BUSINESS OF THE HOUSE (Hansard, 29 March 2000)

§ Mr. Pickles
Will bank charges be imposed? Will people's pensions and benefits be eroded by bank charges? Will there be an overdraft facility on the bank charges and will benefit payments merely go towards reducing people's debts to the banks? What will happen if the payments of account holders infringe their agreements with the banks? What will happen if individuals do not qualify for a bank account or choose not to have one? We have to consider such questions if automated credit transfer is to be achieved.
Offering simple banking services will not in itself solve the problems of post offices. There must be a place where not only can people receive payments, but sums can be paid in. I had a discussion with one of my local sub-postmasters who told me about ACT. He said that he had noticed a trend and that people of 65 would use ACT. However, as they got older and moved into their 80s, they reverted to being paid over the counter. That sounds bizarre. Why should they do that? The answer is that they are frailer; they no longer feel competent to drive a motor car; journeys into town are expensive; and they feel safer and more secure going to the local post office to receive payments rather than receiving them through their bank account. It is easier to receive payments over the counter.
The Prime Minister thought—he may still—that ACT was a good idea. He recently announced that the Post Office would install 3,000 cashpoints in villages around the UK in co-operation with the high street banks and building societies; and that the cashpoints may be Post Office branded but will give people access to money and services from a number of different banks. I suppose that we should believe press reports. According to a report in The Daily Telegraph on 9 January—if it is in The Daily Telegraph, it must be true—the Post Office is now in secret talks with a series of Britain's top lenders in an attempt to win support for the plan and hopes not to charge customers a fee for using its cash machines unless it is forced to do so with the banks. Given the backdrop of what has happened in recent weeks, I am not entirely happy with the idea of a person's hard-earned pension money being paid out to the banks by way of cash transfer
The hon. Member for Northavon referred to the additional pension that will be received, so would it not be truly ironic if that were eaten up by the charges of the major high street banks to ensure that a person could withdraw cash?

§ Mr. Eric Martlew (Carlisle)
The hon. Gentleman is attacking the banks.

§ Mr. Pickles
The hon. Gentleman is living in a time warp; he says that the Tories are attacking the banks. He has perhaps never understood that the Tory party is on the side of pensioners receiving a fair deal. I have obviously stirred him up, and it is nice to know that he has a view on things. I look forward to his contribution, which I am sure will be eloquent.
We have received advice from Geoffrey Leigh, who is the development manager with the Norfolk Rural Community Council and a man of some importance. He says: I cannot see how many of these cash points will end up in villages. And it doesn't help with many of the lower-income people in rural areas who don't have a bank account. Post offices with these will need additional security. It may make life worse for them. The Government has failed to get to grips with problems faced by rural communities. 440 He is absolutely right.
If the Prime Minister is to succeed in getting those 3,000 cashpoints put in, he will need post offices in which to install them. As the hon. Member for Northavon said, the rate of closure of post offices has accelerated. In 1993–94, sadly, 59 post offices closed; in 1995–96, the figure was 65; in 1997–98, 238 closed, and in 1999–2000, 232 closed. The hon. Gentleman said that this year the figure is likely to be 500. It seems that cash machines will be installed at the rate at which post offices are closing.

§ Mr. Bercow
Does my hon. Friend recall that there was a little controversy a few moments ago about the position of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley)? Is my hon. Friend interested to learn that on 15 February, on Second Reading of the Postal Services Bill, at column 825 of Hansard, my right hon. Friend made it perfectly clear that he had received advice about the damaging effect of the compulsory payment of benefits into bank accounts and accordingly rejected the silly proposal that the present Secretary of State for Trade and Industry has inadvisedly accepted?

§ Mr. Pickles
Of course I remember that point in my speech: I would have appalling short-term memory problems if I had not retained that information. I am grateful to my hon. Friend because he has put on record exactly what the position was, and no doubt when the Prime Minister reads my hon. Friend's contribution over his cornflakes, he will say, "I must get to the House of Commons as soon as possible."

§ Mr. Field
Where is he?

§ Mr. Pickles
Where is the Prime Minister? Perhaps the Whip should go and summon him here now, but that would be an overreaction; tomorrow will be early enough for him to give the necessary apology.

Mr. Deputy Speaker
Order. If we dwell on this matter, we will be straying from the new clause.

§ Mr. Pickles
I am grateful to you, Mr. Deputy Speaker. I had wrung just about all the possible humour out of that point.
We have serious problems that will not be solved by the short-term fix of simple banking services. In this highly competitive world, major high street banks will not be worried about providing simple banking services. I support the new clause.

