Commons Sitting of 17 January 2000

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  HOME DEPARTMENT
  The Secretary of State was asked—
  HOME DEPARTMENT

    Prison Overcrowding
    Mr. Tom Brake: How many prisons are overcrowded. [103961]
    The Minister of State, Home Office (Mr. Paul Boateng): Measures of overcrowding vary. At the end of November 1999, based on the measure preferred by the Prison Reform Trust, 62 establishments exceeded their uncrowded capacity. However, no prisons exceeded their safe maximum capacity.
    Mr. Brake: Will the Minister confirm whether it is to become official Government policy to use prison hulks to tackle overcrowding? Will the life of HMP Weare be extended beyond the agreed finish date of 2003? Is he actively looking at whether HMS Invincible could be used as a hulk ship, as reported in the weekend's press?
    Mr. Boateng: The hon. Gentleman ought not to believe everything that he reads in the press—even in Focus. HMP Weare has proved to be an unalloyed success, and we have made no final decision about its future. We will ensure that the courts have at their disposal all the accommodation necessary to hold prisoners safely and securely. We are determined to hold prisoners in that way, not least because our concern—unlike that of the Liberal Democrats—is not, first and foremost, the number of people in prison, but how best we reduce crime.
    Mr. Dale Campbell-Savours: What are we doing to empty the prisons of the mentally ill?
    Mr. Boateng: My hon. Friend will be aware that we have instituted a programme of reform of prison health care. One of the main strands of that is to improve communication and co-operation between the NHS and the Prison Service, precisely to identify more speedily and readily places in medium secure and high secure units for those who more properly belong there.
    Mr. Dafydd Wigley: The Minister will be aware of the strong feeling in north and mid-Wales that there is no local prison, and that the prisons serving
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    the area are inconvenient, with prisoners not in their own communities. If there is a need for additional prison capacity, will he look at the possibility of an additional prison in north and mid-Wales and of using European funds to help finance it?
    Mr. Boateng: I would be delighted to do that. On my visits to Wales—including visits to prisons—I have been made aware of the sentiment in relation to the need for more local provision. I have had some communication on the issue with the Assembly Members concerned and I will bear the right hon. Gentleman's suggestion in mind.
    Dr. Brian Iddon: Does not the management of prison capacity have undesirable side-effects, such as the movement of prisoners hundreds of miles away from their friends and relatives? Does it not disrupt education programmes? Will my right hon. Friend look at those difficulties?
    Mr. Boateng: We have in mind the need to make sure that we locate prisoners as near as possible to their family centres and that we take steps to ensure that the reintegration and rehabilitation of prisoners is not undermined by capacity issues. My hon. Friend will appreciate the operational imperatives in terms of ensuring that we have a system that is suitably flexible to enable us to hold prisoners in conditions of safety and security. He will be aware that we have reduced overcrowding in our prisons from the high level that we inherited. However, there is no room for complacency and we keep a close eye on the figures.
    Miss Ann Widdecombe: I welcome the Minister's statement that HMP Weare has been a resounding success, given all that Labour said about the use of a ship when we introduced it. What percentage of prisoners are in cells designed for one prisoner, but being used by two? What percentage of prisoners are in cells designed for two prisoners, but being shared by three? In how many prisons has slopping out returned—on however limited a scale—as a result of bringing back into use old accommodation?
    Mr. Boateng: It was my right hon. Friend the Home Secretary who brought HMP Weare into play, and it was he who took steps to solve the problem of prison overcrowding. Before the right hon. Lady casts any strictures in our direction, she should consider her own record in government. In 1996–97, prisons were at 106.2 per cent. capacity; now the figure is 105.6 per cent.—it is lower. There is worse: in 1997–98, the last year for which the Conservatives had stewardship of the Prison Service, the figure was 108.1 per cent. The right hon. Lady is in no position to cast aspersions in our direction. We are on course to meet—
    Mr. Michael Jack: What about answering the question?
    Mr. Boateng: The right hon. Gentleman should not get so aerated. If only he would contain himself, we would come to the answer.
    In 1990–91, under Conservative stewardship, the average number of prisoners held three to a cell designed for one was 2,677. That number has certainly not been

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    exceeded today. The figure is on target for the key performance indicator by which one measures the number of prisoners in overcrowded cells. We are clearing up the mess that the Conservatives left us.
    Miss Widdecombe: The Minister must be hard of hearing. What percentage of the prison population is sharing two to a cell designed for one? I shall ask the questions very slowly so that he can look up the answers. What percentage of the prison population is sharing three to a cell designed for two? In how many prisons has slopping out, which we eliminated completely, returned as a result of bringing old accommodation back into use? Those are three simple questions. If he does not know the answers, let him admit it; but I always knew the answers to such questions when I was in his position.
    Mr. Boateng: The right hon. Lady might have known the answers, but she did nothing to tackle the problem. We are tackling it, and I will write to her with the specific answers that she seeks.
    Miss Widdecombe: We take it from that that the Minister does not know the answers to three simple questions.
    I do not know whether it is trne that the Prison Service is considering the use of aircraft carriers. If it is looking for temporary accommodation, that suggests a shortfall in prison places. I have two very simple questions: is the Minister planning any additional permanent accommodation over and above that already announced; and, if so, how does he intend to pay for it, given the very clear statement of the then Chief Secretary, the right hon. Member for Darlington (Mr. Milburn), who said in a letter to the Home Secretary that he would entertain no further claims on the reserve for the purposes of easing pressures in overcrowded prisons?
    Mr. Boateng: The right hon. Lady need have no fear about the availability of funds for building the new prisons needed to fulfil the requirements that the courts impose on the system by way of holding prisoners in safe and secure conditions. We have three prisons currently under construction—Forest Bank, Onley II and Marchington—and there are plans for three more at Ashford, Peterborough and Ashworth. Those will all be funded and will fulfil the current requirements for the prison population.
    Last year, 67,800 prison places were required. In 2001–02, we will have 71,400 places. That is what the Government are doing to address the under-resourcing of the Prison Service under the right hon. Lady's stewardship. We face up to the problems and address them, while ensuring that we also address the causes of crime: she and her Government flunked them.

    Public Safety Radio Communications Project
    Mr. Crispin Blunt: What estimate he has made of the impact on police budgets of the Public Safety Radio Communications Project. [103962]
    The Secretary of State for the Home Department (Mr. Jack Straw): Some £5 million has been provided from the police grant for the next financial year. Once the
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    service is fully operational, the cost is estimated to be around £150 million per year at today's prices, which will be equivalent to some 2 per cent. of police authority budgets. The cost will be reduced by the £50 million subsidy that I announced last September, and will also be taken into account in the overall level of resources provided for the police service in future years. The new digital radio and data system is of great importance to improving the efficiency and effectiveness of front-line police officers.
    Mr. Blunt: While one accepts that the new system will improve the police's communication capacity, does not part of the need for it derive from the fact that the Government have sold off part of the radio spectrum? The Home Secretary mentioned costs of £150 million a year, but the total cost will be some £1.5 billion, of which the Government will produce the generous amount of £50 million from the central budget. When will Surrey have the benefit of the new radio system, and what will be the consequences for Surrey's budget of having to pay for that Government-imposed requirement? Over the next few years, Surrey will move from having the best crime prevention rates in the country and a good funding settlement to having the worst funding settlement—the Home Secretary has offered to meet me to discuss that.
    Mr. Straw: The hon. Gentleman is misinformed about the background to the project. It has arisen not because we have sold off the radio spectrum but because the Government whom he supported agreed, in the mid-1990s, that the spectrum for the police service should change under the terms of an EU directive. A digital radio and data system that will cover the whole country is a vital need for the police service. It will become operational in all police services by 2004, although I cannot give him a precise date for Surrey. The cost will be £150 million a year, which adds up to £1.5 billion over the life of the project. We have already found £50 million from the capital modernisation fund for the immediate costs and, of course, as we agree funding for the police service—including for Surrey—for subsequent years, we will take fully into account the costs of the capital radio project.
    Dr. George Turner: In my experience, the only people who will not welcome this investment in proper technological support for the police are the criminals. If we ensure that the police have such support, they will do their job much more effectively. Does my right hon. Friend accept that, in the past 20 years, the pattern of investment in all technology has been patchy and that this Government need to address those areas in which money was not invested in the past to try to bring the police force up to a reasonable standard within a reasonable time?
    Mr. Straw: I entirely accept my hon. Friend's comments. Investment in technology for the police service has been made in the past. Some of that investment has been successful, but some has not, not least because the decisions have been left to individual police services, which has sometimes led to incompatible radio and IT

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    systems. That is why it is essential for the future that, as far as possible, large IT projects such as the police radio project are co-ordinated on a national basis.
    Mr. Simon Hughes: It is true that the radio communications project is welcomed by the police and that a contribution will be made to it from central funds. However, can the Home Secretary yet tell us whether he has made a decision about future general funding to pay for the project and for the police recruitment that he plans? He has announced £35 million from the crime-fighting fund for next year; it will cost at least £150 million to recruit 5,000 police officers, let alone to keep them on after that. When will both the Met—whose outgoing Commissioner has warned of the problem—and the rest of the police forces know that they have the money guaranteed to ensure that they have a real-terms increase in funds, not a real-terms cut?
    Mr. Straw: The only period in the past 10 years when there was a real-terms cut in police service funding occurred in, I think, 1995–96, under the previous Administration. We have set out firm spending plans for the year 2000–01. Additionally, for that year, we have allocated this extra £35 million as the first slice to pay for the 5,000 additional officers. The money for the following years will be announced as part of the spending review 2000, which will be announced later this year.
    Mr. John Greenway: Will not 80 per cent. of the £1.4 billion that this important radio project costs be paid by police authorities, through the common police services budget? That decision has already been taken, but the costs come on top of the shortfall of £1.2 billion in police funding over the next three years predicted by the police service forecasting group, working on behalf of the police authorities. I think that the right hon. Gentleman will receive the group's findings any day now. They show that the police service cannot afford to meet the radio project costs without further cuts in the number of police officers.
    When will the Home Secretary face up to the reality of the worst funding crisis for our police service in living memory? The issue may not have prompted the press mauling that the right hon. Gentleman has suffered recently in connection with other matters, but if he does not punch his weight more effectively with the Chancellor of the Exchequer, he will be on the canvas and counted out.
    Mr. Straw: That was a rather ropy question.
    The hon. Gentleman is right to say that that 80 per cent. of the costs will be paid from the central police grant and that deductions will be made in the grant. That is the only rational way to fund the project. However, I have already made clear what funding will be announced for 2001 and thereafter.
    The hon. Gentleman referred to the most difficult time that police forces face. In response, I can do no better than to quote Mr. Paul Scott-Lee, the chief constable of Suffolk. Speaking about our crime-fighting fund and the 5,000 extra officers, he said that his force had had its
    "most difficult time about five years ago."
    That was when real-terms spending on the police went down, not up.

    Crime Figures (Kent)
    Dr. Stephen Ladyman: If he will make a statement on the most recent crime figures for Kent. [103963]
    The Minister of State, Home Office (Mr. Charles Clarke): The latest figures, covering the 12 months to September 1999, will be published tomorrow. I hope that they will show continued strong performance in reducing crime in Kent.
    Dr. Ladyman: I am grateful for that answer, and especially for the Government's recognition of Kent's status as the gateway to Europe, which places an additional burden of crime on the local police. However, is my hon. Friend aware that some senior policemen in Kent believe that the criminal networks set up to bootleg alcohol and tobacco are now involved in smuggling illegal immigrants, pornography and drugs into the country? One senior officer has likened that trade to the evolution of organised crime in the United States in the early days of prohibition.
    Will my hon. Friend ensure that he continues to monitor crime figures in Kent? Will he also ensure that Kent police have the money needed to combat this very worrying threat?
    Mr. Clarke: I am aware of the issues raised by my hon. Friend, and I have discussed them with senior police officers in Kent. In fact, the other day I discussed those very matters—organised crime, smuggling and trafficking in people—with the Minister of State, Home Office, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche). We also discussed how those crimes impacted on the people of Kent.
    My hon. Friend makes a good point. I assure him that we will keep the question of organised crime in Kent— the gateway to Europe—under close review.
    Mr. Michael Howard: I share the Minister's hope that tomorrow's figures will show a further reduction in crime in Kent. Since 1994, crime in the county has reduced by 16 per cent. However, has the Minister had an opportunity to study last week's letter to the Home Secretary from the chairman of the Kent police authority? In it, she points out that the Home Secretary's decision on the funding of the radio project referred to in the previous question means that Kent police will face additional revenue costs of £3 million a year, and additional capital costs of more than £4 million a year. She says that that will have a damaging effect on future budgets for the Kent police, and on police manpower numbers.
    What impact does the Minister expect the additional financial pressures on the Kent police exerted by the crimes described by the hon. Member for South Thanet (Dr. Ladyman) to have on the future course of crime in the county, and on the police's ability to combat it?
    Mr. Clarke: I have indeed seen the letter to which the right hon. and learned Gentleman refers. Given his experience, he will know that I have received similar letters from chairs of police authorities throughout the country and have discussed with delegations the

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    requirement for all police authorities at all times to secure future funding for their forces. I assure the right hon. and learned Gentleman that we shall continue to keep these matters under close review. The basis of that review will be the outcomes of the policing that is taking place in every force throughout the country—how well their policing has impacted on recorded levels of crimes. In that context, I am confident that Kent will continue to show an improvement, because of its outstanding police force and the outstanding leadership that that police force has.

    CCTV
    Mr. Piara S. Khabra: How much the Government are investing in CCTV systems in the current financial year. [103964]
    The Minister of State, Home Office (Mr. Charles Clarke): The Government are investing £153 million over three years in the closed circuit television initiative. I am pleased to announce today a further 181 awards to a value of £34 million under the first round of the initiative, bringing the total funding allocated during the current financial year to just under £40 million for 217 schemes. Details of the approved schemes are available on the Home Office website. A further 137 schemes, with a potential value of £25 million, require further information or reassurance before approval can be given.
    Mr. Khabra: I am grateful to the Minister for his reply. May I also thank him for his support for the borough of Ealing's application? Two bids have been approved to install more cameras in my constituency. How effective is CCTV in the reduction of crime under the Government's programme? In what categories of crime has such reduction taken place, and which areas have benefited most?
    Mr. Clarke: I was delighted that the approvals that I mentioned earlier—including schemes from Southall town centre, Springbridge road and Acton town centre— bring investment in CCTV in my hon. Friend's constituency to a total value of £644,000. There is no doubt that CCTV reduces crime, especially in areas such as secure car parks, where individual reductions of up to 80 per cent. have been achieved, and on housing estates, where CCTV can make a material difference to security. There is no doubt that it has an impact; we are investing far more than ever before, and I am delighted that the programme is being established strongly throughout the country.
    Mr. Jonathan Sayeed: I hope that your cold gets better, Madam Speaker.
    I am pleased that the Minister is funding CCTV in Labour constituencies, but why has the application by Ampthill in Mid-Bedfordshire been turned down in the past? Will he be funding it this time round?
    Mr. Clarke: I cannot immediately tell the hon. Gentleman why the application was turned down. However, two programmes were agreed today in the
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    constituency of the right hon. Member for Maidstone and The Weald (Miss Widdecombe), so we cannot be accused of refusing the application on party-political grounds.
    Miss Ann Widdecombe: Thank you very much.
    Mr. Clarke: I am glad to collect credits from wherever they come.
    We have a detailed set of specifications on making CCTV work more effectively to ensure value for money.' Where schemes have been turned down—in the hon. Gentleman's constituency, for example—the Home Office is committed to discussing with the local authorities and police ways of improving the scheme so that applications can be agreed in future. That applies to a number of schemes. I assure the hon. Gentleman that we are prepared to look closely at the scheme to which he referred and see what can be done.

    Community Support and Funding
    5. Mrs. Helen Brinton: What support and funding are available to community groups for (a) fighting crime and (b) working to improve the quality of life in their areas. [103965]
    The Minister of State, Home Office (Mr. Charles Clarke): The Government are committed to promoting and developing community involvement and self-help as part of their overall aim of improving the quality of life in all communities. In support of that, the Government allocate funds to umbrella bodies that provide expert advice, support and training to local community groups to help strengthen the community sector infrastructure and fight crime. A number of projects are already being run by the crime and disorder reduction partnerships, including the reducing burglary initiative, targeted policing and closed circuit television.
    Mrs. Brinton: I welcome that reply, and my hon. Friend's clear commitment to making our communities safer. What does my hon. Friend have to say in praise of the Eastfield residents association? That part of my constituency was dubbed a war zone in the House two years ago, but the association has worked well to combat crime. In addition, how would he reply when the association says that local people can do only so much and that they would like some Government support?
    Mr. Clarke: My hon. Friend has told me about the work of that residents scheme, and I am happy to commend it. Active communities and tenants and residents associations make a massive difference in reducing crime in many communities. The thrust of our crime reduction partnerships under the Crime and Disorder Act 1998 is to link with initiatives such as those taken in my hon. Friend's constituency and to bring resources to bear where they can make the greatest difference. In many crime reduction partnerships, community involvement makes a material difference in delivering results.
    Mr. James Paice: Will the Minister consider the work done in the city of Cambridge by the charity Wintercomfort? Will he

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    consider in particular the case of my constituent, John Brock, the director of the charity, who, just before Christmas, was sentenced to four years in prison for drugs-related offences, the details of which I shall not bore the House with? That has had serious consequences for many community programmes that try to help the homeless and people at the bottom of our society to overcome their problems, including drug abuse. Will the Minister see whether there is anything he can do?
    Mr. Clarke: The hon. Gentleman knows that I cannot comment on the specifics of the case to which he refers, as that is a matter for the courts. I am, however, prepared to consider his substantive point about the impact of the court case on the charity involved and the means required for support, and I will listen to representations from the hon. Gentleman or from people from his constituency on how the strength of charity and community work can be maintained at a time of significant disruption.
    Mr. Bruce Grocott: I welcome all that my hon. Friend has said, but will he have a word with our mutual right hon. Friend, the Minister of State, Home Office, who, on a visit to Telford, saw the work of The Wrekin community safety partnership, which was set up in 1993 when there were not many such partnerships? The partnership has shown great strength in identifying local problems and solutions. Will my hon. Friend ensure that the best practice to be found among the partnerships is made widely available? We can all learn from each other.
    Mr. Clarke: I take that point. My right hon. Friend the Minister of State is sitting next to me and tells me that the scheme in The Wrekin is excellent. My hon. Friend the Member for Telford (Mr. Grocott) made the profound point that we must be much more effective in spreading knowledge of best practice in community schemes. We have set in motion a process that will make us far more effective in that area than we have been hitherto.

    Regulatory Impact Assessment
    Mr. Desmond Swayne: What discussions he has had with the Cabinet Office regarding the regulatory impact assessment for the Representation of the People Bill. [103966]
    The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): The regulatory impact assessment was available when the Bill was published on 18 November, and it expressed the Government's collective view.
    Mr. Swayne: The impact assessment is a very thin document. How did the costs to business—estimated by the Confederation of British Industry at hundreds of millions of pounds—entirely escape those who made the assessment?
    Mr. O'Brien: The regulatory impact assessment assesses impact on the economy. The CBI's estimate is more concerned with the impact on particular businesses. When businesses seek alternative sources of information, they may find that the whole economy will benefit. The Bill's provisions were agreed by Conservative
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    representatives on the electoral procedures working party, and resulted from the data protection directive, to which the Conservative party signed up.
    Mr. Harry Barnes: If the seven batches of amendments that I tabled to the Representation of the People Bill had been accepted, there would have been cost compliance provisions and, presumably, some knock-on effect as regards the assessment. I do not know whether any assessment was made of how much I would have cost the nation—or the economy—if those measures had been developed. Is it not better to spend money—as the Bill does—on electoral registration so as to ensure that it is fully achieved, rather than on measures that would destroy it? That was what the Opposition did when they were in government and introduced the poll tax.
    Mr. O'Brien: My hon. Friend is right. I am sure that Conservative Members' constituents will be bewildered by the fact that some of them appear to oppose provisions in the Bill that would make it easier for people to vote. Why are they so frightened that people should be able to vote?

    Police Pensions
    Mr. David Rendel: What amount and proportion of police funding was spent on pensions in (a) 1990 and (b) the most recent year for which figures are available; and if he will make a statement. [103967]
    Mrs. Jacqui Lait: What measures he is taking in respect of the funding of police pensions. [103972]
    The Secretary of State for the Home Department (Mr. Jack Straw): Net pensions expenditure in 1989–90 amounted to £285 million, or 6.9 per cent. of total spend. For 1998–99, expenditure was £889 million or 12.6 per cent. of total expenditure. We have increased the proportion of overall funding to be distributed for police pensions to 13.2 per cent. in 1998–99, and to 14.5 per cent. in 1999–2000, in recognition of increasing pension costs.
    Following a major review of the police pensions system, I am currently considering what longer-term changes, if any, are required.
    Mr. Rendel: I am grateful to the Secretary of State for that answer; it shows that the proportion of money spent on police pensions has almost doubled during that period. Does he recall the answer given to my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) just before Christmas, which said that, this year, four police forces are seeing a reduction in real-terms spending? However, if we take out pensions spending, 14 police forces will see a reduction in real-terms spending. What does the right hon. Gentleman intend to do about that? How will he get more policemen back on the beat?
    Mr. Straw: The answer to the last part of the hon. Gentleman's question is that, as he knows, we have found additional new money—£35 million—for the next financial year, and more thereafter, to pay for the 5,000

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    police recruits over and above the number that will otherwise be recruited. The arrangements whereby the police pension costs form part of each police authority's budget are of long standing; they have some merits in ensuring that police forces concern themselves with, for example, the number of unnecessary medical retirements that they permit. However, I accept that those rising costs throughout the country are of great concern to the police service—as they are to me. That is why we are examining the longer-term future of the pension scheme.
    Mrs. Lait: May I begin by thanking Ministers, on behalf of the people of Penge, for the closed circuit television system? However, although it might reduce the amount of crime on the streets of Penge, I suspect that the residents will feel equally concerned about police numbers, and will be even more concerned when they realise what a large proportion of the Metropolitan police budget goes on pensions. I have listened with great care to the exchange between the Secretary of State and the hon. Member for Newbury (Mr. Rendel). Will the Home Secretary reassure me further that, when that fact is taken with the expenditure on radios to which reference has already been made, the people of Penge, and of Beckenham and the whole of London, will not see a reduction in front-line policing over time because of the costs of radio and pensions?
    Mr. Straw: It is my fervent hope that the circumstances that the hon. Lady desires come about. I also point out to her that, during the whole period between 1992 and March 1998, when the budgets had been set by the Conservative Administration whom she supported, the Metropolitan police lost 2,060 officers. I worked hard to try to stabilise the number of Metropolitan police officers, and, in the year that ended in March 1999, the reduction was not 2,000, but just 21.
    Mr. John Wilkinson: Is it not an impossible situation when the proportion of police funding for pensions continues to increase? Although I welcome the fact that the Home Secretary has admitted that he will undertake a fundamental review of the matter, I urge him to adopt, at the earliest practical date, a fully funded pension scheme for the police service, and to introduce it gradually so that it will not disadvantage serving officers or reduce their pension expectations, but will, in the longer term, provide security for them and their families.
    Mr. Straw: I have already said that, obviously, the changes to the police pension scheme will not disadvantage existing serving officers. We are closely examining the idea of a fully funded scheme, which in principle would be a more satisfactory alternative. The problem that we are up against, to which we have found no solution, although we hope that one may be forthcoming, is that the initial costs—the funding costs— of a fully funded scheme are very substantial and that money would have to be found from somewhere.

    The Tote
    Mr. John Grogan: If he will make a statement about the future of the Tote. [103968]
    The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): We announced last May that the Tote was to be sold. Since then we have been considering, with the help of independent advisers, how and on what terms the sale should proceed, and we intend to announce our conclusions shortly.
    Mr. Grogan: I thank my hon. Friend for that reply. Does he agree that our 59 race courses are a great national asset and that, as an alternative to selling the Tote to the highest bidder, there are great merits in the proposals being jointly advanced by the Tote and the racing industry to set up a racing trust to buy and run the Tote, so maintaining the vital source of income to racing from the Tote and ensuring that in future it is run on a wholly commercial basis for the benefit of the sport as a whole?
    Mr. O'Brien: I certainly agree that our racing industry is a national asset. We are considering the merits of several proposals. The sale options under consideration include a sale to a racing trust, a sale to racing in another way, a sale on the open market and a flotation on the stock exchange. We intend to sell the Tote as a single business, in line with the May announcement.
    Mr. Owen Paterson: That answer was not satisfactory. The Tote was set up by the racing industry. It does not belong to the state. It has never taken a state subsidy, and it should be returned to the racing industry. Does the Minister agree?
    Mr. O'Brien: The Tote will go to the proper and appropriate purchasers or people who provide the state with some funding in return for it. It is right that the interests of racing, of those who work for the Tote and of the taxpayer should all be considered when taking a final decision. We shall announce that decision very shortly.

    Closed Circuit Television
    Mr. Clive Efford: What assessment he has made of the contribution of CCTV to the prevention and detection of crimes; and if he will make a statement. [103969]
    The Minister of State, Home Office (Mr. Charles Clarke): Police operational experience and a number of research studies reveal that CCTV has considerable crime reduction and detection success, particularly when used as part of a wider strategy.
    Schemes funded under the current CCTV initiative will be evaluated to build up a knowledge base of what works best and in what context.
    Mr. Efford: I thank my hon. Friend for that an answer. May I pass on the thanks of Greenwich council and Eltham police for the scheme that is being funded by the CCTV initiative? May I ask him to join me in congratulating Eltham police, who, by using a temporary scheme over Christmas, managed to arrest 10 individuals with the help of evidence that was gathered by camera, in a period when they would usually expect to arrest four or five individuals? Does he agree that this is vital step forward for the police, in that it will enable them to deploy resources more efficiently?

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    However, there is some concern about the ownership of the evidence that is gathered. Does my hon. Friend agree that, to secure public confidence in the long term, there needs to be a degree of openness and accountability about the evidence that is gathered by camera?
    Mr. Clarke: I am grateful for that information and I am happy to join my hon. Friend in congratulating the police in Eltham on the success of their initiative over Christmas. There are many examples of areas where such initiatives have worked very well, but I strongly agree with my hon. Friend that the evidential basis of some of the material that is collected needs—and is being given— very careful examination and assessment.
    Mr. David Ruffley: Is the Minister aware of a recent local crime prevention survey carried out in mid-Suffolk that shows that 90 per cent. of local residents in Stowmarket believe that the introduction of a CCTV scheme in that town centre would enhance local safety? Is he further aware that Mid Suffolk district council in my constituency is considering making a bid this year for the second round of challenge funding? In light of that, can the Minister assure me today that, on receipt of a bid, he will bear in mind the fact that Stowmarket is the only market town of its size in Suffolk without a CCTV scheme, and seriously consider giving Stowmarket the share of funding that it deserves under the challenge funding scheme?
    Mr. Clarke: I can give the hon. Gentleman that assurance. However, it might have been more in character with his usual graciousness had he acknowledged that the scheme in Bury St. Edmunds that we have announced today has been given to his constituency and is a step forward. It might also have been gracious for a former special adviser to a Conservative Chancellor of the Exchequer to acknowledge that in this one year the Government have given more to CCTV schemes than was given in the whole of the last five years of the Conservative Government.
    I give the hon. Gentleman the assurance that we shall consider carefully the bid for Stowmarket, a place which I travel through frequently on the train from Norwich to London. As I flash past, I shall try to glean what I can to assess the town's crime needs.
    Mr. Bill O'Brien: I congratulate my hon. Friend on the Government's contribution to the introduction of CCTV throughout the community. However, may I press him for more portable CCTVs in communities? My own constituency is asking for such facilities, which would do a tremendous amount to reduce crime in Outwood and Stanley. Will my hon. Friend tell us what provision for portable CCTV is made in the allocation to which he has referred?
    Mr. Clarke: I very much agree with my hon. Friend's points—indeed, a number of the schemes agreed and announced today are portable CCTV schemes. We are currently drawing up the guidelines for the next round in which I hope we shall announce results more regularly— every three months or whatever—than on a year-by-year basis. In the guidelines, we intend to give priority not only to portable CCTV schemes such as those that have been mentioned, but to schemes that focus on rural areas and
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    on parades in out-of-town estates, which have not always been at the top of priority lists. I hope that previous experience will inform the future programme, which remains very substantial over the next two or three years.
    Mr. David Lidington: Given the undoubted effectiveness of closed circuit television in preventing and reducing crime in this country, why do police force figures show that, in the first six months of the current financial year, recorded crime rose nationally by no less than 5 per cent? Why is that happening?
    Mr. Clarke: As I said earlier, the hon. Gentleman will have to wait for the figures tomorrow to see exactly what is happening on recorded crime throughout the country. However, there is no doubt that CCTV can have a major impact in reducing crime in the ways that I described to my hon. Friend the Member for Ealing, Southall (Mr. Khabra). It might be in keeping to acknowledge that the Government are trying to use this important weapon to reduce crime in a way that most Members on both sides of the House would acknowledge is beneficial.

    Wheel Clamping
    Ms Rosie Winterton: What steps he is taking to regulate the activities of private wheel-clamping companies. [103970]
    The Minister of State, Home Office (Mr. Paul Boateng): We have issued a White Paper on the private security industry and propose in it to establish a private security industry authority. This would require wheel clampers to be licensed, and establish a mechanism whereby wheel-clamping firms could be subject to statutory regulations or codes of practice. We are currently considering the responses to the White Paper and will then proceed accordingly.
    Ms Winterton: As I am sure my right hon. Friend will be aware, his answer will delight thousands of motorists who have been the victims of the notorious clamp-and-deliver tactics of unscrupulous cowboy companies. Will he assure me, however, that he will consult not only the wheel-clamping industry, but motoring organisations, the police and local authorities to ensure that any regulation is strong enough to make sure that motorists are no longer subject to the tactics adopted by the modern highway robbers posing as parking enforcers?
    Mr. Boateng: My hon. Friend has been a redoubtable campaigner against the highway robbers and cowboys in the industry. I can certainly give her the assurance that she seeks.
    Mr. John Bercow: I acknowledge that no one in their right mind would attempt to clamp the hon. Member for Doncaster, Central (Ms Winterton), who has been an indefatigable campaigner on this subject. However, will the Minister confirm that, as part of the proposals that the Government intend to introduce, they will speed up the review announced in November by the Secretary of State for the Environment, Transport and

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    the Regions of the procedure whereby the Driver and Vehicle Licensing Agency is able to release the personal details of motorists?
    Mr. Boateng: We are working closely with the Department of the Environment, Transport and the Regions on all these issues. The hon. Gentleman can be assured that that co-operation will continue.
    Mr. Robin Corbett: May I tell my right hon. Friend that cowboy clampers are still demanding money with menaces in many parts of central Birmingham? In some instances, they are trying to seize jewellery and other valuables from those who are caught in dark areas where people park. I urge my right hon. Friend to make the best possible speed in introducing regulations to encourage the proper firms that exercise their responsibilities sensitively, and to clamp down on and put out of business those who act in a hard way and frighten the living daylights out of people.
    Mr. Boateng: My hon. Friend speaks with considerable authority and knowledge on this subject. We are considering a range of options, including criminal sanctions.

    Fire Safety
    Mr. David Crausby: What plans he has to co-ordinate responsibility for the improvement of fire safety. [103974]
    The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): The Government continue to give priority to community fire safety, and there have been recent welcome reductions both in the number of fires and in deaths from fire. We expect shortly to set up a new fire safety advisory board to help maintain the impetus for improvements in fire safety.
    Mr. Crausby: I thank my hon. Friend for that reply. I am sure that he is aware that there are some 60 complex pieces of legislation governing fire safety. Does he agree that a single fire safety Bill would help further the reductions in fires and deaths from fires and, most important, would further assist fire authorities in shifting the emphasis from cure to prevention?
    Mr. O'Brien: I agree with that. We remain committed to introducing a fire safety Bill as soon as parliamentary time allows. One of the aims of that Bill will be to rationalise fire safety legislation, replacing fire safety provisions in various Acts and introducing a general duty of care, to be enforced as far as possible by fire authorities.
    Mrs. Gwyneth Dunwoody: Will my hon. Friend monitor closely some of the aspects of fire reports that are of continuing interest for passengers? Will he, for example, continue to discuss with Eurotunnel the conditions that exist for the safe carriage of passengers, given that there are continuing worries
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    about suggestions that official fire forces might be replaced by people who are employed directly by the authority?
    Mr. O'Brien: I will certainly ensure that the Home Office keeps fully informed of the situation regarding the channel tunnel. We want to ensure that all passengers can travel in that tunnel and that all freight can be carried in it in as safe an environment as possible.

    Witness Protection
    Dr. Desmond Turner: What measures he is taking to ensure that witnesses in magistrates courts are adequately protected. [103975]
    The Minister of State, Home Office (Mr. Paul Boateng): The victim support scheme will be extending its activities to the magistrates courts. That will be of considerable assistance to witnesses who are victims appearing in magistrates courts. To enable the scheme to do this, we have increased incrementally by 50 per cent. to £19 million the grant made available to it, so that it can establish witness support services in all such courts by April 2002.
    Dr. Turner: I thank my right hon. Friend for that reply. As I am sure he is aware, there is a very real and considerable problem of intimidation, not only of those who are victims as well as witnesses, but of witnesses, and not just in magistrates courts but in Crown courts. There are many and constant examples in my constituency. In a serious murder trial, for example, witnesses were literally in fear for their lives. The police do not have the resources to protect every witness, so in areas of my constituency there is a climate of fear: people dare not give evidence or give written statements for fear of reprisals. Will my right hon. Friend please undertake to review witness support and, in particular, protection?
    Mr. Boateng: The police rightly give considerable priority to witness support and protection. We support them in that with the resources necessary to that end. More than that, it was this Government, as my hon. Friend knows, who introduced the Youth Justice and Criminal Evidence Act 1999 precisely in order to address the problem that he has identified, which manifests itself in magistrates courts, including in cases of domestic violence and neighbour disputes. It is very important to ensure, as we have, that magistrates courts have a battery of protection that they can extend to witnesses. Without such support, we shall be unable effectively to reduce crime in the way that we are determined to do.
    Mr. Nicholas Soames: The right hon. Gentleman clearly and rightly takes this matter very seriously. Does he agree that witness intimidation hinders the good order and administration of honourable justice not only in murder cases, to which the hon. Member for Brighton, Kemptown (Dr. Turner) drew the House's attention, but in lesser cases? Does the Minister also agree that the only way in which we can prevent that is by ensuring more people on the ground, better planning and

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    layout of magistrates courts and the provision of areas where people can be protected while waiting to give evidence?
    Mr. Boateng: The hon. Gentleman makes a valid point. The security of magistrates courts, in relation to the protection of both victims and witnesses, can be enhanced enormously by proper layout and design—indeed, the number of escapes can be reduced by effective layout and design in cell and dock areas. We are liaising very closely with the Lord Chancellor's Department on existing and new build in order to ensure that we take such matters into account, to protect witnesses and victims and reduce the number of escapes in transit.
    Fiona Mactaggart: As the chair of the all-party voice group, I know how welcome the new witness protection measures are to people with learning disabilities who have been victims of abuse. One issue about which they are particularly concerned is training of the judges and magistrates who decide on cases involving victims who have learning disabilities. Can the Minister tell us of any progress on judicial training?
    Mr. Boateng: I can certainly assure my hon. Friend that we take judicial training very seriously. We work closely with the Judicial Studies Board, which, as she will appreciate, is an independent body. I assure her that the board, the Home Office and—important in this context— the Department of Health are well aware of the importance of ensuring that special needs are taken into account. That applies to learning disabilities. We have found that those who work for some of the charities engaged in work involving learning disabilities are very often the best people to provide such training. We are actively exploring that avenue in order to ensure that the judiciary gets the benefit of hearing from those who have to work at first hand with such problems.
    No one should be denied justice simply because they are living with a disability. That applies particularly to learning disability. All too often, people are led simply to dismiss the evidence of those who are grappling with disabilities—and doing so with great heroism and courage. Such people deserve, and will get, the full protection of the law.
    Mr. David Heath: Does the Minister appreciate that the problem of petty intimidation of witnesses applies equally in rural areas such as the one I represent? I have seen several cases recently in small villages of people being afraid to come forward with the evidence that the police need. Does the right hon. Gentleman agree that that fear is exacerbated by the lack of visible police presence, reduction in patrols and the inability successfully to mount prosecutions? Will he
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    assure me that every effort will be made to give communities the support that they need to provide the evidence that the police require to put criminals away?
    Mr. Boateng: Both rural and urban areas suffer from this problem. My fellow Minister of State, my hon. Friend the Member for Norwich, South (Mr. Clarke) and I work closely on issues of sparsity and criminal justice. The hon. Gentleman's point will certainly be borne in mind.

    Crime Figures (Lancashire)
    Mr. Peter L. Pike: If he will make a statement on the latest crime figures for Lancashire. [103976]
    The Secretary of State for the Home Department (Mr. Jack Straw): The latest figures, covering the 12 months to September 1999, will be published tomorrow. However, I can tell the House that, for the period to March 1999, there was a 10 per cent. reduction in recorded crime in Lancashire.
    Mr. Pike: I thank my right hon. Friend, who is a neighbour of mine, for that answer. Is not such news good for Lancashire, and does it not show that the Government's policies are working: the police, local authorities and communities are working to ensure that the mindless minority are not allowed to destroy the lives of the law-abiding majority?
    Mr. Straw: The record of Lancashire police is exemplary. It shows the good sense of the Government's policies in providing full backing to the police and local authorities. I am delighted to note that in a financial settlement that was below the average for the current financial year, Burnley and Padiham are to get 14 more front-line police officers in the next financial year.
    Mr. Michael Jack: The chief constable of Lancashire is to be congratulated on the use of her resources to achieve such an excellent reduction in crime. Does the Home Secretary agree that the fact that the chief constable has now had to make application to the crime-fighting fund for more police officers is a clear indication that her existing police budget is not the source of additional manpower for her fight against crime?
    Mr. Straw: I am delighted that the chief constable of Lancashire is making application to the crime-fighting fund for additional officers. I am also pleased to place on record what Chief Constable Pauline Clare said when the settlement for next year was announced on 26 October:
    "An increase of 4 per cent. is more than we expected and should be sufficient to match anticipated increases in pay and inflation. It should also help us to maintain police officer numbers."

