the Post Office system and on its connection with the diversification of Post Office services. As with all other businesses, some lines of work will increase while others decline. New opportunities are opening for the Post Office which should bolster its position. One promising prospect, for example, could be the retailing of the national lottery. We do not yet know whether the Post Office will win a contract to sell lottery tickets, but we have extended its statutory powers so that it will be able to bid for the contract. Who knows how much business that could generate if the Post Office were successful? It could be an important element in the underpinning of the Post Office network throughout the country. Of course, I am not the Secretary of State for National Heritage. If only I were Prime Minister, it would be much more convenient, and I could answer all the points made in the debate. Perhaps I will be, one day.

Mr. Boyce

The way the hon. Member is carrying on, upsetting most of his Back Bench colleagues, it is hardly likely. I want to take up the point about post offices selling lottery tickets. That is a good proposal, but if the Government have taken away people's rights to draw their pensions at the post office, the purpose of this debate is defeated. The debate is about pensioners drawing pensions from post offices. Any additional business for post offices is a good thing, but the debate is not about that.

Mr. Hamilton

The hon. Gentleman poses a hypothesis. It is not Government policy to remove the right of pensioners to receive their pensions from the post office. As was said by the hon. Member for North Cornwall, the Prime Minister said last week that our policy was to encourage people to receive benefits through their accounts, while maintaining a viable network of post office outlets. So the two are not necessarily inconsistent. As was written in our manifesto, we are absolutely committed to the maintenance of a viable network of post offices throughout the country.

To return to the forms which have been sent out, I am well aware of the concern that has been expressed about the recent trial. It has been noticed in ministerial postbags as well. But I want to stress that the trial is only a trial and is merely to test the impact of different methods of presentation. I have heard the criticisms that my hon. Friends and others have made this evening, but the Department of Social Security is looking at ways of encouraging the take-up of automated credit transfer on a voluntary basis.

Mr. Peter Luff (Worcester)

rose—

Mr. Hamilton

I would like to continue, if I may, because, as a result of willingly taking interventions, I am falling behind with my speech and I shall be unable to answer, even in three quarters of an hour, all the points made in the debate, which I am anxious to do.

Redesign of some of the forms is one of the ways being considered. None of the forms is intended to deprive benefit recipients of the option of being paid through the post office. I understand that all three forms indicated that a choice of payent methods was available, but I have heard the criticisms made by my hon. Friends, in particular, about the clarity of the way in which a particular choice was put before people. I can assure my hon. Friends that those points will be read with great care by my right hon. Friend the Secretary of State for Social Security in the morning.

The hon. Member for Western Isles asked me for two commitments. He asked if the Government would retract their policy to encourage pensioners to use ACT. I am afraid that I cannot give him the commitment that he sought. We have been encouraging the take-up of ACT for 10 years and we shall continue to do so. I have explained the cost background and the benefits that will flow from making the system more efficient.

The hon. Member also asked me if the test trial forms would be shredded and new ones produced with "comprehensive and unbiased" information. The management of the trial is a matter for my right hon. Friend the Secretary of State, but I repeat the point that I have just made. It is no more than a test, and my right hon. Friend needs to assess the results before he can decide how to redesign the forms. No doubt he will take account of that point before making any decision in that respect.

Although we have a viable system of post offices around the country, particularly in rural areas, I realise that this particular claim may sound rather hollow to those living in areas which have lost their local post offices in recent years. Although that is sad, it is not something that is a feature of the 1990s or of Conservative Governments. In the past five years, the number of post offices has fallen by 1,151, but under the Labour Government a similar fall—of 1,190 —occurred between 1974 and 1979. The figures are almost identical. Between 1965 and 1970, 541 post offices were closed.

The trend of post office closure has gone on for some time and at the end of each year there are usually a smaller number of post offices than there were at the beginning of it. If that trend continued, however, one would cease to have a viable national network. Many of the arguments that have been put forward today with such vigour and eloquence could equally have been made at any time in the past 30 years, given the steady decline in the number of post offices.

A large networked organisation such as Post Office Counters Ltd. is generally successful, but some individual post offices are struggling. Demographic changes and changes in shopping patterns mean that in certain areas the viability of post offices grows weaker. Rural offices, in particular, are vulnerable to those changes as traditional village life changes and declines. I deplore that because I live in a small village and I particularly value its community life.

