HC Deb 07 February 2000 vol 344 cc11-4
8. Mr. Phil Hope (Corby)

If he will make a statement on the impact upon people in rural areas of proposals to computerise the benefits payment system. [107195]

The Secretary of State for Social Security (Mr. Alistair Darling)

About half of new pensioners and more than half the people in receipt of child benefit prefer to have their benefits paid into their bank accounts. However, for some people, especially in rural areas, receiving their money in cash at the post office is very important, and we want that choice to remain. So, even after the move to paying benefits directly into bank accounts, from 2003, people in rural areas will still be able to collect their cash at the local post office if they want to do so.

Mr. Hope

I thank my right hon. Friend for that reply. People who live in east Northamptonshire, a rural part of my constituency, have been greatly concerned about press reports that were not the same as his reply. Will he assure me that the Government have joined-up thinking in this matter and that they recognise the vital social, as well as commercial, functions of post offices? Will he further assure me that in future we shall see a halt to the decline of services in rural areas that began under the Tories, and that there will be a real rural revival?

Mr. Darling

My hon. Friend is right—doing nothing and sticking with the present system would be an absolute disaster for post offices, because more and more of those who are coming into the benefit system, especially pensioners and people receiving child benefit, are asking to have their money paid direct into a bank or building society account. That is their right, and there is nothing that the Government can or should do about that.

We have also ensured that, for the first time, the Post Office has the capability to compete with the banks—it can now get access to the money necessary to enable it to pay out cash to its customers. When we came to office, the Post Office could not do so because the necessary investment had not been made. The previous Government had no intention of doing anything about it, and instead were going to privatise the entire post office network.

We are ensuring that people will have a choice after 2003, and that the Post Office can compete with banks in a way that simply is not possible at the moment.

Mr. Peter Lilley (Hitchin and Harpenden)

Will the Secretary of State confirm that he received from officials the same advice that I received about the impact of moving to compulsory ACT—compulsory payment of benefits through the banks—namely, that it would lead to the collapse of the post office network across the country, that the only way to prevent that collapse would be to introduce a subsidy, that such a subsidy would absorb a large part of the savings that it was hoped to make in the first place, and that the net effect would be a minimum saving but maximum hardship for old, disabled and young people, and that communities would be destroyed? Will he think again about this disastrous policy?

Mr. Darling

The right hon. Gentleman was a member of a Conservative Government—and he belonged to the right-wing, doctrinaire part of that Government—who wanted to sell off the whole of the post office network, which would have put many post offices at risk—so he has no credibility as a defender of the Post Office.

I do not know what advice the right hon. Gentleman was given because, of course, we do not see the advice given to previous Administrations. However, he must have been told that the present system—under which the cost of paying a benefit by girocheque is some 79p an item, whereas the cost of paying it direct into a bank account is less than 1p—is unsustainable. He must also have been told that making payments by means of order books and giros is extremely expensive because of the amount of money lost through fraud, and that therefore that is also unsustainable. The only way to ensure that the post office network survives is to ensure that it gets investment—something that he opposed when he was a member of the Conservative Government who wanted to sell it off.

We are giving the Post Office the additional investment necessary to ensure that people have a choice about whether they receive their benefit in cash at a post office or through a bank or building society. The alternative to what we are doing is to maintain a system whereby we continue to pay benefits using order books that are by and large unchanged since the ration books of the second world war. That is clearly unsustainable and nonsensical.

Mr. Bob Blizzard (Waveney)

Will my right hon. Friend join me in condemning certain newspapers and certain Opposition politicians who, by their scaremongering, are serving only to undermine public confidence in sub-post offices, in spite of the fact that the Government and my right hon. Friend today have clearly stated that cash benefits will still be available at post offices? Does he agree that comments to the contrary serve only to frighten elderly people, and that those who are calling for the abandonment of ACT would compel the 50 per cent. of people who have chosen ACT to return to the ration book type of payment?

Mr. Darling

The point that those who differ with us on our policy should remember is that more and more people—whether we like it or not—are asking to have their benefits paid into their bank accounts. Therefore, if we did nothing, the post office network would suffer, and anyone who believes that that is a sensible policy needs his head looking at.

The right thing to do is to ensure that people have a choice, because we believe in choice. People should be allowed to choose where they receive their benefit or pension. However, we also need to ensure that the necessary investment is made in the Post Office. That did not happen, and the Post Office paid a heavy price for the doctrinaire opposition to addition investment shown by the Conservative privatisers who now sit on the Opposition Benches.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

Will the Secretary of State guarantee that, in any departmental publicity leaflets, equal emphasis will be given to both choices, including the post office choice, and that the option to retain payments through a post office will not be buried away in the small print of the leaflets?

Mr. Darling

I can give the hon. Gentleman that assurance. A poster campaign is being mounted jointly by the Benefits Agency and the Post Office. Posters and leaflets explaining the new system should appear in every post office throughout the land to give people the reassurance that they will have a choice as to whether they receive their money through the post office or their bank or building society.

Mr. Lawrie Quinn (Scarborough and Whitby)

Is my right hon. Friend aware of the announcement made by my right hon. Friend the Prime Minister at the end of last week in which he pointed out that 3,000 extra cashpoint machines will be available in rural post offices? Many people will want to receive their benefits through the new system and, despite the scaremongering of Conservative Members, that will add to the renaissance of services in rural areas.

Mr. Darling

My hon. Friend is right. The Post Office already has an alliance with, I think, three banks and offers banking facilities as a result of that. I fail to understand the policy of the Conservative party. I know that it is conservative in every sense of the word, but its recipe is to do absolutely nothing and to stick with a system that is not sustainable. That is nonsensical and it would also cost the DSS substantial sums in administrative costs and in money lost through fraud and error. Surely nobody in their right mind could defend that, but let us hear what the hon. Member for Daventry (Mr. Boswell) has to say.

Mr. Tim Boswell (Daventry)

I begin by assuring the Secretary of State that I feel very much in my right mind. I am sure that he would wish to join me in acknowledging that the effects of rural transport difficulties are compounded for those who are elderly or who have disability problems. While we are discussing states of mind, it seems that the right hon. Gentleman suffers from a degree of selective amnesia. He seems to be unaware that the sub-post office network is already privatised and that my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who spoke so eloquently a moment ago, had initiated a project for the automation of the benefits payments system that would have been highly beneficial.

Although the Secretary of State has given assurances, does he not accept that, in the form that he has given them, they are merely bland, imprecise and uncosted? Does he not understand that they will cut very thin ice with an elderly or disabled person who wishes to go to his or her local sub-post office, finds that its business has become uneconomic because of the significant loss of benefit payments that will result from the changes that the Secretary of State has initiated, and that it has simply shut its doors—so that that person has nowhere to go?

Mr. Darling

The hon. Gentleman will no doubt reflect on the fact that rural transport was significantly run down by the previous Conservative Government, principally because of the deregulation of bus services that took place in the 1980s when Mr. Ridley was the Secretary of State responsible for such matters.

I return to point about the Post Office. The hon. Gentleman says that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) left us with the benefits payment card. Indeed he did, and it was another mess that we inherited. When we took over, the project was three years late and the contractor was not willing to continue with it unless he received significantly more money to do so. What was worse, the system still cost substantially more to pay money directly into people's bank accounts.

I come back to my point: if we do nothing, more and more people will vote with their feet because they are asking for their money to be paid into banks and buildings societies. The Government are giving the Post Office the additional support and investment that will allow it to offer more services. After 2003, people will have a choice—they can either have their money paid direct into their bank or building society or they can get their cash through a post office.