Points of Order
3.31 pm
Ann Clwyd: On a point of order, Madam Speaker. Have you had any indication that the Government intend to make a statement on the lifting of the European Union arms embargo on Indonesia? That is a contentious issue in the House. The Indonesians owe us £1.5 billion in export credit guarantees. Theirs is still an unstable regime. The United States, by contrast, is refusing to lift the embargo until the Indonesians co-operate with the war crimes investigations, and until the refugees return from West Timor to East Timor. It is important that the Government explain why they have supported the lifting of the embargo, whereas some other EU countries have opposed it.
Madam Speaker: I have to tell the hon. Lady that I have not been informed by a Minister that the Government are to make a statement on that issue. Those on the Treasury Bench—perhaps I should say the Government Front Bench, because some of the media do not know what I mean by Treasury Bench—will have noted the hon. Lady's concern, and we may hear something in due course.
Mr. Julian Brazier: On a point of order, Madam Speaker. Has the Secretary of State for Defence asked to make a statement setting the record right as regards his statement last week on the ruling of the European Court of Human Rights on homosexuals in the armed forces? He stated:
"British Governments have always complied with such rulings".—[Official Report, 12 January 2000; Vol. 342, c. 287.]
As recently as 1988, a British Government derogated unilaterally from a ruling under the European convention on human rights relating to the interrogation of prisoners.
It may be the Secretary of State's intention to come to the House to make it clear that the handling of such issues by earlier Governments is not the problem: it is the fact that the Government decided last year to incorporate the convention into British law—
Madam Speaker: Order. I fear that the hon. Gentleman is seeking to prolong an exchange that we had last week. That is not a point of order, and he will have to pursue his interest by other means.
Mr. Jeremy Corbyn: On a point of order, Madam Speaker. Have you received any requests for a further statement from the Home Secretary on the condition of General Pinochet? Last Wednesday, the Home Secretary made a statement to the House in which he outlined his view that Senator Pinochet was not fit to stand trial. There seemed to be some discrepancies in that statement, according to a report in The Observer yesterday; and today the Home Secretary has placed in the Library a letter from Professor Grimley Evans.
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I have an early-day motion asking for the release of the medical information, and there is a request from the Spanish authorities for an independent medical examination of Pinochet. This man is accused of serious crimes against humanity under the terrorism convention, and I believe that it would be right and proper for the Home Secretary to return to the House to make a further statement, so that these discrepancies can be explored.
Madam Speaker: I have not heard that the Home Secretary is to make a statement on that issue today, but if I recall correctly, the last time the Home Secretary was at the Dispatch Box on that issue he said that he hoped to make a statement to the House as soon as possible.
Mr. Michael Jack: On a point of order, Madam Speaker. Last week, you issued guidance to Ministers, in particular, suggesting that answers should be shorter so that we could get through more questions. In giving his first answer today in Home Office questions, the Minister of State took 11 minutes to say precisely nothing, as he seemed incapable of replying to the question put to him by my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe). May I ask you, Madam Speaker, in the interests of education and training for Ministers, to provide details and data relating to particularly long questions, and guidance so that Ministers' performances may be improved?
Madam Speaker: I must say that I noted that that first question took quite some time. I should like to run seminars on how to answer questions, but also, sometimes, on how to ask them. I hope that the House will note both that those on the Government Front Bench should answer questions far more briskly, and that Back Benchers should take it on themselves to sit in the Tea Room at lunchtime and go through their questions so that they are precise and do not ramble on. Many are Adjournment debates rather than questions.
Mr. Tam Dalyell: On a point of order, Madam Speaker.
Madam Speaker: The hon. Gentleman is always very brisk with his questions.
Mr. Dalyell: Perhaps I could make the first contribution to your seminar, Madam Speaker, by asking whether you have received a request that Question 36 should be answered. It dealt with the issue of WPC Yvonne Fletcher, and asked whether there had been any progress since our ambassador went to Tripoli.
Madam Speaker: The Home Secretary did not indicate to me today that he had selected that question to answer. As the hon. Gentleman knows, that is done from time to time at the end of Question time. I am afraid that he must bide his time, and perhaps table the question again in another form. He is very ingenious, and no doubt capable of doing that.

Opposition Day
[2ND ALLOTTED DAY]
Opposition Day

  Pensioners
  Madam Speaker: I have selected the amendment in the name of the Prime Minister.
  3.37 pm
  Mr. Steve Webb: I beg to move,
  That this House believes that an increase of 75p in April 2000 in the rate of the retirement pension would be inadequate.
  Only in the House of Commons would this motion be controversial. The idea that paying retirement pensioners an extra 75p from next April could possibly be adequate would not occur to most of the pensioners in our constituencies, or, indeed, to non-pensioners. Here, it will divide the House, and, I suspect, may even be defeated. We live in hope.
  Pensioners to whom I have talked—and, I am sure, those to whom many other hon. Members have talked— are insulted by the offer of 75p next April. They are not only insulted, however; they are resigned, which I find all the more worrying. They are resigned because they have reached a point at which they expect nothing better. Sadly, successive Governments have left pensioners feeling that they cannot trust any of the whole lot of them, and that this is no more than they could have expected.
  It is not only the Liberal Democrats and some nationalists who believe that 75p is inadequate. I established on Thursday evening that 83 Labour Members had signed an early-day motion whose wording is identical to this motion. If we exclude the payroll vote, that means that approximately one in four Labour Back Benchers considers 75p inadequate, as well as the many more who think the same, but did not add their names. The Minister may wish to dismiss us as an Opposition party, but I wonder whether he wishes to dismiss the views of about a quarter, or perhaps more, of his own Back Benchers.
  Those 83 hon. Members include former Ministers— and, indeed, one person who served in the Cabinet in this Parliament. We are talking not just about the awkward squad, but about some very senior as well as some newer Members. If the 83 were to vote for the motion along with the Liberal Democrats and the nationalists, the Government's majority would be decimated, provided that one other party voted with us.
  Mr. Andrew Robathan: Not "decimated".
  Mr. Webb: Yes, literally decimated. The Government's majority would be reduced from about 170 to about 17.
  Sir Sydney Chapman: The definition of "decimation" is reducing by a tenth, not to a tenth.
  Mr. Robathan: Exactly, Professor.
  Mr. Webb: I am prepared to argue that it means reducing to a tenth, but I will not press the point.
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  The crucial question is, how will Her Majesty's official Opposition vote? We wait with bated breath to find out. Given that, had they been in power, 75p is all that pensioners would have got, one would expect them to vote against the motion. So on the ground that the Conservative party does not actually have a pensions policy, it should abstain. However, on the ground that the opportunist thing to do would be to rip up what it used to do and to say the opposite, it should vote with us; so there are all those possibilities. This afternoon, we look forward to finding out what the Tories will do.
  The motion is about far more than the uprating. It is about whether the basic state pension has a future at all. The critical point is this: in a year when the Government had spare cash not just for everything else, but for pensioners and, indeed, for pensioner incomes, they thought of every way to spend it except putting it on the state pension. If they will not put it on the state pension in a year when they have plenty of money, will they ever if times are hard? If we do not stop the rot now, there will be no pension left to save.
  To give an idea of how extraordinary the position in which we find ourselves is, I consulted the Library about what has happened to the state pension not just in the past 20 years, but since the war, relative to average earnings and relative to the poverty line. The results were astonishing and cast new light on what has been happening in the welfare state since the war.
  When the pension came in, it represented about 14 per cent. of average earnings. That rose to 19 per cent. in the mid-1960s and stayed at around 20 per cent. until the early 1980s, when Mrs. Thatcher got her hands on it. Now it is about 15 per cent. In 30 years or so, it will be just 7 per cent. Why does that matter? It matters because pensions are about smoothing the transition from paid employment to retirement. If pensions lose touch with the earnings that they replace, they will achieve nothing.
  I give one example. I have said that pensions were about 15 per cent. of average earnings. Hon. Members earn a minimum of £47,000 a year. Fifteen per cent. of that is roughly £7,000. Could any of us imagine retiring on £7,000? Clearly not. Of course, the pension in absolute terms is not £7,000: it is £3,500.
  That is what we are increasingly condemning our fellow citizens to. It will get worse, not better because, by the time the Government state second pension comes in, the basic state pension will be half of income at the poverty line, or, in today's money, about £39 a week. The Government like to describe the state pension as the foundation of income in old age, but it is clearly a sinking foundation.
  Not so long ago, the Labour party used to think that pensions should have something to do with earnings. This morning, I was leafing through Hansard from 13 April 1983. I came across the Labour spokesman's views. Succinctly and powerfully, he said:
  "Although pensions being tied to prices might look good for electioneering slogans, it is catastrophic for people who are now aged between 30 and 50 who believe that they are paying into a scheme that will provide them with a decent pension. That will produce major problems in the future."—[Official Report, 13 April 1983; Vol. 40, c. 882.]
  What would happen under a Blairite regime to a firebrand left-winger such as that? Surely he would not find a place in the Government; he certainly would not as pensions

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  Minister. It is a funny old world, as I am sure the right hon. Member for Birmingham, Perry Barr (Mr. Rooker) would agree.
  Today, we are considering not just the value of the pension relative to earnings. Often, the Government will say that the pension is unaffordable. In last Tuesday's debate, they came up with some huge figure—tens of billions of pounds—on linking the pension to earnings and said that that was clearly unaffordable, but the answers that I have from the Library show that, in the 30 to 40 years after the war, successive Labour and Tory Governments not only linked the pension to earnings, but did vastly better. The pension rose from 13 per cent. of average earnings just after the war to 20 per cent. in the early 1980s—hugely better than earnings indexation.
  Those 30 to 40 years were not years of unparalleled boom, yet successive Governments found the money to do that. How can it be that a prosperous country such as ours cannot find the money to do it now, when successive post-war Governments did? Could it be to do with political priorities and the fact that, incredibly, the basic pension is still not a priority?
  We must consider a second aspect of the pension's value—its value relative to the poverty line. Although the Minister is very fond of saying that the pension was never intended to be enough to live on, when it was introduced—when it was worth 108 per cent. of the national assistance line—it was exactly that. If one had only a pension, one was not entitled to a top-up, because the pension was supposed to be enough to live on.
  For most of the post-war period, the pension has been worth about 95 per cent. of the poverty line, or just a shade below. In the past year or two, however, there has been a drastic fall in its value. For someone who is newly retired, the pension is now worth 86 per cent. of the poverty line; amazingly, for an 80-year-old, it is 79 per cent. of the poverty line—which is a full £18 per week short of the poverty line. The consequence has been a huge and growing gap between the pension and the poverty line.
  How is the gap to be filled? According to Ministers, for most people, it is to be filled by voluntary savings.
  Mr. Dale Campbell-Savours: I have been listening very closely to the hon. Gentleman's comments. However, I should tell him that—I say this in the Chamber, as it is a contempt of the House to mislead it—last year, from my 69,000 constituents, we received only six letters complaining about the level of the state pension. With the introduction of the pension guarantee, much of the argument on raising the state pension has effectively been destroyed. The hon. Gentleman has now been speaking for seven minutes, but has not even mentioned that.
  Mr. Webb: The hon. Gentleman may be sure that I shall mention it. Furthermore, I think that he has received so few letters on the issue because people do not think that there is any point in sending one. As I said, pensioners do not trust any of us on the issue because they have been let down by so many of us.
  The gap between the basic pension and the poverty line has to be filled. However, if it is to be filled by people's voluntary savings, and if they will receive only a
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  means-tested top-up—which the hon. Member for Workington (Mr. Campbell-Savours) just mentioned— why should they bother to save?
  Currently, someone retiring with £40,000 in savings should not have bothered to save that money, as it will buy him or her a pension top-up and payment of rent. The way things are going, if we retire with £100,000, we need not have bothered; expressed as a lump sum, it is only the gap between the basic pension and the poverty line. Why should anyone save in such circumstances?
  The phrase in the Government's amendment to the motion that we should support
  "the Government's commitment to letting pensioners benefit more from their savings"
  is ludicrous. The Government are discouraging savings with every step that they take.
  Why is this year's pension rise so low—only 1.1 per cent? In the year to September, the inflation rate was precisely 1.1 per cent.—whence the pension increase of 75p was derived. The increase will give pensioners another £39 a year, to meet all the price rises facing them. However, let us consider their various bills.
  Last April, I tabled a question on council tax increases, and was told that, net of all rebates and benefits, the typical pensioner had to pay an extra £40 in council tax. As the same funding formula will be used this April, the increase could well be similar. Paying that one increase will thus require all a pensioner's pension increase, leaving him or her nothing to pay for other price increases. As the motion states, the 1.1 per cent. increase is inadequate because it does not reflect the rise in pensioners' cost of living. However, the situation is even worse.
  Inflation was low because mortgage rates and interest rates were decreasing. The consequence of those decreases has not only been a poor pension increase, but decreasing savings incomes for pensioners. Pensioners were therefore hit with the double whammy of decreasing incomes, caused by decreasing interest rates, and a poor pensions uprating.
  It is one thing to say that 75p is not enough, but another to suggest what should be done. There are two aspects to our proposals. First, as pensioners are buying a different basket of goods, indexation should relate to pensioners' true cost of living and not to the average cost of living of the population overall. The Government should therefore construct a proper pensioners' price index. Although there is already a pensioners' price index, incredibly, it does not include housing. It therefore does not provide a proper basis for indexing pensions.
  I hope that the Minister will tell us that the Government will determine pensioners' true living costs and index pensions on that basis.
  Mr. Dafydd Wigley: I support the hon. Gentleman wholeheartedly on the need for a relevant index. Does he accept that that would not in itself make up for the loss that pensioners have suffered since 1980–81, when the change was made? Does he also accept that we need to bridge that loss for pensioners as far as we can and as quickly as possible?
  Mr. Webb: The right hon. Gentleman is right. I was going to describe the second part of the package.

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  The oldest pensioners have lost most from 20 years of price indexing the basic state pension. Those who retired when the link was broken have had nothing but price indexation for 20 years. Inflation has eroded their savings. Many of them are elderly widows on low incomes. That is why our party wants substantial additional resources to be focused on the oldest pensioners—the over-75s and over-80s. We want a targeted approach that does not rely on means testing, but which would help to deal with the problem that the right hon. Gentleman raised.
  The hon. Member for Workington referred to how the Government's other policies have helped pensioners. Those policies are listed at considerable length in the amendment. Let us take a look at some of them. The amendment stretches the truth considerably on the tax guarantee, saying that it
  "now means that two thirds of pensioners now pay no income tax".
  The use of the word "now" twice is proof that nothing has happened. One would expect the number of pensioners paying income tax next year to be only a fraction of the number the year the Government came to office, but the facts show that the figure is the same. So much for a tax guarantee. The Government can guarantee only that as many pensioners will be paying tax as ever.
  What about the winter fuel money? It might as well be called the winter biscuit money or the winter tea money, because it has nothing to do with fuel. Clearly it is welcome, but why was it not put on the pension and related benefits? When the Government had £500 million—or whatever the figure was—for pensioners, why did it go on winter fuel money? Winter fuel money does not have to be indexed, so next year it can be £100, the same as this year. Who knows whether a future Government will carry on with it? Have we voted for a winter fuel payments Act? Of course we have not. The change did not need primary legislation because it is a social fund payment. I wonder whether hon. Members who are older than 60 realise that they are the beneficiaries of social fund payments. That is how easy the measure was to introduce and that is how easy it will be to do away with. Had the money been put on the pension, it would at least have had to be indexed. Although it might have been phased out slowly, it would have been better on the pension.
  The Government sometimes say that our proposal for age additions is poorly targeted, but what else is paying £100 tax free to everyone in the country older than 60? It is scarcely a targeted strategy. The Government are guilty of inconsistency.
  At least the Government have listened to us about the additional needs of older pensioners when it comes to television licences. Their policy is welcome to that extent, although there seems to be no explanation of why pensioners are not being given the money to spend for themselves.
  The minimum income guarantee is a good benchmark, but to coin a new Labour phrase, it should be for the few, not the many. It should be a residual measure, catching the few who fall through the safety net. It should not be a mass approach for hundreds of thousands of pensioners. The Government tell us that in 2047 all will be well, but we have slightly more urgent priorities. Critically,
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  one third of those entitled to the so-called guarantee do not get it. Money on the pension would reach them, but the so-called guarantee is not guaranteed.
  Mr. John Bercow: On the subject of effective targeting, does the hon. Gentleman agree that it would be very wise, as my right hon. Friend the Leader of the Opposition recommended, to abolish the 65-year age restriction for claimants of invalid care allowance and the carers premium, thereby helping 55,000 of the poorest pensioners in the country?
  Mr. Webb: I have a lot of sympathy with the hon. Gentleman's point, which is why I am curious as to why the Leader of the Opposition did not do that when he was a social security Minister.
  The objection to such increases in the pension is usually that they would not benefit the poorest pensioners. It is sometimes said that if extra money is put on the pension it will just come off their income support, but that ignores three important, deserving and needy groups of pensioners, all of whom would benefit from a pension rise.
  The first group are the 750,000 pensioners—as estimated by the Government—who are entitled to income support but do not claim it, typically missing out on £1,000 a year. They would benefit in full from a pension rise, and they are the poorest pensioners in the land, bar none. In addition, there are 600,000 pensioners who live below the income support line but who have capital above the measly £8,000 threshold. I should point out that £8,000 is not very much life savings. Most of us would be concerned if we started our retirement with only £8,000 accumulated. However, that is enough to deny someone the so-called guarantee. Those people would get a pension rise in full.
  The third and final group—the group who write to me most, from all around the country—are those who have small amounts of savings, taking them beyond the reach of the means-tested benefits system. They get nothing from the so-called guarantee; they get pension rises in full. If the Government really believe, as they say in the amendment, in
  "letting pensioners benefit more from their savings"
  they will reward those people who have saved, and not penalise them.
  How would our proposals—pensioner price indexation and extra money for the older pensioners—be paid for? Has anyone looked at the value of the national insurance fund recently? The balance is getting on for £15 billion, and the annual surplus is in excess of £1 billion. The package that I have just proposed would cost about half that. These are modest demands, yet the vast amounts in the national insurance fund suggest that the money is there. It is about priorities. The specific figures that we have identified are a £5 increase for those over 80 and a £3 increase for those over 75—as a down payment, with more to come.
  Mr. Bill Rammell: I have sympathy with the hon. Gentleman's view that we need to be doing more for pensioners. However, did I correctly understand him to say that there is a £15 billion surplus, half of which would be taken to fund his party's proposals? Could he clarify that?
  Mr. Webb: I apologise if that was unclear. The balance is £15 billion, and there is an surplus of more than

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  £1 billion every year. The package would cost half the annual surplus—about £0.5 billion. In other words, the balance in the account would continue to go up even our proposals were implemented.
  I have outlined what I believe should be done. It is not enough for Opposition parties—as some are wont to do— to say how terrible things are without putting forward a credible alternative. [HON. MEMBERS: "Like the Liberal Democrats."] We have proposed what we would do today.
  The motion is simply about this April's pension rise. As regards the basic state pension, the Government have said that they will carry on with what the Tories did. Pensioners will get 75p this April unless the House can convince the Government that that is unacceptable.
  Mr. Frank Field: I was one of those who willingly signed the relevant early-day motion, and I will continue to do so in future. I am sure that the hon. Gentleman is aware that I am not the only Labour Member to sign it. While one is pleased and proud with what the Government have done up to now, many of us had hoped that the Government would be doing even more by the time of the general election. That is why we signed the motion.
  Mr. Webb: I am grateful for the right hon. Gentleman's support, and we share his hope that the Government will do more before the election. We would like them to do something this April, rather than let pensioners have another year of inadequate incomes.
  Mr. Simon Hughes: My hon. Friend has expressed the views of the parties, and he answered the question from the hon. Member for Workington (Mr. Campbell-Savours). What is the view of the pensioners' movement and pensioners' organisations? In my experience, this is one of the two main pensioners' issues that all the pensioner groups make the most representations about. They are livid that the Government do not understand how measly their proposal for this year is.
  Mr. Webb: My hon. Friend is right. Not long ago, I addressed the national pensioners' convention in Blackpool—an audience of 1,500 pensioners. They are calling for earnings indexation and a substantial increase in the pension for older pensioners, in line with our arguments. We are finding that our arguments are gaining resonance, and pensioners are concerned that people are out of touch.
  Mr. Jeremy Corbyn: I have a great deal of sympathy with what the hon. Gentleman has said. In his assessment of pensioners' living standards, has he made any calculation of the increasing costs imposed on the elderly in day centre and home help charges and all the other charges made by local authorities of all parties throughout the country? Obviously, those charges affect the living standards of a specific group of people who used to have to rely on an inadequate pension and now have to rely on an inadequate pension minus the charges.
  Mr. Webb: The hon. Gentleman is absolutely right. That is exactly the sort of item that should appear in the
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  index of goods that we take into account when we consider what should happen to pensions, even though it has no impact on the retail prices index.
  In a year in which the Government had money for pensioners, they put nothing into the pension. A sentence of death is hanging over the state pension. By our votes this evening, we have a chance to bring it a reprieve.
  4 pm
  The Minister of State, Department of Social Security (Mr. Jeff Rooker): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
  "notes that the Government inherited a situation where increasing numbers of pensioners were living in poverty and where, if nothing had been done, one in three people would have retired on to means-tested benefits by the middle of this century; congratulates the Government on the start it has made in dealing with these problems; applauds in particular the introduction of the Minimum Income Guarantee, benefiting one and a half million pensioner households, and welcomes the Government's commitment to raising it in line with earnings for the rest of this Parliament and to conducting a take-up campaign to ensure that pensioners get what they are entitled to; supports the Government's commitment to helping pensioners, including the restoration of free eye tests and the new winter fuel payments, which benefit over seven million pensioner households and will be paid every year from now on; welcomes the Government's commitment to extending further help with pensioners' needs, including free television licences for people aged 75 or over from next autumn and the extension of concessionary public transport fare schemes; supports the Government's commitment to letting pensioners benefit more from their savings through the minimum tax guarantee which now means that two thirds of pensioners now pay no income tax; and welcomes the Government's plans to reform pensions, through the new stakeholder pensions and second state pension, so that everyone who puts in a full life of working or caring will in due course be able to retire on an income above means-tested levels.".
  I welcome this debate—one of the key debates for the Liberal Democrats. The subject, which they have chosen, is important to the Liberal Democrats here and to the Government, but it clearly not important to 72 per cent. of Liberal Democrat Members, as they have not bothered us with their attendance: a factor that they can explain in due course to their constituents.
  Mr. Tom Brake: Cheap.
  Mr. Rooker: Oh, yes. We will have some cheapness today.
  I regret the fact that I shall have to use some figures and statistics today; I shall try to keep them to a minimum but, in rebutting some of the points made by the hon. Member for Northavon (Mr. Webb) it is inevitable that I shall have to use some. As the hon. Gentleman said, the motion deals only with the supposed inadequacy of the 75p increase. The rest of what he said is not in the motion. It is on the record, but that is not the same as presenting a motion to the House that can be debated.
  The hon. Gentleman did not tell us what is quite clear: that the Liberal Democrats have changed their policy since the general election. We make no apology for fulfilling our manifesto commitment—and indeed going beyond it. It is well known that the commitment on which we were elected was to use the basic state pension as the building blocks of pensioner income and to raise it at least in line with prices. That has been done for three years.

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  On page 49, the Liberal Democrat manifesto—I am not taking this out of context; I shall quote the whole sentence—said:
  "The basic state pension will remain indexed to prices."
  That is exactly what the 75p is. The manifesto also said:
  "We will create an additional top-up pension for pensioners with incomes below the income support level. This will be indexed to earnings".
  That is exactly what the minimum income guarantee is. As my right hon. Friend the Chancellor has said on more than one occasion, it will continue to be index-linked to earnings.
  The Government have put into effect two key planks of the Liberal Democrat manifesto, and we are being held to account and complained against today with regard to one of them. I am not sure whether there has been a change in Lib Dem policy.
  Mr. Paul Burstow: Yes.
  Mr. Rooker: Oh, there has.
  Dr. Jenny Tonge: Will the Minister give way?
  Mr. Rooker: No, I must make a bit of progress. I have not actually started my speech yet. I made those introductory remarks to get the tone of the debate right on the matters on which we are being attacked, one of which is pensioner incomes.
  The hon. Member for Northavon sometimes talked about the basic state pension and sometimes about total pensioner incomes, although he never quite put it that way. If any right hon. or hon. Member knows a pensioner who lives on an income of £66.75 a week—the basic state pension—and who has no capital over £3,000, it is their bounden duty to ensure that he or she gets the benefit of the minimum income guarantee. Everywhere I hold meetings—including pensioners' convention meetings—I say, "Hands up, anybody who is getting only £66.75." I know that that is slightly unfair because, by their nature, such meetings may not be attended by the poorest, but so far, no one has put their hand up.
  The Government are deliberately targeting resources on the poorest pensioners, but the reality of pensioner incomes is different. The average income for a pensioner couple now, on 1996–97 figures—the latest ones, which were published in 1998 in the pensioner income series, although we will have more up-to-date figures by the end of the month—is £248 a week. The average income for a single pensioner is £129 a week.
  It is true that there is a difference with age. For couples in which the male is aged over 75, the average income is £226 a week, and for the others it is £259 a week. It is a fact that, as pensioners get older, their income falls. Among single pensioners, the average income for men is £141 a week, and for women it is £126. It is a myth that the generality of pensioners exist on £66.75 a week.
  Mr. Simon Hughes: No one is saying that.
  Mr. Rooker: The whole thrust of the speech by the hon. Member for Northavon was directed towards perpetuating that myth.
  Mr. Corbyn: My right hon. Friend the Minister will have heard my intervention in the speech by the
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  hon. Member for Northavon (Mr. Webb). In the assessments made by my right hon. Friend's Department, what examination has been made of the cost of living index as it relates to pensioners in terms of transport costs, increased charges imposed by local authorities and the loss of former public facilities that now have to be paid for privately? All the evidence that I have seen suggests that pensioners are becoming significantly worse off because of cuts in local services.
  Mr. Rooker: I say to my hon. Friend genuinely that the whole range of income is taken into account. I am giving average figures, which are the only ones any of us can give unless we use an individual example. In many ways, we succeed or fail in this place by giving individual examples of our constituents, but when we make a global assessment, we have to use averages based on pensioner incomes and expenditure. The factors that my hon. Friend mentioned are taken into account. We must remember that averages can be misleading. However, that does not alter the fact that the figures that I have given show that average pensioner incomes are now totally different to what they were 20 years ago.
  Mr. Simon Hughes: I am sure that the Minister understands that, even given the Government's present policy of the minimum income guarantee or the policy that he is right to say that we had at the last election— although we have moved on since—of a minimum basic income, a minority of pensioners do not get anything above the basic state pension. Will he confirm that there has never been a 100 per cent. take-up and that there probably never will be? If we are to meet the needs of the poorest pensioners, we must do something other than keeping the pension down and getting pensioners to make up the difference by applying for other benefits. Many people refuse to apply for those other benefits because they fear means testing and see it as degrading.
  Mr. Rooker: I accept the point. As the hon. Gentleman knows, we have three sets of benefits. We have the means-tested income benefits and the minimum income guarantee, for which we will shortly announce a Government-led, national take-up campaign. It will be a unique campaign for a Government to run.
  However, many other benefits are not income related, yet their take-up remains a problem. For example, attendance allowance take-up by pensioners is about 40 per cent. of what we think that it should be. It is difficult to drive a take-up campaign on benefits that are not income related, but the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) is right: the Government have a moral obligation and duty to target resources on the poorest pensioners. The campaign will cost several million pounds, and we shall announce the details shortly.
  Mr. Campbell-Savours: My right hon. Friend gave some interesting statistics earlier that may surprise many people outside the House. Will not the figures for 1996–97 be substantially higher than those that he gave? Are there any projections about what those figures will be? All hon. Members want the state pension to be increased substantially, but the amount of correspondence

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  that we receive on the level of the base pension has diminished. We need more accurate statistics that show the truth of what is going on in the country.
  Mr. Rooker: My hon. Friend is right to say that the figures will have changed from those that I quoted. However, the new pensioner income series figures for 1997–98 will be available before the end of the month, and the Department of Social Security will publish a paper on pensioner incomes shortly afterwards.
  I will not go into the details, but a pensioner in my constituency made an inquiry of me last Friday evening. I had not met the gentleman before but, in the course of our conversation, I happened to see the pension forecast made for him just before he retired in May last year. His basic state pension was £66.75. He had a full, 100 per cent. national insurance pension after working in the engineering industry. The salaries that he had received were not massive, as he was not involved in highly skilled work. He had almost £6 in graduated pension from the system operating between 1961 and 1975, and his SERPS pension was well over £50.
  My constituent's income was therefore more than £120—almost double the basic state pension. That is typical of three quarters of the people who are retiring now: they do not retire only on the basic state pension, as they also have the benefit of SERPS and the other pension. I shall deal with those receiving only the basic state pension shortly.
  Average pensioner incomes have risen in the past 20 years, but the gap between the poorest pensioners and the most well-off has widened significantly. The incomes of the least well-off 20 per cent. of single pensioners have risen by only 28 per cent. in real terms, whereas the incomes of the richest 20 per cent. of pensioners have increased by 76 per cent. in real terms.
  The main reason for the improvement in many pensioners' incomes has been the growth in incomes from occupational pensions and from investment. In 1979— three years before the left-wing firebrand's remarks referred to by the hon. Member for Northavon—43 per cent. of pensioners had occupational pensions. By 1996–97, that figure had risen to 65 per cent. Occupational pensions have been a massive success in this country, and the credit for that goes to all the parties and individuals involved. The contribution from Governments can be seen in the tax advantages associated with the schemes.
  Since 1979, there has been an increase in real income from occupational pensions of 162 per cent. That is a very substantial increase, and the average amount of investment income received by all pensioners has doubled in real terms. The proportion of pensioners dependent on means-tested state benefits was 40 per cent. in 1996–97, including 28 per cent. of those who were recently retired. So about a quarter of today's pensioners are coming out of a lifetime of work on to the means test. That is a serious situation, which no Government can ignore. There is an overwhelming case for ensuring that we take effective action in respect of those pensioners, and that is what we have tried to do.
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  I suppose, when I look around the Chamber, that very few understand more than I do the feelings about the links between the basic state pension and prices rather than earnings.
  Mr. Campbell-Savours: The Rooker-Wise amendment.
  Mr. Rooker: It has nothing to do with that.
  When that link was introduced by the previous Labour Government—much to their credit—it operated for only four years, and was calculated wrongly for three of those four years. However, there is no doubt that it gave pensioners a real increase in the basic state pension.
  Of course, there was no state earnings-related pension then: SERPS effectively started accumulating only from 1978. We were in a different situation. Nobody could have given the kind of total incomes that pensioners receive today, even in the values of 1979.
  There were many years in which the basic state pension did not increase at all—1956, 1957, 1959 and 1960. It should have gone up in May 1964, but it did not; it should have gone up in November 1970, but it did not. I do not want to make a party political point, but a Conservative Government were in power on every one of those dates. So it was not the norm to have an annual increase and in some years—it happened in 1975 in particular—there were two increases because the Labour Government needed to make up the gap that had occurred before they came to power.
  There are various beliefs that pensions have risen every year, that they have always been linked to earnings and that the basic state pension has always been enough to live on. Those are all myths; they are untrue.
  Mr. Webb: Does the Minister accept the point that I made based on the Library's figures? History shows that, since the war, the pension has not simply been earnings-indexed but has risen as a share of average earnings from 14 to 20 per cent. The Minister may be saying that pensioners should be grateful for an annual increase but, since the war, Governments have done better than providing earnings indexation over a period of decades. Why is that so impossible now?
  Mr. Rooker: That completely ignores the example that I gave from my constituency of someone who has just retired and has SERPS of more than £50 a week. Of course, those figures are based on the basic state pension—anyone can make those calculations, because we know the figures. They are universal, as long as people have the full 100 per cent. Succeeding Governments—and the graduated pension, from 1961 to 1975, was introduced by a Conservative Government—attempted to build on the basic state pension so that people received an amount that related to their earnings. That was an important element, but is never taken into account in statistics based on the basic state pension.
  I accept the hon. Gentleman's point, but it is valid only if the basic state pension is total pensioner income. I refuse to accept that. One must consider the total pensioner income in the round, which is why Richard Crossman and Sir Keith Joseph, along with previous Ministers, attempted to make that break, to build on the basic state pension. Therefore, it is inevitable that there is fluctuation when prices are compared with earnings,

  569
  because one is looking at a moving target, based on individual circumstances. So, although I accept the hon. Gentleman's figures, I do not think that they paint a true picture, or do any service to pensioners—either pensioners of the future, who are thinking about saving for a pension, or today's pensioners.
  Mr. Bercow: Will the Minister give way?
  Mr. Rooker: If the hon. Gentleman's intervention is as good as his previous one, then yes.
  Mr. Bercow: I am grateful to the right hon. Gentleman for giving way. I hope that he will agree that, notwithstanding the importance of improving provision, it is of the essence that the existing system should be efficiently administered. Following the breakdown of NIRS2, which deprived thousands of pensioners of their legitimate entitlements, does he recall the "Dear colleague" letter of 11 September 1998 from the Secretary of State which said that the problem would be resolved in the next couple of weeks? However, on 28 January 1999, the right hon. Gentleman was forced to admit that it would be many months before the problem was completely resolved. Has it now been resolved, in each and every case?
  Mr. Rooker: No. As I said in answering a question last week, the latest information from the Benefits Agency is that 83,000 cases are outstanding and we expect all to be settled this year. NIRS2 has been bad for pensioners— some have not been paid correctly, although some have been overpaid. That massive computer system—bought on the cheap by the Conservative Government—is crucial to many of our reforms. Bereavement allowances, state second pensions and stakeholder pensions all depend on the success of NIRS2, as does pensions forecasting.
  There is no quick fix for the computer system, and delays, though regrettable, are inevitable. A quick fix would be irresponsible given the high dependency on the system of many policies, benefits payments and contracted-out rebates. We hope to settle the 83,000 cases—some underpayments, some overpayments—by the end of the year.
  Let me turn to the costs implied by the hon. Member for Northavon in his speech; of course, no costs were mentioned in the Liberal Democrat motion, which makes no proposal. Increasing retirement pensions—and, we should not forget, linked benefits—by the average earnings index would cost £1 billion net in 2000, and £8 billion in 2010. I answered questions on this subject within the last week and in November, so I almost expect an intervention at this point. The single pension will go up to £67.50 a week in April but, if it had been linked to earnings or prices—whichever was higher—since 1979, when the link was broken, it would be £97, a difference of almost £20. The cost of bridging that gap in one go would be £13 billion net, including the additional cost of benefits linked to the retirement pension.
  We have just under 11 million pensioners. By 2030, there will be almost 14 million, so the gross cost of even a modest change in April would be £30 billion a year by then. Much of that money would go to well-off pensioners. I do not claim that those on the average are well off, but they are much better off than people on
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  income support, who would benefit less. That cannot be right. We do not apologise for using the basic state pension as a building block. No one is expected to live on that pension alone. For anyone who has no savings, there is other provision, such as the minimum income guarantee.
  One of our traditional aims has been to concentrate help on the least well-off, while managing the system so that those who can do things for themselves do so without Government involvement. Since the second world war, the lack of a consensus on pensions has meant that no Government have been able to build for the long term. I do not say that people cannot trust Governments—that would be wrong, and unfair to Governments of both parties. However, the more provision people make for themselves via funded schemes and occupational pensions, the more secure they are bound to feel, given the history of pension provision.
  By 2001–02, we shall spend £4 billion more in real terms on pensioners. We make no apology for that, as much of the money will be targeted at the poorest pensioners. Some 1.5 million pensioners are benefiting from the increase to the minimum income guarantee by £160 a year in real terms. Pensioner couples aged more than 80 and on income support will be £455 a year better off, in real terms, after this April's increase—that is more than £8 a week. The actions that we have taken will ensure that as many people as possible receive that extra benefit. We have not merely based our actions on research, but have piloted schemes to find the best way of organising the take-up of that benefit.
  We are examining the rules on capital. Some of the points that the hon. Member for Northavon made about capital and savings are right. Our commitment is that, before the end of this Parliament, we shall have done something about capital limits, which have been frozen for so long. That is unfair on many pensioners—whether the limits are £3,000, £8,000 or £16,000. We shall deal with the matter—it is in the package.
  However, it is true that part of the package is not about the least well-off—we make no apology about the winter fuel payments. To put that money into people's hands before Christmas, we needed a cut-off date in September, in order to pay £100 per pensioner household—indeed the amount will now be paid to all men and women aged over 60. If we had undertaken means-testing for the payments, it would have cost us £100 to organise each payment. That is why we acted in that way. The money is not targeted in the sense suggested by the hon. Gentleman, because we consider that it forms part of our policy of ensuring that the wider pensioner community should benefit from the economic performance of the country.
  The same argument applies to television licences—free to the over-75s, but not means-tested. That is a further demonstration that we are spreading more of the country's income around the pensioner community.
  I realise that the time for debate is short, so I shall come to a conclusion. The minimum tax guarantee and other measures have taken 200,000 pensioners out of tax, and two thirds of pensioners pay no income tax at all. The VAT cut on fuel affected everybody, but fuel is a disproportionately high part of pensioner expenditure, so pensioners also benefited from that cut.