Mr. Harris

Surely we should be looking at new ways in which to attract extra business to post offices. My hon. Friend has already mentioned, quite properly, the possibility of their selling lottery tickets, but we should ease the restrictions and inhibitions on post offices so that they can do other business. Another feature of rural areas —it is certainly true of mine, as it no doubt is of my hon. Friend's constituency—is that the sub-branches of the banks are closing down. Why not lift the inhibitions from sub-post offices so that they can do a deal with the banks to act as their agents? That would encourage the viability of those post offices. We must not be defeatist about village post offices.

Mr. Hamilton

I entirely agree with my hon. Friend, and that is the value of the Post Office review, which is under way at the moment. That review has led to exactly the same type of scaremongering as that which has given rise to the campaign mentioned in the debate. Because the Government do not want to set parameters on the general review of opportunities open to the Post Office, we could be asked to rule out various options. Eventually, we would end up with a real dog's breakfast.

As in so many areas, nationalisation has imposed restrictions on the development of an important industry. If those restrictions were removed, it could offer new life to a great national institution. The post office review will certainly consider all the options, such as those suggested by my hon. Friend the Member for St. Ives (Mr. Harris). I hope that that review will breathe new life into the post office system.

The Post Office is very keen to be released from the bonds and shackles of state control. Consequently, it would be wrong if we dismissed any options. I regret, therefore, the timidity of those who have poured scorn on the Post Office review and have caused many people to worry unduly about its outcome.

Mr. Brian Wilson (Cunninghame, North)

Will the hon. Gentleman give way?

Mr. Hamilton

I am reluctant to do so because the hon. Gentleman was not here for much of the debate and I want to respond to those hon. Members who have been present throughout.

It is always regrettable when a local post office has to close, but I am pleased to say that for an increasing number of smaller offices salvation has been found in the introduction of community post offices.

Offices are open on a part-time basis, according to the level of business transacted. The Post Office introduced that programme in 1988 and it has proved successful in keeping a local service going which might otherwise have been withdrawn following the retirement of the existing sub-postmaster or sub-postmistress. That is a current problem. There are many instances where a sub-postmaster retires and the post office cannot find a replacement. Indeed, it is a serious problem in some rural areas.

I do not know if it is a problem in the Western Isles, where there are 85 post offices. As the hon. Member for that constituency said eloquently in his speech, the local post office is the most widespread meeting point and community institution in that scattered area. Finding a successor to the postmaster or postmistress is a serious problem in some parts of the country.

Hon. Members are familiar with some of the more colourful examples of community offices mentioned in recent debates about the rural network. They illustrate the benefits of flexibility and the opportunity to develop that has arisen in recent years. Community post offices have opened in pubs, churches, even garden sheds and front rooms. That trend would not have been thinkable prior to the developments of recent years.

I agree with the hon. Member for Nuneaton (Mr. Olner) that if it were Government policy to close rural sub-post offices it would be a foolish policy. That is not our policy. Curiously enough, there has been much community of interest and agreement in the debate, and it has in many ways been similar to the previous debate in which I starred—[Interruption.] I was searching for the right word, which sometimes eludes me.

There is a commitment to achievement of the same objective. The means by which we would get there may be different, but our objective is the same. We have affirmed our commitment to the nationwide network of post offices, including the rural network.

The fact that Government business transacted through post offices has not decreased but increased in each of the last few years is a demonstrable illustration of the Government's commitment to the policy that we declared in our manifesto. The Post Office is making strenuous efforts, in particular in co-operation with the Rural Development Commission, to keep small rural post offices open, particularly in areas where changing shopping patterns have been threatening their viability.

As I come to the question of the Post Office review, I pay tribute to my hon. Friend the Member for Ribble Valley, who dealt with the matter in the context of his extremely scattered constituency, which I know well as I spent some time there in a by-election not long ago—[Interruption.] In the general election I was otherwise engaged in my own constituency. The hon. Member for Jarrow (Mr. Dixon), with his usual percipience, spotted why my hon. Friend the Member for Ribble Valley lost the by-election but won the general election.

I appreciate that his constituency is scattered and that the importance of the local post office in Ribble Valley is not to be understated. The Post Office review gives great opportunity, as my hon. Friend recognised, for scattered rural areas of that kind. I cannot tonight state when our decisions will be made public because no decisions have yet been made, but my hon. Friend can rest assured that when we have something to say on the matter it will be announced to the House. In the meantime, I assure everybody that the review is being undertaken with no preconceptions as to its outcome and that we are looking at both public and private sector options.

It has been said tonight that the privatisation of the Post Office might lead to large numbers of post office closures. The hon. Member for Derbyshire, North-East (Mr. Barnes) said that. Although no decisions have been made—so speculation about the effect of privatisation would be idle—I believe that the impact of greater flexibility to which loosening the bonds of state control has given rise in other formerly nationalised industries would be to the benefit of the Post Office and would underpin the network to which we are all committed.

That is why I regret the confusion that has been created in recent times over the impact of ACT and the possible impact of privatisation. Those two issues ought to be considered separately, because our policy of encouraging ACT on a voluntary basis has been in place for some time—for 10 years or so—and we have yet to decide whether to privatise part or all of the Post Office. Whatever the outcome of the review, our commitment to a nationwide network of post offices will not be compromised. There are ways to protect the network, whether it be in the public or the private sector, and also whatever services the Post Office provides.

I remind hon. Members, as did the hon. Member for Glanford and Scunthorpe (Mr. Morley) in his speech, that 19,000 of the 20,000 post offices are already in the private sector, because all sub-post offices are run by individual entrepreneurs. They contract for their services with the Post Office, but the premises and the business itself are firmly in the private sector. That has been a great strength of the system.

The Post Office's programme of converting Crown offices to agency status has been successful in improving efficiency, with Post Office services having been transferred to the private sector. There is no inconsistency at all between the private sector option and the provision of services that hitherto were the responsibility of a nationalised institution. What matters is the Government's commitment to those services being available on a widespread and viable basis throughout the country. I am happy yet again to reaffirm that commitment.

Mr. Morley

There is still a great risk in privatising the core of a service such as the Post Office, which is in part publicly controlled but which, of course, has a private interest element—the contracting out of sub-post offices. I draw the Minister's attention to the privatisation of the electricity boards. Has he thought about the number of showrooms that have been closed as the electricity companies seek to maximise their revenue? We believe that, as well as having a duty to make a profit, the Post Office should provide a public service.

Mr. Hamilton

It is a little far-fetched to compare electricity showrooms with post offices. I do not therefore intend to respond to the hon. Gentleman's point, as only a couple of minutes are left to me.

We are considering in our review whether there are ways of organising all or part of Post Office business in such a way as to enable further gains to be made and the customer to have even better services while safeguarding our nationwide network commitment and our universal mail service obligation. My right hon. Friend the President of the Board of Trade has made it crystal clear—there was no ambivalence or ambiguity about it—that the two unbreakable commitments on the basis of which our Post Office review is predicated are, first, that a nationwide network of post offices and a universal postal delivery service at a uniform tariff will be preserved and, secondly, that our universal mail service obligation, whatever the outcome of the review, will be as it is now.

We are, however, seeking to improve efficiency in order to reduce costs. The consequence will be that money which is now wasted can be channelled into other more productive and socially useful services. That must be the objective and aim of us all in the debate. Nobody benefits from waste. We must seek to use scarce resources in ways that are most productive and that give the greatest satisfaction to consumers. That, of course, is the rationale for the existence of any business. We believe in striving constantly for improvements. If there is a way to improve the current arrangements, whether through privatisation or in any other way, we shall not shrink from making appropriate changes.

I hope that during this valuable and interesting debate I have been able to allay the fears of at least some hon. Members, though the experience of many years in politics inclines me to believe that such optimism is usually misplaced. I am grateful to the hon. Member for Western Isles and to all those who have participated in the debate for this opportunity to run over issues which are of such concern to our constituents. I look forward to seeing act 2 on Wednesday, when the ringmaster of the drama, as on this occasion, will be the hon. Member for Jarrow. On that—

The motion having been made at Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.