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  One of the most despicable and cheapskate policies of the Conservative Government was the removal of free eye tests for pensioners. We have reintroduced those tests.
  There is a new home energy efficiency scheme for those over-60s who receive an income-related benefit. The maximum grant will be increased from the present £315 to £2,000. That will be of substantial benefit to about 460,000 households over the first two years, 280,000 of which will be households whose members are aged more than 60.
  We could develop that package. However, we make no apology; we have stuck to our manifesto commitment. We have ensured that the extra resources are targeted on the poorest pensioners, who are substantially better off than they were when the Government came to power. We know that, over the totality, general pensioner incomes are much higher than the basic state pension. To ignore that fact does an absolute disservice to pensioners—as did the contribution of the hon. Member for Northavon.
  4.28 pm
  Mrs. Jacqui Lait: It is a great pleasure to take part in this debate and to hear the Minister of State lauding the achievements of the Conservative Government over 18 years, as many pensioners now retire on considerably more than the basic state pension. On the other hand, it is a shame that we had to listen to a typical Liberal motion. Many of us who have fought the Liberals in many elections will recognise the technique. The measure sounds supportive and costs a huge amount. As we discovered during the debate, their minds were changed halfway through the formation of their policy and they have ducked all the decisions.
  The motion does not say what Liberal Democrat policy is, although the hon. Member for Northavon (Mr. Webb) tried hard to explain it. It smacks of the luxury of perpetual opposition, as do so many of their promises. They promised extra police officers and to double child benefit. They would take child support back to the courts—that would be £800 million. As we discovered this afternoon, they would use up the national insurance fund surplus. That would have a direct effect on the retail prices index.
  All those measures would add significantly—
  Mr. Corbyn: Will the hon. Lady give way?
  Mrs. Lait: If the hon. Gentleman will allow me to complete what I was saying on this fairly substandard Liberal motion, I shall be delighted to give way.
  Those combined changes would add a huge amount to public spending, which I am sure that the hon. Member for Truro and St. Austell (Mr. Taylor) will be keen to rein back when he does his sums for his Budget statement.
  Mr. Corbyn: Before the hon. Lady completes her litany of past mistakes, will she explain why, in 1980, the Conservative Government broke the link with earnings? Ever since, the pension has been deteriorating as a proportion of earnings. The whole pensioner community
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  feels robbed by 18 years of Conservative government. Is the hon. Lady suggesting that she would reinstate the link with earnings, as many of us would wish to do?
  Mrs. Lait: Interestingly, we have heard the Minister explain why the Government are not restoring that link. Although the hon. Member for Islington, North (Mr. Corbyn) probably believes that everyone in Islington retires on only the basic state pension, as a result of our changes two thirds of all pensioners now retire on considerably more than that.
  We have heard from the Government this afternoon great appreciation of everything that has been done in the past 18 years. The Minister expressed an intention to continue many of the things that we introduced. I should think that it is a great comfort to many pensioners that the Government have not yet tinkered with many of them. However, just last week—it was very opportune— I received, from a constituent who has given me permission to use his name, a critique of the 75p by which the state pension is being increased. Mr. Frederick Pemberton, who lives in Beckenham, had written earlier complaining about it and then produced a critique of the reply that he received from the Department. He starts:
  "This so-called Promised Land.
  Five per cent. VAT on fuel. This VAT cut is not specifically for pensioners, but for all households.
  Twenty million pounds to improve cataract service. Fifty million pounds to boost cardiac care. Again the two services are for all the country.
  Concessionary bus passes. As I live in one of the London boroughs I receive a free bus pass. This scheme has been in existence for at least 12 years.
  The home energy efficiency scheme and locks and bolts. This applies to 150,000 pensioners. That works out at 0.13 per cent. of pensioners in the country. As a home owner, I do not qualify."
  Mr. Pemberton continues:
  "Ten pounds for the free eyesight test. As pensioners only purchase spectacles once in five years, this generous grant works out at 4p a week.
  Free television licences. Thousands of homes in the country have a pensioner over the age of 75 living with them. They are the ones who will also benefit from the free licence."
  He went on to say that his and his wife's income will increase by 1.1 per cent. plus the winter fuel payment, which makes a total of £3.40 a week.
  Mr. Pemberton's letter reflects the comments that I have heard from many pensioners. It would be wise for everyone to recognise that even affluent areas such as Bromley contain pockets of real deprivation and that pensioners, as reflected in that letter, feel badly let down.
  Mr. John Cryer: Does this mean that the hon. Lady wants to take away the free eye tests that the Government have given pensioners?
  Mrs. Lait: I was merely pointing out that it has a marginal effect on any pensioner's income.
  The minimum income guarantee, from which we hope that many pensioners can benefit—including the 600,000 who currently do not—is an extension of means testing, with all the problems that go with that. It is only for people on income support. Pensioners with any savings

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  do not qualify. [Interruption.] If that is not correct, I would be more than happy for the Minister to let me know.
  Mr. Rooker: I will correct what the hon. Lady said, because people listen to what we say in this place. She said that if a pensioner has any savings, he does not qualify. That is not true. There are capital limits of £3,000 and £8,000, and I have said that we shall address those figures—by implication, raising them—before the end of this Parliament.
  Mrs. Lait: I am delighted to learn that people with savings of £3,000 and £8,000 will benefit from the minimum income guarantee. However, 600,000 people do not claim the benefit for reasons that the much vaunted research has produced, but which many of us have known for many years. All the Government have done is waste money on research that has told us what we already know. People find the process of claiming for means-testing off-putting and they do not like the stigma attached to it. We have been aware of that, as have the Government, for many years. However, the right hon. Gentleman tells us that the Government will carry out yet more research to find out how they can best sell the minimum income guarantee. It will cost several millions more pounds to try to ensure that those 600,000 people benefit from it.
  As I understand it, the recommendations in the report that was published on 13 December said that the most sensible, and probably the cheapest, way of ensuring that everyone knows about the minimum income guarantee is to write confidentially to all those who may be eligible for it. If it will cost several million pounds for the 600,000 pensioners who do not claim, it would be interesting to examine the administrative costs of the scheme.
  We fundamentally object to the minimum income guarantee because it is a disincentive to save. Like the Under-Secretary of State for Social Security, the hon. Member for City of York (Mr. Bayley), I spent a large part of last year on the Committee considering the Welfare Reform and Pensions Act 1999, which introduced the stakeholder pension. Tomorrow, we shall start to consider the Child Support, Pensions and Social Security Bill, which will introduce the state second pension.
  As I understand it, both pensions will be worth what people can already claim under the minimum income guarantee and housing and council tax benefits. If that is so, I will be dissatisfied. Who on a tight budget and with a small income will put money into either the stakeholder pension or the state second pension? Why bother? If people have to manage on a tight budget and the kids need shoes, who will put money into a pension? I have yet to receive an answer to that question from the Government, but it must be dealt with. There is no reason for people in such circumstances to buy into either of those pensions.
  Mr. Campbell-Savours: Can I trigger the hon. Lady's memory? Does she recall the great debates of the 1970s when Labour pioneered the state earnings-related pension scheme? That was 30 years ago, and the whole country looked forward to substantial pensions well into the future and past the millennium. However, does she remember what happened in the 1980s when I sat on the Opposition Benches and we watched SERPS being progressively
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  undermined and destroyed by a Conservative Government? Why does not she refer to what happened in the 1980s?
  Mrs. Lait: The hon. Gentleman must recognise that SERPS has been made affordable, as have private occupational pensions. They are just as important because more and more people wish to save outwith the Government's provision. They realise that, if they have a private pension over which they have control, they are not at the whim—dare I say it—of politicians. I support them entirely. It is infinitely better to be in control of one's own money.
  Kali Mountford: Can the hon. Lady cast her mind back as far as last week and answer the question that was put to the hon. Member for Havant (Mr. Willetts)? If it is not possible for people to contribute to the state second pension or the stakeholder pension, how can people with earnings of less than £9,500 a year possibly afford a private pension scheme?
  Mrs. Lait: The hon. Lady has entirely missed the point. The state second pension and the stakeholder pension are not sufficiently attractive to encourage people to save. That is because of the package of benefits that they would otherwise receive. However, I have been generous with my time. To allow many other hon. Members to speak, I hope that I shall be allowed to draw my remarks to a relatively speedy conclusion.
  The Minister of State referred to the problems that pensioners are having as a result of NIRS2 computer failings. I am reassured that those failings will be cleared up at some time during the coming year, as the Benefits Agency hopes. As my hon. Friend the Member for Havant (Mr. Willetts) has said, that is a year late already.
  Given the catalogue of problems that pensioners have faced, does anyone blame them for not wanting to be involved with the Government? They have been hit by advance corporation tax, and future pensioners are now realising the cost. Only last week, my hon. Friend pointed out in social security questions that the Manchester local authority will have to find an extra £30 million. Cornwall will have to find an extra £35 million and Staffordshire an extra £75 million. That will have an effect on pensioners' council tax, which is already increasing because the Government are downloading their stealth taxes on to local authorities.
  Pensioners are being hit also by the fuel duty increase. They wait and wait for their NHS appointments and operations. Poor pensioners who have saved in shares can no longer reclaim tax. They are now hit by a 75p increase in their pension, which they think is measly. To add insult to injury, the Department of Social Security is saving itself money. It estimated a 1.3 per cent. increase in the state pension but it is paying out only 1.1 per cent. It could at least pay, as we would, the invalid care allowance to new carers over 65 years of age. That would cost about £20 million and would be of direct help to many elderly people, as it would recognise the reality of looking after an elderly husband or wife.
  Mr. Webb: Will the hon. Lady give way?
  Mrs. Lait: I hope that the hon. Gentleman will excuse me for not giving way on this occasion. Doubtless there will be many opportunities to discuss these matters in the coming weeks.

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  Pensioners will receive a 75p increase in their pensions, out of which they will pay the increased fuel duty, increased transport costs and their increased council tax. Doubtless many of them will pay these increased costs out of their £100 heating allowance. Is that what the Government really wanted?
  4.42 pm
  Mr. Jim Cunningham: I am aware that many Members on both sides of the House want to speak in this short debate. My first observation, in response to the hon. Member for Northavon (Mr. Webb), the Liberal Democrat spokesman, is that I accept that many Labour Members signed an early-day motion on the 75p a week increase. We had a perfect right to indicate to the Government that, although we appreciate what they have been doing for pensioners, we want them to go a step further. There is nothing wrong with that, and signing the motion should not be seen as a criticism of the Government. I for one will not be in the Lobby with the Liberal Democrats this evening. I wish to clear up that point straight away.
  The hon. Member for Northavon referred to statistics going back to the period after the second world war. Anyone who worked in industry after that war will be aware of the various changes that have taken place in terms of pensions and so forth. In the early 1970s, not many people had occupational pensions. They have come on to the scene fairly recently, over the past 10 or 15 years. However, I can tell the official Opposition spokesman, the hon. Member for Beckenham (Mrs. Lait), that I remember when the previous Government— the Thatcher Government—were encouraging people, through tax incentives, to get out of state earnings-related pension schemes and into private pension schemes. We all know the story. There were certain instances of people not benefiting from those schemes because of some of the abuses that took place under the Conservative Government. Those abuses were never addressed by that Government. We have had many debates in the House about that.
  It is interesting that the hon. Member for Northavon wants to use the surpluses from the social security budget. Many of us would like to take a good look at that proposal. We must be careful when we start to spend surpluses. If the hon. Gentleman knows anything about local government expenditure, he will be aware of the need to keep money for a rainy day. It is necessary to be careful also about money that is put away and to ensure that inflation does not lead to greater problems further down the road. Consideration should also be given to the economic situation and the country's circumstances at a given time.
  In general terms, the pensions issue has been a minefield over the past 20 or 25 years.
  Dr. Peter Brand: I am listening with great interest. Does not the hon. Gentleman share the Prime Minister's confidence that we shall continue to become a wealthier nation? Is he betraying the tendency
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  that I so often see in older people—that of not recognising when a rainy day has arrived? The plight of pensioners is now such that they are in the rain and should be helped.
  Mr. Cunningham: I learn lessons from the pensioners: always prepare for a rainy day. That is good housekeeping. I have complete confidence in the Prime Minister's analysis of the economy. If the hon. Gentleman wants to increase taxes, he must first ensure that the economy is prosperous and, secondly, that he does not set loose another bout of very high inflation that erodes benefits to pensioners. He should take such factors into consideration when making interventions.
  The official Opposition accused the Government of using stealth to off-load costs onto local authorities, but nobody was more adroit at that than the previous Government, who implemented cuts in housing benefit and in local authorities' administrative costs in respect of housing and other benefits, thus making central Government savings. That was one of the reasons they claimed they were able to reduce taxation. The Opposition spokesperson must be reminded of the millions of pensioners under her Government who had to rely on local authorities, which were left to try to fund free travel or to compensate pensioners for travel. This Government have made an attempt to address those matters.
  I deal now with some of the matters that concern pensioners in Coventry. One is the relationship between pensions and earnings. It would be wrong of me not to mention it; I have regularly received representations on it. I recognise that the Government, through their package of measures, to which I shall come, are doing a number of things for pensioners. Over this Parliament, they will start to address such concerns.
  Pensioners are also concerned about the future of the welfare state. Only last week, the Social Security Secretary indicated that there would be a two-tier pension, which was part of our manifesto. There was also a commitment to the continuation of SERPS—in contrast to the suggestion of the hon. Member for Northavon, who seemed to imply that there was some hidden agenda to abolish SERPS. I have seen no such agenda. The Secretary of State implied that we would not only honour our election pledge, but retain SERPS. The hon. Gentleman, who I am sure was present for that exchange, should know that.
  More must be done on the funding of care in the community. The Government have begun the work; they have described certain measures that they are prepared to take. There is also the matter of the cost of sheltered accommodation, which affects many pensioners. I know that the Government will also consider that.
  We should not forget that, although we have had difficulties in the national health service, the Government have begun to pump in the £21 billion for the next three years, which is vital.
  Let us consider what the Government are doing for pensioners. The Opposition spokesperson derided free eye tests because someone had written her a letter saying that it apparently costs £10 every so often. I remember that when free eye tests were abolished, many in the Tory party were up in arms about it. Regardless of whether the figure in the letter is right, such a move created much consternation.

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  The other part of the package that shows that we are trying to do something for pensioners—it has been raised many times in the House—is the provision of free television licences for the over-75s. That is an important step—perhaps not for some people, but certainly for pensioners. I remember, one Friday morning, the previous Government's bitter opposition to what we used to call winter chill payments. This Government have taken the matter into consideration and provided £100 a year for help with fuel payments, which is certainly welcome among many pensioners whom I know. In addition, they have reduced VAT on fuel.
  I do not want to go on too long, because I am conscious of the fact that a number of hon. Members from both sides of the House want to speak. I realise that this is a limited debate, but I thought that I should raise certain points of importance to some of the constituents whom I represent.
  4.50 pm
  Mr. David Heath: It is a great pleasure to be able to contribute to the debate. Like many hon. Members, I believe that the safety of pensioners' incomes is crucial, and that it is vital that we debate it. I was a co-sponsor of the early-day motion on which the wording of the motion is based.
  I do not entirely accept the assertion of the hon. Member for Workington (Mr. Campbell-Savours), who is no longer in his place, that the content of his postbag suggests that pensioners are no longer interested in the state retirement pension. The experience of many hon. Members will be different from his. Perhaps pensioners as a class are suffering from exhaustion—sick and tired of making the same points throughout 18 years of Conservative Government and almost three years of Labour Government. They are beginning to despair of ever being given a fair deal.
  I could go into great detail about the plight of pensioners, but I do not want to over-egg the pudding. I do not want to suggest that the situation for every pensioner is dire: that transparently is not so. On the way to the House today, I listened to an interesting discussion on my car radio about a television advertisement that seems to be shown every five minutes, depicting an elderly lady doing her exercises while watering her plants. I shall not mention the private company that it promotes, but the interesting discussion on the radio was about whether the image of elderly people that the advertisement portrays was appropriate. There are arguments on both sides, but it is clear that none of us should give the impression that all pensioners are in desperate financial straits, because they are not.
  That does not alter the fact that some pensioners are in dire straits. Some of them live in great poverty, and their situation worsens year by year. There is a second group of pensioners who cannot be classed as poor under the general definition of that term, but whose incomes are being eroded, and the increases that they are being offered in the retirement pension package are insufficient to meet their increasing needs as individuals trying to lead their lives.
  To be fair to him, the Minister accepted that there is a clear differentiation in the average figures. Pensioner wealth may be increasing because more people who are slightly better off are entering the system and more people who are in considerable poverty are leaving it for one
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  reason or another. However, the relative wealth of the individual pensioner entering the system may decrease year by year, which is why we have strongly advocated the need for different treatment of the more elderly pensioner who has different needs.
  I was concerned by the Minister's response. He knows that I have enormous respect for him—I have told him that on other occasions and on different subjects. However, elements of the right hon. Gentleman's speech were disingenuous. He set up a series of straw men that it was convenient to knock down. He contended that my hon. Friend the Member for Northavon (Mr. Webb) was suggesting that the majority of pensioners were wholly and solely reliant on the standard state pension. My hon. Friend never said that; it is not in the motion; and no one is suggesting that it is the case. While increases in the state pension form a significant part of the calculations that any pensioner will make in regard to the affordability of what he or she will need in the following year, no one is suggesting that a huge number of pensioners live solely on the state pension—although some do.
  The Minister suggested that we were dealing with the absolute level of pension payments, rather than the increase in the absolute level. That, too, is an important distinction. If the year-on-year increases do not match a realistic rate of inflation for pensioners, pensioners, relatively, are becoming poorer, and no amount of fiddling with the figures will alter that basic fact. The question that we must consider is whether it is right for pensioners to be getting poorer while the country is getting richer. Our position is plain: we believe that that should not be the case, and that pensioners can and should expect a better deal from the country.
  Mr. Bercow: I am listening intently to the hon. Gentleman's speech. Is he aware that, between 1979 and 1996, the proportion of pensioners in the bottom fifth of national income distribution fell from just under half the total to just under a quarter? To aid us in considering what he has to say, can he tell us what proportion of pensioners fall into the bottom fifth of national income distribution in the constituency of Somerton and Frome?
  Mr. Heath: It will not surprise the House to learn that I do not have the answer to that specific question before me, and possibly the Minister does not either. I can say, however, that to talk of proportions as the hon. Gentleman does disguises the truth of the situation. If the number of pensioners falls as a proportion of the total number of people receiving benefits, such as the unemployed, of course the proportion will fall. Most of us recall the massive increase in the number of unemployed people under the Conservative Government. I suggest that what the hon. Gentleman has said actually means very little, and that it certainly does little to benefit debate if, having researched a specific bit of information, an hon. Member then presents it as a genuine interrogation of another hon. Member who has the Floor and is trying to pursue an argument.
  The Minister made too much of reliance on other pension payments. He was at pains to tell us about all the other potential sources of income for pensioners, and how buoyant they were. That, too, avoids the basic issue in the motion, which is the increase in the basic state pension. The right hon. Gentleman failed to be quite so forthcoming in answering an important question put by

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  my hon. Friend the Member for Northavon about the measure by which pensions are indexed. It is transparently clear to anyone who has examined the position that the present basket of costs making up the measure of indexation is wholly inappropriate to pensioners. Nothing could illustrate that more clearly than mortgage interest payments, which have a hugely distorting effect.
  I agree with the hon. Member for Islington, North (Mr. Corbyn). Why do we not look at the package of payments to which pensioners are subject, especially the payments demanded by public authorities for services that pensioners need in their daily lives? Why is that not taken into account in establishing the basis for indexation? Such a system would at least approach a fair assessment of what the increase in costs is likely to be over the following year, rather than producing an arbitrary figure bearing little relation to the real lives of real pensioners.
  The Government's official response in their amendment to what is a simple and easy-to-understand proposition from the Liberal Democrats is almost an essay on all the novel means of funding that they have devised to avoid doing something about the old age pension. Most of those are in the form either of one-off payments or of hypothecated measures. The Government talk about hypothecated taxation, but I did not realise that that meant that, through the benefits system, they would hypothecate what the recipient did with the taxation. That seems to be what the Government are trying to do in the case of pensioners: to determine what pensioners should do and give them money that is directly related to an activity irrespective of whether they wish to partake of it.
  The amendment draws attention to some measures that I welcome. A long time ago, I was an optician, so I welcome the reintroduction of free eye tests, although I question whether the Government have extended them to the people who are most vulnerable in ophthalmic terms—40 to 50-year-olds, who are most likely to suffer glaucoma or retinopathies—but that is a separate issue. It is a good measure, which I personally applaud.
  The television licence measure has introduced new anomalies to the system. That is one criticism of it, although, in intention, it is not a bad measure. However, we keep on coming back to the point: why do we have all these tactics to divert us away from the basic critical element—the retirement pension and how we even start catching up after the disastrous effects of the Conservative Government's decisions? How do we start to make progress in catching up so that pensioners get back to something like the position that should exist?
  I understand the Minister's position when he says that to try to catch up in one go is beyond the Government's capability. Of course, we all understand that. We know that we cannot simply replace—
  Mr. Rooker rose—
  Mr. Heath: It looks as if the Minister would like to intervene. I am happy to give way.
  Mr. Rooker: What the hon. Gentleman has just said gives me an opportunity to correct something that I said earlier. I said that catching up in one go would cost £13 billion. That figure is correct, but I also said that
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  catching up meant £20 a week on the single pension. I managed to subtract £67.50 from £97.45 and make it £20, instead of £30, for which I apologise. I hope that Hansard will take due note of that. However, the cost of catching up in one go would still be £13 billion net.
  Mr. Heath: The Minister has now removed one of the lines from my speech, but it was clearly a slip of the tongue. It does not alter what he said about the £13 billion. Of course, we accept that such a huge sum will not be spent at once, but what worries many Liberal Democrats and a significant number of Labour Members is that we have not even begun catching up.
  I believe that that was what pensioners expected from the Government. They did not expect a change of Government but not a change of policy. That is the problem that most of us have with the Government's performance. We are still waiting for a fair deal for pensioners. Pensioners constantly express to us their grievous disappointment with what has happened to date. They are not ungrateful for what has been done, but they believe that it is not enough, is not coming soon enough and is not dealing with the basic issue of the state retirement pension, the erosion of which continues.
  That is why the motion is important. It is a great shame that we cannot develop the cross-party support that I know exists.
  Mr. Vernon Coaker: May I ask the hon. Gentleman a simple question which generates significant debate in pensioner meetings when I ask it? What answer does he get when he asks his pension groups, "Do you think rich pensioners should get as much help as poor pensioners, or do you think that the Government are right to try to target help at poor pensioners first?"
  Mr. Heath: My answer would be that I have a curious devotion to the principle of progressive taxation. That is a useful way in which to deal with that issue, although perhaps that view is not now widely shared in the House.
  Today, we had the opportunity of assembling that cross-party coalition of interests that really might have made a significant point to Ministers on this issue. As my hon. Friend the Member for Northavon said, if that coalition had been assembled, it would have hugely reduced the Government's majority. He used the word "decimated" to describe the reduction, but was immediately challenged by Conservative Members on the word's meaning. However, I thought that he used it correctly, as the 10 per cent. of hon. Members who stayed loyal to the Government—rather than the 90-percent majority who were prepared to express their view—would have paid the price. That cohort should have been grateful for the opportunity to express their opinion on a very important matter.
  After hearing the speech of the hon. Member for Beckenham (Mrs. Lait), I think that the most confusing aspect of today's debate lies in determining what on earth Conservative Members' position on the issue might be. Although the hon. Lady did not allow interventions late in her speech—so that hon. Members were not able to clarify the position—we were expecting to be told Conservative Members' opinion on a crucial issue and their answer to a very simple question: is the 75p increase adequate or inadequate? We still do not know their answer to the question, as the hon. Lady seemed happy to speak about anything other than the motion on the Order Paper.

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  Such reticence was unexpected, given the brief letter to my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy), the leader of the Liberal Democrats, from the right hon. Member for Richmond, Yorks (Mr. Hague), who, in the last paragraph, states:
  "As to our voting intentions on the up-rating statement, we will make our position clear nearer the time."
  If we are to learn the official Opposition's position on the matter, we really are going to have to run to the wire on it.
  Conservative Members simply cannot decide whether 75p is adequate or inadequate. Is it a difficult answer to give? I think that it is not. The Government say that the increase is adequate; Liberal Democrat Members say that it is inadequate; Conservative Members do not know. The official Opposition's position is that they do not know whether it is adequate. If they choose to abstain in the vote at the end of the debate, the British people will have the clearest demonstration possible of why the official Opposition simply cannot provide a credible opposition on behalf of the many pensioners who were expecting their support today. I say that pensioners were expecting Conservative Members' support today, although after 18 years of Conservative Government perhaps they were not.
  It is important that we have had this debate, and I look forward to hearing the Minister's reply to it. I also hope that we have been able to make a point on behalf of British pensioners—which is simply that we do not believe that it is right that, year after year, their pension entitlement should suffer from erosion, they should get poorer, and that, in town and country alike, they should find themselves in miserable conditions. Let us not forget that rural pensioner poverty is a very real issue and that many pensioners in rural areas do not have access to the services that those in urban areas expect.
  If we cannot have a debate on the subject that is sensible, addresses the issues and produces results, Parliament is failing those who deserve our support.
  5.8 pm
  Mr. Roger Berry: I suppose that recently many of us have been reflecting on the previous century. One of the great unsung achievements of that century is the fact that the number of people of retiring age has increased dramatically. In the century's first census, in 1901, about half a million people were over 75; at the century's last census, the figure was more than 4 million. The increase is hardly surprising. In 1908, when the old age pension was first introduced, for people over 70, average male life expectancy was a mere 48 years.
  The previous century witnessed a dramatic improvement in longevity. That is something to be celebrated. We often forget that major achievement of the past century, which has left us with about 11 million pensioners in this country—about one in four of the electorate. The majority lead active lives, participating fully in the community and living independently with their friends and neighbours.
  It is shocking when people talk about the demographic time bomb, as if there were a problem with more people living longer than we can afford. Not only is that an inaccurate description of current plans for funding retirement, but it is deeply offensive to 11 million people and their friends and relatives.
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  The situation that the Government inherited, as set out in the Government amendment, is characterised by two obvious facts. First, the number of pensioners living in poverty was increasing—the figure stood at one pensioner in four at the time of the election. Secondly, pensioners had a growing dependence on means-tested benefits. The new Labour Government had to address those two key problems.
  I congratulate the Government on their significant achievements in addressing the needs of today's pensioners. The minimum income guarantee has resulted in record increases in income support of three times normal levels. There is a commitment that those levels will rise in line with earnings. The Government are also committed to a take-up campaign. It is slightly overdue, but no doubt that is because they are determined to get it right. I have close relatives who are almost certainly entitled to income support and I am concerned that accurate information should be made available. It is better to spend a little time on the take-up campaign and ensure that it works, but it has to be a priority. I hope that the Government will consider retrospective payments to those who have missed out so far because they have known nothing about the minimum income guarantee.
  I welcome the free eye tests for pensioners, the increase in the winter fuel payments and the free television licences for those over 75. In case anyone has any doubts, the Liberal Democrats welcome them too. The hon. Member for Northavon (Mr. Webb) and I share a parliamentary boundary. We also happen to have all or part of our constituencies within the area covered by South Gloucestershire county council. Last year, the Liberal Democrats on that council voted for a resolution that included the following:
  "the council therefore welcomes the current Labour Government's commitment to pensioners as demonstrated by its fivefold increase in winter fuel payments, free eye tests for pensioners and cutting VAT on domestic fuel to 5 per cent., the lowest level allowed and notes the current Labour Government's effort to start to address this problem"—
  the problem of poverty, that is—
  "by introducing a minimum income guarantee for pensioners which will be uprated in line with earnings rather than prices from April 2000."
  Liberal Democrat and Labour councillors from my local authority pointed out:
  "On present estimates, it will mean that the poorest pensioners will be getting nearly £800 a year more as a couple and nearly £500 a year more as a single pensioner, than they did in 1997".
  I am pleased that there is common ground in congratulating the Government on their significant measures to address the needs of pensioners.
  However, along with my hon. Friend the Member for Coventry, South (Mr. Cunningham), I admit that I signed early-day motion No. 73, the words of which are exactly the same as the motion today. The motion may have been tabled for reasons about which one could speculate, but as a matter of fact, I believe that April's 75p increase is inadequate. I believe that there should be a real-terms increase in the basic retirement pension. If I did not believe that, I would not have signed the motion. Having done so—and not taken my name off the motion—I still believe that. My position would otherwise be rather difficult.
  I believe that 75p is not enough—first, because that is overwhelmingly the view of the public. My constituents who have contacted me and stopped me at the post

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  office—pensioners have discovered that this is an effective way of getting their point across to their Member of Parliament—have made it clear that a real increase in the pension, and not just one to match inflation, would be warmly welcomed. I have no doubt also that every organisation representing pensioners would welcome a real increase in the basic retirement pension. I am convinced that every trade union would take the same view, not least because their members are future pensioners.
  I would go so far as to say that if the Government had decided to increase the basic state pension by slightly more than inflation, I suspect that there would not have been much opposition from Labour Back Benchers. People would not have said, "In principle, this is the wrong thing to do." I suspect that there might have been a fair amount of support.
  Secondly, at present, a real increase in the basic state pension is the only way to help the poorest 750,000 to 1 million pensioners who are entitled to income support but do not claim it. It is the only way to improve their incomes and to relieve their poverty.
  Thirdly, increasing the basic state pension would reduce the number of people dependent on means testing, which is a clear objective of Government policy. Fourthly, it would increase saving. Everyone has acknowledged that means testing penalises saving. That is why the Government, rightly, are reviewing the capital limits. We all know of many people who, because of their modest savings, are just above the income support level and cannot access significant improvements in their income unless the basic state pension improves.
  The final reason why I signed the motion—and why I have left my name on it—is that its proposals are entirely consistent with Labour's election commitment. At the election, we said that the
  "basic state pension will be retained as the foundation of pension provision".
  It is difficult to envisage how the basic state pension can be that foundation unless in some way it keeps up with rising living standards. We said also that the basic state pension would increase
  "at least in line with prices".
  We did not say that it would increase only in line with prices. Along with my colleagues, I signed an early-day motion that was entirely consistent with the policy on which we fought the election.
  I shall support the Government amendment tonight. However, I cannot, in all conscience, vote against the Liberal Democrats' motion—for the very simple reason that I support it.
  5.20pm
  Mr. Edward Leigh: It is always a pleasure to follow the hon. Member for Kingswood (Mr. Berry), who does his career no good by speaking from his heart; I am glad that he, for one, will stick to his guns on the motion that he signed.
  The Government have two defences against the motion moved so ably by the hon. Member for Northavon (Mr. Webb). I do not always agree with what he says, but he always adduces strong arguments in support of
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  his case. The Government say that they simply cannot afford to restore the link with earnings and that it is better to concentrate resources on those who need them most. Those are understandable arguments.
  There is the TINA argument—the old Thatcherite argument that there is no alternative—that we cannot restore the link because it would cost us up to £8 billion over 10 years. No one argues that we would go bankrupt, because we are such a wealthy country, but it is argued that the public finances would be seriously affected.
  There is a universality argument: that such would be the reaction of taxpayers to an increase in public expenditure that there would be pressure for the basic state pension to be means-tested; there is also a demographic argument, that we are an increasingly greying population; and there is the argument, to which I am sympathetic, that people's willingness to invest in private pensions would be affected. There is also a ratchet effect argument, but that is so complex, and we have so little time, that I had better leave it for another day.
  Everyone seems to accept those arguments, but I am not sure that they are as strong as people make out. The Government actuary, in his quinquennia] review, said:
  "Real earnings growth will result in working people being relatively better off in future even if National Insurance contribution rates were to be increased to meet the cost of increasing flat-rate benefits in line with earnings. Based on gross pay and real earnings growth of 1.5% per annum, real earnings relative to prices will, in the year 2060, be approximately 2.5 times the corresponding level in 1999/00. Allowing for higher National Insurance contribution rates and earnings limits, someone on average male earnings would still have real net earnings, after National Insurance contributions, of approximately 2.4 times current levels."
  That means that, because our economy is growing so well, we could afford to restore the link and people in work would still be better off.
  Before the Social Security Committee, the Government actuary said:
  "The point is that those who are working and contributing would still be a lot better off than they are today even if we were deducting contributions to enable the earnings link to be maintained."
  I am not arguing that we should restore the link but emphasising the fact that such is the wealth being generated in our economy that we could do more to help the basic state pension. It may have been right to break the link all those years ago, but we could consider being more generous now. There are also other ways in which we could help with pensions in the private sector to avoid means testing.
  The Government argue that they are concentrating resources on the pensioners who are most in need and that there is no point in spreading the butter very thinly all over the place. The Department of Social Security has published an interesting research summary in its report No. 100. It has conducted research into the attitudes of those who should be claiming income support but are not. It says that 48 per cent. of pensioners still appear to be "entitled non-recipients" of income support.
  The report says that people who are entitled to the means-tested benefits of the minimum income guarantee are not claiming them because there is "an attitudinal component"—I apologise for the social-security speak that runs through the document, but it is the Government's document and that is why I am quoting it—
  "which here is broadly described as the 'stigma' dimension. The pensioners wished to remain independent and self sufficient in older age, they expressed a concern that claiming IS could be a threat to their pride and independence."

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  The second reason is
  "a process dimension, consisting of objections to, or negative perceptions of, various aspects of the claim process. For some these negative images were based on past memories and images of the history of the social security system. Images of those claiming benefits tended to be negative, viewing claimants as 'spongers' or 'scroungers'."
  Although the Government would argue that we have left behind the workhouse mentality of the 19th century and pensioners who have not made adequate contributions for their futures are not forced into workhouses, pensioners feel forced into some sort of mental workhouse when they are told that they must apply for certain benefits. Many pensioners do not want to do so.
  Mr. Coaker: If there is such a problem with means-tested benefits, why is it that in my surgeries claims by pensioners for means-tested benefits such as housing benefit or council tax benefit are not affected? There is an attitudinal problem, but debates in which we continue to talk about stigma and income support will not help.
  Mr. Leigh: I cannot accept that. I am not making the facts up: they come from the Government's document. Those applying for means-tested benefits are often younger people, many of whom are out to get every benefit they can. There is nothing wrong in that, if they are entitled to the benefits. However, those younger people are very different from the older people who were brought up in a fine tradition and who are proud to be pensioners. They feel that they have paid their debt to society, worked all their lives and looked forward to retiring. They feel that it is a judgment against themselves to have to apply for means-tested benefits and they do not want to do so. I am not making the situation worse by talking about it, because we have to be honest and address it. There is something wrong with our social security system.
  On the other hand, our pensioners are generally doing very well. The statistics come pouring in, but they show that the richest pensioners have become some 80 per cent. better off over the past two decades. Even the poorest pensioners, thanks to means-tested benefits, are a third better off. In material terms, pensioners may be better off, but whether they are happy about how that has been achieved is another question.
  Mr. Webb: I am grateful to the hon. Gentleman for his introductory remarks. Does he accept that the statistics are misleading, because they do not follow an individual pensioner over time? Over time, individual pensioners see their incomes maintained or falling, as inflation erodes the real value of their income, but the averages include the fact that the poorest old pensioners have died and the newly retired ones have whopping great occupational pensions. The averages shoot up, but any given pensioner is seeing not 30 per cent. rises but steady real-terms falls.
  Mr. Leigh: The hon. Gentleman makes a fair point. We should be very cautious about accepting the many statistics that are given to us. The statistic that I have just cited has appeared in many briefing notes over the years and is a good little quotation to bring up in defence of the Government of the day, but it may not accurately reflect the experience of an individual pensioner.
  Mr. Bercow: Do not poor take-up rates underline the need for Governments to do everything in their power
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  to minimise unavoidable pensioner costs? Would not one effective way in which to do that be for the Government to work to the maximum to change fundamentally that charter for amoral pilfering otherwise known as the common agricultural policy?
  Mr. Leigh: I shall not go down that route, Mr. Deputy Speaker, as I know that you would take me to task. However, my hon. Friend is right to say that our country has a tradition of fair and uncorrupt Government.
  The Liberal Democrats may be right to say that it is an insult to pay pensioners an April increase of only 75p for the year, when the economy is supposed to be doing well. Perhaps we could afford £1, although I do not want to go too far. As the Minister said, pensions have not always increased in line with inflation: sometimes they have risen by more, sometimes they have not moved at all. No hard and fast rule states that the 75p increment cannot be changed.
  The case can be argued in terms of what can be done immediately to help pensioners, and what can be done in the long term. Our room for manoeuvre for helping existing pensioners may be limited, but the long-term prospects are much more exciting and interesting because the future allows more room for manoeuvre.
  The previous Government succeeded in changing people's attitudes. Philip Booth, in Economic Affairs, said:
  "The OECD looked at long-term budget deficits and national debt figures for various countries, on the assumption that their state social-insurance schemes remain intact. The estimates were based on the assumption of 1995 policies continuing. By 2030, Germany was projected to have a budget deficit of 9 per cent. of GDP and a debt:GDP ratio of over 100 per cent. Figures for France were similar. Italy was projected to have a budget deficit of 30 per cent. and a debt:GDP ratio of 120 per cent. The UK had a projected budget surplus and a projected debt:GDP ratio of below 10 per cent."
  One of the Conservative Government's greatest achievements was to increase dramatically the resources put into private pensions and occupational pensions. I want that sort of response to continue.
  I am talking about the long term, and what I propose will not have any direct benefit for today's pensioners. However, I hope that the next Conservative Government will build on the work of this Labour Government, who are trying to create a basic pension system that raises people above means-tested benefits. The Government argue that that is what the stakeholder pension and the second pension will do, but there are more creative ways to give people a choice about where their money should be invested.
  People's money should be invested in their own personal funds. People should be allowed to retain those funds in the public sector. They should have the right to insist on that. Alternatively, they could go into a mutual friendly society, or into a private insurance scheme. The result would be a personally funded system, which the Government could not attack as they have attacked the SERPS principle. However, I accept that that is a long-term solution and that it does not help the immediate problem.
  Earlier, I talked about the workhouse. I have often noted that Labour Members of Parliament explain their calling by referring to a novel—"The Ragged Trousered Philanthropists", by Robert Tressell—that moved them in

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  their youth. I read the book last year, as in the House it is important to know one's enemy. It is a very good book, and I commend it, although there are some boring passages about socialist ideology. If Robert Tressell were alive today, I am sure that Alastair Campbell would give him a quick telephone call to say that he had never written the novel.
  The hon. Member for Islington, North (Mr. Corbyn) is in his place. He has read the novel, and approves of it. One character is called Jack Linden, formerly a fine worker but now old and unable to work. He is thrown out of employment and has no money, so he has to ask the local community for help. The book says that on a Wednesday the secretary of the Organized Benevolence Society called at the House, and on the Friday
  "Jack received a letter from him to the effect that the case had been duly considered by the committee, who had come to the conclusion that as it was a 'chronic' case they were unable to deal with it, and advised him to apply to the Board of Guardians. This was what Linden had hitherto shrunk from doing"—
  he was a pensioner of 67—
  "but the situation was desperate. They owed five weeks' rent, and to crown their misfortune his eyesight had become so bad that even if there had been any prospect of obtaining work it was very doubtful if he could have managed to do it. So Linden, feeling utterly crushed and degraded, swallowed all that remained of his pride and went like a beaten dog to see the relieving officer, who took him before the Board, who did not think it a suitable case for out-relief, and after some preliminaries it was arranged that Linden and his wife were to go into the workhouse, and Mary"—
  their daughter—
  "was to be allowed three shillings a week to help her to support herself and the two children. As for Linden's sons, the Guardians intimated their intention of compelling them to contribute towards the cost of their parents* maintenance."
  Those appalling conditions existed in this country at the beginning of the last century. I am not, of course, arguing that the Government are forcing anybody into a workhouse. We live in a prosperous society, in which people are helped through means-tested benefits. But many pensioners feel that they are being forced into a workhouse—they have paid their way all their life, yet when they retire at the age of 65, they find that they have to go cap in hand, just like Jack Linden, to ask for a means-tested benefit. That is simply not fair or right.
  5.36 pm
  Ms Oona King: I am pleased to have the opportunity to speak in the debate, because I represent a constituency where the gap between the needs of pensioners, and the support that they receive, is one of the widest. If any Opposition Member doubts the effects of 18 years of Tory slash and burn on our public services, I invite them to come with me to visit Bethnal Green, Whitechapel, Wapping, Bow or Stepney. Pensioners in those areas—which were, incidentally, bombed in the second world war—spend much of their time in my constituency surgeries telling me of the gap between their needs and the support that they receive.
  Deprivation in Tower Hamlets is not confined to young families living in damp, overcrowded flats, with no one in work and little prospect of employment. In fact, I would say that social exclusion is felt most acutely by my elderly and vulnerable constituents who spent their whole lives
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  working, looking forward to retiring with comfort and dignity. Of course, they do not have the opportunity, as younger constituents do, to benefit from the Government's new deal for the unemployed, although they benefit from many of the new measures that the Government have introduced, to which I shall come.
  It remains the case, however, that many pensioners have no chance of enjoying a retirement in the comfort and dignity that they hoped for. We must be honest and recognise that, for many, retirement continues to be a daily struggle to make ends meet. There is certainly little left over at the end of each week to enjoy the things that many of us in the working population take for granted. I will never forget an elderly constituent who came to one of my first constituency surgeries and said, "I must speak with you, because my rent has gone up from £29.50 a week to £29.70." My maths is not great at the best of the times; however, it was obvious that this man had queued for four hours to tell me that his rent had gone up by 20p a week. Most of us in the Chamber might drop a 20p piece on the floor and continue walking—we certainly would not queue for four hours to speak to our Member of Parliament about losing that amount. So I hope that this debate will take into account the reality of many pensioners' lives.
  We must also recognise that many pensioners sit at home in fear. They are afraid not just to go out because of crime, but to stay in their own homes because of crime, so often linked to drugs. They are afraid of becoming ill or disabled and of needing long-term care that they cannot afford.
  The Government have taken essential and well-publicised steps to address the needs of pensioners through many measures. Those include the £100 increase in winter fuel allowance, the restoration of free eye tests, the introduction of free television licences for the over-75s, increased funding for the health service and for local authorities' social services departments and, most importantly, the introduction of the minimum income guarantee for pensioners.
  I was going to discuss my concerns about the increased investment that we want over the next two years in the health service but, in the light of the Prime Minister's welcome commitment to increase health spending year on year until the proportion of our gross domestic product spent on health is in line with the proportions in other western countries, I will confine myself to the amount of money that pensioners have to live on.
  I wholeheartedly welcome the introduction of the minimum income guarantee, which fulfils our manifesto commitment to help the poorest pensioners. I particularly welcome the commitment made by my right hon. Friend the Chancellor of the Exchequer to ensure that the guarantee will rise in line with earnings, rather than inflation. Many hon. Members meet pensioners who do not realise that they are entitled to an income support top-up to bring them up to the amount of the minimum income guarantee. I pay tribute to Tower Hamlets Age Concern and other organisations that raise awareness of the guarantee and help to guide my constituents through the benefits maze to ensure that they receive their entitlements. I hope that all hon. Members will remind pensioners who come to see them that the minimum income guarantee can be claimed in writing or by

  589
  telephone. Complicated application forms often put pensioners off making claims, and I am certain that the Government's improvements will help.
  Other pensioners, particularly the oldest, who remember the means tests of the 1930s, are often put off claiming minimum income guarantee because a stigma is attached to income support. I was pleased to hear my right hon. Friend the Minister assure the House last week that the forthcoming Government-sponsored take-up campaign would include a partial rebranding of the guarantee to try to remove some of that stigma.
  The challenge before us is to introduce measures that ensure that all pensioners share in the growing prosperity of the nation. However, despite the Government's best efforts, it is true, both in perception and in reality, that many pensioners are not sharing that prosperity. That is why I should like an increase greater than inflation in the basic state pension. Because of the panoply of measures that I have mentioned, it would be untrue to imply that the Government are giving pensioners only 75p extra, but it would be equally untrue to say that the country could not afford to pay pensioners more in basic state pension. The abolition of the link between basic state pension and average earnings and the later entrenchment of that decision were among the meanest and most disgraceful acts of the Thatcher and Major Governments. Restoring and backdating the link would carry an astronomical financial cost, which I shall turn to shortly.
  Putting extra money into the basic state pension would not target those pensioners most in need, and, as with any universal benefit, some money would go to relatively rich pensioners. Stakeholder pensions and second state pensions will improve matters for many pensioners in future, particularly those who have been overlooked in the past, such as women and carers. I cannot help but point out that I am one of only two women Members in the Chamber at present. No woman Conservative Members— indeed, hardly any Tories at all—are here, and only one of the three women Liberal Democrats is present. It is quite obvious why women have been overlooked by the Department of Social Security and by almost every other Department: we are not present to make our voices heard. That is clearly shown in this Chamber today; I am sick to death of it.
  Most pensioners in my constituency—both men and women—have never had an opportunity to contribute to occupational or private pension schemes. They paid then-stamp throughout their whole working life in the expectation that they would receive a decent pension from the state. They deserve more than they are getting at present. They certainly deserve the £30 a week extra for single pensioners and the £30 to £45 a week extra for couples that they would receive if the earnings link were restored. However, that is pie in the sky in our current political situation. How much would it cost? My right hon. Friend the Minister mentioned a cost of £13 billion net. In response to questions, I have been reliably informed that it would mean 6p on basic income tax. Which politician, from any party, will stand up and say, "Six pence on income tax, vote for me"? No politician will say that. And which pensioner will expect their children to vote for it? We are all dishonest if we do not remain in the real world.
  Despite that, I sincerely hope that Ministers might signal their good intentions by reviewing next year's inflation-linked increase, so that we accelerate the
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  allocation of the share of the country's income that is directed at pensioners. It was right and proper that the Government's overall strategy was first to direct our efforts towards the poorest pensioners. I hope that we shall now turn our attention to those pensioners who do not qualify for the minimum income guarantee. Those people are not necessarily rich; indeed, many of them only just manage to keep their heads above water. It is unfair that those who have worked hard all their lives and have savings, or a small occupational pension, which take them just above income support, should end up being worse off because they do not receive other passported benefits, such as housing benefit or council tax benefit.
  Although people with savings should be expected to make use of them in retirement, and should not live off only the interest, some pensioners who visit me do not accept that. We must realise that there is still a disincentive to save; we should do more to ensure that people with savings and occupational pensions do not lose out.
  I am delighted that the Government have extended the new l0p income tax starting rate to savings. That will help pensioners with savings—as will next year's 22p standard rate. I was also delighted to note the announcement by my right hon. Friend the Chancellor, in his pre-Budget statement, that the personal allowance for the elderly would be raised by £310 for those aged between 65 and 74 and by £380 for those aged 75 years and over. That increase has a phenomenal meaning. No pensioner aged between 65 and 74, who has an income of £110 or less a week, will pay income tax. When I say "phenomenal", I mean that, as a result of the measures, few pensioners in Tower Hamlets, for example, will pay income tax on any of their income. Many pensioners will surely be grateful to the Government for that.
  I remind anyone who genuinely cares about getting a better deal for pensioners that only this Labour Government are delivering that. Only this Labour Government will deliver an even better deal in the future. As we know, if they had to, the Tories would sell the clothes off their grandmother. As for the Liberals, they are always talking about putting lp on income tax. [Interruption.] Liberal Members have no doubt changed their policy on that as well, judging by their remarks. That lp on income tax would raise approximately £2 billion. Let us suppose that the Liberals were going to direct half of that—£1 billion—to pensioners. By the end of this Parliament, Labour will have spent £4 billion extra on pensioners. If people examine the facts, they will recognise that only Labour has both the moral commitment and the financial ability to meet pensioners' needs.
  I hope that the Government will do more. I hope that they will direct more money towards pensioners. But let us remember that the Labour Government are doing more to meet the needs of pensioners than the Tories or Liberals could ever hope to offer.
  5.50 pm
  Mr. Ronnie Fearn: I speak for the town— Southport—that has the second-highest proportion of pensioners in Great Britain. We are beaten only by Bournemouth.
  A fortnight ago, I spoke to a meeting of 200 pensioners. Beforehand, I had sent out a little memo which said, "If you have a particular gripe, bring it to the meeting."

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  Of course, the insult of the 75p pension increase was high on the agenda; everyone spoke about that. However, when they spoke, pensioners were also looking at the other part of the chitty that I had sent, which asked how much the price of their average basket of groceries, bought from a supermarket or small store, had increased in the past three years. The answer that came back—people had not got together to discuss the subject—was, between £2 and £2.50. They compared that with the mere 75p increase that the Government have graciously allowed them, which pensioners say is not enough.
  I do not meet pensioners at the post office, but I knock on doors, as we all do. Recently, I have had to knock on 500 doors because there is to be a by-election in Ainsdale ward. I have also knocked on doors in my ward, because I am still a member of the local authority, Sefton. When asked, "Have you anything to say to a politician?" most people go quiet and do not say much. This time, though, people were very vociferous on two issues. The minor issue was the lack of sports facilities for young people in Southport, but people were also asking, "Why is this insult of 75p being thrust upon us, as pensioners?" That was the major issue.
  I mentioned to people that we had opposed the provision. I said that we would also express our opposition to it today, in the motion, and people were grateful for that; but, in the end, it is the Government who decide. We have said that we shall make our case forcefully, but the Government must decide whether the 75p increase is enough.
  I happened to be in the House in 1988, when I was speaking on health for my party, and a disastrous vote took place. The Conservatives wanted to introduce charges for eye testing and dental charges, and we, with the Labour Opposition, voted against the provision. It was passed by only six votes, much to the regret of myself, the country and pensioners. Some pensioners over the age of 80 and various others on benefit did not need to pay that charge, but the majority of pensioners did have to pay, so they were delighted when we voted, with the new Labour Government, to remove the charge. That pleasure has been completely destroyed by the increase of only 75p.
  At the recent meeting, the pensioners acknowledged that eye tests were now free but asked me, "Have you seen the cost of spectacles?" They were paying an average of between £50 and £90 for spectacles or lenses. That cost has been increasing. Although their eye test is free, that saving has not counterbalanced the increased charges.
  In my constituency, Mersea Travel led the way—with Sheffield—in granting a free pensioners travel pass. That pass is still available and there are no complaints but, when I speak to groups elsewhere, a very strong case is made that travel is not free. The concessionary pass does not exist; tokens are available, which pay for only part of the journey. We may be lucky in my part of Southport, but throughout rural areas, for instance, the pensioners pass has not yet reached the standard set by the two authorities that first offered the free pass.
  Travel benefits pensioners. Pensioners who can get out and travel around keep fitter, saving the NHS money. Therefore, the pensioners pass is essential. I hope that the Government will take a broad perspective, and remember those people who are not capable of moving beyond their home.
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  Another group of poor pensioners is emerging very strongly in my constituency and in many other seaside resorts. That group consists of pensioners who were left as widows by husbands who thought that they had left them well-off in dividends, shares, and money in building societies. All those pensioners have seen their income shrivel over the past few years—not two years, but the past few years—so much so that, now, the majority of visitors to my surgery, and to the citizens advice bureau in Southport, have debts incurred because of property repairs.
  Last week, a widow—quite well-to-do, I supposed— visited my surgery and said that she was desperate. Her income had shrivelled so much that, although the roof was going, she had no money with which to repair it. These, the new poor, are arriving very sharply in this country. Anyone who speaks to the CAB or visits any Member's surgery will find that that is so.
  If the pensioner has been connected, or the husband was connected, with the forces, they can be advised—as I advise them—to go to the Soldiers, Sailors and Airmens Families Association, which is very good indeed, or to the Army, Navy and Air Force benevolent funds. However, only part of the cost of repairs can be paid by that organisation or organisations, and it is a means-tested affair. The forces are doing their bit for the pensioners— they are elderly pensioners now—but we should not have to rely on benevolent funds to ensure that pensioners get an adequate living.
  The standard spending assessment is not what local authorities expected, so every authority is struggling to make ends meet. They now find that increases have not kept pace with inflation and that unexpected matters arise which require purchase and expense. Costs of care are increasing. Those costs include the cost of home help. At the moment, that service is drifting into private enterprise. About 30, 40, 50 and, in some cases, 70 per cent. of that care help has been privatised and, because of privatisation, costs are increasing.
  Dr. Brand: Has my hon. Friend come across one of the consequences of privatising home care? Many pensioners now have to pay VAT on the services that they receive at home. Is it not disgraceful that the Government penalise pensioners twice?
  Mr. Fearn: I agree with my hon. Friend. Such cases have been brought to my surgery and to the citizens advice bureau, which actually passes its cases on to me when it cannot find an answer.
  Mr. Berry: I thought that it was the other way round.
  Mr. Fearn: We do both. However, I write to Ministers and Government officials and receive answers that are not always terribly helpful. They sometimes are, but from the point of view of giving, their response is normally parsimonious.
  Some people say that they are tired of pensioners saying, "I fought for my country and now look at how I am being treated with an increase of only 75p in my pension." However, I admire the pensioners who say that. They have done their service for the country not only when they fought, but as members of this great country's work force. They are being kicked in the teeth as regards pensions.

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  When the Minister replies, will he clarify the position of the minimum income guarantee for older women? We certainly know that they make up one category that does not collect what it is due. That is not because such women are too proud to claim, but because the benefit is not that well known. What briefing and encouragement will the Minister give to induce them to apply for the benefit?
  6.2 pm
  Mr. John Grogan: I shall confine my brief remarks to four matters of particular relevance to pensioners. I will follow many hon. Members in discussing concessionary television licences; I will follow the hon. Member for Southport (Mr. Fearn) in considering concessionary bus passes; and I will follow the hon. Member for Gainsborough (Mr. Leigh) in considering the take-up of income support by pensioners, and the minimum income guarantee. I will quote the same Government research document as did the hon. Member for Gainsborough, but I cannot promise to quote from "The Ragged Trousered Philanthropists". It must be the first time in the long history of Parliament that that book has been quoted by a Conservative Member.
  I preface my remarks by pointing out that in my constituency, as in many others, retired and older people play a key role in maintaining many voluntary organisations, church organisations, much of local government and many political parties. I observed the Conservative party conference, and it seems that retired people play a disproportionate role in maintaining the major Opposition party. Nevertheless, their enthusiasm, energy and experience keep many community organisations going.
  My father was 75 on 12 November last year. He is lucky enough to receive a teacher's pension. Three days before he was 75, my right hon. Friend the Chancellor of the Exchequer announced that, from this year, all 75-year-olds would get a free television licence. At last, my dad has to admit that I must be a man of some influence to arrange that three days before his birthday. Seriously, however, there is no issue that causes greater argument among pensioners and between pensioners and politicians than the operation of the current concessionary television licence scheme, which applies to some forms of sheltered housing.
  The Davies committee that considered the funding of the BBC concluded that the current concession generally goes to poorer pensioners and that those that receive it are more likely to be single pensioners. Therefore, there is a rough and ready distributional justification for the scheme. However, the logic of giving extremely welcome free television licences to those over 75 will, and should, ultimately be extended to all pensioners. It costs £300 million to give free licences to those over 75, and it would cost a further £400 million to give it to all pensioners, as is the case in Ireland. I hope that, in time, we shall do that.
  Even though one-off payments, such as winter fuel payments and free television licences, are often criticised, they benefit all pensioners. They benefit pensioners who claim income support and do not benefit from pension increases, and they benefit pensioners who are entitled to income support and do not claim it. In time, the free licence scheme should be extended to all pensioners.
  If there is one subject that causes more debate among pensioners than the concessionary television licence, it is concessionary bus passes. That is particularly true in
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  border areas between two concessionary fare regimes. My constituency is in such a border area. The hon. Member for Southport referred to bus tokens; in Tadcaster, pensioners receive £8 worth of bus tokens a year. A return journey to Leeds costs £3.50, so pensioners can make two journeys into Leeds and have £1 of tokens left. When the half-fare bus pass is introduced for pensioners in Tadcaster next year, a couple going into Leeds once a week could make a big saving of £180 a year.
  However, there are several issues that the Government must consider. In particular, they must consider reciprocal arrangements between different authorities and the mutual recognition of bus passes. In some areas, such recognition takes place and is usually co-ordinated by the county council. For example, in Sussex and Devon, a bus pass from one district will enable a pensioner to receive concessions in any other district in those counties.
  West Yorkshire passenger transport authority gives mutual recognition to the concessions given to pensioners in Manchester. Therefore, if pensioners with a West Yorkshire bus pass travel to Greater Manchester, they can receive the concessions that are available there. If West Yorkshire passenger transport authority gives concessions to Lancastrians—albeit pensioners—the very least that should happen is that, once other councils in Yorkshire start to introduce such schemes, there should be mutual recognition across the county; otherwise, what will happen to pensioners from Tadcaster who go to Leeds and catch a bus to St. James's hospital to visit relatives or one to an out-of-town leisure centre so that they can go for a swim or play bowls? Are we suggesting that they should not receive the 20p concession that is available to pensioners in the West Yorkshire area and that they should have to pay the full fare for the second journey? Details of such schemes need scrutinising.
  On pensioners' take-up of income support, I refer, as I said I would, to the research published by the Government in October and to the press releases that came out in December. This valuable research was based in nine different areas and the December press release says that its aim was
  "to examine the most effective and cost efficient ways of identifying pensioners who were entitled to IS but were not claiming … and, having identified them, to examine the most effective and efficient ways of encouraging them to claim."
  Roughly 9,000 pilot schemes were run in the nine areas, and four ways were used to get in touch with pensioners. They were:
  "telephone; visit; postal (long form), and postal (short screening form)."
  As was said earlier, the most effective way of contacting pensioners to encourage them to take up benefit was to send them the long form and an accompanying letter.
  It is worth while considering the detail of the research to show the type of problems with which the Government have to deal. It points out that 32 per cent. of the pilot cases contacted by the Benefits Agency did not respond to an intervention, as it is described in the document, and that 15 per cent. said that they did not want to make a claim. Therefore, almost 50 per cent. of the pilot cases were lost at that stage. Indeed, only 5 per cent. of the pilot cases ultimately resulted in a successful claim for income support.
  What lessons can we learn from the research? Possibly, we can learn that it is difficult for the Benefits Agency to be the most effective mechanism for take-up campaigns.

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  Its job is to process efficiently and calculate benefit claims. Problems of stigma, for example, are particularly difficult for the Benefits Agency to overcome. Other lessons that we can learn are identified in the Government's press release. It states that the
  "main barriers to claiming are attitudes about being an Income Support claimant and its perceived stigma"
  and
  "the physical process of making a claim".
  It continues:
  "More specifically, these involve pensioners misunderstanding the criteria for entitlement; the complexity of the application form … the need to reveal financial details; the terminology used, eg benefit, support."
  I look forward to the Government's forthcoming announcement about how to encourage take-up among pensioners. Will that be by simplifying the form, or reinforcing the notion of entitlement, which is referred to in the Government's press release, and getting endorsement from authority figures? I do not know whether that will be Victor Meldrew. However, such moves will be welcome.
  The real solution is buried away in the press release, where it is referred to as an option. It is the option of
  "making Income Support an automatic payment without a need to claim".
  That was certainly envisaged by the Commission on Social Justice, which was set up by the late John Smith. The commission was probably the first body to popularise the idea of a minimum income guarantee for pensioners. It certainly envisaged ultimately that in making a claim for a state pension, pensioners would be asked at that stage what other income from pensions they received. If that did not add up to the minimum pension guarantee, they would automatically receive that payment. That is the only sure-fire way of ensuring that all pensioners who are entitled to the minimum income guarantee are paid it.
  Buried away in the research document is a sentence that I shall bring to the attention of the House. It states:
  "Populous urban areas with the highest levels of deprivation and income support receipt had more extensive provision of advice and advocacy services. More rural areas (with the exception of York) had poor provision of information and advice. Assessing the overall impact of welfare rights activity was difficult. Little robust, systematic evaluation of take-up activity was found in the areas."
  I suggest that pensioners, especially those in rural areas such as North Yorkshire, suffer a double whammy in terms of the benefits that should be available to them. First, advice centres are not nearly comprehensive enough in rural areas, although I accept that some of the advice services are very good, as they are in North Yorkshire. As a result, take-up levels for income support in rural areas, including attendance allowance and disability living allowance, are much lower than in urban areas. It reinforces the so-called stigma that attaches to them if fewer people claim them.
  Secondly, local authorities, which depend for their funding, as North Yorkshire county council does—and particularly its social services departments—on the number of claimants, among pensioners, of income support, attendance allowance and disability living allowance, lose out through lack of grants. In terms of the provision of home helps and meals on wheels services, many people in rural areas suffer.
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  The North Yorkshire county council Labour group, although in a minority, has undertaken some research on these matters. It has found that only 11.1 per cent. of pensioners in North Yorkshire claim successfully for attendance allowance and disability living allowance, which are non-means-tested benefits. The England average is 14.5 per cent. The average among county councils is 13.3 per cent. Even though the group is a minority, it has successfully persuaded the county council to give corporate priority this year to the improvement of welfare benefits advice. I leave the House with the thought that central and local government have a key role in ensuring that pensioners receive the benefits to which they are entitled.
  6.14 pm
  Mr. Paul Goggins: The impact of the current virus is such that my speech will be delivered in perhaps softer tones than would be customary. None the less, I hope that it will contribute something to the debate. It is a pleasure to be able to take up the remarks of my hon. Friend the Member for Selby (Mr. Grogan), who made several interesting proposals and suggestions—not least the need for joined-up government across the Pennines on transport policy.
  When I read the motion I was disappointed with its scope. When I first saw the subject for the debate— meeting the needs of pensioners—I thought that we would have a much more wide-ranging debate than one that focused narrowly on the 75p increase in the state retirement pension. However, the state retirement pension is clearly important. My right hon. Friend the Minister of State reminded the House earlier that the state pension remains the bedrock of Government pensions policy.
  Government policies for Britain's 11 million pensioners must be as wide-ranging as their different needs and characteristics demand. Our 11 million pensioners are not a homogeneous group; they are very different people.
  It must be acknowledged that many pensioners now are better off than could have been dreamed of 30 or 40 years ago. Before coming to the Chamber, I opened the latest report on households below average incomes. I knew that the hon. Member for Northavon (Mr. Webb) was to propose the motion and that he is something of an expert on this series of reports, which he demonstrated this afternoon.
  The tables in the report tell us a great deal about the poorer members of our society. They tell us also a thing or two about some of the richer members of it. For example, 5 million of our 11 million pensioners are members of the richest 60 per cent. of the population, and 1 million are members of the richest 20 per cent. Most of us know from our family and friends and our own experience that that is the case.
  My hon. Friend the Member for Selby brought as evidence the position of his father, and I do the same. My father is 70 and he is not one of the super rich, but, like my hon. Friend's father, he was a teacher. He has an occupational pension and lives a quite comfortable life. During this interesting debate on the state retirement pension, my father has been sunning himself in Tenerife, along with thousands of other pensioners in Britain who take themselves abroad at this time of year for some warmer weather.
  I do not make that point to belittle the plight of pensioners who still face poverty. It is a scandal that so many pensioners still do face poverty. I make the point to

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  put the pensioner question into context. The rich-and-poor divide that scars our society affects pensioners as well as people in all other sections of society. I believe that different policies are required for these different groups to deal, first, with the immediate pressures that come with poverty and, secondly, and just as important—more important in the long term—to deal with the factors that cause poverty in our society in the long run.
  Against that background, I believe that the Government's approach is absolutely right. The measures that will help today's pensioners—the minimum income guarantee, the winter fuel allowance, free eye tests, free television licences for the over-75s and all the other measures that were welcomed by my hon. Friend the Member for Kingswood (Mr. Berry) with, as he said, admirable assistance from the Liberal Democrat councillors on his local authority—mean that the poorest pensioners in Britain are now £;10 a week better off if single, and £16 in the case of a pensioner couple.
  The second crucial piece of Government policy is the action that we are taking to prevent poverty in future generations of pensioners. We are dealing with the causes, not just the symptoms. The Government are introducing the state second pension and the framework for stakeholder pensions so that we can avoid poverty in future.
  Pensioner poverty is a huge problem and no one should underestimate that fact. The statistics on households below average income tell us that, between 1991 and 1997, a quarter of all single pensioners lived in poverty, not just for one of those years but for all six. They were trapped in poverty, with no prospect of an escape route. That has a severe impact on the life and quality of life of those pensioners.
  Nowhere is that seen more graphically than in terms of health and life expectancy. In Manchester, a typical man who is reaching the age of 65 can expect to live until he is 78—a further 13 years. However, he will spend only about seven of those years in good health. In Surrey today, a typical man reaching 65 years of age can expect to live until he is 80—a further 15 years—and enjoy 10 of them in good health.
  We must first accept that there are people in poverty who live in Surrey, just as there are reasonably well-off people who live in Manchester. The example brings two important points to our attention. First, people in better-off areas enjoy longer life and can expect healthier life, too. Secondly, pensioners in poorer areas need extra support from public services. The man from Manchester will die earlier but will require an extra year of support from the national health service, the local authority, the voluntary sector and so on. Pensioner poverty is about much more than 75p a week; it is about lifetime chances and public services, as well as income.
  I have been to many pensioner meetings, as have my hon. Friends and some Opposition Members. I am in no doubt that, if the Government were to increase the state retirement pension in line with earnings rather than prices, it would be extremely popular with a number of pensioner organisations and groups, not least those in my constituency. However, I do not favour that approach because I do not believe that it would help us tackle the problem of pensioner poverty now.
  We have heard several examples of the sums involved if the state retirement pension were increased—I think £13 billion was the figure given for an increase of
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  £30 a week. The hon. Member for Gainsborough (Mr. Leigh) generously proposed an increase of £1 a week. An increase in the state retirement pension of £5 a week would mean, first, extra Government expenditure of £2.5 billion a year, which would of course be built on year on year, and secondly, a boost to the incomes of better-off people. The one group that such an increase would not benefit would be the poorest pensioners, who would lose every pound of that £5 in withdrawal of means-tested benefits. They would see the advantage taken away from them.
  There have been some interesting contributions to the debate on the issue of means testing—not least from the hon. Member for Gainsborough who follows the social security debate, and especially means testing, assiduously—but I grow impatient over it. The Government are often accused by their critics of taking measures that increase it.
  If the Government are to help the least well-off people, and if we leave aside, for the time being anyway, the fact that their long-term aim is to implement measures such as the state second pension and stakeholder pensions, to give carers, the low paid and people with disabilities the chance of a second pension that would take them above the poverty line in the long term, we must recognise that there has to be some measure of income and resources.
  No party or Government can run away from that fact. We may hear much rhetoric on the issue, but no other party has made a firm proposal to abolish means testing as part of their overall strategy. All parties have a responsibility to help to develop a different approach to the testing of income and resources—to try to foster a new mindset among the public.
  When means testing was operating in the 19th century and then in the 1930s, most people were poor, and the process was demeaning and stigmatising. However, times have changed; most people today are not poor. Together we should be able to create a new attitude to the testing of income and resources that reduces the stigmatisation process.
  Three measures could be helpful. First, the branding of the minimum income guarantee as a guarantee—an entitlement—is very helpful. It begins to get us away from the handout mentality. Secondly, it is extremely helpful that the year-on-year increase is in line with earnings rather than prices. Its value will therefore increase year on year.
  Many people do not claim means-tested benefits because they are of only marginal advantage. A lady came to my advice bureau the other day—not about pensions but in relation to another benefit—who had in the past claimed family credit and been only marginally better off. In the end, she had given up claiming. A few years went by; we introduced the working families tax credit, she made a new claim and now finds herself £70 a week better off. As people see a substantial difference by virtue of making a claim—it is worth their while—they will be more likely to claim. More pensioners will claim benefits as the minimum income guarantee increases.
  The third reason for optimism is that anybody who retires from 2010 will have no memory of times before the second world war. Perhaps the images of the 1930s and further back will therefore dim in the public's minds. We must be honest: no party will get rid of the means test. It is a necessary test of income and resources, and we need a more positive attitude towards it.

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  I said that I was somewhat disappointed by the narrow nature of the motion. I certainly hope that we have other opportunities in the near future to debate other issues that affect pensioners. I was very pleased that the hon. Member for Southport (Mr. Fearn) introduced the issue of housing as it affects pensioners, because it is extremely important.
  In the Manchester part of my constituency, two thirds of pensioners live in rented accommodation—much of it local authority owned, some of it housing association property, and some private. Many of those pensioners are unhappy with the house in which they live. Some have medical problems and need adaptations to their houses, which take for ever to be made. If they need alternative accommodation, what is available is often unsuitable for their needs. Some have family living outside the area, but transferring to suitable accommodation can be difficult. Sometimes, their houses are too big, but often smaller and more suitable accommodation is not available. Pensioners' housing need is an issue that we must all address.
  One extremely important issue that has not been raised in this debate is the fact that 300,000 pensioners in Britain do not have access to a telephone. That is not necessarily a matter for the Government; it is one for telephone companies. Last week, a gas company announced that it would be abolishing the standing charge and restructuring its charging system to take account of that. If a gas company can do that, surely telephone companies can do something to connect the 300,000 pensioners who are isolated. It is great that pensioners are using the internet, but not if 300,000 of them cannot pick up a telephone to call for help when they need it.
  I was glad to hear my right hon. Friend the Minister of State promise that the issue of capital limits will be dealt with in this Parliament. That is so important. It is 12 years since the limits were set, but they have never been changed. Much can be done to help the poorest pensioners as and when the limits are altered.
  Complaints about the 75p increase in the state retirement pension pale into insignificance when compared with what the Government are doing for pensioners generally and for poorer pensioners in particular.
  6.28 pm
  Mr. Paul Burstow: I apologise to the one or two hon. Members who have been unable to speak in this debate.
  This has been a very useful debate. Liberal Democrats make no apologies for focusing on the derisory 75p increase in the basic state pension which is to come into effect in April. All I want to do is to seek clarity on the stance of the official Opposition and of the many Labour Members who signed the early-day motion to which my hon. Friend the Member for Northavon (Mr. Webb) referred.
  I shall try to address a few of the points made in the debate, starting with the comments of the hon. Member for Kingswood (Mr. Berry), who rightly said that the supposed demographic time bomb is a myth. The royal commission on long-term care and, indeed, the Select
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  Committee on Health, have comprehensively scotched that argument. If there was a time-bomb at all, it went off in the 20th century, and we managed to afford the costs of it. It is important to bear in mind the fact that we not only afforded a massive increase in the number of pensioners but were able to put in additional resources to improve the basic state pension. We should not forget that fact, to which my hon. Friend the Member for Northavon drew our attention.
  The Minister referred in his opening remarks to the fact that we had changed our policy since the general election in respect of our manifesto commitment on the uprating of the basic state pension. That is true. It is fine and appropriate to consider policies and to keep them under review. It is a strange proposition that at no point should a party re-evaluate its position. The position that we have outlined sets us clearly apart from the other parties on the issue of pensioners and how to improve their circumstances.
  We have made it clear that we want a new £3 age addition to the basic state pension at 75, and we want to build on and increase to £5 the miserly 25p age addition at 80. Those are the first steps in improving the lot of the poorest of our pensioners.
  We should consider how to index the basic state pension to the basket of costs that pensioners face in reality. The hon. Member for Islington, North (Mr. Corbyn) and others referred to the costs that are not properly factored into the calculation of the retail prices index, which is the current basis for uprating.
  The Minister spent quite some time talking about averages. He talked a lot less about the poorest of our pensioners. As we have established in this debate, although it is undoubtedly true that average pensioner incomes have increased, the figures ignore the situation of the long-term retired, whose incomes have declined because all too often they are uprated in relation to prices rather than earnings—whether occupational pensions or the basic state pension. Inflation has eroded the value of pensions, and has left pensioners in an increasingly difficult and hard-pressed situation.
  Where do the Conservatives stand? Very few of them stood in this debate. [HoN. MEMBERS: "Where are they?"] They obviously had engagements elsewhere. Perhaps they were consulting pensioner constituents to find out their views. In a speech lasting 14 minutes, their spokeswoman, the hon. Member for Beckenham (Mrs. Lait), did not elucidate their policy or give the official Opposition's view of whether the basic state pension uprating this April is adequate. My hon. Friend the Member for Somerton and Frome (Mr. Heath) was right to pose that question, but the Conservatives did not answer it. They do not seem to want to say what their policy is.
  My hon. Friend the Member for Southport (Mr. Fearn) rightly made the link between health equalities and the level of pensions. That was drawn out by the Government's own report—the Acheson report—in September 1988, which made it clear that there is a definite link between low incomes and poor health outcomes, to which several hon. Members referred.
  The proposition that we have put to the House tonight is that the 75p increase in the basic state pension is derisory. It will do nothing to meet the real costs of living with which pensioners are confronted every day. For most

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  pensioners, the pension increase will be consumed by, for example, the council tax increase. The poorest pensioners will be hit the hardest. Indeed, 870,000 people who are entitled to claim the so-called minimum income guarantee do not claim it. The hon. Member for Gainsborough (Mr. Leigh) referred to the Government's research on take-up. A factor that he did not mention, which I think is highly relevant, is that 36 per cent. of the people who responded to the Government's research said that they would not claim the benefit: they would refuse to take up a means-tested benefit and would thus continue to live in poverty. The Government must consider that seriously. It is right that we urge people to take up the minimum income guarantee, and I hope that the campaign that the Government are about to launch is a success.
  Another 600,000 people are disqualified from the minimum income guarantee because they have savings of £8,000 or more. My hon. Friend the Member for Southport rightly talked about this new category of poor pensioners who live in properties which their income is no longer sufficient to maintain. That is a serious challenge for all hon. Members to think about: there is now no reward for thrift. The Government made matters worse when they decided to abolish the tax credit on dividends, as a result of which many pensioners lose £75 per annum.
  The largest group of pensioners who are missing out on the income guarantee are older women who, as a result of broken contribution records, often do not receive full basic state pensions. Currently, 1.5 million pensioners need income support. In the Green Paper that the Government published last year, they said:
  "People who work all their lives should not have to rely on means tested benefits."
  On the Government's own figures, at least another 1 million people will require means-tested income support by 2050.
  For some 1.4 million people, the minimum income guarantee will make no difference—those 600,000 who are disqualified because of the capital thresholds and those who have not claimed the benefit. That means that the minimum income guarantee is no guarantee at all.
  All the evidence shows that the poorest pensioners are the oldest pensioners. For example, by the Government's own definition, 80 per cent. of the over-80s live in fuel poverty. We want far more money to be put into the basic state pension. A more effective way of targeting money would be to target it on the basis not of means but of age. That is why we believe that the extra 25p that is added to the basic state pension at the age of 80, which has not been uprated since 1971, should be raised for the first time for many years to at least £5, and that there should be an age addition at the age of 75 of at least £3.
  The hon. Member for Bethnal Green and Bow (Ms King) referred to the proposal for 1p on income tax for education on which my party has campaigned. She was the first person in the debate to mention that, but to listen to her, one would have thought that it had been the substance of many speeches by Liberal Democrats. It is not our policy to use the 1p on income tax for education to fund pensions.
  The hon. Member for Coventry, South (Mr. Cunningham) questioned us about our proposal to use the surplus on the national insurance fund. My hon. Friend the Member for Northavon outlined in some detail how that would work, but
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  I shall recap. Currently, there is an accumulated balance on the national insurance fund of £15 billion. Every year, £1 billion is added to that surplus. Our proposals for age additions would cost about £0.5 billion per annum—modest increases targeted to help those most in need. That is the difference between our approach and the Government's.
  The hon. Member for Bethnal Green and Bow was right to say that the country could afford to do more for pensioners through the basic state pension. That applies to the current generation of pensioners, but how will future pensioners fare? The Government's solution is to scrap the state earnings-related pension and put in its place the state second pension. The first full state second pension will not be paid until 2047. Eighteen-year-olds might have some hope that a state second pension will come to their aid when they retire, but only once they have been in the work force for 40 years, and only if they pass the relevant qualifying tests for credits.
  The Government are introducing the state second pension at such a slow rate that it makes snails look positively fast. By 2025, the state second pension will put in people's pockets an extra £1.30 a week. After 40 years in the work force, will the state second pension lift its beneficiaries out of the means test, which is what the Green Paper said it should do? The answer is no. The minimum income guarantee will very quickly overtake the combined sum of the basic state pension and the state second pension.
  The Government's amendment refers to people retiring on incomes above means-tested levels "in due course." That is a never-never land promise—it will never be redeemed by this or any Government. It prompts the question, when will the state second pension lift people above means-test levels? As it is currently framed in the legislation, it will not.
  Liberal Democrats believe that the 75p increase in the basic state pension from this April is a disgrace, derisory and an insult to the pensioners of this country. That is why tonight we shall go through the Lobby to vote for our motion, and we hope that other Members who feel the same way will do so as well.
  6.39 pm
  The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): The hon. Member for Northavon (Mr. Webb) gave a passable impression of a "desiccated calculating machine" as he bombarded us with statistics and with facts and figures. It was just the kind of passionate, almost addictive, number crunching that Nye Bevan would have held in disdain.
  I have no doubt that the hon. Gentleman is well informed. The problem with his argument is its assumption that other people, both in the House and outside, are less well informed than he is. His argument demands total credulity: it asks us to believe every word that he says now. It also demands collective amnesia: it asks us to forget everything that the Liberal Democrats have said before.
  The motion states that uprating the basic state pension in line with the retail prices index is inadequate, yet, as my right hon. Friend the Minister of State said earlier, just over two years ago the Liberal Democrat election manifesto said:
  "The basic state pension will remain indexed to prices."

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  Moreover, the Liberal Democrats gave a perfect description—in glowing terms—of the minimum income guarantee that the Labour Government have introduced. They said that they would
  "Guarantee everyone an acceptable minimum standard of living in retirement. We will create an additional top-up pension for pensioners below the Income Support level. This will be indexed to earnings".
  As most hon. Members know, the Liberal Democrats made those promises in a manifesto which—despite the ability of some of them to play with figures—displayed their inability to do basic sums. It contained spending pledges that would have cost some 5p in the pound in additional income tax, or some £600 per family. The Liberal Democrats promised to raise revenue, and to fund their pledges across the broad spectrum of Government expenditure, by putting 1p on income tax—should it prove necessary: they did not even give a guarantee that they would do that. We have heard confirmation this evening that not a scrap of the money raised from that 1p would go to pensioners. Every bit would support the Liberal Democrats' education plans—plans, incidentally, which have been funded to a far greater extent by this Labour Government.
  Mr. Chris Pond: My hon. Friend will have heard the hon. Member for Northavon (Mr. Webb) suggest earlier that Governments since the war had done more than link pensions to earnings. He may wish to stress that the present Government have done much more than that: indeed, the earnings link in itself may have been the easy option. Has he the shadow of a suspicion that, had this Government simply linked the basic pension to earnings, we would today be debating an Opposition motion demanding that we introduce a minimum income guarantee and increase it in line with prices?
  Mr. Bayley: My hon. Friend is well versed in these matters, and he is absolutely right. Had we restored the link with earnings, the increase in spending on pensioners from the social security budget would have been less than it will be in the lifetime of this Parliament. By the end of the current Parliament, this Labour Government will be spending some £4 billion more per year on pensioners.
  As my hon. Friend suggests, had we restored the earnings link—as the Liberal Democrats now imply that we should have—there would have been the same cost inflation. That is what Liberal Democrat policies would have brought about. The problem is that the Liberal Democrats produced a manifesto in which their sums did not add up, and they have now added yet more expenditure by promising more to pensioners, without explaining how—[Interruption.]
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. Hon. Members must not shout at each other across the Floor.
  Mr. Bayley: If the Liberal Democrats wish to increase expenditure, they owe it to the public, and to pensioners in particular, to explain how they are going to do that.
  Pensioners are bright. They are too bright to be taken in easily by a bit of flexible arithmetic. During the last Parliament, I went to a public meeting to talk to the York
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  pensioners association, which I had established. It was one of the first things that I did after being elected. I went to the meeting days after the Labour party had decided, in policy terms, to opt for targeting rather than raising the basic state pension in line with earnings—which had been our policy hitherto, as hon. Members know.
  To be blunt, I expected a pretty rough ride. After I had said my piece, a woman pensioner stood up and said, "I am glad you said that, Mr. Bayley. When the Labour party promised the earth, I rather wondered where they would find the money." When a party makes promises without explaining how they will be funded, it has no credibility.
  My hon. Friend the Member for Kingswood (Mr. Berry) did not argue that the Government should restore the link between the basic state pension and earnings, but he did argue that they should do more than provide price indexation for pensioners as a whole. Similar points were made by my hon. Friends the Members for Coventry, South (Mr. Cunningham) and for Bethnal Green and Bow (Ms King).
  All my hon. Friends recognise that the Government are doing substantially more for the poorest pensioners through the minimum income guarantee, but we are also doing more than simple price indexation for all pensioners. We are doing more by means of services such as eye tests, and the concessionary fares proposal that my right hon. Friend the Secretary of State for the Environment, Transport and the Regions will introduce in legislation during the current Session; but we are also doing more by introducing, for instance, the winter fuel supplement, which applied to all pensioners.
  Initially, the winter fuel supplement was to be higher for pensioners on low incomes. It was to be £50 for pensioners receiving income support, and £20 for other pensioner households. However, partly in response to arguments such as those advanced by my hon. Friend the Member for Kingswood—for instance, the argument that all pensioners should receive increases that are more than merely price indexed—this year we were able to announce a fivefold increase in the value of the winter fuel addition to £100. That is nearly £2 per week, in addition to the 75p. It is entirely wrong to suggest that the Government are leaving all pensioners with a mere 75p; we are providing additions for all pensioners on top of that.
  I know, and every member of the Government knows, that many pensioners want us to do more. Many want us to restore the link. As my hon. Friend the Member for Gravesham (Mr. Pond) pointed out, if it were just a matter of spending, it could be said that the Government had done more than meet the cost of restoring the link. An extra £800 million has been added to social security expenditure on pensioners as a result of the introduction of the winter fuel addition and the minimum income guarantee for pensioners— £800 million more than would have been the cost of uprating pensions in relation to earnings over the three years during which we have been in government so far.
  Of course, the Government have a choice. If we deemed it right, we could spend the money on an equal increase in the basic state pension for all pensioners; alternatively, we could target more on the pensioners who need help most.

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  The Government are serious about reducing poverty. When we published our first poverty report in September, many people, including most of the commentators in the newspapers, were taken aback at the boldness of our commitments and at the transparency of the indicators that we intend to use to monitor our success in reducing poverty. We put ourselves on the line and for a simple reason: we are committed to reducing poverty. If we are going to meet those ambitious goals, we will have to ensure that we target resources on those who need them most: the poor.
  Think of the Government's inheritance when they came to office just over two and a half years ago. Pensioner incomes increased significantly between 1979 and 1997, a point that was made by hon. Members from the official Opposition. Indeed, over that period, average pensioner income rose faster than average earnings, yet, at the same time, the gap between the incomes of the poorest pensioners and other pensioners increased dramatically. Our priority is to direct more help to those who have been hardest hit through the 18 years of Conservative pension policy.
  Mr. Webb: The Minister refers to those who have been hardest hit. Presumably, the small saver would come into that category. Will he explain why the Government have for three years retained the Tory capital limits—they have frozen them each year? He has promised action by the end of the Parliament. Why do pensioners have to wait that long? A year ago, the Government promised action soon. Why are we having to wait?
  Mr. Bayley: The Government have promised to address capital limits. We will do so during the lifetime of the Parliament. The Liberal Democrats, who promise the earth without taxation commitments to pay for their promises, ask for yet another promise. Each year—pensioners understand the policy—the Government have introduced benefits for pensioners over and above price indexation. Each year, we have done things that have reduced the costs that pensioners face and that have increased pensioner incomes. The hon. Member for Northavon is wrong to shake his head because we have reduced the fuel costs that pensioners face; we have provided fuel supplements for all pensioners. During the lifetime of the current Parliament, we will continue to do that year by year. We have made an absolutely fundamental commitment—which, incidentally, the Liberal Democrats did not make—to deal with capital limits during the lifetime of the Parliament. That we will do.
  If we increased the basic state pension in line with earnings, every pensioner would gain, except those on income support. Those on income support would lose every pound of the pension rise from their income support payment—from the minimum income guarantee. Instead, by targeting that money on the minimum income guarantee, we are helping the poorest pensioners substantially.
  My hon. Friend the Member for Kingswood also raised the capital limits issue. He did so to explain why he put his name to the early-day motion that has been discussed by quite a number of hon. Members on both sides of the House. I hope that my hon. Friend will be reassured by the commitment that the Government have given to address the issue. We are looking at the issue now and we will address it during the current Parliament.
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  My hon. Friend the Member for Selby (Mr. Grogan) made a lot of important and useful points about the importance of a take-up campaign to ensure that pensioners who are entitled to the minimum income guarantee take it up, but he made one suggestion that I should like to discuss a bit further: that perhaps the take-up campaign should be run by any organisation other than the Benefits Agency because it was a tarnished commodity and would put people off claiming.
  My hon. Friend is aware that we have changed the law to enable organisations other than the Benefits Agency to take information and to process a minimum income guarantee application. If someone is applying for housing benefit, for example, that other organisation could take information from the local authority. That is a welcome step forward, but I counsel against writing the Benefits Agency out of the equation. One of the problems with the Benefits Agency that we inherited was that it was simply a passive payer of benefits, rather than an active part of the welfare system. We need to ensure that the image of the Benefits Agency changes and that it is involved with a wide range of other agencies in spearheading the campaign.
  The hon. Member for Southport (Mr. Fearn) made the point that additional help is needed for older pensioners. He asked whether the minimum income guarantee should be changed to achieve that. The minimum income guarantee already provides higher rates of guaranteed minimum income for older pensioners. As most hon. Members will know, for a single pensioner, the minimum income guarantee guarantees an income of £75 a week at current rates, but for a single person aged over 75, the rate is £95.60 a week. For a single person aged over 80, it is £101.30.
  Mr. Fearn: I asked the Minister to come forward with priorities, so that the 37 per cent. of older women who are not claiming at the moment do claim.
  Mr. Bayley: The Liberal Democrats have a simple choice. Either they put whatever resources are available in the hands of all older pensioners, in which case there is not much money to go round, or they target it at the poorest older pensioners. If their objective is the same as the Government's—to reduce poverty among older pensioners on the lowest incomes—they will applaud what the Government are doing and agree with us that the minimum income guarantee is the right way to provide dignity to people in retirement who have not been able to put aside resources for private pension provision. If the Liberal Democrats want to abolish poverty, they should join us and ensure that the minimum income guarantee works.
  Hon. Members have not spoken much about the need to create a pension system that ensures that people do not need to fall on means-tested benefits, but the Government are creating such a system with legislation that we passed last year to create stakeholder pensions and with the Child Support, Pensions and Social Security Bill, which is currently before the House. That will create the state second pension and reform the state earnings-related pension to provide a better return for people on the lowest earnings. For those earning under £9,500 a year, the state second pension will provide twice the pension on maturity that SERPS provides at the moment.

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  The problem with the state earnings-related pension lies within the name itself: it is earnings related, so it is the poorest people at work who get the lowest pensions. We are reforming that with a state second pension. We are also providing credits to carers and to disabled people whose employment record has been disrupted by their state of health.
  For today's pensioners, we are providing substantially more than simple price indexation. We abolished VAT on fuel, as we promised we would. We reduced it to the lowest level allowed under legislation that the Conservatives agreed with Brussels.
  The Government have abolished the gas levy. We have introduced the winter fuel allowances, and increased them fivefold to £100 per household—which is almost £2 per week on top of the indexation to be introduced from next April.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 41, Noes 300.

  Division No. 27]

  [7 pm

  AYES

  Allan, Richard

  Keetch, Paul

  Ashdown, Rt Hon Paddy

  Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

  Baker, Norman

  Ballard, Jackie

  Kirkwood, Archy

  Berth, Rt Hon A J

  Llwyd, Elfyn

  Brake, Tom

  Maclennan, Rt Hon Robert

  Brand, Dr Peter

  Michie, Mrs Ray (Argyll & Bute)

  Breed, Colin

  Moore, Michael

  Bruce, Malcolm (Gordon)

  Oaten, Mark

  Burstow, Paul

  Öpik, Lembit

  Cable, Dr Vincent

  Rendel, David

  Campbell, Rt Hon Menzies (NE Fife)

  Sanders, Adrian

  Smith, Sir Robert (W Ab'd'ns)

  Chidgey, David

  Stunell, Andrew

  Cotter, Brian

  Taylor, Matthew (Truro)

  Dawson, Hilton

  Tonge, Dr Jenny

  Fearn, Ronnie

  Tyler, Paul

  Foster, Don (Bath)

  Webb, Steve

  Harris, Dr Evan

  Wigley, Rt Hon Dafydd

  Harvey, Nick

  Willis, Phil

  Heath, David (Somerton & Frome)

  Tellers for the Ayes:

  Hughes, Simon (Southwark N)

  Mr. Bob Russell and

  Jones, Nigel (Cheltenham)

  Mr. Edward Davey.

  NOES

  Abbott, Ms Diane

  Best, Harold

  Adams, Mrs Irene (Paisley N)

  Betts, Clive

  Ainger, Nick

  Blears, Ms Hazel

  Ainsworth, Robert (Cov'try NE)

  Boateng, Rt Hon Paul

  Allen, Graham

  Bradley, Keith (Withington)

  Anderson, Donald (Swansea E)

  Bradley, Peter (The Wrekin)

  Armstrong, Rt Hon Ms Hilary

  Bradshaw, Ben

  Ashton, Joe

  Brinton, Mrs Helen

  Atherton, Ms Candy

  Brown, Russell (Dumfries)

  Atkins, Charlotte

  Browne, Desmond

  Banks, Tony

  Burden, Richard

  Barron, Kevin

  Burgon, Colin

  Bayley, Hugh

  Butler, Mrs Christine

  Beckett, Rt Hon Mrs Margaret

  Campbell, Ronnie (Blyth V)

  Bell, Martin (Tatton)

  Campbell-Savours, Dale

  Benn, Hilary (Leeds C)

  Cann, Jamie

  Bennett, Andrew F

  Caplin, Ivor

  Benton, Joe

  Casale, Roger

  Bermingham, Gerald

  Caton, Martin

  608

  Cawsey, Ian

  Heal, Mrs Sylvia

  Chapman, Ben (Wirral S)

  Henderson, Doug (Newcastle N)

  Chaytor, David

  Henderson, Ivan (Harwich)

  Clapham, Michael

  Hepburn, Stephen

  Clark, Rt Hon Dr David (S Shields)

  Heppell, John

  Clark, Paul (Gillingham)

  Hill, Keith

  Clarke, Charles (Norwich S)

  Hodge, Ms Margaret

  Clarke, Rt Hon Tom (Coatbridge)

  Hoey, Kate

  Clarke, Tony (Northampton S)

  Hood, Jimmy

  Clwyd, Ann

  Hope, Phil

  Coaker, Vernon

  Howarth, George (Knowsley N)

  Coffey, Ms Ann

  Howells, Dr Kim

  Cohen, Harry

  Hoyle, Lindsay

  Coleman, Iain

  Hughes, Ms Beverley (Stretford)

  Colman, Tony

  Hughes, Kevin (Doncaster N)

  Connarty, Michael

  Humble, Mrs Joan

  Cook, Frank (Stockton N)

  Hurst, Alan

  Cooper, Yvette

  Iddon, Dr Brian

  Corbett, Robin

  Illsley, Eric

  Corston, Jean

  Jackson, Helen (Hillsborough)

  Cousins, Jim

  Jamieson, David

  Cranston, Ross

  Jenkins, Brian

  Crausby, David

  Johnson, Alan (Hull W & Hessle)

  Cryer, John (Hornchurch)

  Johnson, Miss Melanie (Welwyn Hatfield)

  Cunningham, Jim (Cov'try S)

  Curtis-Thomas, Mrs Claire

  Jones, Rt Hon Barry (Alyn)

  Dalyell, Tam

  Jones, Helen (Warrington N)

  Darting, Rt Hon Alistair

  Jones, Jon Owen (Cardiff C)

  Darvill, Keith

  Jones, Dr Lynne (Selly Oak)

  Davey, Valerie (Bristol W)

  Kaufman, Rt Hon Gerald

  Davidson, Ian

  Keeble, Ms Sally

  Davies, Rt Hon Denzil (Llanelli)

  Keen, Alan (Feltham & Heston)

  Davies, Geraint (Croydon C)

  Kelly, Ms Ruth

  Dean, Mrs Janet

  Kennedy, Jane (Wavertree)

  Denham, John

  Khabra, Piara S

  Dismore, Andrew

  Kidney, David

  Dobbin, Jim

  King, Andy (Rugby & Kenilworth)

  Donohoe, Brian H

  King, Ms Oona (Bethnal Green)

  Doran, Frank

  Kumar, Dr Ashok

  Dowd, Jim

  Ladyman, Dr Stephen

  Dunwoody, Mrs Gwyneth

  Laxton, Bob

  Eagle, Angela (Wallasey)

  Lepper, David

  Eagle, Maria (L'pool Garston)

  Leslie, Christopher

  Edwards, Huw

  Levitt, Tom

  Efford, Clive

  Lewis, Terry (Worsley)

  Ennis, Jeff

  Liddell, Rt Hon Mrs Helen

  Field, Rt Hon Frank

  Linton, Martin

  Fisher, Mark

  Lloyd, Tony (Manchester C)

  Fitzpatrick, Jim

  Love, Andrew

  Fitzsimons, Lorna

  McAvoy, Thomas

  Flint, Caroline

  McCabe, Steve

  Flynn, Paul

  McCafferty, Ms Chris

  Follett, Barbara

  McDonagh, Siobhain

  Foster, Rt Hon Derek

  Macdonald, Calum

  Foster, Michael Jabez (Hastings)

  McFall, John

  Foster, Michael J (Worcester)

  McGuire, Mrs Anne

  Fyfe, Maria

  McIsaac, Shona

  Galloway, George

  McKenna, Mrs Rosemary

  Gapes, Mike

  Mackinlay, Andrew

  Gardiner, Barry

  McNulty, Tony

  George, Bruce (Walsall S)

  MacShane, Denis

  Gerrard, Neil

  Mactaggart, Fiona

  Gibson, Dr Ian

  McWalter, Tony

  Gilroy, Mrs Linda

  McWilliam, John

  Godsiff, Roger

  Marsden, Gordon (Blackpool S)

  Goggins, Paul

  Marsden, Paul (Shrewsbury)

  Golding, Mrs Llin

  Marshall, David (Shettleston)

  Griffiths, Jane (Reading E)

  Marshall-Andrews, Robert

  Griffiths, Nigel (Edinburgh S)

  Martlew, Eric

  Griffiths, Win (Bridgend)

  Maxton, John

  Grocott, Bruce

  Meale, Alan

  Grogan, John

  Merron, Gillian

  Hain, Peter

  Miller, Andrew

  Hall, Patrick (Bedford)

  Mitchell, Austin

  Hamilton, Fabian (Leeds NE)

  Moffatt, Laura

  Harman, Rt Hon Ms Harriet

  Moran, Ms Margaret

  609

  Morley, Elliot

  Savidge, Malcolm

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Sawford, Phil

  Sedgemore, Brian

  Mountford, Kali

  Shaw, Jonathan

  Mowlam, Rt Hon Marjorie

  Sheerman, Barry

  Mudie, George

  Sheldon, Rt Hon Robert

  Mullin, Chris

  Simpson, Alan (Nottingham S)

  Murphy, Jim (Eastwood)

  Singh, Marsha

  Murphy, Rt Hon Paul (Torfaen)

  Smith, Rt Hon Andrew (Oxford E)

  Naysmith, Dr Doug

  Smith, Angela (Basildon)

  Norris, Dan

  Smith, Rt Hon Chris (Islington S)

  O'Brien, Bill (Normanton)

  Smith, Jacqui (Redditch)

  O'Brien, Mike (N Warks)

  Smith, John (Glamorgan)

  O'Hara, Eddie

  Smith, Llew (Blaenau Gwent)

  Olner, Bill

  Snape, Peter

  Organ, Mrs Diana

  Soley, Clive

  Palmer, Dr Nick

  Southworth, Ms Helen

  Pearson, Ian

  Spellar, John

  Pendry, Tom

  Squire, Ms Rachel

  Perham, Ms Linda

  Starkey, Dr Phyllis

  Pickthall, Colin

  Steinberg, Gerry

  Pike, Peter L

  Stevenson, George

  Plaskitt, James

  Stewart, David (Inverness E)

  Pond, Chris

  Stewart, Ian (Eccles)

  Pound, Stephen

  Stinchcombe, Paul

  Powell, Sir Raymond

  Stoate, Dr Howard

  Prentice, Ms Bridget (Lewisham E)

  Strang, Rt Hon Dr Gavin

  Prentice, Gordon (Pendle)

  Straw, Rt Hon Jack

  Prosser, Gwyn

  Stringer, Graham

  Purchase, Ken

  Stuart, Ms Gisela

  Quin, Rt Hon Ms Joyce

  Sutcliffe, Gerry

  Quinn, Lawrie

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Rammell, Bill

  Reed, Andrew (Loughborough)

  Taylor, Ms Dari (Stockton S)

  Reid, Rt Hon Dr John (Hamilton N)

  Taylor, David (NW Leics)

  Robinson, Geoffrey (Cov'try NW)

  Temple-Morris, Peter

  Roche, Mrs Barbara

  Thomas, Gareth R (Harrow W)

  Rogers, Allan

  Timms, Stephen

  Rooker, Rt Hon Jeff

  Tipping, Paddy

  Ross, Emie (Dundee W)

  Todd, Mark

  Rowlands, Ted

  Touhig, Don

  Roy, Frank

  Trickett, Jon

  Ruane, Chris

  Turner, Dr Desmond (Kemptown)

  Ruddock, Joan

  Turner, Dr George (NW Norfolk)

  Russell, Ms Christine (Chester)

  Turner, Neil (Wigan)

  Ryan, Ms Joan

  Twigg, Derek (Halton)

  Salter, Martin

  Tynan, Bill

  Sarwar, Mohammad

  Walley, Ms Joan

  610

  Ward, Ms Claire

  Wood, Mike

  Wareing, Robert N

  Woodward, Shaun

  Watts, David

  Woolas, Phil

  White, Brian

  Worthington, Tony

  Whitehead, Dr Alan

  Wright, Anthony D (Gt Yarmouth)

  Wicks, Malcolm

  Wright, Dr Tony (Cannock)

  Williams, Rt Hon Alan (Swansea W)

  Wyatt, Derek

  Williams, Mrs Betty (Conwy)

  Tellers for the Noes:

  Wills, Michael

  Mr. Mike Hall and

  Winterton, Ms Rosie (Doncaster C)

  Mr. Greg Pope.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
  MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House notes that the Government inherited a situation where increasing numbers of pensioners were living in poverty and where, if nothing had been done, one in three people would have retired on to means-tested benefits by the middle of this century; congratulates the Government on the start it has made in dealing with these problems; applauds in particular the introduction of the Minimum Income Guarantee, benefiting one and a half million pensioner households, and welcomes the Government's commitment to raising it in line with earnings for the rest of this Parliament and to conducting a take-up campaign to ensure that pensioners get what they are entitled to; supports the Government's commitment to helping pensioners, including the restoration of free eye tests and the new winter fuel payments, which benefit over seven million pensioner households and will be paid every year from now on; welcomes the Government's commitment to extending further help with pensioners' needs, including free television licences for people aged 75 or over from next autumn and the extension of concessionary public transport fare schemes; supports the Government's commitment to letting pensioners benefit more from their savings through the minimum tax guarantee which now means that two thirds of pensioners now pay no income tax; and welcomes the Government's plans to reform pensions, through the new stakeholder pensions and second state pension, so that everyone who puts in a full life of working or caring will in due course be able to retire on an income above means-tested levels.

  Post Office Services
  [Relevant documents: The Eleventh Report from the Trade and Industry Committee, Session 1998–99, on the Horizon Project for Automated Payment of Benefits through Post Offices (HC 530), the Twelfth Report, Session 1998–99, on The 1999 Post Office White Paper (HC 94) and the Government's responses thereto (Session 1999–2000, HC 50).]
  Mr. Deputy Speaker (Mr. Michael J. Martin): Madam Speaker has selected the amendment in the name of the Prime Minister.
  Mr. Anthony Steen: On a point of order, Mr. Deputy Speaker. This is a matter that I think that you will be interested in, and concerned about. I attended a debate in Westminster Hall last Wednesday—and a very good debate it was—on the problems of post offices and post office closures, which concern every hon. Member. It was an interesting debate, to which many hon. Members contributed and the Minister responded with a helpful and concerned speech. All present appreciated his promise to look into various issues.
  One sitting day later—Thursday was the only other sitting day since then—the Liberal Democrats have chosen to debate the same subject. Madam Speaker is now responsible for two Chambers, whereas before we had just one. Does she have any control over whether both Chambers debate the same subject at the same time, or whether they debate one subject and another—
  Mr. Deputy Speaker: Order. That is not a point of order. The House has decided that the issue is so important that it should be debated again.
  Mr. Steen rose—
  Mr. Deputy Speaker: Order. It was not a point of order. The hon. Gentleman must be fair. He is eating into time that has been allocated to an Opposition party.
  7.15 pm
  Dr. Vincent Cable: I beg to move,
  That this House deplores the continuing decline under successive governments in the sub-post office network which is contributing to growing financial exclusion especially among pensioners and other low-income groups; regrets the Government's intention to press ahead with automated credit transfer from 2003 which will lead to further large scale closures and will deny freedom of choice; and urges the Government to postpone automated credit transfer until the Post Office has developed its own automated platform and, as part of the Universal Service Obligation, require Post Office Counters to maintain a sub-post office network which satisfies broad social and economic as well as narrow financial criteria of viability.
  In reply to the point of order, you stole my opening lines, Mr. Deputy Speaker. I wanted to acknowledge from the outset that the issue has aroused a great deal of interest in the House. We have had a succession of debates, one of which was held last week. There was another in October, prompted by my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood), and yet another in July. It is right that the issue should be debated frequently. We are all concerned about it. Every constituency has post office branches under threat. Some 28 million people use the post office system every week, through its branches. It is right that as many hon. Members as possible should
  612
  wish to say something about the issue. Some of the Minister's answers in last week's debate were reassuring, but many of them did not answer the key questions. That is why we have initiated the debate today.
  The network has gone through a long process of decline. I am sure that the Minister will reinforce that point. The process did not start two years ago. The branch network has been declining for 20 years, with about 200 closures a year. The tempo seems to have increased recently, going up to 230 or 240 closures a year, but we are dealing with a long-term trend.
  Everyone concerned has been alarmed by the impact of the compulsory change to automated credit transfer between 2003 and 2005. The Post Office will then lose the £400 million income that it derives from that service. That is important, because it strikes at the basic revenue stream of the post office network.
  The implications were spelled out in the answer to a helpful parliamentary question tabled a few weeks ago by the hon. Member for Birmingham, Erdington (Mr. Corbett), who asked for an estimate of the number of branches in each constituency at which benefits account for more than 40 per cent. of business. That would give a rough approximation of the impact of the change and show how many branches might be expected to close. It is just an approximation, but it is the only one that we have. The figures are instructive, pointing to an enormous cull of post office branches, particularly in inner city and rural areas. Some of the examples are striking. All hon. Members should look at the list to see how their constituencies might be affected.
  In the constituencies of the Prime Minister, the Home Secretary, the Secretary of State for Northern Ireland and the Secretary of State for Trade and Industry, two thirds of all branches could be expected to disappear, on this estimate. There is no respect for ideology. The leader of the Conservative party would lose 33 branches and the hon. Member for Bolsover (Mr. Skinner) would lose 37. Some of the worst affected constituencies are represented by my hon. Friends. At the top of the hit list is my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who would lose 38 branches, but several other Liberal Democrat constituencies would lose well over 30, including Montgomeryshire, Orkney and Shetland and Torridge and West Devon. Most of the rural constituencies in Cornwall, Wales and Scotland would lose well over 20 branches. The impact could be substantial.
  The figures may be wrong. I shall be interested to hear the Minister's reaction.
  Mr. Richard Livsey: My hon. Friend knows that the constituency of Ceredigion has many post offices that are likely to close. It has been estimated that half the post offices in mid-Wales will close. Will that not be a great deprivation for rural people on low incomes?
  Dr. Cable: I apologise to my hon. Friend for missing Brecon and Radnor from the list, as it was mentioned. In Ceredigion, 40 branches are at risk—the second highest number in Britain. Before Ministers get out their atlases to find out where this constituency is—presumably they will have to visit it—they will need answers as to why Government policy on plausible assumptions will lead to the loss of roughly two thirds of post office branches.

  613
  There has been some evidence of panic recently, and the Secretary of State came up with a suggested partial remedy—a system of appeals. I would be interested to know what it amounts to. The proposal has been superimposed on another suggestion—made in the White Paper—that the regulator, when one is established, should set some objective, independent benchmark for deciding when post office branches should remain open or closed. It is important that we understand how this mechanism is to work if we are to understand how these closures, if they take place, are to be managed.
  I can visualise a situation where 200 branches are closing a year, or four a week, and where we have a meaningful system of appeals on which judgments are made as to the continuation of the branch in question. However, if 40 branches are closing a week, how will the system handle it? If the branches are simply not viable because of the loss of Post Office income, what is the purpose of the appeal? The principle of an appeals system when the system itself is not financially viable raises all sorts of basic questions.
  I have doubts as to the capacity of Post Office Counters, as currently structured and motivated, to handle the system. In July, in an Adjournment debate, I raised the case of one of my constituents who had her business effectively expropriated by Post Office Counters, which closed the branch, with no meaningful appeal. She has lost her money. The branch has reopened down the road, with an inferior service. All that has happened, apparently, is that Post Office Counters has pocketed the franchise fee.
  As a result of the debate, the criminal investigation branch of the Post Office has been set upon this postmistress. No charges have been pressed, but there has been a great deal of harassment. When her lawyers asked why this had taken place, they were told that my constituent was being taught a lesson for bringing the matter to Parliament. That is the way some people in the Post Office network are operating.
  It is not simply a question of allowing appeals against closures. It is necessary also to have a system by which postmasters and postmistresses are given some security of tenure so that they can continue their business. We need a transparent system in which complaints can be measured, and a Post Office Counters regime which is genuinely entrepreneurial and committed to keeping branches open.
  I have cited one example that angered me greatly, but many hon. Members will know of cases of small branches being closed down. The branches are then re-advertised on a part-time basis by Post Office Counters, which makes it clear that there is no prospect of the business being continued.
  Mr. Archy Kirkwood: Does my hon. Friend accept that it is worse than just a question of financial viability? In my constituency, 58 per cent. of sub-postmasters and sub-postmistresses live on site, and have mortgages and loans that are integral parts of their business. If they lose their businesses, they may also lose their homes.
  Dr. Cable: Absolutely. That is why we need a system of appeals, and why we need to protect the security of postmasters and postmistresses who are basically
  614
  entrepreneurs in an insecure environment. I challenge the Minister to give us his own estimate of the impact of the loss of Post Office income. It may be that the figures that I have cited are implausible. However, they could be much worse.
  Mrs. Linda Gilroy: Does the hon. Gentleman agree that unnecessary scaremongering can undermine the post office network? I have visited post offices in my constituency, and the myths being peddled by both main Opposition parties are severely undermining them. Does he agree that he needs to be measured in his approach?
  Dr. Cable: I do not know whether I am scaremongering. The figures that I have cited were produced in response to a perfectly fair question from a Labour Back Bencher. If those figures are wrong, the Minister might explain how the Post Office itself estimates the loss of income's impact on the network. There are reasonable grounds for believing that the impact will be a great deal worse. One of the reasons for that is that when people spend money in a post office, there is a footfall effect—they spend money on other things. It is not simply the loss of the benefit income.
  Another factor is that it is not simply the benefit business that is at risk. Other fee transactions of the Post Office—such as drivers' licences—could disappear also. We have seen recently that the working families tax credit is taking another source of benefit income out of the Post Office. The impact could be much worse than the figures that I have quoted. That is the answer to the charge of scaremongering.
  Mr. Paul Tyler: The constituency of the hon. Member for Plymouth, Sutton (Mrs. Gilroy) falls within the area covered by The Western Morning News, a well respected regional newspaper. The information that it carries from postmasters and postmistresses in her constituency is entirely supportive of the point that my hon. Friend is making. It has been suggested by a number of Government supporters that this problem will arise only in the future—from 2003 onwards. However, I have constituents who have been sent benefits information which specifically rules out the use of a post office account and demands information about their bank accounts.
  Dr. Cable: I thank my hon. Friend for his support. I wish to refer also to what will happen to those excluded people when ACT comes in. We are concerned not just with the impact on the branch network, but the impact on the individuals who receive their benefits.
  What is involved here is a system of compulsion. There is voluntary ACT at present, and people do use their own bank accounts for the settlement of benefits. Roughly 48 per cent. of pensioners choose voluntarily to use their bank accounts. However, that figure is much lower for poorer people—under 10 per cent. of people on income support, for example. There will have to be considerable pressure to stop people using post offices and to get them to use bank accounts. That is the essence of the problem— the element of coercion.
  The Government may reply that they are tying up deals with the banks, so that people will continue to be able to use the hole in the wall and their arrangements will not

  615
  be changed fundamentally. But if it is true that large numbers of branches have to close, the post office will no longer be there to be used as a bank, so choice will no longer be present.
  Separate problems have been highlighted by groups such as Age Concern, the Townswomen's Guild—it is difficult to think of a less militant organisation—and the Retail Village Network. One could not accuse such responsible lobbying organisations of scaremongering. These groups are focusing on the problems of the 20 per cent. of people who use post offices but do not have bank accounts.
  How will the Post Office identify the people who do not have bank accounts? How will the Post Office establish criteria for deciding who should continue to be paid in the traditional way because they cannot have a bank account—people who are bankrupt, for example— and those who choose not to have a bank account? How, in fact, will the distinction be made?
  Another large group of people, for reasons of personal choice, have traditionally decided that although they have a bank account, they would much rather use post offices. Probably half of all those who use the Post Office system are in this category. Why do they choose not to use their bank accounts? One reason is geographic: only about 5 per cent. of rural parishes have banks and the number is declining as branches close, but 60 per cent. have post offices. There would be a high cost involved in going to the nearest town to transact the business.
  Mr. John Bercow: Is the hon. Gentleman aware that the view of the hon. Member for Plymouth, Sutton (Mrs. Gilroy) was roundly contradicted only last Wednesday in Westminster Hall by the hon. Member for Forest of Dean (Mrs. Organ), who rightly expressed the gravest concern for the future, under Government proposals, for people who do not have bank accounts?
  Dr. Cable: I thank the hon. Gentleman: that is indeed the case.
  Why else might people choose not to use their bank accounts? There is legitimate anxiety about the costs of banking. What assurance is there that money paid into a bank account will not be offset against an overdraft? What hidden charges will go with the new arrangements between the banks and the post offices? How will the scheme fit with the plans of Barclays and others to start charging for using automated telling machines? Barclays and the Co-operative bank have already entered into arrangements, but will a pensioner using another bank who draws £10 for the weekend have to pay £1 for the transaction? There may be good answers, but we have not yet had them.
  We need to be clearer about what happens to people who cannot collect their benefits in person. We all know people in that category. Their carers collect for them. There is no problem with that at the post office, where there is an established relationship, but we know that it is much more difficult in the banking system. I had to take all the way to the chairman of the Halifax the case of a blind lady with a carer who ended up paying £60 for a legal notary's signature to establish the authenticity of the person drawing the money. Banks can be highly inflexible, bureaucratic and expensive.
  616
  We need answers to all those questions before people can have any confidence that the arrangements can be sustained properly.
  Dr. Jenny Tonge: It is also important for some mothers to collect child benefit direct from a post office or sub-post office, because their only other access to money may be via their husband in a joint bank account. It is terribly important for them to maintain that independence.
  Dr. Cable: That is a helpful additional point, and the welfare campaign groups have already drawn attention to many others.
  The Minister may be able to help us with solutions to some of the problems, but we need to know what is driving the change in the first place. Why is it so urgent that we press ahead? Two important, possibly compelling, reasons are given. One is that the system is necessary to defeat fraud; the other is that it is very costly— £400 million a year in transaction costs—to have a paper-based rather than an electronic system.
  We need to deal with those serious challenges in turn. My understanding—I am open to contradiction by the Minister—is that the best way of dealing with fraud at the post office is to have bar-coded books. Why was that option never pursued? The previous Government expensively pursued the option of swipe cards. I am not sure who carries most blame for the sorry tale, but somehow or other £300 million of taxpayers' money slipped through the cracks and the whole project has been abandoned.
  The Trade and Industry Committee produced a devastating report explaining the enormous waste of public money on that false lead in dealing with the fraud problem. The Committee's members will be familiar with the key paragraph that makes it clear that the swipe card system was abandoned at such heavy cost primarily because the Benefits Agency, which was driving the whole exercise, was determined to save on the transaction costs and would not let the project be seen through to a conclusion.
  There is a real saving to be made on the £400 million transaction costs in moving from a paper-based to an electronic system, not merely a paper saving to the Benefits Agency, but what is the price that we will pay for that saving for the agency and, ultimately, for the Treasury? The Government may respond to the political pressure to compensate the Post Office for the loss of all the branches, and the payment, made through the deal with the banks or directly by the Treasury, could be large. If the network is to be preserved in that way, where will the saving come from?
  The right hon. Member for Hitchin and Harpenden (Mr. Lilley), who originally presided over the system, said that it was very likely that, if the Government were serious about trying to maintain the post office network, the £400 million saving would simply disappear; so why go through the upheaval? It is more likely, though, that that will not happen and that the Government will allow the network to decline. There will be an appeals system and some token effort to save branches here and there; the £400 million will be saved by the Treasury; but there will be a great cost to our rural, suburban and inner-city communities.

  617
  Which of the two directions are the Government going in? Will they provide substantial compensation for the loss to the post office network of £400 million of business, and how much of the network will they save? Are they driven by the Treasury or by the interests of the communities that we all serve?
  7.37 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
  "welcomes the fact that the Government will be introducing a Bill to modernise the Post Office; notes the contrast with years of Tory inaction, that left the Post Office to decline; welcomes the reduction of the External Financing Limit and the ability to borrow which will boost the Post Office's ability to invest for the future, welcomes for the first time the clear commitment of the Government to a network throughout the United Kingdom of post offices which will be automated, and to introduce for the first time criteria for access to Post Office services; welcomes the fact that for the first time the Universal Service Obligation will be guaranteed in legislation; welcomes the study by the Performance and Innovation Unit which is looking at the future of the network; and notes that the policies of the Opposition would undoubtedly lead to the decline of the Post Office."
  The Government are deeply committed to the protection of postal services for all customers now and in the future. That is why we published in July our White Paper "A World Class Service for the 21st Century", which will be presented to the House as a Bill in the near future.
  As the hon. Member for Totnes (Mr. Steen) said on a point of order, much has already been said in the House on our plans for the Post Office. Only last Wednesday, in what could be called a sub-office of this Crown office, I replied to the fourth debate on the post office network this Session. It might be helpful, however, if I repeat the steps that the Government are taking not only to secure access for customers to postal services but to equip the business for the challenges that it faces in the communications market of the 21st century.
  Mr. Oliver Letwin: Why, does the Minister think, have we had those four debates? I hope that he recognises that the issue is of the profoundest concern to many millions of our constituents.
  Mr. Johnson: I do indeed recognise that. I have said time and again that no one believes more than I do in the strength of the network and its importance to rural and urban areas. I merely pointed out that we are having something of a rerun of the same debate.
  We are committed to establishing a framework to enable the Post Office to develop to its full potential by providing the greater commercial and financial freedom that the business needs to tackle the triple challenge of globalisation, liberalisation and new technology, while ensuring that we retain the vital social obligations that make the Post Office such an important detail in the social fabric of our country.
  Over the past seven years, the challenge from overseas competitors has become ever more intense. At least six overseas postal administrations have established offices within a few miles of the House to entice British companies to print and post abroad. For years, overseas
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  postal administrations have exploited the fact that the Post Office has been operating with one hand tied behind its back, with negligible commercial freedom; with no ability to invest other than from retained profits; with large chunks of those profits siphoned off by the Exchequer; and with its future under constant review since 1992.
  The Post Office must have the freedom to compete in the radically changed postal market while continuing to provide services such as articles for the blind, post buses and its other social obligations, which are vital to the communities that it serves.
  Mr. Barry Jones: I appreciate the response that my hon. Friend gave in last week's debate in Westminster Hall and I am grateful for the informative material that he has given me as briefing in response to my constituents' queries. Postmasters in Queensferry, Golftyn, Wepre, Caergwrle and Saltney Ferry have been to see me or written to me about their concerns. I am grateful for what my hon. Friend has done, but will he meet a small deputation of postmasters from my constituency later in the year?
  Mr. Johnson: I can never resist an invitation from my right hon. Friend. I will meet his constituents, just as I will go to East Anglia the week after next to meet sub-postmasters in that area and to the south-west the week after for the same reason. I understand the concerns on this issue, some of which have been expressed by Opposition Members.
  Mr. Elfyn Llwyd: The Minister will be relieved to hear that I do not intend to invite him to my constituency or to the constituency of Ceredigion, where the issue is equally important. On a serious note, the Minister mentioned competitiveness, but how will depriving a sub-post office of 40 per cent. of its income make it more competitive? His response last Wednesday offered no cheer to those in that position.
  Mr. Johnson: I obviously cannot visit every constituency and talk to all postmasters, but I will tell local sub-postmasters and mistresses that they should be wary of opportunism by politicians that undermines the network and creates the very circumstances that we are all trying to avoid.
  Mrs. Angela Browning: I visited post offices in Wales in September and if the Minister finds it too onerous to get around the country to visit them, I should be happy to share that responsibility with him.
  Mr. Johnson: That is not worthy of a response. It is obvious that I need to stay in the House to deal with the countless debates that we have on the Post Office.
  Fiona Mactaggart: I thank my hon. Friend the Minister for what he has already done for the Crown post office in my constituency. It was closed, to the great frustration of the 450 businesses on the Slough trading estate, and I hope that he can continue with his good offices to bring the Post Office and Slough trading estate together to ensure that the people and businesses in my constituency, which he knows so well, get the post office service that they deserve.
  Mr. Johnson: I thank my hon. Friend for her comments, and I will do everything that I can to protect

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  postal services in Slough, where I was a postman for 15 years. Our plans to enable the Post Office to compete in the 21st century are set out in the White Paper. We have put forward a package of reforms that will maintain and improve postal services in this country and enable our Post Office to become a major global player while it is retained in public ownership.
  The record of the previous Government was lamentable. In July 1992, the Conservative Government announced that they would sell off Parcelforce and review the status of the rest of the business. By April 1997, having spent £1.5 million in consultancy fees, the Conservatives' manifesto said that, if elected, they would sell off Parcelforce and review the status of the rest of the business. They had promised in their 1992 manifesto to introduce a regulator and a number of other initiatives but, like the millennium wheel, they failed to start when they promised, and then just went round in a huge circle.
  Mr. Jim Cunningham: Does my hon. Friend agree that the Post Office's situation today was largely created by the Conservatives and that, instead of criticising him because he cannot visit every constituency, the hon. Member for Tiverton and Honiton (Mrs. Browning) should visit them all herself to apologise for the high development costs that the Conservatives caused?
  Mr. Johnson: I thank my hon. Friend for those important remarks. In the early 1990s, the Labour party joined the Post Office trade unions and the British public to oppose vigorously the then Government's plans to break up and privatise the business. We argued for commercial freedom in the public sector. In the face of overwhelming opposition, the Conservatives eventually abandoned their plans but decided that, if they could not privatise the Post Office, they would plunder it.
  Mr. Patrick McLoughlin: Will the Minister give way?
  Mr. Johnson: I give way to an hon. Member who knows all about those issues.
  Mr. McLoughlin: The Minister mentioned the millennium wheel, but perhaps he should remember that the Prime Minister opened it a month ago, and it is not yet working. It is not likely to be working for another two months.
  Mr. Johnson: I am sure that we will be selling tickets for the millennium wheel over post office counters very soon.
  Responding to criticism of the fact that the Post Office had had to hand over £1 billion in 10 years to Government under the external financing limit, the right hon. Member for Henley (Mr. Heseltine), then President of the Board of Trade, announced in March 1995:
  "I am prepared to agree that, in future, we will aim to set the EFL at about half the Post Office's forecast post-tax profit. I hope to make progress in this direction this Autumn".
  A few months later, that pledge was ignored and, instead, the EFL was increased to cream off a further £1 billion over the following three years.
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  The Post Office touches people's lives like no other industry and is part of the country's infrastructure like no other business. It delivers to 27.5 million addresses six days a week. It collects from hundreds of thousands of pillar boxes seven days a week, and 28 million people each week use its network of sub and Crown post offices.
  Mr. David Heath: I hope that it will not be opportunistic if I intervene on behalf of the 150,000 members of the public who signed a petition in the Western Daily Press in support of their sub-post offices. If sub-post offices are to lose part of their income, how will it be replaced? If the Minister cannot answer that, how can sub-postmasters and mistresses plan ahead, put business plans together or have any hope of transferring their businesses to other owners?
  Mr. Johnson: If the hon. Gentleman will be patient, I shall come on to those points in a few moments. I was setting out the Government's policy for reinvigorating the Post Office. The White Paper sets out a balanced package of reforms that will preserve those services and benefit the Post Office, its employees and its customers.
  Under the reforms, for the first time, we will create an arm's length relationship with Government, based on a five-year strategic plan, giving the Post Office greater freedoms to develop new products and services; to price commercially; and to borrow for growth investments. For the first time, we will introduce a tough, independent regulator, the Postal Services Commission, to promote and protect customer interests, set high-quality standards, regulate prices, and promote competition and innovation. We will strengthen consumer representation through a revamped and reinvigorated Post Office Users National Council and we will put additional resources into the Post Office, more than doubling the post-tax earnings that the Post Office can keep for investment, rather than paying to government. Also for the first time, we will enshrine the universal service obligation and the single uniform tariff in law, and we will establish access criteria to protect a nationwide network of post offices.
  As part of the package, we have already reduced the Government's take to a dividend at commercial levels— 50 per cent. of post-tax profits for 1999–2000, falling to 40 per cent. thereafter. We have allowed the Post Office to invest substantially overseas by approving the acquisition of German Parcel, an investment of nearly £300 million and we have allowed the Post Office to borrow up to £75 million each year without prior approval, a facility that it has already used for further smaller European acquisitions in the parcels market.
  Mr. Ian Bruce rose —
  Mr. Johnson: I shall give way to the hon. Gentleman.
  Mr. Deputy Speaker: Order. The hon. Member for South Dorset (Mr. Bruce) has just walked into the Chamber. It really is bad manners for him to intervene in a debate to which other hon. Members wish to contribute.
  Mr. Bruce: I was here earlier, Mr. Deputy Speaker, and I am most grateful to the Minister for allowing me to intervene.
  The Minister said that he was going to get universal service enshrined in law. Does that apply to the counters side of the business, as well as to the postal side?

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  At present, it is enshrined in the contract with the Department of Social Security that that service will be delivered universally.
  Mr. Johnson: One of the greatest crimes in the post office is to jump the queue, but I hope to cover that point later in my speech.
  Under the White Paper reforms, Post Office plc will be independent, publicly owned, and able to attract, quickly and effectively, the necessary interest from financial institutions that understand the plc model.
  Although I spoke about this matter at some length last Wednesday, let me underline our determination to secure the future of the Post Office Counters network. As the hon. Member for Somerton and Frome (Mr. Heath) rightly said, post offices have been closing at a rate of 1 per cent. of the network a year for 20 years. Neither the Government nor the Post Office can guarantee that no post office will ever close in the future but, for the first time, we will introduce access criteria laying down minimum standards to ensure that everybody in the UK has reasonable access to Post Office Counters services, particularly in rural parts of the country and in areas of social deprivation. The postal services commission and the users council will monitor the network against these criteria.
  The Horizon project is being put back on track and some 40,000 counter positions at more than 18,000 post offices will be equipped with a modern, on-line computer system to enable the Post Office to modernise and improve services to existing customers, and to win new business.
  Mr. Tyler: Will the Minister set out the time scale involved? If the operation is not complete by 2003, when ACT will have pushed more people to use banks, it will not be effective in saving so many post offices. In what particular way do his plans differ from those of his Conservative predecessors? I recall that, when he was on this side of the House—[HON. MEMBERS: "He was only elected in 1997."] When the Minister's colleagues were in opposition, they stood four square with Liberal Democrat Members in attacking the very proposals that he is now pursuing.
  Mr. Johnson: I was amazed when I read the motion that we are debating. It has been public knowledge for some time that we will computerise the vast Post Office network by spring 2001. The migration to ACT will not even begin until 2003, and will be phased over the next two years.
  We realise that, for many people, this is a worrying time. The interest in this and previous debates on the subject underlines the public's high regard for the Post Office and the services that it provides.
  Mr. Steen: I am grateful to the Minister for allowing me to ask my question. He has said that Post Office services and rural post offices are safe with the Government. If that is so, what are the Liberal Democrats whingeing about?
  Mr. Johnson: I suggest that the hon. Gentleman asks that question of others.
  The very fine speech made in Westminster Hall by my hon. Friend the Member for Stroud (Mr. Drew) last Wednesday intelligently and clearly set out the arguments
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  for those concerned about access to postal services. My hon. Friend had taken the time and trouble to look into the matter. His constituency was the pilot area for the use of benefit payments cards, and those hon. Members who are genuinely uneasy about those matters should read my hon. Friend's speech. He set the positive tone that others should follow if we are to avoid the network being blighted by politicians talking down the Post Office, as the Liberal Democrats have done again in the motion that we are seeking to amend.
  Mr. Phil Willis: I rise to help out the hon. Member for Totnes (Mr. Steen). He stated earlier that the debate was a waste of time, but he has sat through all of it so far. I can tell the Minister what Liberal Democrat Members are whingeing about. In his response to the speech by my hon. Friend the Member for Twickenham (Dr. Cable), the Minister has not yet answered the question posed by my hon. Friend the Member for Somerton and Frome (Mr. Heath). What is he offering to those sub-postmasters and sub-postmistresses whose businesses will be on the edge when he takes away 40 per cent. of their business? What practical alternatives will he propose that will mean that those post offices are safe in the Government's hands?
  Mr. Johnson: The hon. Gentleman should be patient. I have not yet finished my speech and, with the leave of the House, I intend to reply to the debate. All the points that have been raised will be covered—in fact, many of them were covered last Wednesday.
  This is a time of change, and change is sometimes unsettling. It is our duty to give a positive lead, and I am confident that our package of measures will give the Post Office and its customers a future to look forward to.
  The programmes that we have put in place for the Horizon project will provide post offices with an integrated and on-line IT platform that will modernise the way that they operate. Some cynical views have been expressed about the Treasury's role in this. However, I can tell the House that the Treasury is contributing £500 million to computerise and place on-line every post office in the country. It is inconceivable that that investment would be made only for the offices to close down afterwards.
  A key benefit from the project will be the Post Office's ability substantially to extend its existing arrangements with the high street banks, under which it provides a range of banking services on an agency basis. That is a vital factor also in the attack on social exclusion.
  The wider work that the Government have commissioned on the matter has demonstrated that financial exclusion is both a cause and an effect of social exclusion. It has highlighted the desirability of promoting the spread of bank accounts, and has shown that encouraging the unbanked— especially the disadvantaged—to open a bank account will provide financial as well as social advantages to them as individuals. It is also an important step in connecting the socially excluded to the mainstream.
  Mr. Richard Allan: Has the Minister received commitments from the clearing banks to provide universal access to banking services? Will they take any customer who goes to them wanting benefit payments? Will he indicate the charges that a clearing

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  bank might levy against benefit customers who want no other banking service apart from the complete encashment of their benefit payment, which is what they do at present with their girocheques?
  Mr. Johnson: As I said last week, we are confident that we will negotiate agreements with the clearing banks that will ensure the provision of the services that we want to be provided. We gave a clear commitment in last week's debate that benefit claimants will continue to be able to withdraw all their benefit cash across a post office counter, both before and after the change.
  Increasingly, benefit customers choose payment by bank account as their preferred method. One third of benefit recipients already choose to access their benefits payments via their bank account, and the trend is bound to accelerate. Working together, the Benefits Agency and Post Office Counters will ensure that, from 2003, payment by ACT will offer an attractive and secure choice to benefit customers and to pensioners.
  Payment by ACT will open up access to a wider range of banking services and other financial services, while continuing to offer access to cash at Post Office Counters. Other bank customers, especially those in rural areas, will benefit from the wider availability of banking facilities, and the taxpayer will benefit from the fact that such a system will be much cheaper to operate and will virtually eliminate fraudulent encashment.
  The move to paying benefits direct into bank accounts via the existing automated credit transfer system will not start before 2003, as I said, and it will be phased in over two years. The Government will not take active measures to move customers on to automated credit transfer before 2003. With automation completed by spring 2001, Post Office Counters will have a further two years to grow new areas of work to compensate for what has always been an unhealthy and fragile over-reliance on Benefits Agency work.
  Given developments in banking technology, and with new simple banking products being introduced, we believe that it will be possible to cater to individual circumstances and provide accounts that will answer individual needs. The majority of benefits recipients— more than 80 per cent.—already have access to bank accounts. However, we recognise that some may still be unwilling to make use of a bank account. It is not our intention to compel them to do so. For such people, we are considering what alternative simple electronic money transmissions systems using ACT which could also be accessed at post offices may be commercially available. We recognise that benefits recipients will expect to be able to withdraw the exact amount of their benefits and to do so without incurring bank charges.
  I emphasise again that there will be no change to existing methods of benefit payment before 2003, and that all benefits recipients and state pensioners who wish to do so will be able to continue to access their benefits in cash, at post offices, both before and after the change.
  By moving to ACT, we will merely be replacing outdated paper-based methods of payment, which have scarcely changed in the past 50 years with a modern, more secure and more cost-effective system. Ensuring that
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  individuals will continue to be able to access their benefits and pensions in cash at post offices is fundamental to our plans.
  The Post Office network, with its nationwide reach, represents a valuable channel for the delivery of Government and other services, and will continue to do so in the future. The early progress with the Horizon automated platform now in prospect should enable Post Office Counters to offer substantial enhancements to the services that it can offer clients and customers, which in turn will increase the attractiveness of post offices compared with other channels.
  The network's extensive reach and the sense of trust and familiarity that many customers have in carrying out transactions in their local post office should, in conjunction with the Horizon system, ensure that the Post Office is well placed to deliver modern applications for central and local government and other public sector organisations. That is crucial in the light of the fact that the Government are committed to providing all Government services on-line by 2008.
  The Post Office has had some success in recent years in diversifying into new areas of business. The success of the lottery business carried out in post office outlets, the establishment of bureaux de change facilities—the Post Office is now the biggest dealer in the country—and personal insurance are notable examples.
  The strength of the Post Office's business lies in its ability to reach customers in all corners of the United Kingdom, but such an extensive network can prosper only if it continues to be used by the local community which it serves in rural and urban areas. If local communities value the presence of a post office outlet, as so many clearly do, their best guarantee of retaining it lies in making full use of the facilities on both sides of the business. To give credit where it is due, the Post Office continues to make every effort, particularly in rural areas, to keep a post office service operating. I shall look into the case raised by the hon. Member for Twickenham (Dr. Cable) about his constituent.
  Where suitable applicants to take over a post office cannot be found, community offices, based in village halls, pubs, and private homes are set up to maintain at least a range of key services.
  Mr. John Smith: On the point about the Post Office striving to maintain rural post offices in our communities, does my hon. Friend share my concern over the decision just last week of the Post Office in Wales to withdraw an offer of a sub-post office franchise to Julie Morgan of Garregwen in Bonvilston, just a few weeks after it had made the initial offer? We now do not have a post office between Cowbridge and Ely in south Wales—a distance of some 20 miles.
  Mr. Johnson: I will look into that important point. It reminds me of the fairly disparaging remarks made about the appeals process. As we discussed in Westminster Hall last week, the problem too often with post office closures and conversions from Crown offices, sometimes centrally located, into the back of hardware shops well out of the centre of town, is that the local community believes that there is no sufficient appeals procedure giving them the time and the opportunity genuinely to offer alternatives to that post office closing.

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  The appeals procedure that we announced just after Christmas was not in reply to a flood of post office closures—that is not what we are about. The procedure is to protect customers' interests and to provide a new focus in an area in which, too often, the local community has been ignored.
  Mr. Norman Baker rose —
  Mr. Johnson: I must come to a conclusion.
  We have repeatedly made clear our wish to see a thriving nationwide network of post offices. We understand the difficulties involved in transition, but the way to tackle the issue is not, as some local newspapers have suggested, to cling to the status quo. There is no surer route to stagnation and decline, as the National Federation of Sub-Postmasters fully and wisely recognises. The future of the Post Office Counters network depends to an important extent on the skills and dedication of its managers and staff. Above all, it depends on its continued attractiveness to clients and customers as a channel for accessing products and services, and to sub-postmasters, who have invested more than £1 billion in the network, as an attractive business proposition.
  Through early progress with the Horizon platform now in prospect, the Post Office will continue to maintain a nationwide network of outlets which will provide customers with convenient access to its services and help counters to retain existing custom and attract new business. The establishment of access criteria will, for the first time, set out in law a Government commitment to monitor what is happening to the network and a requirement to act where necessary.
  The revamped consumer body and a new independent regulator will monitor the new arrangements and provide an effective voice for communities which fear that access may be impaired.
  Mr. Kirkwood: Will the Minister accept a helpful intervention?
  Mr. Johnson: If it is helpful, yes.
  Mr. Kirkwood: I was encouraged because the Minister was good enough to reply an Adjournment debate that I secured on the subject. He mentioned that the Prime Minister had just set up, through the performance and innovation unit, a committee to look at the social value of post offices. Many of us are hanging a lot of hope and expectation on that. Can the hon. Gentleman add to his speech two or three sentences about the committee's: remit, and does it have any opportunity for considering alternative sources of income that might sustain some of these businesses in future?
  Mr. Johnson: That was helpful but premature—I am just coming to that point. The legitimate concerns expressed by hon. Members are being addressed by the performance and innovation unit study commissioned last autumn—on the very day of the Adjournment debate, I believe—and due to report directly to the Prime Minister. In that way, we can ensure the viability of a network that depends partly on Government but essentially on local communities continuing to make sufficient use of their post office and village shop.
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  The PIU study focuses clearly on the social obligations and the social value of the Post Office—a network that is socially necessary but sometimes not commercially viable. That is the principal aim of that examination.
  Mrs. Gilroy: Will my hon. Friend also draw to the Opposition's attention the report on access to financial services by the Treasury's policy action team? It goes into considerable detail about the role of post offices and sub-post offices in addressing social exclusion. As that is a criticism in the Liberal Democrat motion, I think that it is high time they read the report.
  Mr. Johnson: I thank my hon. Friend for that helpful intervention.
  Last Monday was the 160th anniversary of the introduction of the penny post and Rowland Hill's other great reforms. Those radical changes created the modern Post Office by transforming an organisation that had, even in 1840, been a central feature of British life for 300 years. In Victorian Britain, the Post Office dealt with 75 million items every year. It now handles that volume every working day.
  Our reforms are the most radical since Rowland Hill's, but they preserve the principles of accessibility, affordability and, above all, public service that he established. I commend the Government's amendment to the House.
  8.9 pm
  Mrs. Angela Browning: When the Secretary of State for Trade and Industry sent hon. Members his "Dear colleague" letter last May, announcing out of the blue that the Government had decided to change their action on benefit payments through the post office network, we waited for a month for the imminent White Paper. In July 1999, when the Secretary of State introduced the White Paper, we discovered that no viable option was on offer that would give hope for the future to many of our smaller, more sparsely spread post offices. Within a week, the Conservative party used a half-day Opposition debate to bring the matter to the Floor of the House. We thought the matter so important that that was our immediate reaction.
  Since then, there have been many debates on the Post Office, including the one that I attended last week in Westminster Hall. The issue keeps coming before us, and Ministers keep having to come to the Dispatch Box, because there is great uncertainty. So much time has elapsed since the statement last July that post offices are already feeling the pinch. People trying to dispose of their businesses, and others considering buying a post office, are taking into account the prospect of a 30 per cent. drop in revenue by 2003.
  Those of us who represent large rural constituencies know—although this is not an exclusively rural matter; I am equally concerned about post offices on the suburban fringe—that unless we receive answers to the many questions raised about the Government's change in policy, the situation will become worse long before the change to automated credit transfer, which the Government are determined to push through in 2003.
  Mr. Livsey: The hon. Lady makes some cogent points about rural areas and their post offices. Does she agree,

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  however, that there was a cut in the hours during which sub-post offices were allowed to operate under the previous Conservative Government? That often made the business unviable, particularly when a new tenant took it over. Will she pledge that the Conservatives will not reduce the hours of sub-post offices in future?
  Mrs. Browning: The hon. Gentleman draws attention to the fact that the sub-post office network has been under pressure for some time. No one who has day-to-day dealings with constituency cases would deny that. However, I can think of cases in which hours went up as well as down. The hon. Gentleman's point is important because of changes in the structure of services provided by post offices, and, particularly, because of changes in the businesses in which they are located, which are as key to their viability as the Post Office itself. The post office has sometimes become the village shop, which has diminished the service. We all know that people often shop once a week outside their villages, and for that and many other reasons the position of the village post office has worsened.
  We face a change in the policy that the Government inherited. Their proposals leave many questions unanswered. We do not know what sort of post office network we shall have in 2003, if the Government have their way. People will be obliged to have benefits paid into a bank account, although the Minister has told us tonight that they may be able to receive their benefits in cash through electronic transfer. He told us that there will be no cost to the people concerned, but we should like to know his estimate of the costs of the new system by comparison with the costs of the one he inherited. Who will pick up the transaction cost?
  The Minister was asked those questions by the hon. Member for Twickenham (Dr. Cable), and I asked them last week and last July. Seven months after the July statement, the Minister remains unable to answer specific questions. The Secretary of State changed the policy last May. He did so without any idea of what system would replace the existing one. Since then, there have been all sorts of suggestions about how the Government would shore up what will clearly be a significant drop in revenue. We believe that there is a question mark over the viability of 50 per cent. of the country's 18,000 sub-post offices.
  The Secretary of State leapt into the press the moment he heard that Camelot and the Post Office would put together a joint venture for a renewal of Camelot's lottery licence. There was nothing wrong with that bid; let us hope it is successful. However, the Secretary of State's argument that that would help rural post offices merely flagged up his lack of knowledge both of the lottery system and of what happens when there are terminals in small outlets in rural areas.
  I have had to write to Camelot repeatedly about small post offices or shops that had terminals but were unable to maintain 3,000 transactions a week. Terminals have been withdrawn from many of them, and many hon. Members will have had the experience of fighting to have terminals restored. One advantage of having a lottery terminal in a post office is that the terminals increase the
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  footfall of people passing through the premises. Those people buy other things and carry out other transactions, which helps the viability of the unit.
  Mr. Alan Johnson: I am extremely interested in the hon. Lady's views on the Post Office. Between now and 2003, when migration starts, there will be a general election. Will the Conservatives fight that election on the platform of privatising the whole of the Post Office, or do they intend to break it up and privatise only half of it?
  Mrs. Browning: What an extraordinary question. The Labour Government are going to privatise the Post Office, and they plan to introduce a Bill any day now. We look forward to reading it, and the Conservative manifesto will reflect the changes that the Government make to the Post Office before the general election. The Secretary of State promised that the Bill would turn Royal Mail into a public limited company and that the Government would own 100 per cent. of the shares. During the recess, however, the Secretary of State said that the Government might not own quite 100 per cent. We want to know what privatisation package the Government intend. Once we have seen what we will inherit, we will produce a manifesto telling the British people what we will do.
  I am flattered that the Minister wants to know what our manifesto will say, but tonight's debate is not about our manifesto but about the policy that the Government inherited from the Conservative party, which would have secured the payment of benefit. The Minister rightly said that they would have to move away from the old-fashioned system of paper transactions towards the use of a swipe card and, ultimately, a smart card. Answers to oral and written questions gave us every reason to believe, until 29 May last year, that the Government intended to do that.
  Some Members in the Chamber this evening were not in Westminster Hall last week when my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who served both as Secretary of State for Trade and Industry and for Social Security, pointed out that if the post office network was going to survive, there would have to be a change in systems and technology, and the network would have to be underpinned by the presence of a customer that pays out benefits—the Government. We fought the last election on that principle, but the Government have changed that policy.
  Mrs. Gilroy: The hon. Lady was trying to make a point about the decision taken by the Government in May 1999. I am sure that she has studied in great detail the report of the Select Committee on Trade and Industry, which notes:
  "We do not fault Ministers for taking the decision they did in May 1999 in these circumstances. We have not regarded it as part of our task to come to a judgement on decisions taken prior to May 1997; it may be that the inquiry by the Comptroller and Auditor General will cast light on such decisions."
  Is the hon. Lady looking forward to dealing with that report?
  Mrs. Browning: Of course I am. If there are criticisms about the system and the contracts that were drawn up, that is a legitimate matter for inquiry. However, it in no way detracts from the fact that the Conservative party went into the previous election with a policy that would have ensured that the payment of benefits through post

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  offices was maintained, with Post Office Counters as a customer of the Government—£400 million of taxpayers' money would have been legitimately used through the post office network to pay out benefits. That would have helped to ensure a viable future for those post offices.
  As the hon. Lady is interested in Select Committee reports, I advise her to note the statement that
  "Ministers have been less than candid in their responses to the House and to this Committee".
  Will she ask Ministers what the Select Committee meant by that?
  Mr. Ian Bruce: In his speech, the Minister did not touch on the matter of universal service in respect of counter delivery. In my constituency, five or six rural post offices have been threatened with closure. On each occasion, I have reminded the Post Office of its contract with the Department of Social Security—it has to provide, wherever possible, universal service of counter delivery for the payment of benefits and pensions. The Post Office agrees with me about that universal service provision. The Labour Government are about to remove it. When they have done so, no Member of Parliament will be able to ensure that one of their rural post offices does not close.
  Mrs. Browning: My hon. Friend is absolutely right. The heart of the matter—as hon. Members have pointed out this evening, and as I did on 15 July—and the reason for the Government's change of policy is not that they have suddenly discovered that IT will be of benefit to post offices. Of course it will be. The Conservative party had already realised that post offices needed to be equipped with computers, not only for benefit transactions but so that they could increase their ticketing and banking business—a range of other opportunities that are not open to them, but which will be when they have computers. What this is all about is a £400 million smash-and-grab raid by the Treasury. Does it not sound a pretty paltry amount compared to the amount of damage that its withdrawal will cause?
  As always, when the Treasury wants to claw some money from the Department of Trade and Industry, DTI Ministers and their Secretary of State roll over and play dead. They put up no defence; they do not even consider the consequences of what that withdrawal will mean. Instead, they let the Treasury have its way; they do the Treasury's bidding, and when the problems flood in they set up committee after committee and scheme after scheme to try to shore up the damage.
  The DTI team, with a former Treasury Minister as Secretary of State—indeed, almost all the ministerial team are former Treasury Ministers—should have seen this matter coming. They should have realised that they are no longer Treasury Ministers and that, although of course their job is to modernise the Post Office to facilitate the improved technology, they should have considered the knock-on effect of their policies. That point is not confined to the DTI; it has become a hallmark of the Government. They announce something, spin it and spend months looking for solutions to the problems that they have created, causing indecision and uncertainty.
  Mr. David Heath: The hon. Lady makes some extremely good points, with many of which I agree. However, I find it rather difficult to reconcile her position
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  with that of the hon. Member for South Hams, who seems to prefer the Government's policy to that of the hon. Lady, and would perhaps describe her remarks as whingeing. Will she attempt to make that reconciliation for us?
  Mrs. Browning: I should be delighted to reconcile Members on the Liberal Benches with my hon. Friend the Member for Totnes (Mr. Steen). I have known my hon. Friend for many years. I am not sure how long the reconciliation will take me but, in a spirit of co-operation, I am willing to do it. However, the hon. Member for Somerton and Frame (Mr. Heath) misjudges my hon. Friend, who is most active in his rural constituency in supporting his rural post offices. No doubt when we all meet for drinks, a chat and a bit of counselling, we shall be able to sort things out, but I think that my hon. Friend was concerned about the fact that, although there was a good debate in Westminster Hall, which made an extremely valuable contribution to the subject, it was a pity that the debate was held there because only a limited number of Members were able to speak. Furthermore, only a limited number of people were able to attend the debate.
  Mr. Steen: As my hon. Friend is aware, my constituency is now Totnes, not South Hams. The Liberal Democrats are light years away in their backwardness on such matters. They do not realise that things move on.
  Does my hon. Friend agree that the problem with Westminster Hall is that, while we are debating there, this Chamber is empty? It is a total waste of public—
  Mr. Deputy Speaker (Mr. Michael Lord): Order. We are not debating the merits of Westminster Hall.
  Mrs. Browning: You rightly chide my hon. Friend the Member for Totnes, Mr. Deputy Speaker. However, there was concern that when we held that important debate, which was of interest to many members of the public as well as to Members of the House, Westminster Hall was full of schoolchildren. There is nothing wrong with children coming to the House of Commons, but many other members of the public would have liked to hear the debate. I am grateful that we have an opportunity to debate the matter on the Floor of the House.
  Mr. Letwin: May I return my hon. Friend to the points she was making before that series of interventions? Does she agree that one of the most remarkable features of the scheme is that, because the Minister did not reply to the question she put a few moments ago, we do not have the slightest idea how much of the £400 million that the Treasury hopes to save will instead be spent on the banks. We do not even know whether the sum is greater than £400 million.
  Mrs. Browning: There are many unanswered questions that I shall give the Minister an opportunity to answer. In seven months, they have been repeated several times in several debates. They deserve to be answered. Who will bear the transaction costs of the collection of benefit from the post office when it goes via the clearing bank? The Minister said that it will not be the customer, so it must either be the clearing bank or the post office itself. If that is so, sub-post offices that receive remuneration for that administrative cost will have that remuneration taken

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  away from them, with the prospect that they will incur additional charges in carrying out the Government's new policy for post offices.
  During the summer recess, it was obvious that DTI Ministers were putting a lot of pressure on the clearing banks to provide bank accounts for the socially excluded. It sounded nice, but I know from discussions that I have had with the clearing banks that they will not be able to provide bank accounts for the socially excluded and those who, by law, are prohibited from holding bank accounts. If the Minister is to find alternative ways of paying those people, he must take that into account. It would be nice to see a reconciliation sheet showing how the saving of £400 million by the Department of Social Security compares with the additional costs of the various processes that the Government are finding it necessary to cobble together because they did not think things through when the Secretary of State made his policy change decision at the end of May.
  We still have an imprecise picture of how people will access their local post office within a reasonable travelling time. It is obvious that, between now and 2003, post offices will close. I do not wish to stir up unhappiness, but I know that people are already finding it difficult to dispose of post offices. Therefore, there are likely to be far fewer post offices everywhere by 2003.
  The Minister said, in effect, "In that case, we shall look to provide postal services in village halls and people's front rooms." In my constituency, there is a post office in someone's front room, which is open just two half-days a week. Such innovative changes to the sub-post office network are welcome, and obviously one must be creative and flexible, but the Minister knows that the Post Office White Paper makes a very clear commitment to access. What is the likely cost, and who will fund it? Will he answer those questions tonight? Will the Government provide some additional funding for access? If so, should not it appear on the reconciliation sheet?
  I should like to give the Minister the opportunity to answer these questions in terms tonight because—
  Mr. Lindsay Hoyle: Will the hon. Lady give way?
  Mrs. Browning: I will give way as it is the hon. Gentleman, but I am trying to conclude my remarks.
  Mr. Hoyle: Why is the Conservative party suddenly showing an interest in rural post offices when, for 18 years, they were allowed to close and not an eyelid was batted?
  Mrs. Browning: I do not know how many meetings the hon. Gentleman has had with sub-postmasters in his constituency—
  Mr. Hoyle: Every day.
  Mrs. Browning: That is part of the great Labour lie rearing its head again tonight. I am saying quite seriously that it is no good for the hon. Gentleman to make such allegations across the Floor of the House without having a substantive reason for doing so.
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  I have been a Member of Parliament for seven years. In those seven years, I have held two public meetings with all the sub-postmasters in my constituency, and spent a lot of time corresponding with them. I know that I am not unique; many of my colleagues do the same. It is nonsense for the hon. Gentleman to say that we are suddenly starting to take an interest in post offices. We certainly have an interest now as a result of the change of policy by the Minister and the Secretary of State.
  I want to bring the House back to that—
  Mr. Adrian Sanders: Will the hon. Lady give way?
  Mrs. Browning: As it is a Devon Member, I shall give way, but this really is the last time.
  Mr. Sanders: It is a helpful intervention. Earlier, the hon. Lady mentioned the suburban fringe. Several hon. Members have spoken about the rural post office network. I should like confirmation that she sees this as a problem that affects urban areas to the same extent. By "urban areas" I mean the inner cities, seaside resorts and towns across the country. There is a danger that, in the absence of such a recognition, people will think, "It is just the rural communities again, harping on about the problems," when in fact it is a matter that should unite rural and urban areas.
  Mrs. Browning: I agree with the hon. Gentleman. In my opening remarks, I mentioned the urban fringe. In the summer recess, when I visited many colleagues' constituencies, I made a point of visiting many post offices in the urban fringe. I recall visiting one in Poole, in Dorset, with my hon. Friend the Member for Poole (Mr. Syms). Although that post office was well away from the town centre, it obviously served a very large community, many of whom were very elderly, and many of whom were so frail that they could not have taken a bus ride. I am sure that the whole House recognises the importance of such post offices.
  Mr. Bercow: Would my hon. Friend allow me?
  Mrs. Browning: I must make some progress; I hope that my hon. Friend will understand. With him, I visited a post office in his constituency, and he knows that it was a really excellent small village shop. The people who run it are very worried about their future—not just the post office but the shop is under threat. [Laughter.] Hon. Members may laugh, but it is not funny if one lives in that village.
  I want to remind the House of the statement that the Secretary of State made on the Post Office in July. He said:
  "Today's announcement is good news for the Post Office and all those whose livelihoods depend on it, because it can now build for the future with real confidence … The White Paper brings an end to the uncertainty that has dogged the Post Office over the last decade: uncertainty over its role and place in society; uncertainty over its long-term viability and ownership … and uncertainty over the Post Office network."—[Official Report, 8 July 1999; Vol. 334, c. 1175.]
  Seven months later, there has never been more uncertainty about the future of the Post Office network than there is today. That is a direct result of the Government's change of policy, their dithering and their failure to look for

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  alternative viable policies before announcing a policy change. All that is down to the Government. This is the fourth debate that I have attended on this subject. It is about time that the Minister gave us some clear answers and ended the uncertainty.
  8.36 pm
  Mrs. Diana Organ: As the hon. Member for Twickenham (Dr. Cable) said at the beginning of his contribution, although concern has been expressed on both sides of the House, greater public concern about the future of the 18,000 post offices has been expressed outside the House. In my area, that concern has been fuelled by the Western Daily Press campaign. As my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy) pointed out, that campaign has at times verged on scaremongering, frightening people into believing that they will lose their rural post offices within the next week.
  Post offices provide a crucial service in rural areas and, as small businesses, they are vulnerable. Their number has been dwindling. The decline has already been noted to be about 1 per cent. a year over the past 20 years and that is principally due to the Tories' indecision, the Tories' neglect, the threats of privatisation and the Tories' cuts in the opening hours of rural post offices. They explain the majority of closures in those 20 years. We have now reached the stage that, if the rate of closure that went on in the Tory years in rural Gloucestershire continued, we would be left with no rural post offices by 2010.
  Like many hon. Members, I have had a meeting with rural sub-postmasters. Many of the points that I wish to make echo their concerns and their fears as to what might happen to them come 2003. However, as well as their concerns, they voiced what they consider to be the opportunities and the challenges that they can meet.
  In rural areas, the post office is often linked most successfully with the village shop. It is often the only centre in the rural community. In April 1998, the Government introduced a very worthwhile rebate of 50 per cent. on the council tax for a shop in a rural parish with fewer than 3,000 people if it is the only shop. That was a good move to support rural post offices. They also added in that measure the ability for a discretionary extra 50 per cent. rebate and Forest of Dean district council has offered that in response to moves from the National Federation of Sub-Postmasters.
  Such extra support is very welcome in rural areas, but that local authority, which has supported post offices in the long term, has recently sent letters to people who pay their council tax over the post office counter to suggest that they might like to pay by direct debit. It says that that will be cheaper. It may be; in the short term there will be savings for the local authority. However, the change could cause long-term damage to the Post Office. If the local authority is to support rural post offices, it would have been helpful if, as well as telling those who pay at the post office that they could switch to direct debit, it had sent letters asking those who pay by direct debit whether they knew that they could pay their council tax over the post office counter.
  Post offices need to have the opportunity to develop more services. For example, they could become the centre in rural areas for rural banking and for finance, insurance and many other services. They need to be multi-service
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  centres and the Government want to develop them. In their performance and innovation unit report on the rural economy, which was published in December 1999, they said that they wanted centres of information technology, business links and a variety of other financial services to come together in one place.
  The only problem that I have with the report is that there is no mention of the existing Post Office network and the financial services that are already provided, and the fact that there is a network in rural areas that could be built upon. I hope that the rural White Paper will take on board the other innovation in the performance and innovation unit report about the work of the Post Office and use the Post Office network as the basis for the multi-service centre that we want to develop to help rural economies.
  I shall give the House a good example that I mentioned in the Westminster Hall debate last Wednesday, which bears repeating. Ruardean Woodside, a small village in the Forest of Dean, became one of the first of eight pilots set up in April 1999 to become an internet centre for that rural area. The hardware was provided by a grant from Gloucestershire rural community council. The kit is linked to Glosnet. People can come in and use the worldwide web and the internet. There are printers and people can send e-mail, print or fax to a range of services. It is free except for the telephone charge. It is a wonderful model of how the post office can be a centre of telecottaging activity. It stops rural isolation and helps to fight against information poverty in rural areas, to which the Government are committed.
  The post office should be linked more to the local authority as a one-stop shop, where the information and the services provided by local authorities can be in the same premises. The post office is already the first point of information for many people on many issues, especially on social security and on grants that are available from local government.
  Post offices have a real social function. Those who work in them know better than anybody else who is being fraudulent. They recognise the faces of those who come through the door. They will know when strangers come in and they will challenge them if they know that they are trying to cash a benefit cheque.
  I know of two rural postmasters who will help families that are a bit chaotic and perhaps do not claim their child benefit. In one instance in Little Dean, the postmaster will go to the household, knock on the door and say to the family, "Do you know that you have four weeks' of child benefit owing to you?" He will do so to help the family out. That is a real social function.
  Post office staff keep an eye on pensioners. They know when someone has not come in on a Thursday morning to collect his or her pension. They alert other people or they knock on the person's door to see whether he or she is all right. That is a social service that should formally be recognised and even reflected in the core payment that is given to sub-postmasters.
  The Post Office network in our rural areas carries out at least 160 different services, one of which is to arrange holiday insurance, should that be wanted. Post offices used to be able to offer five different categories of insurance, including personal accident and household and earnings protection. However, the Tories stamped that out. I think that the Government should be considering reintroducing a

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  wider range of insurance services, especially in rural areas. Why not give post offices the facility to sell quantum cards for gas, electricity and water bills?
  In the Forest of Dean there is poor public transport. It is being improved as a result of the Government's money for rural transport, but it is still poor. Poor people have to spend money to go to the neighbouring town to get and fill up their quantum cards. Surely it would assist people to pay promptly if quantum cards were available in post offices, particularly when we have the horizon project fully on board to help them with this facility. With smart card technology, it would be easy to accomplish.
  Similarly, the post office could be used to enable people to renew their driving licence, vehicle licensing and passports. Why cannot people get a new passport form from their local rural sub-post office? During last year, when there were problems with the Passport Agency, customers were told to go to their local post offices to have their current passport extended, and thousands did so. People want to use this local facility, and it makes sense. There will then be a package provided by the post office. The passport form, the E111, travel insurance and foreign currency could all come from the local service centre, the Post Office network. Banks and travel agents can issue new passport forms, so why cannot rural sub-post offices?
  I mentioned that one can get foreign currency from one's local post office. Not many people are aware of that. That is the problem with the services that post offices offer.
  Mr. David Drew: Does my hon. Friend and close neighbour agree that one of the fundamental problems is that sub-postmasters must sign an agreement that ties their hands and prevents them from marketing? That is certainly true of banking facilities. The agreement is so daft that they are not even allowed to put up signs in their windows to tell customers that they can cash a cheque. That must be changed.
  Mrs. Organ: My hon. Friend is right; sub-postmasters do not have the time to market or advertise, they are not allowed to, and certainly do not have the resources to finance it. The Post Office and the Government need to invest in a national advertising campaign to make people aware of all the facilities available. It is difficult when there is a queue on a Thursday morning for rural sub-postmasters to tell each person at the counter, "We do this; we offer that service." They do not have the time and people do not want to hear of such services in that way. There must be a national advertising campaign.
  Finally, I shall address the thorny problem that a third of Post Office business comprises benefit payments. Many people are concerned about the changes that will come into effect in 2003. I have had assurances from my right hon. Friend the Minister of State, Department of Social Security and my hon. Friend the Minister for Competitiveness, in letters and in the debate in Westminster Hall last Wednesday, that there will be the choice of having benefits paid in cash over the counter. That will be warmly received, but what exactly does it mean? What is meant by "cash"?
  Will there be the same counterfoil system as at present, or will payments be made by cheque, which must be cashed? Not everybody can get or wants a bank account.
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  Poor pensioners do not want one and would not be able to get one, since banks would not want them as customers. An 85-year-old would find it very confusing suddenly to have to run a bank account. Such customers just want their benefits paid to them through a counterfoil system and to receive cash in their hands.
  The Post Office needs effectively to become the rural banking network, which could be a benefit of the Horizon project. Several banks—the Co-operative, Lloyds, Girobank and Barclays—have already signed up to links with the Post Office. To enhance the Post Office's service provision, it is important that people use the Post Office for such banking facilities. The Post Office should become virtually a bank in its own right.
  We need to identify what we can develop in the Post Office and what it can offer in future. I am not sure that there is a clear strategy for rural sub-post offices. They need help in informing people of what is available and what can be received in future. Our local post offices must provide a wide range of services. We must build up insurance, banking and financial services and link post offices, through the computerised programme, to other information services, such as that in Ruardean Woodside, making them part of a multi-service centre, with Business Links and local authority one-stop shops, so that they can truly remain at the heart of service provision in the countryside and help our rural economies.
  8.48 pm
  Mr. Richard Page: I am grateful for the opportunity to say a few words.
  I genuinely believe that Labour Members sincerely wish to see the preservation and prosperity of the Post Office network, but I think that that is about as far as it goes. Before going any further, I should confess—perhaps confess is the wrong word—that I am one of those Members who has borne responsibility for overseeing the work of the Post Office. I was a Minister in the Department of Trade and Industry. I can admit now that I fought and lost some of the battles with the Treasury, although I am glad to say that some I won. Today, we have had a clear indication that the DTI team, personified by the Minister for Competitiveness, has lost the battle to the Treasury.
  Leaving aside all the bluster and rhetoric, I have sympathy with the Minister. He is having to play a very poor hand of cards that the Treasury has dealt him.
  I am committed to the modernisation of Post Office services and to the introduction of new technology to facilitate the changes, such as Horizon and ACTs, provided that both sides of the equation are in place. We have heard tonight that the second part of that equation— how those changes will be delivered—is not there.
  However, three positive things have come out of the debate. First, it is good that we have had an opportunity further to discuss this matter. I have a strange feeling that we will discuss it and discuss it until eventually the Government accept that they must do something about it. They cannot allow the Minister to stonewall time after time.
  Secondly, there is a benefit to the Minister, because all he need do is read into the record the speeches that he has given several times already. I have a feeling that he will be asked to come back to the House and to keep giving a

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  repeat performance until he is allowed to say what will happen to solve that part of the equation. I hope that when he winds up the debate he will have a go at the motion, and, I hope, erode the beautiful friendship between the Labour party and the Liberal Democrats that has existed for a number of years.
  Thirdly, and more importantly, as many hon. Members have said, the motion refers to the impact that automated credit transfer will have on a large number of people. If each Parliament had to design its own coat of arms with a motto underneath, the Government would have in their design a large pencil eraser with the motto—in Latin, of course, to ensure that it is not easily understood—that in English would be, "It seemed a good idea at the time." If I had to characterise the Government's actions, I would say that to them it seemed a good idea at the time but they did not work out its long-term effect. This proposal is a classic case of, "It seemed a good idea at the time."
  This measure is attractive to the Government, especially to the Treasury. We have heard that £400 million will be saved, and that is a lot of money. As has been shown time and again, there has been little recognition of the effect of the proposal on a substantial number of people who will have to use this system. The Minister is a nice chap, but nothing he has said so far reassures me that the second half of the equation is even half way towards being in place.
  Mr. Letwin: I hope that my hon. Friend is not subscribing to the thesis that the net saving will be £400 million, given that we have not the slightest clue what it will be. We know only that the gross saving will be £400 million. A huge amount of unspecified money is to be paid to the banks.
  Mr. Page: I ask my hon. Friend to hold his horses. As night follows day, my views will gradually unfold. Given the time, I may have to truncate my speech, but I shall touch on my hon. Friend's perfectly valid and genuine point.
  It goes without saying—the hon. Member for Forest of Dean (Mrs. Organ) started to make this point—that many of the people who collect their benefits from a sub-post office are among the most vulnerable—people who are old, frail and do not use information technology. For the Government to make this announcement without fully thinking through the consequences is exceedingly worrying for those people. It is difficult to understand how a Government can try to push a legitimate cost of looking after those vulnerable people on to financial institutions without clearing it with them first.
  Would it not have been better to have joined-up Government—to use their oft repeated phrase? There could have been a statement by the Government and those financial institutions explaining how the system will work.
  My sympathies are with the banks, because undoubtedly a number of people receiving benefit will not want or will not be able to handle this extra dimension. Automatic transfers of this kind will be welcome to Members of the House, but for a percentage of our people they will be worrying, frightening and confusing.
  We all know constituents who fall into the category to which I refer. Technology may be pushing us towards a cashless society, but there is a generation to which that
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  will never apply. I look the Minister in the eye when I say that that generation will never be able to handle it— and it is composed of the old, the frail and the vulnerable. I welcome that part of the motion, and hope that it will increase pressure on the Government to announce the second part of the equation to which I have referred.
  The debate, however, extends beyond postal services. If we exclude them from what we have been discussing today, we see that they constitute only a small part of the activity of sub-post offices. What we are really considering is the possibility—indeed, the probability— that we shall create areas of potential deprivation. Deprivation is not exclusively financial, of course. I am talking about maintaining communities and services— especially in rural areas, although the same applies to constituencies on the urban fringe. The removal of such services will be the straw that breaks the back of local shops and forces them into redundancies and closure, thus hastening the death of small communities.
  What will the individuals affected do? It will mean a long drive—or a bus journey, at a cost—to some larger population centre to obtain the necessities of life. To people who have lost their village store, this will become a form of social exclusion. Moreover, the Government's announcement that they will save themselves £400 million—this brings me to the point made by my hon. Friend the Member for West Dorset (Mr. Letwin)— may well relate just to the gross figure. The Government may ultimately have to find more than that to prop up the communities that they have gone some way towards destroying.
  I think that the Minister is receiving a clear message from the debate. The thousands of people who run, and work in, sub-post offices throughout the country need answers to specific questions. They want to know how the new Horizon project will affect them if 30 per cent. of their income disappears when automatic credit transfer is introduced in 2003. There are 8,000 sub-post offices in rural areas that will have to face the challenge, and several thousand more in suburban areas. It is not enough to say that they will be able to diversify—that, for instance, they can become lottery agents, if they are not lottery agents already; there is plenty of competition there. How they will survive is the great unanswered question.
  I am even less convinced that the Cabinet Office performance and innovation unit will come up with convincing answers when it reports next month. Let us hope that it will, but I think all Members know that post offices and sub-post offices make a vital contribution to the vitality of their communities. We do not need the spin doctors of Whitehall who tell us what we already know, and what has been repeatedly acknowledged today.
  According to what the Minister for Competitiveness told the House on 12 January, the study would reflect on how the post office network could best contribute to the Government's objectives for the future,
  "and, in the process, … formulate objectives for the network itself."—[Official Report, Westminster Hall, 12 January 2000; Vol. 342, c. 67WH.]
  We immediately find ourselves involved in an argument, however. On the one hand, Ministers are saying that they will not become involved in the day-to-day running of the system; on the other hand, they are establishing a basic strategy and primary objectives for any organisation, which means that they must be involved in how that day-to-day running takes place.

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  Like the Liberal Democrats, the Government want to have their cake and it. They favour automation, but they do not favour having to pick up the costs. I think that they are avoiding a good many hard choices, and I can tell the Minister that the issue will return time and again.
  9 pm
  Mr. Alan Hurst: I am pleased to be called in what is our second debate within a week on this important matter. Without seeking to graduate in sycophancy, may I say that I am increasingly reassured by the replies of my hon. Friend the Minister for Competitiveness? I wonder whether I might mention again his renowned quotation. He said it first, I think, in Westminster Hall:
  "I emphasise again that there will be no change before 2003 to existing methods of benefit payments. All benefit recipients and state pensioners who want to will continue to be able to access their benefits in cash, across the counter at the post office, both before and after the changeover."—[Official Report, Westminster Hall, 12 January 2000; Vol. 342, c. 69WH.]
  That is a fairly convincing reply. I wavered a little when the Minister went on to say today—after he made that statement for, I think, the third time—that we would not take active measures to move customers to automated credit transfer before 2003. I am sure that he will be able to reassure hon. Members exactly what those measures might be.
  If I understand the position correctly, one of the main concerns of all right hon. and hon. Members' constituents is that they will not be able to receive cash payments. That view has been expressed widely and caused much concern, particularly among elderly people, who believe that the process is in train already. The Minister was able to reassure me in Westminster Hall last week that the somewhat misleading letter on child benefit payments that was issued by the Benefits Agency had been withdrawn. I hope that further letters or statements that give the impression that there is no choice, even though there is, will cease to be issued, and that cash payment will continue to be an option. If we can resolve the cash question, that will be of great benefit to those who do not want, or cannot have, a bank account.
  The second concern involves the profit margin and whether businesses can survive if a certain amount of their business goes because of direct payment, even if some of it remains via cash payment. I suspect that most of us know that village post offices are not gold mines where vast profits are made daily. People there work long hours, often in difficult circumstances—in many cases, I suspect, for quite low margins of profit. Therefore, two things need to go hand in hand; I was hoping that the hon. Member for South-West Hertfordshire (Mr. Page) would mention them when he talked about two stages.
  Two stages need to be in harness. As my hon. Friend the Member for Forest of Dean (Mrs. Organ) eloquently mentioned, other business has to come in at the same pace as the cash-payment system declines. If that equation can be achieved, there will be a positive future for rural, suburban and inner-city post offices. Again, I am reassured—I hope that I am not over-reassured—by the Minister for Competitiveness, who indicated the
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  Government's commitment to negotiate arrangements with the major clearing banks, so that sub-post offices become their agents.
  Mr. Page: I understand what the hon. Gentleman is saying, but does he not accept how worrying it is for old people when the Government announce just one part and hope—I hope that I am wrong and that what they say will happen does happen—that the second part will follow in one, two or three years' time?
  Mr. Hurst: I fully accept that there is concern. That was the reason why, in the earlier debate, I mentioned— I say it again today—that all of us have a duty to reassure our constituents in a loud and clear voice that the cash payment option will remain and that steps are being taken to reinvigorate local post services. Fear must not strangle the very businesses that we seek to save.
  I will not go through the position again. We are fully aware that the post office is a crucial part of each village, suburban and inner-city community: in many cases, if the post office goes away, there will be not social exclusion but a social desert. There will be nowhere for the interchange of ideas among people because all the places for such an interchange will have gone: the pub, school, church, chapel, shop and, finally, post office.
  I know that it is not the Government's intention for such social deserts to be created, and I am encouraged by Ministers' recent statements. All of us want the concept of community to survive, and believe that the post office is at the heart of the community. Again, however, I implore the Minister to ensure that the introduction of banking business and other services at post offices proceeds at the same pace as the decline of cash payments.
  9.5 pm
  Mr. Brian Cotter: Earlier in the debate, hon. Members made the point that sub-post offices are very important to local areas. Specifically, the hon. Member for Forest of Dean (Mrs. Organ)—who is about to leave the Chamber—made various points on the issue with which I shall deal shortly.
  In a very real sense, the post office is the centre of the community. However, the Government's White Paper on post offices states:
  "The sub-post office plays a valuable role in local communities, particularly for the less mobile. But the Post Office cannot sustain a network if it is not sufficiently well used, and nor can Government."
  Those are worrying words indeed. If there is not sufficient support for post offices, they will be at risk; indeed, in the White Paper, it is acknowledged that they are at risk. The implication of the statement is that the Government will not support sub-post offices if they are not attracting sufficient turnover. We should remember, however, the relation between the issues of benefit payment methods and possible declines in the numbers of those who use post offices.
  The hon. Member for Forest of Dean made various good points—which I shall not of course, repeat—and tried to draw attention to various ways in which sub-post offices might use their position to benefit communities. She also mentioned a national advertising campaign— which is a very good idea—as a means of achieving that goal. However, as I recently told the Minister in a

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  Westminster Hall debate, in view of the grave confusion caused by the letter sent to benefits users, post offices should display a notice clearly stating, "You can still get your benefits here." Although I think there should be a national advertising campaign, as the hon. Lady suggested, a statement of available services should also be clearly displayed in post offices.
  The Government should acknowledge their commitment to small businesses. The fact is that 90 per cent. of the sub-post office network is managed by small business people. Moreover, a recent report stated that 90 per cent. of small businesses with fewer than nine employees use sub-post offices for their banking and deposit facilities. Ministers therefore have a neat link available between establishing their commitment to small businesses and addressing the issues affecting sub-post offices.
  Hon. Members have already mentioned our grave concerns for those who have decided to run sub-post offices. The Minister said that small business people had invested about £1 billion of their own money in sub-post offices. Sub-postmasters and mistresses will feel very let down in that investment, as they decided on it based on volumes of business currently being done by the post office, much of which involved benefits payments. The Government have therefore misled those who were deciding whether to take on a sub-post office about the basic business, which is now at risk.
  The Minister said that the £1 billion was for an attractive investment. Sub-postmasters and mistresses clearly no longer feel that it was an attractive investment. I am sure that they have told other hon. Members that they are desperately worried that they will not get a return on their investment and will not be able to retire on a decent income. They feel let down.
  That is one reason why the debate keeps recurring. It is not just because the Liberal Democrats decided to raise the subject again. Even after the debate last week, which I participated in, people are still looking for the answers. I have a great deal of time for the Minister. It has been said that he has a great struggle with the Treasury. I am sure that he is doing his best, but we want to reinforce to him what is being said about sub-post offices. The Treasury must come up with something more than the various ideas mentioned by the hon. Member for Forest of Dean, which I support.
  We had a fiasco and great delays with passports recently. Sub-post offices could play a key role. With electronic communications, it should be possible to make an application at the local post office and have it near enough issued by the sub-postmaster. Photographs and forms can be transmitted electronically and it should be possible to get a passport within two or three days.
  Mr. Andrew Miller: I refer the hon. Gentleman to a letter that my right hon. Friend the Home Secretary placed in the Library last week in response to a question that I asked. He made it clear that the Government intend to look at the possibility of increasing facilities for passport and similar applications that are the responsibility of the Home Office.
  Mr. Cotter: That is welcome, but there is a grave concern that there will not be many sub-post offices left when the reforms are introduced.
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  The Minister said that the Horizon project would be implemented by spring 2001. That is fine. I am glad to hear him repeating that commitment this evening. However, sub-postmasters have told me that they are not in the least impressed with the training on the computer system. That is an area of great concern and I should like the Minister to respond to it. It is all very well installing good equipment, but people who are not well acquainted with computer systems need good training.
  Mr. Miller: I have followed the Horizon project in detail under the previous Administration and under this Government because of my interest in technology. There is a programme of training that involves all 19,000 sub-post office staff. At my most recent visit to ICL's Feltham operation, where Horizon is being developed, I was told that sub-postmasters, from those aged 16 to those in their 80s, had already been trained and that the target was to hit every potential sub-postmaster.
  Mr. Cotter: That is very good. It is easy to say that training has been carried out, but I am questioning the quality of the training and whether it addresses what people need to know.
  We are holding this debate because the Government have been reactive rather than proactive. The PIU's consideration of socially desirable objectives was referred to earlier. The Post Office White Paper could have addressed many of the issues. However, as a result of concerns that have arisen since then, the PIU has been set up. We look forward to what it will say. However, the Government seem to react too late, and to do so when people have decided not to use the post office to collect their benefits.
  The Minister talked about access criteria. It is all very well to have criteria, but people may not be ready and willing to run sub-post offices because of concerns about profitability. When a sub-post office is closed now, it is difficult to find another site, as well as finding someone willing to run it. Postmasters and postmistresses are extremely concerned now—let alone in two or three years' time when it may be difficult to find staff to run sub-post offices.
  I have received more letters on the issue since last week's debate. I appreciate the fact that the Minister has stayed to answer the debate, and I very much hope that he will come up with something more tangible than his initial response.
  9.16 pm
  Mr. Lindsay Hoyle: Clearly, all parties are concerned about the future of sub-post offices in urban and rural areas. However, I take issue with the hon. Member for Tiverton and Honiton (Mrs. Browning), who said that everything was rosy during the 18 years of Tory Government—that was far from being the case. Let us have the facts. Some 40 post offices a week have closed over the past 20 years. There was no great debate then in this House, saying that something must be done about that haemorrhaging of rural post offices. Nothing actually happened. It is a bit rich for the hon. Lady to come to this House shedding crocodile tears about the future of the Post Office. If we believe in the future of rural post offices, we must address what went wrong before.
  Part of the problem has been the modern culture of banking. Pensioners have their pensions paid automatically into their bank accounts, and people on

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  child benefit have had it paid into their bank accounts. That has reduced the number of post office users, and rural post offices have suffered in particular. We ought to discuss how we can save the Post Office and reopen rural post offices.
  I visit my local post offices. I was lucky enough to reopen the Chapel Lane post office in Coppull, and I have been in contact with Mrs. Foster at Wheelton post office in Chorley and Mrs. Friend at Hoghton post office, and with all the users. The belief that only Conservative Members care about post offices, after 18 years of not caring, will not wash with me.
  All parties share the belief that something must be done. I have belief in the Minister, and I hope that others will. I know that the Government take the future seriously. The rural community is important to the Government, and we must ensure that the vitality of villages continues through their post offices. We ought to be embracing new technology in rural areas, as that is where the future will be. We ought to have that new technology, and bolt on additional services. It is all very well people saying that rural post offices can have a bit of this and a bit of that. They need to be able to offer full financial packages, lottery tickets, passports, tax discs and a whole range of services.
  People who work hard in rural post offices and are the backbone of their community will then be rewarded financially and, crucially, will be able to sell on the business. People have been very worried about the future and have rightly questioned their Members of Parliament. I welcome that questioning and the support that we can offer. We have to tell people that we take their concerns seriously and will try to ensure that they have a bright future in which they can sell on the business when they retire.
  If we do that, further post offices might reopen. There is no doubt that there was a haemorrhage, and the number of villages without a post office is significant. Thankfully, 60 per cent. of villages have a post office, although only 5 per cent. have a bank. We should consider how to encourage more post offices to open. We must ensure that we have a practical rural banking system throughout the United Kingdom.
  We have a Minister who is confident that he can deliver a rural bank and ensure that those who are currently excluded from banking services are welcomed, with the promise that people will still be able to draw cash if they wish to. We must tackle social exclusion. To open an account in a high street bank in Chorley, people have to produce either a passport or a driving licence. That rules out a lot of people. We must give people the benefits of having a bank account: those services must embrace those in the rural community so that the farmer who collects money for his milk can pay it in at the local post office.
  The rural banking service in the post office will be a high-tech service. We must watch out for luddism and embrace the new technology.
  Mrs. Browning: The hon. Gentleman does not seem to be aware that the decision to put computers into post offices was a Conservative policy which the current Government inherited. Nobody is saying that technology
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  is not important, but it is no good giving post offices technology, with all that it affords them, while chopping 30 per cent. off their revenue with another policy.
  Mr. Hoyle: It is interesting how the Conservatives wave the flag on the last couple of years of their Government. That commitment was not delivered; it was something that they were only beginning to embrace. They are saying that, after 16 years of doing nothing, they should be congratulated on two years of being bothered about rural post offices. We will not allow them to rewrite history in that way.
  The Government are trying to sort out the previous Government's mistakes and to ensure that we put in the right technology. We have the right Minister to do it. We should welcome the fact that the Government have assured the future of our rural and urban post offices.
  9.23 pm
  Mr. Patrick McLoughlin: I have heard some rewriting of history, but the hon. Member for Chorley (Mr. Hoyle) takes the biscuit. I listened with interest to his speech.
  The Minister drew attention to the number of times we have discussed the Post Office since July, with a full day's debate inspired by the official Opposition, a half-day debate inspired by the Liberal Democrats and a debate last week in Westminster Hall. I once had responsibility for the Post Office. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) and I have been trying to recall the number of times that we discussed the Post Office—there was certainly a major debate on it when we presented our Green Paper—but I cannot recall a time when we had to hold a debate because of the closure and the threat of closure of sub-post offices. If such threats had existed, the Labour party and the Liberal Democrats would have shouted the need for debates from the rooftops. The very fact that such debates were not requested is evidence of how carefully we considered the future of the rural post office network, so I will take no lectures from the Government today.
  I accept the Minister's commitment to the Post Office and I readily acknowledge that he has a record unmatched by previous Post Office Ministers. However, I wish to raise several points that I hope he will address when he winds up. Today's debate is not about the Post Office and the delivery of letters: it is about the sub-post office network and 18,000 privately operated businesses. Those businesses provide a vital lifeline, especially in rural areas. There is no doubt that the post office remains the most attractive element in the village retail structure. It is invariably located with integrated village shops. Rural community sub-post offices provide essential services for those confined to the village for whatever reason. The sub-post office is a critical element of village shop owners' financial plans.
  In my constituency, West Derbyshire, which covers a huge rural area, I am concerned about how many closures have taken place in the past few years. For example, post offices have closed in Cubley, Longford, Roston, Flagg, Lea Bridge, Knifton, Quarndon, Fenny Bentley, Clifton and Taddington. That is a massive escalation of closures. Of course closures take place over time when someone has run a post office for a long time and wishes to retire, and it is always very difficult for them to find someone

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  else to take the post office on. However, I believe that Post Office Counters is partly responsible for that situation.
  I was so concerned about the future of the sub-post office network that I did a survey of all the post offices in my constituency last year. I thought that Cubley post office was still open—until I received a letter back from Mrs. Wilton of 4 Long Meadow, Cubley, who closed the post office. She said:
  "I did manage to find another person in the village keen to take on the running of the P.O. in her home. She was informed by Post Office Counters that she would have to install an alarm, she would be responsible for insuring the equipment and would have to pay the running costs estimated at £22 per month, this out of a gross salary of £135 per month. Obviously her enthusiasm evaporated!
  My personal view, and I stress personal, is that P.O.C.L. say they do not close Post Offices but are more than happy to have it done for them."
  A further issue arises from the contract that people are required to sign before they take on a post office. A new sub-post office could have opened in Idridgehay, when some new people took over the village shop in which the post office used to be located. However, they found the requirements to which they had to sign up too burdensome. On top of the money that would have to be spent on decorating the outside of the shop in the corporate colours, as the Post Office insists on, the last sentence of the contract they were sent caused them great concern:
  "At the time of your resignation your successor will be appointed at your premises"—
  let us remember that people run these businesses in their own homes—
  "unless the Regional Manager has stated that he wishes to close or reinstate the office on vacancy or no acceptable candidate can be found to take over the appointment in your existing premises".
  Village post offices are often run from home. Who is likely to sign a contract that allows the Post Office to put someone else in a person's home to run the local service?
  Rightly or wrongly, many people in rural areas believe that the network of village post offices is under threat. The evidence in my constituency leads me to agree. That threat is not in the interests of the Government or the country, so I hope that the Minister will encourage a new approach from Post Office Counters. For example, why are carriers in competition with Parcelforce not allowed to operate through the post office system? Why do not the Government open up the services provided by village post offices?
  The Minister has a golden opportunity to make the progress that many hon. Members have attempted over a number of years. I hope that he will take it, and secure the future of our vital village post office network. If he manages to help that network, he will ensure the survival of offices in the other, urban areas mentioned by other hon. Members in this debate.
  9.32 pm
  Mr. Norman Baker: My Liberal Democrat colleagues and I make no apology for holding yet another debate on the Post Office. The network of sub-post offices, and the services that can be accessed through them, are vital to our rural and urban communities. We have had to return to the subject because so many
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  questions were left unanswered. I hope that they will be answered tonight: if they are not, I predict that there will be further debates on the subject until they are answered.
  The Minister has temporarily gone from his place, after being present for the whole debate. Excellent though he is, the Minister is working overtime, thanks to a shortage of other Ministers to deal with this matter.
  Mr. Page: When the news is good, the Secretary of State is present: when the news is bad, someone else is.
  Mr. Tyler: The hon. Gentleman speaks from experience.
  Mr. Baker: My short experience in the House leads me to believe that what the hon. Gentleman says is true.
  We have heard that Britain still has more than 18,000 post offices, despite the closures that have taken place at an alarming rate over the past 20 years. Those offices serve 28 million people every week.
  Under the Conservative Government, 4,000 sub-post offices closed. That decline has continued under Labour. Offices close every week, yet we know how important they are to rural communities and to estates in urban areas. Often they are the only community services left when the school, the pub and the other shops are long gone.
  We also heard how important benefit payments are to postal business. The Post Office expressed its concern about the Government's policy trend in a press release issued on 8 July 1999:
  "The DSS's decision to pay benefits by Automated Credit Transfer from 2003 … would seriously threaten the income streams of many post offices, especially in rural areas."
  That is the fact of the matter. It is why so many hon. Members are worried that the Government's plans will undermine the economics of the post office system, and lead to closures.
  The share of income for post offices deriving from the payment of benefits averages between 30 and 40 per cent., but it can be as high as 70 per cent. in some offices.
  In my constituency of Lewes, more than 40 per cent. of the income of eight out of the 34 post offices derives from the payment of benefits. In the Secretary of State's constituency of Tyneside, North, where there are 22 post offices, 16–73 per cent. of them—depend on benefit payments for more than 40 per cent. their income. In the Prime Minister's constituency, 72 per cent. of post offices are so dependent. Interestingly, in Edinburgh, Central, the constituency of the Secretary of State for Social Security, only 5 per cent. of post offices are in danger of closing down, which is fortunate.
  The Minister talked about an unhealthy reliance on benefits. In one sense, I can understand that—it does not do to put all one's eggs in one basket. Nevertheless the word "unhealthy" suggests that the Minister believes that dependence on benefits should be reduced, but is not yet clear what will replace it. That point concerns many Liberal Democrat colleagues and, I believe, hon. Members across the House. It seems that benefits will be taken away—that much is clear—but what will replace them is not at all clear.
  How great is the Government's commitment to the network? What is their commitment to the vital lifeline that rural post offices in particular provide? The Minister

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  talked about access criteria, but it is not clear how they will link with the financial performance of a post office. If a post office is vital for a community because the nearest one to it is a long way away, will it survive because it performs an important function for the local community, no matter how unsuccessful it is financially? Or will it have to close because it is not financially viable, even though people will be inconvenienced? We need to understand the relationship between the social factors and the economic performance of each post office.
  I have doubts about the appeals procedure, and I hope that the Minister can reassure me when he winds up the debate. The new appeals procedure sounds like a good idea, but it is not clear how it will deal with even the present volume of sub-post offices that are closing, never mind an increased volume if things go awry. Nor is it clear whether it will be based on simply financial criteria. If so, what is the point of an appeal? It will just be argued that the figures do not stack up and that the post office must shut.
  We need to have clear and rigorous social guidelines in place that can overrule the financial performance of each unit. Post offices will be doing the best they can under the circumstances—it may not make financial sense, but it will make social sense. The Minister will have to clarify that point if we are to have confidence in the appeals procedure.
  The Minister said that people must use their post office or lose it—we have heard that phrase many times. But what about those who have to use it because there is no alternative, but who still might lose it because it is not making money? Where do those people go when their sub-post offices close? The Minister said that there can be no guarantee that no post office will shut. The hon. Member for West Derbyshire (Mr. McLoughlin) spoke about people's individual circumstances and the difficulty of replacing postmasters. Of course that is true. But we want the Government's guarantee that except for those personal circumstances, they will maintain the network at or at about its present size. I have not heard the Minister give that guarantee—I hope that he will tonight. If not, what is the minimum size of the network that he is prepared to tolerate? It is currently 18,000—how low will it have to go before he says that it has gone too far?
  The Minister mentioned that there is a small window of opportunity. The hon. Gentleman told us again tonight that automation will take place by spring 2001. We are pleased that the Government are pushing forward with automation. We know that ACT kicks in in 2003. That is not a very long time in which, to use the Minister's words, to grow new business. What happens if post offices do not grow new business in that two-year period?
  The Minister praised the contribution of the hon. Member for Stroud (Mr. Drew), who was not called to speak in the debate tonight but who secured the debate last week in Westminster Hall. The hon. Gentleman said:
  "it would be good to hear that, even with the introduction of ACT, the timetable of 2003 to 2005 is flexible".—[Official Report, Westminster Hall, 12 January 2000; Vol. 342, c. 49WH.]
  The Minister should respond to that sound point. A question remains over the consequences of a mass take-up of use of the internet or new digital facilities. Will automation render the sub-post offices out of date? The key question remains: how far will the financial performance of each unit outweigh social factors?
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  Considerable doubts remain about franchise arrangements in urban areas. Post Office Counters seems determined to leave perfectly good offices so that it can enter into franchise arrangements with retailers. However, in Newhaven, Post Office Counters left a perfectly good and serviceable Crown office—near the sorting office, which was in the same building—to move in with a retailer that soon went bankrupt. At three days' notice, the post office had to move into a portable cabin in a car park, which the disabled find it difficult to use. Meanwhile, the original Crown office lies empty. That kind of mess results when Post Office Counters refuses to go it alone when necessary, preferring to reach franchise agreements with partners that often seem fairly dubious.
  In Lewes, the franchise post office does nearly as much business as the Crown post office—about two thirds or three quarters as much. The franchise post office has been given notice by W. H. Smith, and will close in three months' time. The Crown office is at the top of a hill, which is impossible to reach for the elderly and disabled. No alternative arrangement has been made. Post Office Counters does us no favours by reaching such franchise agreements. Why do the agreements include such short notice periods? Why should people's lives be disrupted without notice because of those agreements? We need confidence that Post Office Counters is as keen to maintain the network as Members of Parliament are.
  Questions remain about cash transactions. The hon. Member for Tiverton and Honiton (Mrs. Browning) asked how much they will cost, and who will pay. Will the banks suffer a loss? Will the Post Office? Will the Treasury suffer a loss, or the Department of Social Security?
  Mrs. Browning: The hon. Gentleman will agree that banks tend not to suffer losses. I fear that if banks are not properly reimbursed, they will pass on the costs to their customers, which would be totally unacceptable.
  Mr. Baker: The hon. Lady makes a valid point.
  The hon. Member for Forest of Dean (Mrs. Organ), who is no longer here—
  Mrs. Organ: I am.
  Mr. Baker: I beg the hon. Lady's pardon. She asked what cash is. That seems a simple question, but does cash include cheques? All sorts of fears surround that point. Many people do not want a bank account and want no truck with the banking system. They want to hand over a book and receive cash in return. Successive Governments have ensured that child benefit is paid in cash to women for the very good reason that it ensures that children are properly supported. We must now allow such money to be sucked into paying off overdrafts on bank accounts, or to go into joint bank accounts held with unsuitable husbands.
  On 23 October 1999, a form was issued relating to child benefit. It lists the ways in which child benefit may be paid. It says that the benefit may be paid straight into a bank or building society account every four weeks, or through the Post Office by payment into a giro account or national savings bank account. The form does not mention cash payments over the counter. Will the Minister write to everyone who has received the form to make them

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  aware that they can receive cash over the counter, or will he allow the form to let people believe mistakenly that they cannot receive child benefit in cash?
  The Liberal Democrats favour a fully automated, modernised, competitive, publicly owned Post Office, operating with greater commercial freedom. [Interruption.] There should be no surprise about that; it has been our position for a long time.
  We are in favour of the maintenance of universal service provision, with national uniform tariffs, which especially benefit rural and remote areas. We are in favour of real customer choice, through the retention of alternative payment options for benefits and the postponement of ACT for benefits until we are convinced that such arrangements will guarantee the network in its current state. We are in favour of a proper appeals system, so as to ensure that it is extremely difficult to close post offices. We are in favour of ensuring the survival of the post office network in its present form, with the present number of post offices, for those people—the majority— who want it.
  We have used one of our rare Opposition Days to hold the debate because the matter is so important. We have held four debates on the subject recently, in this place or in Westminster Hall, because it is so important and because of the uncertainty of the Government's response. The Minister has not quelled the many genuine doubts of many Liberal Democrat, Conservative and Labour Members. During the next 15 minutes, it is up to the Minister to answer our questions or be faced with another debate in the not too distant future.
  9.46 pm
  Mr. Alan Johnson: With the leave of the House, I shall conclude the debate.
  The debate has been wide ranging and, as in the debate last week, the amount of participation by hon. Members reflects the importance of the matter to them and to their constituents in urban and in rural areas. Hon. Members have raised many specific issues and expressed many concerns, to which I shall respond.
  First, I reiterate the Government's firm commitment to the protection of postal services for all customers now and in the future. Although much the focus of the debate has been on the future of the counters network, its subject extends to other vital facets of the Post Office's operation—the provision of letter and parcel services.
  In my opening speech, I dealt with the balanced package of reforms, set out in the White Paper, to enable the Post Office to meet the major challenges that it faces in a rapidly changing communications market. Key elements to underpin the Post Office's crucial social obligations include the enshrining in law for the first time of the universal service obligation of daily mail deliveries to every postal address in the country and of the uniform domestic letter tariff—a matter of special relevance and importance in rural areas.
  We shall establish a new independent regulator, the Postal Services Commission, to promote and protect customer interests. We shall set a high quality of service standards; regulate prices; promote competition; and strengthen consumer representation through a revamped Post Office Users National Council. We provided additional financial resources to the Post Office for
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  investment by reducing the proportion of post-tax earnings to be paid to the Government. We have a commitment to a nationwide network of post offices and to the setting of access criteria, against which the evolution of the network can be closely monitored and under which ways of maintaining reasonable access can be investigated.
  Hon. Members have raised a wide range of issues. I shall respond to as many of them as I can. However, first I admit that the Government make no pretence of being able to answer every question at present. The study of the post office network by the performance and innovation unit at the Cabinet Office was commissioned by the Prime Minister last October. That was before any campaigns by rural newspapers and even before any Adjournment debates had been held on the matter—apart from one honourable exception, initiated by a Liberal Democrat Member. It is expected that the report will be completed in the spring. It will inform our thinking on setting the future objectives, role and contribution of the network and on setting access criteria.
  The performance and innovation unit will closely examine issues related to the migration of benefits to ACT.
  Mrs. Browning: I am sure that the House is delighted that the Prime Minister has taken that personal interest. Can the Minister promise us that, when the report is available, the Prime Minister will stand at the Dispatch Box and present it to the House?
  Mr. Johnson: No, I cannot. However, I can assure the hon. Lady that there will be a debate on the contents of the report.
  The hon. Member for Twickenham (Dr. Cable) tabled a short motion. I can clarify the issues that it raises. It is based on a false premise.
  First, the motion says that changes by the Government
  "will lead to further large scale closures".
  At the start of the debate, I and other hon. Members pointed out that, in whipping up such concern, the Liberal Democrats are devaluing the properties of some sub-postmasters and sub-postmistresses and creating the very circumstances that all hon. Members are determined to avoid.
  The motion says that ACT
  "will deny freedom of choice".
  It will not. Any benefit recipient who wants to continue to draw their benefit payment in cash across a post office counter before and after the changes will be able to do so.
  The motion asks the Government to postpone ACT
  "until the Post Office has developed its own automated platform".
  The Post Office will have developed its own automated platform by spring 2001. The migration to ACT will not even start until 2003.
  The motion says that, as part of the universal service obligation, we are to
  "require Post Office Counters to maintain a sub-post office network which satisfies broad social and economic as well as narrow financial criteria of viability."
  We have said that we will enshrine access criteria in law for the first time and ensure that an independent regulator and a revamped consumer body have the obligation to

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  police them. I do not doubt that the hon. Member for Twickenham and the Liberal Democrats have people's best interests at heart, but we really must be careful about the messages that are sent about the post office network.
  The hon. Member for Tiverton and Honiton (Mrs. Browning) spoke about the deal that we inherited from the previous Government. As I have said before, the benefit payment card system proposed by the previous Government was well intentioned. They sought to computerise the network. To draw an analogy with television programmes, I would prefer to talk about "Tomorrow's World" than about "All Our Yesterdays", but that particular private finance initiative was based on the developer also being the financier. Anyone who reads the report of the Select Committee on Trade and Industry will agree that we had no alternative but to pull out of that contract and to set up a new computerisation contract that was capable of being achieved.
  Mr. Bob Laxton: Does my hon. Friend agree that the Trade and Industry Committee received evidence to the effect that the recouping of the costs of the establishment of the ICL Pathway project—Project Horizon—would probably amount to more than 73p per transaction, for an almost indefinite period? That seemed to me a crazy contract.
  Mr. Johnson: The point is well made.
  The hon. Member for Tiverton and Honiton raised a point about transaction costs. That is a matter for commercial negotiation between the DSS, the Benefits Agency and the banks, and between the Post Office and the banks, but I believe that she is aware that even the benefit payment card proposed by the previous Government related to an eight-year contract with the Benefits Agency, which ran out in 2005. They made it perfectly clear—I had an interest in the matter at the time—that it was an interim measure on the route to ACT; it was not a for ever solution to the problem.
  The hon. Lady will also know that the cost of girocheques is 79p per payment, the cost of payment for the benefit payment card was 67p per payment, the cost of the order book control system that we are using at the moment—the bar coded system—is 49p and the cost of ACT is 1p. Given that information technology is becoming more ubiquitous, the migration to ACT is bound to continue, no matter which Government are in power.
  By holding this debate yet again, we are at last having a debate about the future of the Post Office. As my hon. Friend the Member for Chorley (Mr. Hoyle) said, year after year seeped away with no one showing any particular political interest in the subject.
  The hon. Member for Tiverton and Honiton mentioned lottery tickets, with derision. We are not saying that the increase in lottery payments is a panacea for the problem. We are saying that it is very welcome new work to pass across post office counters.
  My hon. Friend the Member for Forest of Dean (Mrs. Organ), in a very important speech, drew attention to the crucial fact that we do not advertise the services that are available across post office counters. She mentioned 160 transactions. There are actually 170; and, with
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  computerisation, every office in the country will be able to provide every service. At the moment, some offices in rural areas are restricted in the services that they can provide because of the difficulty of training staff in 170 transactions. We need to deal with that issue.
  My hon. Friend mentioned the performance and innovation unit report on rural areas and said that it did not mention the Post Office network. She also made that point last week and I shall write to her about it. The PIU team is offended by her comment. It says that there is a complete chapter on the network in the report, so I shall deal with that point in correspondence. My hon. Friend also raised some excellent ideas on how we could increase traffic across post office counters.
  The hon. Member for South-West Hertfordshire (Mr. Page) said that I had been dealt a poor hand by the Treasury and that I had to do something about it. He was a member of a Government under whom the Treasury screwed the Post Office for £1 billion over 10 years. They attracted stern criticism from the Tory-dominated Select Committee on Trade and Industry. The right hon. Member for Henley (Mr. Heseltine) said that that system would stop and that they would introduce a dividend system based on 40 per cent. of pre-tax profits. Three months later, a Conservative Chancellor of the Exchequer hiked the external financing limit to £1 billion over three years, and the hon. Gentleman tells me that this Government have been dealt a poor hand by the Treasury.
  My hon. Friend the Member for Braintree (Mr. Hurst) said that we needed to take active measures and he referred to the Benefits Agency letter, as did the hon. Member for Lewes (Mr. Baker) in his wind-up speech. We are in contact with the Benefits Agency about the letter that was sent to the 370,000 of the 7.5 million child benefit recipients who get their payments weekly. Since 1982, the system has been that child benefits are paid monthly unless someone meets certain criteria. It is a regular procedure for the Benefits Agency to write to the minority who still receive weekly payments to remind them of the criteria. The Department has concerns about the absence of certain words in that letter. The matter has been taken up with the Benefits Agency and, as I have said before, we are working with it in complete partnership to ensure that any misunderstanding caused by the letter is eradicated and so that people understand— I say it again—that they have the right to draw benefits in cash.
  The hon. Member for Weston-super-Mare (Mr. Cotter) also referred to struggles with the Treasury. I have mentioned the struggles that the previous Government had, and we are having an easy time compared to them. Over the past few months, the Treasury has agreed to the Post Office keeping more of its money. The external financing limited was 50 per cent. last year and it will be 40 per cent. in future years. By putting £480 million of investment into the computerisation of the network, the Treasury has done a great deal to lift the dead hand that has fallen on the Post Office from across the road at the Treasury buildings since at least the time of Rowland Hill.
  My hon. Friend the Member for Chorley made a profound point about the erosion of the network over the past few years. I am sorry to surprise and shock the hon. Member for West Derbyshire (Mr. McLoughlin), but I thought that he made an excellent contribution. It recognised that we have problems with closures now and some of those problems are about the relationship

  653
  between Post Office Counters and sub-postmasters, who must be part of any meaningful review to protect the network. I am sorry to ruin the hon. Gentleman's career, but he also mentioned what I seem to remember was called "reciprocal exclusivity", which is being considered by the PIU.
  This has been an important debate. I acknowledge that we do not yet have detailed answers to all the questions that have been raised, but we are fully alive to them. We are already working on them and will continue to do so in the coming months. As in many facets of national life, the world in which the Post Office and postal services operate is changing rapidly. We will provide the protection for this vital part of the social fabric of this country and we will ensure that post offices are given the resources that they need to survive in very difficult circumstances. I urge the House to support the Government amendment.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 43, Noes 298.

  Division No. 28]

  [9.59 pm

  AYES

  Allan, Richard

  Jones, Nigel (Cheltenham)

  Ashdown, Rt Hon Paddy

  Keetch, Paul

  Baker, Norman

  Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

  Ballard, Jackie

  Beith, Rt Hon A J

  Kirkwood, Archy

  Bell, Martin (Tatton)

  Livsey, Richard

  Brake, Tom

  Llwyd, Elfyn

  Brand, Dr Peter

  Maclennan, Rt Hon Robert

  Breed, Colin

  Michie, Mrs Ray (Argyll & Bute)

  Bruce, Malcolm (Gordon)

  Moore, Michael

  Burnett, John

  Oaten, Mark

  Cable, Dr Vincent

  Öpik, Lembit

  Campbell, Rt Hon Menzies (NE Fife)

  Rendel, David

  Ross, William (E Lond'y)

  Chidgey, David

  Sanders, Adrian

  Cotter, Brian

  Smith, Sir Robert (W Ab'd'ns)

  Davey, Edward (Kingston)

  Taylor, Matthew (Truro)

  Feam, Ronnie

  Tonge, Dr Jenny

  Foster, Don (Bath)

  Tyler, Paul

  George, Andrew (St Ives)

  Webb, Steve

  Harris, Dr Evan

  Willis, Phil

  Harvey, Nick

  Tellers for the Ayes:

  Heath, David (Somerton & Frome)

  Mr. Bob Russell and

  Hughes, Simon (Southwark N)

  Mr. Andrew Stunell.

  NOES

  Abbott, Ms Diane

  Best, Harold

  Adams, Mrs Irene (Paisley N)

  Betts, Clive

  Ainger, Nick

  Blears, Ms Hazel

  Allen, Graham

  Boateng, Rt Hon Paul

  Anderson, Donald (Swansea E)

  Bradley, Keith (Withington)

  Anderson, Janet (Rossendale)

  Bradley, Peter (The Wrekin)

  Ashton, Joe

  Bradshaw, Ben

  Atherton, Ms Candy

  Brinton, Mrs Helen

  Atkins, Charlotte

  Brown, Russell (Dumfries)

  Banks, Tony

  Browne, Desmond

  Barnes, Harry

  Burden, Richard

  Barron, Kevin

  Burgon, Colin

  Bayley, Hugh

  Butler, Mrs Christine

  Beckett, Rt Hon Mrs Margaret

  Caborn, Rt Hon Richard

  Benn, Hilary (Leeds C)

  Campbell, Alan (Tynemouth)

  Benn, Rt Hon Tony (Chesterfield)

  Campbell, Ronnie (Blyth V)

  Bennett, Andrew F

  Campbell-Savours, Dale

  Benton, Joe

  Cann, Jamie

  Bermingham, Gerald

  Caplin, Ivor

  Berry, Roger

  Casale, Roger

  654

  Caton, Martin

  Hall, Patrick (Bedford)

  Cawsey, Ian

  Hamilton, Fabian (Leeds NE)

  Chapman, Ben (Wirral S)

  Harman, Rt Hon Ms Harriet

  Chaytor, David

  Heal, Mrs Sylvia

  Clapham, Michael

  Henderson, Doug (Newcastle N)

  Clark, Rt Hon Dr David (S Shields)

  Henderson, Ivan (Harwich)

  Clark, Dr Lynda (Edinburgh Pentlands)

  Hepburn, Stephen

  Heppell, John

  Clarke, Charles (Norwich S)

  Hill, Keith

  Clarke, Rt Hon Tom (Coatbridge)

  Hodge, Ms Margaret

  Clarke, Tony (Northampton S)

  Hoey, Kate

  Clwyd, Ann

  Hood, Jimmy

  Coaker, Vemon

  Hope, Phil

  Coffey, Ms Ann

  Hopkins, Kelvin

  Cohen, Harry

  Howarth, George (Knowsley N)

  Connarty, Michael

  Howells, Dr Kim

  Cooper, Yvette

  Hoyle, Lindsay

  Corbett, Robin

  Hughes, Ms Beverley (Stretford)

  Corbyn, Jeremy

  Hughes, Kevin (Doncaster N)

  Corston, Jean

  Humble, Mrs Joan

  Cousins, Jim

  Hurst, Alan

  Crausby, David

  Hutton, John

  Cryer, Mrs Ann (Keighley)

  Iddon, Dr Brian

  Cryer, John (Hornchurch)

  Illsley, Eric

  Cunningham, Jim (Cov'try S)

  Jackson, Helen (Hillsborough)

  Curtis-Thomas, Mrs Claire

  Jamieson, David

  Dalyell, Tam

  Jenkins, Brian

  Darting, Rt Hon Alistair

  Johnson, Alan (Hull W & Hessle)

  Darvill, Keith

  Johnson, Miss Melanie (Welwyn Hatfield)

  Davey, Valerie (Bristol W)

  Davidson, Ian

  Jones, Rt Hon Barry (Alyn)

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Helen (Warrington N)

  Davies, Geraint (Croydon C)

  Jones, Ms Jenny (Wolverh'ton SW)

  Davis, Rt Hon Terry (B'ham Hodge H)

  Jones, Jon Owen (Cardiff C)

  Dawson, Hilton

  Jones, Dr Lynne (Selly Oak)

  Dean, Mrs Janet

  Jones, Martyn (Clwyd S)

  Dobbin, Jim

  Keeble, Ms Sally

  Donohoe, Brian H

  Keen, Alan (Feltham & Heston)

  Doran, Frank

  Kelly, Ms Ruth

  Dowd, Jim

  Kennedy, Jane (Wavertree)

  Drew, David

  Kidney, David

  Dunwoody, Mrs Gwyneth

  King, Andy (Rugby & Kenilworth)

  Eagle, Angela (Wallasey)

  King, Ms Oona (Bethnal Green)

  Eagle, Maria (L'pool Garston)

  Kumar, Dr Ashok

  Edwards, Huw

  Ladyman, Dr Stephen

  Efford, Clive

  Laxton, Bob

  Ennis, Jeff

  Leslie, Christopher

  Etherington, Bill

  Levitt, Tom

  Field, Rt Hon Frank

  Lewis, Terry (Worsley)

  Fisher, Mark

  Liddell, Rt Hon Mrs Helen

  Fitzpatrick, Jim

  Linton, Martin

  Fitzsimons, Loma

  Lloyd, Tony (Manchester C)

  Flint, Caroline

  Love, Andrew

  Flynn, Paul

  McAvoy, Thomas

  Follett, Barbara

  McCabe, Steve

  Foster, Rt Hon Derek

  McCafferty, Ms Chris

  Foster, Michael Jabez (Hastings)

  McDonagh, Siobhain

  Foster, Michael J (Worcester)

  Macdonald, Calum

  Fyfe, Maria

  McDonnell, John

  Gapes, Mike

  McFall, John

  Gardiner, Barry

  McKenna, Mrs Rosemary

  George, Bruce (Walsall S)

  Mackinlay, Andrew

  Gerrard, Neil

  McNulty, Tony

  Gibson, Dr Ian

  Mactaggart, Fiona

  Gilroy, Mrs Linda

  McWalter, Tony

  Godsiff, Roger

  McWilliam, John

  Goggins, Paul

  Mallaber, Judy

  Golding, Mrs Llin

  Marsden, Gordon (Blackpool S)

  Griffiths, Jane (Reading E)

  Marsden, Paul (Shrewsbury)

  Griffiths, Nigel (Edinburgh S)

  Marshall, David (Shettleston)

  Griffiths, Win (Bridgend)

  Marshall, Jim (Leicester S)

  Grocott, Bruce

  Marshall-Andrews, Robert

  Grogan, John

  Martlew, Eric

  Hain, Peter

  Maxton, John

  Hall, Mike (Weaver Vale)

  Meacher, Rt Hon Michael

  655

  Meale, Alan

  Smith, Rt Hon Andrew (Oxford E)

  Merron, Gillian

  Smith, Angela (Basildon)

  Miller, Andrew

  Smith, Jacqui (Redditch)

  Mitchell, Austin

  Smith, John (Glamorgan)

  Moffatt, Laura

  Smith, Llew (Blaenau Gwent)

  Moran, Ms Margaret

  Snape, Peter

  Morley, Elliot

  Southworth, Ms Helen

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Spellar, John

  Squire, Ms Rachel

  Mountford, Kali

  Starkey, Dr Phyllis

  Mowlam, Rt Hon Marjorie

  Steinberg, Gerry

  Mudie, George

  Stevenson, George

  Mullin, Chris

  Stewart, David (Inverness E)

  Murphy, Jim (Eastwood)

  Stewart, Ian (Eccles)

  Naysmith, Dr Doug

  Stinchcombe, Paul

  Norris, Dan

  Stoate, Dr Howard

  O'Brien, Bill (Normanton)

  Strang, Rt Hon Dr Gavin

  O'Brien, Mike (N Warks)

  Stringer, Graham

  O'Hara, Eddie

  Stuart, Ms Gisela

  Olner, Bill

  Sutcliffe, Gerry

  Organ, Mrs Diana

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Palmer, Dr Nick

  Pearson, Ian

  Taylor, Ms Dari (Stockton S)

  Pendry, Tom

  Taylor, David (NW Leics)

  Perham, Ms Linda

  Temple-Morris, Peter

  Pickthall, Colin

  Thomas, Gareth R (Harrow W)

  Pike, Peter L

  Timms, Stephen

  Plaskitt, James

  Tipping, Paddy

  Pond, Chris

  Todd, Mark

  Pope, Greg

  Touhig, Don

  Powell, Sir Raymond

  Trickett, Jon

  Prentice, Ms Bridget (Lewisham E)

  Truswell, Paul

  Prentice, Gordon (Pendle)

  Turner, Dr Desmond (Kemptown)

  Prescott, Rt Hon John

  Turner, Dr George (NW Norfolk)

  Purchase, Ken

  Turner, Neil (Wigan)

  Quin, Rt Hon Ms Joyce

  Twigg, Derek (Halton)

  Quinn, Lawrie

  Tynan, Bill

  Radice, Rt Hon Giles

  Walley, Ms Joan

  Rammell, Bill

  Ward, Ms Claire

  Rapson, Syd

  Wareing, Robert N

  Reed, Andrew (Loughborough)

  Watts, David

  Reid, Rt Hon Dr John (Hamilton N)

  Whitehead, Dr Alan

  Robinson, Geoffrey (Cov'try NW)

  Wicks, Malcolm

  Rogers, Allan

  Williams, Rt Hon Alan (Swansea W)

  Rooker, Rt Hon Jeff

  Ross, Ernie (Dundee W)

  Williams, Mrs Betty (Conwy)

  Rowlands, Ted

  Wills, Michael

  Roy, Frank

  Winterton, Ms Rosie (Doncaster C)

  Ruane, Chris

  Wood, Mike

  Ruddock, Joan

  Woodward, Shaun

  Russell, Ms Christine (Chester)

  Woolas, Phil

  Salter, Martin

  Worthington, Tony

  Sarwar, Mohammad

  Wright, Anthony D (Gt Yarmouth)

  Savidge, Malcolm

  Wright, Dr Tony (Cannock)

  Sawford, Phil

  Wyatt, Derek

  Sheldon, Rt Hon Robert

  Tellers for the Noes:

  Simpson, Alan (Nottingham S)

  Mrs. Anne McGuire and

  Singh, Marsha

  Mr. Robert Ainsworth.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
  The House divided: Ayes 286, Noes 41.

  Division No. 29]

  [10.11 pm

  AYES

  Abbott, Ms Diane

  Atherton, Ms Candy

  Adams, Mrs Irene (Paisley N)

  Atkins, Charlotte

  Ainger, Nick

  Barnes, Harry

  Allen, Graham

  Barron, Kevin

  Anderson, Donald (Swansea E)

  Bayley, Hugh

  Anderson, Janet (Rossendale)

  Beckett, Rt Hon Mrs Margaret

  656

  Benn, Hilary (Leeds C)

  Flint, Caroline

  Benn, Rt Hon Tony (Chesterfield)

  Flynn, Paul

  Bennett, Andrew F

  Follett, Barbara

  Benton, Joe

  Foster, Rt Hon Derek

  Bermingham, Gerald

  Foster, Michael Jabez (Hastings)

  Berry, Roger

  Foster, Michael J (Worcester)

  Best, Harold

  Fyfe, Maria

  Betts, Clive

  Gapes, Mike

  Blears, Ms Hazel

  Gardiner, Barry

  Boateng, Rt Hon Paul

  George, Bruce (Walsall S)

  Bradley, Keith (Withington)

  Gerrard, Neil

  Bradley, Peter (The Wrekin)

  Gibson, Dr Ian

  Bradshaw, Ben

  Gilroy, Mrs Linda

  Brinton, Mrs Helen

  Godsiff, Roger

  Brown, Russell (Dumfries)

  Goggins, Paul

  Browne, Desmond

  Golding, Mrs Llin

  Burden, Richard

  Griffiths, Jane (Reading E)

  Burgon, Colin

  Griffiths, Nigel (Edinburgh S)

  Butler, Mrs Christine

  Griffiths, Win (Bridgend)

  Cabom, Rt Hon Richard

  Grocott, Bruce

  Campbell, Alan (Tynemouth)

  Grogan, John

  Campbell—Savours, Dale

  Hain, Peter

  Cann, Jamie

  Hall, Mike (Weaver Vale)

  Caplin, Ivor

  Hall, Patrick (Bedford)

  Casale, Roger

  Hamilton, Fabian (Leeds NE)

  Caton, Martin

  Harman, Rt Hon Ms Harriet

  Cawsey, Ian

  Heal, Mrs Sylvia

  Chapman, Ben (Wirral S)

  Henderson, Doug (Newcastle N)

  Chaytor, David

  Henderson, Ivan (Harwich)

  Clapham, Michael

  Hepburn, Stephen

  Clark, Rt Hon Dr David (S Shields)

  Heppell, John

  Clark, Dr Lynda (Edinburgh Pentlands)

  Hill, Keith

  Hoey, Kate

  Clarke, Charles (Norwich S)

  Hood, Jimmy

  Clarke, Rt Hon Tom (Coatbridge)

  Hope, Phil

  Clarke, Tony (Northampton S)

  Hopkins, Kelvin

  Clwyd, Ann

  Howarth, George (Knowsley N)

  Coaker, Vernon

  Howells, Dr Kim

  Coffey, Ms Ann

  Hoyle, Lindsay

  Cohen, Harry

  Hughes, Ms Beverley (Stretford)

  Connarty, Michael

  Hughes, Kevin (Doncaster N)

  Cooper, Yvette

  Humble, Mrs Joan

  Corbett, Robin

  Hurst, Alan

  Corbyn, Jeremy

  Hutton, John

  Corston, Jean

  Iddon, Dr Brian

  Cousins, Jim

  Illsley, Eric

  Crausby, David

  Jackson, Helen (Hillsborough)

  Cryer, Mrs Ann (Keighley)

  Jamieson, David

  Cryer, John (Hornchurch)

  Jenkins, Brian

  Cunningham, Jim (Cov'try S)

  Johnson, Alan (Hull W & Hessle)

  Curtis-Thomas, Mrs Claire

  Johnson, Miss Melanie (Welwyn Hatfield)

  Dalyell, Tam

  Darling, Rt Hon Alistair

  Jones, Rt Hon Barry (Alyn)

  Darvill, Keith

  Jones, Helen (Warrington N)

  Davey, Valerie (Bristol W)

  Jones, Ms Jenny (Wolverh'ton SW)

  Davidson, Ian

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Jon Owen (Cardiff C)

  Davies, Geraint (Croydon C)

  Jones, Dr Lynne (Selly Oak)

  Davis, Rt Hon Terry (B'ham Hodge H)

  Jones, Martyn (Clwyd S)

  Keeble, Ms Sally

  Dawson, Hilton

  Keen, Alan (Feltham & Heston)

  Dean, Mrs Janet

  Kelly, Ms Ruth

  Dobbin, Jim

  Kennedy, Jane (Wavertree)

  Donohoe, Brian H

  Kidney, David

  Doran, Frank

  King, Andy (Rugby & Kenilworth)

  Dowd, Jim

  King, Ms Oona (Bethnal Green)

  Drew, David

  Kumar, Dr Ashok

  Eagle, Angela (Wallasey)

  Ladyman, Dr Stephen

  Eagle, Maria (L'pool Garston)

  Laxton, Bob

  Efford, Clive

  Leslie, Christopher

  Ennis, Jeff

  Levitt, Tom

  Etherington, Bill

  Lewis, Terry (Worsley)

  Field, Rt Hon Frank

  Liddell, Rt Hon Mrs Helen

  Fisher, Mark

  Linton, Martin

  Fitzpatrick, Jim

  Lloyd, Tony (Manchester C)

  Fitzsimons, Lorna

  Love, Andrew

  657

  McAvoy, Thomas

  Ruane, Chris

  McCabe, Steve

  Ruddock, Joan

  McCafferty, Ms Chris

  Russell, Ms Christine (Chester)

  Macdonald, Calum

  Salter, Martin

  McDonnell, John

  Sarwar, Mohammad

  McFall, John

  Savidge, Malcolm

  McKenna, Mrs Rosemary

  Sawford, Phil

  Mackinlay, Andrew

  Sheldon, Rt Hon Robert

  McNulty, Tony

  Simpson, Alan (Nottingham S)

  Mactaggart, Fiona

  Smith, Rt Hon Andrew (Oxford E)

  McWalter, Tony

  Smith, Angela (Basildon)

  McWilliam, John

  Smith, Jacqui (Redditch)

  Mallaber, Judy

  Smith, John (Glamorgan)

  Marsden, Paul (Shrewsbury)

  Smith, Llew (Blaenau Gwent)

  Marshall, David (Shettleston)

  Snape, Peter

  Marshall, Jim (Leicester S)

  Southworth, Ms Helen

  Marshall-Andrews, Robert

  Spellar, John

  Martlew, Eric

  Squire, Ms Rachel

  Maxton, John

  Starkey, Dr Phyllis

  Meacher, Rt Hon Michael

  Steinberg, Gerry

  Meale, Alan

  Stevenson, George

  Merron, Gillian

  Stewart, David (Inverness E)

  Miller, Andrew

  Stewart, Ian (Eccles)

  Mitchell, Austin

  Stinchcombe, Paul

  Moftatt, Laura

  Stoate, Dr Howard

  Moran, Ms Margaret

  Stringer, Graham

  Morley, Elliot

  Stuart, Ms Gisela

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Sutcliffe, Gerry

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Mowlam, Rt Hon Marjorie

  Taylor, Ms Dari (Stockton S)

  Mudie, George

  Taylor, David (NW Leics)

  Mullin, Chris

  Temple-Morris, Peter

  Murphy, Jim (Eastwood)

  Thomas, Gareth R (Harrow W)

  Naysmith, Dr Doug

  Timms, Stephen

  Norris, Dan

  Tipping, Paddy

  O'Brien, Bill (Normanton)

  Todd, Mark

  O'Brien, Mike (N Warks)

  Touhig, Don

  O'Hara, Eddie

  Trickett, Jon

  Olner, Bill

  Truswell, Paul

  Organ, Mrs Diana

  Turner Dr Desmond (kemptown)

  Palmer, Dr Nick

  Turner Dr Georae (NW Norfolk)

  Pearson, Ian

  Turner, Neil (Wigan)

  Pendry, Tom

  Twigg, Derek (Halton)

  Perham, Ms Linda

  Tynan, Bill

  Pickthall, Colin

  Walley, Ms Joan

  Pike, Peter L

  Ward, Ms Claire

  Plaskitt, James

  Wareing, Robert N Watts, David

  Pond, Chris

  Whitehead, Dr Alan

  Pope, Greg

  Wicks, Malcolm

  Prentice, Ms Bridget (Lewisham E)

  Williams, Rt Hon Alan (Swansea W)

  Prescott, Rt Hon John

  Williams, Mrs Betty (Conwy)

  Purchase, Ken

  Wills, Michael

  Quin, Rt Hon Ms Joyce

  Winterton, Ms Rosie (Doncaster C)

  Quinn, Lawrie

  Wood, Mike

  Radice, Rt Hon Giles

  Woodward, Shaun

  Rammell, Bill

  Woolas, Phil

  Rapson, Syd

  Worthington, Tony

  Reed, Andrew (Loughborough)

  Wright, Anthony D (Gt Yarmouth)

  Reid, Rt Hon Dr John (Hamilton N)

  Wright, Dr Tony (Cannock)

  Robinson, Geoffrey (Cov'try NW)

  Wyatt, Derek

  Ross, Emie (Dundee W)

  Tellers for the Ayes:

  Rowlands, Ted

  Mrs. Anne McGuire and

  Roy, Frank

  Mr. Robert Ainsworth.

  NOES

  Allan, Richard

  Brand, Dr Peter

  Ashdown, Rt Hon Paddy

  Breed, Colin

  Baker, Norman

  Bruce, Malcolm (Gordon)

  Ballard, Jackie

  Burnett, John Cable, Dr Vincent

  Beith, Rt Hon A J

  Campbell, Rt Hon Menzies (NE Fife)

  Bell, Martin (Tatton)

  Brake, Tom

  Chidgey, David

  658

  Cotter, Brian

  Michie, Mrs Ray (Argyll & Bute)

  Davey, Edward (Kingston)

  Moore, Michael

  Fearn, Ronnie

  Oaten, Mark

  Foster, Don (Bath)

  Öpik, Lembit

  George,Andrew (St Ives)

  Rendel, David

  Harris, Dr Evan

  Sanders, Adrian

  Harvey, Nick

  Smith, Sir Robert (W Ab'd'ns)

  Heath, David (Somerton & Frome)

  Taylor, Matthew (Truro)

  Hughes, Simon(Southwark N)

  Tonge, Dr Jenny

  Jones, Nigel (Cheltenham)

  Tyler, Paul

  Keetch, Paul

  Webb, Steve

  Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

  Willis, Phil

  Kirkwood, Archy

  Tellers for the Noes:

  Livsey, Richard

  Mr. Bob Russell and

  Maclennan, Rt Hon Robert

  Mr. Andrew Stunell.

  Question accordingly agreed to.
  MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House "welcomes the fact that the Government will be introducing a Bill to modernise the Post Office; notes the contrast with years of Tory inaction, that left the Post Office to decline; welcomes the reduction of the External Financing Limit and the ability to borrow which will boost the Post Office's ability to invest for the future, welcomes for the first time the clear commitment of the Government to a network throughout the United Kingdom of post offices which will be automated, and to introduce for the first time criteria for access to Post Office services; welcomes the fact that for the first time the Universal Service Obligation will be guaranteed in legislation; welcomes the study by the Performance and Innovation Unit which is looking at the future of the network; and notes that the policies of the Opposition would undoubtedly lead to the decline of the Post Office."
  10.22 pm
  Dr. Jenny Tonge: On a point of order, Madam Speaker. This follows the point of order that was raised by the hon. Member for Cynon Valley (Ann Clwyd) this afternoon. I understand from the media this evening that, despite the dangerously unstable situation in Indonesia and the failure to make any progress on the release of East Timorese refugees who are still in West Timor, the Government have taken the arms embargo off Indonesia. I wish that the Minister would come to the House to make a statement to hon. Members, instead of announcing it on the media.
  Madam Speaker: Perhaps I could refer the hon. Lady to a question that was tabled on Friday for answer today, on the status of the European Union arms embargo on Indonesia. She might like to follow that through. Meanwhile, I am sure that, yet again, the Government Front-Bench team will have noted the concern of hon. Members in many parts of the House on the issue.

  Post Office Services

    POLITICAL PARTIES, ELECTIONS AND REFERENDUMS BILL
    Ordered,
    That Standing Committee G be discharged from considering Part I (the Electoral Commission) and Part VII (Referendums) of the Political Parties, Elections and Referendums Bill and any new Clauses or new Schedules relating to those Parts, and that those Parts of the Bill, and such new Clauses and new Schedules, be committed to a Committee of the whole House;
    That, when the provisions of the Bill considered respectively by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole from the Standing Committee.—[Mr. Dowd.]

  Sandra Gregory
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]
  10.23 pm
  Mr. Malcolm Bruce: Although Sandra Gregory was arrested almost seven years ago, it is the first time that her case has been raised in the House. The reason is that a process has been going on for the past seven years, but that appears now to be stalled. It is necessary for the House to address that. A number of hon. Members have supported the case, particularly the hon. Member for Halifax (Mrs. Mahon), who has said that she would have been here if she had not been away on other business. She and I have together raised the matter with Ministers.
  I remind the House that Sandra Gregory was arrested on 3 February 1993 at Bangkok airport and found to be in possession of 89 g of heroin in condoms that were secreted internally. She claimed that she was carrying the heroin on behalf of an acquaintance, Robert Locke, for a payment of £1,000, to be used for her fare back to the United Kingdom. The Thai authorities were apparently tipped off by the British embassy that Locke was suspected of drug trafficking, although it had no knowledge of Sandra Gregory. In the event, she was clearly compromised with undeniable possession.
  Locke pleaded not guilty, and, with only Sandra's evidence against him, was acquitted—although, ironically, he was convicted of being in possession of heroin while in prison in Thailand and sentenced to three years. He has also been convicted of a heroin offence since his return to the United Kingdom.
  Sandra had no option but to plead guilty, and was subsequently sentenced to a mandatory minimum sentence of 25 years. Sandra's offence was attempting to export drugs. Had she been caught with that amount—89 g—within Thailand, it would not have been an offence as it was under 100 g, which is the limit of what is regarded as being for personal use. The current street value of the drug is about £9,000.
  Sandra was not motivated by greed—she was not planning to sell the drug or realise its value. She was accepting payment for acting as what is known in the trade as a mule. It was not, as some people have suggested, an act of greed but an act of irrational desperation by a sick and homesick young woman.
  As it was a mandatory minimum sentence, mitigating circumstances were not considered. However, at the time of the offence, Sandra Gregory was suffering from dengue fever and amoebic dysentery, had lost more than 25 per cent. of her body weight and was desperate to get back to the United Kingdom. She was, in her mother's words,
  "not really in her right mind".
  Neither Sandra nor her parents—Stan and Doreen, who live in my constituency—deny that an offence was committed, or that Sandra should have been punished. The issue is entirely one of proportionality.
  Under the Thai judicial system, the normal process of appealing for someone in Sandra's position is through an appeal to the King. Sandra was able to initiate that process only after conviction, which was delayed for three years, pending the outcome of Robert Locke's trial.
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  Sandra is now completing the seventh year of her sentence, and still does not know when her appeal to the King will be considered. She was told that it would be before Christmas, then in the new year. The latest information is that it may not be for another six months which, in itself, is an added frustration.
  The Government maintain that it is not policy to support clemency appeals for British nationals under foreign jurisdictions other than in exceptional cases, which seems to mean cases involving, for example, the terminal illness of the prisoner or a next of kin. United Kingdom practice, however, seems to differ very sharply from the practice of other Governments and does not even seem to be consistently applied by our own Government.
  If Sandra Gregory were an Australian, she would receive automatic Government support for a clemency appeal. If Sandra were an American, she would have her sentence reduced to take account of time spent in a Thai prison. The Americans multiply Thai prison years by six. Therefore, Sandra's three years spent in a jail in Bangkok would have been regarded as 18 years in the American system, so that she would have been immediately eligible for parole on her return home and would now have been deemed to have served the entire sentence without remission.
  The Dutch Government review the sentence of those who are transferred from conviction under foreign jurisdiction back to Holland against the domestic equivalent sentence. In Sandra's case, her sentence would have been a maximum of four years.
  Since her return to the United Kingdom, Sandra has spent time in Holloway, Wakefield, and Durham maximum security wing, and she is currently at Cookham Wood, in Kent. She is serving the third longest sentence of any woman in a United Kingdom prison, with only Myra Hindley and Rosemary West serving longer sentences—life meaning life in both cases. While Sandra Gregory was in Durham, she was in the same wing as Rosemary West, and certainly felt great resentment that she was treated as being the same category of criminal.
  The effect has been that Sandra Gregory—a first-time offender who bitterly regrets her crime and is repentant—has seen professional criminals, with a serious track record of serious crimes, come in and out of prison while she continues to languish.
  A little over a year after Sandra's arrest, another British woman was arrested in Bangkok, trying to export 7 kg of heroin. On conviction, she was sentenced to life imprisonment. That sentence was reduced on appeal to 35 years and then to 25 years in a general amnesty. Recently, her appeal to the King for clemency, which has been heard even though she was arrested more than a year after Sandra Gregory, resulted in her sentence being reduced to 10 years. That appeal was apparently supported by United Kingdom Customs and Excise. How is that consistent with the Government's stated policy? The reason given to me was that she gave evidence leading to the conviction of other drug dealers. She is now eligible for parole, although she and her family are in such danger that they will have to find new identities. Patricia Hussain, the woman in question, had previous convictions for theft, fraud and prostitution and was carrying not 89 g of heroin, but 7 kg.
  I have no doubt that Sandra Gregory, who met Patricia Hussain when they were in prison in Thailand, wishes her well, but she would not be human if she did not feel that

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  there was some difference in approach. When Sandra's parents and I asked the Foreign Office for an explanation, Nicolette Smith of the consular division said in a letter on 30 November:
  "Consular confidentiality precludes my commenting on Patricia Hussain's situation."
  I hope that the Minister might feel able to explain how the difference can be justified. It cannot be justice that someone convicted for a far more serious offence should get Government agency support and now be eligible for release while Sandra Gregory faces another four years before becoming eligible for parole.
  Sandra's parents, Stan and Doreen, have supported their daughter throughout and worked for a fair assessment of her sentence. They have behaved with great dignity and quiet determination. They hurt to see her mood swings, and the prime years of her life wasting away. I participated in a live television programme with them in Aberdeen yesterday. They were not told in advance that there would be a video at the start of the programme showing Sandra's arrest and conviction and her obvious distress and resentment. I have nothing but respect for their ability to argue their case rationally in such circumstances.
  In the past year, Stan and Doreen Gregory have sought and won support for Sandra's application for clemency from a wide cross-section of people. They have received the backing of the Church of Scotland, the Roman Catholic Church in Scotland and the Episcopal Church of Scotland. They have had the support of 35 Anglican and Roman Catholic bishops, including one archbishop. Fifty seven Members of Parliament from all parties, including former Cabinet Ministers, have signed a motion calling on the Government to support her appeal to the King. More than 30 Members of the Scottish Parliament have backed a similar motion. Many others have given public or private support.
  I am as aware as any Member of Parliament of the seriousness of drugs crimes. I support the need for tough penalties, especially for traffickers, which Sandra Gregory was not. However, that does not mean that the normal rules of justice can be set aside. Sandra Gregory is as much a victim of drugs as many others. While she faces the prospect of at least another four years in jail before she is even eligible for parole, the serious dealers go free to carry on their trafficking. They have the power to escape while minnows such as Sandra Gregory are left to take the rap.
  What assurances can the Minister give Sandra's family that the lack of British Government support for her appeal to the King will not prejudice her chances? Is that lack of support already contributing to the continuing delay in her appeal being heard? Does the Minister know why the delay has occurred and when a final hearing and adjudication will be carried out? What firm assurances can be given that the delay will not continue indefinitely? Will the Government make it clear, respectfully, to the King of Thailand that there is widespread support in the UK for Sandra's sentence to be reviewed and reduced?
  Will the Government convey to the King the fact that lack of support is an issue of general policy, and does not mean that the British Government do not believe that there may be a strong case for clemency? Can the Minister deny, on the basis of the treatment of nationals of countries other than the UK and the outcome of the
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  Hussain appeal, that it would now be appropriate for Sandra Gregory's sentence to be reduced to 10 years or less, making her now eligible for parole?
  Sandra Gregory should be punished. She is being punished. Her parents are being punished. Is it not now time for mitigating circumstances to be fully considered? Should not her punishment be compared with her offence and the punishment of others? Is it not now disproportionate? Indeed, may her parents be right in believing that it may be in breach of the European convention on human rights? Does the Minister understand the hurt and offence—expressed to me yesterday—caused to Stan and Doreen Gregory by seeing Kosovo war criminals, who have been convicted of systematic cold-blooded mass murder, getting lighter sentences than their daughter? Are not these fair comparisons? Is not the Government in danger of unfairness and inconsistency?
  Sandra Gregory is paying dearly for her crime. She should not be made a scapegoat for those who are not.
  10.37 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Peter Hain): I am grateful to the hon. Member for Gordon (Mr. Bruce) for bringing this matter to the attention of the House and for putting some pertinent questions and powerful arguments, of which I am sure the Thai authorities will take note. I am glad of the opportunity to tell the House of the interest that the Government have shown in Sandra Gregory's case.
  I also wish to take this opportunity to outline our review of policy on making representations in support of pleas for clemency by British prisoners abroad to the authorities of the countries where they are detained.
  The Government are steadfastly committed to tackling serious crime, including drug smuggling. We co-operate with other countries in this, both bilaterally and multilaterally. Just because a drug criminal is British is no excuse—there should be no more leniency than for other nationals committing similar crimes. British nationals detained abroad are subject to local jurisdiction wherever they commit their crimes. We respect the right of other countries to decide their own sentencing guidelines in accordance with their laws, customs and culture—just as we would ask them to do for us.
  As the hon. Gentleman said, Sandra Gregory was arrested at Bangkok international airport in February 1993, when 86.9 grammes of heroin were found concealed inside her body. She pleaded guilty to drug trafficking, and was sentenced to 25 years' imprisonment. This is an extremely long sentence by British standards, although it was reduced in 1996 by two years in His Majesty the King of Thailand's golden jubilee amnesty.
  On 5 June 1997, Sandra transferred to a British prison under the terms of the UK-Thailand prisoner transfer agreement. I should point out to the hon. Gentleman that Australia does not have a prisoner transfer agreement, which is why there is a different situation for that country. The move greatly facilitates visits from her family, and allows her to be in an English-speaking environment—albeit in the difficult circumstances to which the hon. Gentleman has drawn the attention of the House—with the same rights and privileges as other British prisoners. She will become eligible for parole in 2003. She may also benefit from any further general reduction in sentences in future amnesties by His Majesty the King of Thailand.

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  In May 1997, Sandra submitted her royal pardon petition to His Majesty the King of Thailand. She wrote to the Foreign Secretary on 10 June 1997, asking him to give official support to her royal pardon petition. Our policy at the time was to support petitions only when there were compelling compassionate circumstances—for example, where a prisoner was terminally ill and unlikely to survive their sentence, or where a relative was terminally ill and their death would leave elderly relatives, or young children with no-one to care for them.
  Sandra was 29 at the time of her arrest and had lived in Thailand for more than 18 months. She knew how tough the Thai laws on drugs were. She admitted that she had agreed to carry the drugs for an acquaintance and for financial gain. She was in good health, with no dependent relatives. After consideration, we declined to support Sandra's plea because there were insufficient compassionate or humanitarian reasons. She did not qualify for support under the policy that I have outlined.
  Mr. Bruce: Does the Minister consider that suffering from dengue fever and amoebic dysentery and having lost 25 per cent. of one's bodyweight is good health? Are not those mitigating circumstances that a clemency appeal could consider?
  Mr. Hain: That will be taken into account, and was noted at the time.
  Since that time, Sandra Gregory's parents—I pay tribute to them—have urged us consistently to reverse our decision because they believe that Sandra's sentence is disproportionately long by comparison with the sentence that she would have received in the United Kingdom for a similar conviction, which is undoubtedly the case. They have organised an effective campaign, gaining support from Members of Parliament, Members of the Scottish Parliament, members of the public and the Church.
  Sandra accepts that what she did was wrong and she is sorry. I have every sympathy for Mr. and Mrs. Gregory; as a parent, I would probably have done the same had one of my children been in this predicament; I admire their efforts and the dignified way in which they have conducted their campaign.
  In the light of that, in March 1999 we began a review of our policy on making representations about the convictions and sentencing of British prisoners abroad to the authorities of the countries where they are detained. We focused particularly on support for clemency pleas. The review was a complex exercise and took a long time.
  There are more than 2,000 British prisoners overseas. We identified 243 prisoners serving sentences of at least five years in countries where there are clemency schemes; 93 of them were in Thailand and 21 in Morocco. We found that we could not discriminate among them, or even prioritise their clemency pleas.
  Disregarding the drug offenders would not help Sandra. Supporting all the pleas for pardons simultaneously would damage our credibility and severely limit the chances of success for any of the pleas. Even if we were to reduce the list to prisoners with sentences of at least 10 years we would still have 142 potential pleas to consider.
  Mr. Martin Bell: Does the Minister accept that even if there are 2,000 other prisoners, to have this British
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  young Lady serving this sentence in a British jail is an exceptional circumstance, especially given the disquiet in Gordon, throughout Scotland and in the House?
  Mr. Hain: It is a troubling circumstance. That is why I am grateful that the matter has been raised.
  Some prisoners have argued that overseas penal and judicial systems do not always take account of mitigating circumstances and that the Government should therefore also support pleas for early release if the prisoners have received a much longer sentence than they might have done in the UK, as Sandra Gregory's case shows, but just as we would not accept other countries seeking to determine our laws and customs, we must accept their right to decide sentencing guidelines in accordance with their laws, customs and culture. The guidelines often reflect strong political pressures to impose deterrent sentences to dissuade others from making a bad drugs problem any worse.
  Our policy on official support for pardon applications was already in line with that operated by Her Majesty's Prison Service. Early release of foreign prisoners in the UK on compassionate grounds is covered by section 36 of the Criminal Justice Act 1991. In general, the circumstances looked for by the Prison Service are terminal illness of the prisoner; terminal illness and/or death of a spouse when there will be no one to care for the children; and when there is no one to care for a terminally ill parent.
  If we accept other countries' rights to sentence as they wish, that we do not intervene in that judicial process and that our policy on supporting clemency pleas abroad is in line with our policy at home, it follows that we have little scope for modifying our policy.
  We have looked at the issue from every angle, but we could not look at Sandra's case in isolation. After very careful consideration and taking all factors into account, we decided not to change our policy on supporting clemency pleas. Our primary concern was to ensure that the policy should be based on clear and objective criteria. We decided that that was best achieved by the existing guidelines—only supporting clemency pleas when there were certain clear compassionate grounds to do so. That unfortunately means that we were not able to support Sandra's plea for clemency.
  British nationals detained abroad are subject to local jurisdiction wherever they commit their crimes and we have to respect the right of other countries to decide their own sentencing guidelines. Indeed, we expect the same respect ourselves. The harsh penalties imposed in some states for offences such as drug trafficking and sex offences are widely advertised and very few prisoners can genuinely claim to have been ignorant of them. Our travel advice notices for countries such as Thailand, Malaysia, the Philippines, Morocco and Saudi Arabia include warnings about their sentencing policies.
  We know the strong support that Sandra's case has attracted, which has been reflected this evening. Indeed, I stress that we have brought that support to the attention of the Thai authorities and I am sure that this debate will similarly be brought to their attention. Our embassy in Bangkok wrote to the Thai authorities on 25 August 1999 to draw their attention to a petition submitted by Sandra's

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  supporters in the UK. Our embassy wrote again on 3 November 1999 to explain our policy to them and to make it clear to the Thai authorities that our lack of formal support should not act to deter them from exercising clemency.
  In any case, success or failure of clemency pleas does not rest on Government support. Unsupported clemency pleas have been successful in Thailand and a Government-supported plea on behalf of a prisoner with a terminal illness was unsuccessful.
  The Thais have been considering Sandra's royal pardon petition for two and a half years. In December 1999, we were told that we would hear the decision of Sandra's royal pardon petition early in the new year—the hon. Gentleman rightly asked about that point. However, on 6 January, our embassy in Bangkok was told that it is now likely to be known in the middle of this year. While we sympathise with Sandra's family, and anyone who is separated from their loved ones, the compassionate circumstances do not exist that would warrant the Government formally supporting her plea to the Thai authorities for early release, but that does not mean that we have not made representations. I am sure that the Thai authorities will also take careful note of this debate.
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  The hon. Gentleman also raised the case of Patricia Hussain. The Government declined to support Ms Hussain's royal pardon petition because there were insufficient compassionate circumstances. However, we did write to the Thai Foreign Minister in late 1997 explaining that we would not support her plea, but drawing his attention to the way in which Ms Hussain had co-operated with the Customs authorities in the UK and the United States following her arrest. On 11 November 1999, the Thai Ministry of Foreign Affairs informed our embassy in Bangkok that Ms Hussain's plea for clemency had been granted and her sentence reduced further to 10 years. She now qualifies to be considered for release on parole according to UK parole regulations.
  The decision to grant Ms Hussain clemency rested entirely with the Thai authorities, as does the decision on Sandra's case. As I have already said, we have made similar representations on Sandra's behalf, most recently on 3 November 1999. I am sure that those responsible will take note of those recommendations, as I am sure that they will take note of the powerful arguments expressed in the House this evening by the hon. Member for Gordon.
  Question put and agreed to.
  Adjourned accordingly at eleven minutes to Eleven o'clock.