§ Mr. David Drew (Stroud)
I cannot echo the remarks of the hon. Member for Brentwood and Ongar (Mr. Pickles), but this is an important debate, and although it concerns a particular new clause, it is one of a series of debates about the future of the Post Office. Although I can support the aims of my near neighbour, the hon. Member for Northavon (Mr. Webb), I am not sure that the new clause is the appropriate means of achieving them because it has not been thought through.
I took note of what my right hon. Friend the Member for Birkenhead (Mr. Field) said, and of course this debate is on-going in the sense that automated credit transfer is not yet assured because the technology being installed in sub-post offices must be proved to be not only economically viable but technologically capable.
441 More important, I am worried about the important signals that the new clause would give out. First, it would send a signal to sub-postmasters and mistresses who are thinking about the future of their business. The most worrying aspect of the debate is that people's businesses are being put in jeopardy by loose talk. We are failing to give people confidence in their future. Those people have a future: every Member of Parliament believes that the national network is important; we are arguing about how to secure it, not whether to do so.
Negotiations are—or should be—taking place between the Post Office and the banks. That is where the arguments have to take place. The amendment worries me because it sends a signal to them to lay off, step back and procrastinate. When I meet the managing director of Post Office Counters Ltd. tomorrow, I shall ask him about some of the worrying rumours that I have heard. I shall ask him what negotiations he is engaged in, which banks he is talking to and what progress is being made toward the solution. Allowing people to delay for the next year or even longer will result in more sub-post offices being lost, along with confidence in the network, and that is the very thing we are trying to avoid. That is what worries me about the amendment. I can will the ends, but the means it employs strike me as counter-productive and potentially dangerous.
We are faced with two starkly contrasting options: adopt ACT, or leave things as they are. However, there is a third way, which is the inclusion of the smart card. We take no lectures from the official Opposition, who managed to make a complete hash of the Horizon system; it took years to get it up and running, then the swipe card had to be withdrawn because it never worked properly. We know that the smart card provides a potential answer, but the question is, who will pay for it? It cannot be paid for in full by any one party; a combination of different interests will be required.
I am worried about the outcome if we allow negotiations not to take place and we do not admit the potential of ACT and smart card technology. I am told that that technology is a killer application, which can be utilised, not only by the Benefits Agency, the Department of Social Security and local councils, but by other bodies who want people to have the opportunity to make payments through and into the postal network and sub-post offices. If we give any signal that those negotiations should not be conducted with the greatest urgency, we shall rue the day.

§ Mr. Webb
The hon. Gentleman is making a serious contribution to the debate, for which I am grateful. He appears to be saying that a saving made by the Department of Social Security should be spent, in part, on a matter that is the responsibility of the Department of Trade and Industry. Has he made any representations to the Department of Social Security, which thinks that it will save £400 million, that the money should come out of its departmental budget? Does he think that the Department would let go of the money?

§ Mr. Drew
That is the nature of the debate and it is what I expect to happen if we achieve joined-up thinking and joined-up action. We still await the report of the 442 performance and innovation unit, which will consider in a cross-departmental context the whole issue of generating a future for sub-post offices. Now is not the time for the new clause. There is to be a lobby in a couple of weeks' time and people are worried now—they have every reason to worry, given that post offices are closing because of fears about their future viability. However, the new clause does not set out the way forward.
We need measured, proper negotiations between the Post Office and other parties, including the Government. Only that process can produce the correct outcome whereby the network survives and benefits are paid in the appropriate form. That means giving people a choice—the Government have always said that choice is paramount. We must allow matters to take their natural course. That is why the new clause is premature and should be withdrawn.

§ Mr. Nicholls
The new clause is extremely well targeted. It has enabled us to concentrate on an issue that to date has not been the subject of a satisfactory answer from the Minister. The Government's position throughout is that we are engaging in a completely synthetic argument, that there is no problem and that after 2003 people will still be able to collect their benefits in cash from sub-post offices. The Minister of State wrote to me recently making exactly that point. It is one of those statements that politicians like and it is true as far as it goes, but it does not tell the whole story.
Yes, people will be able to continue to take their benefits in cash after 2003, but only if they have a bank account. Lest anybody be in any doubt, it is worth while considering the literature that the Government have issued. It may be that fashions have changed over the past two years or so, but when I was in government I insisted on seeing the documentation that was going out in my areas of responsibility. I wanted to know whether it would give a misleading view of Government policy on the one hand and what I intended on the other. I expected to see that documentation in my red box. Those who doubt the impression that people have been given should read the literature that is being sent to the public. There is not the slightest doubt that individuals must be extremely cute to realise that at times they are being given a choice.
The documents to which I shall refer are deliberately calculated to deceive. I know that and I recognise them. I am a lawyer, and I am paid to draft documents that are calculated to deceive. I see other lawyers on the Government Benches nodding. I am prepared to give due credit to those who drafted the documents to which I shall refer. They are people who are capable of deceit of a high order.
Despite the fact that the Opposition Whip said that he wanted a passionate and prolix speech, I shall not try you, Mr. Deputy Speaker, by delivering one. Instead, I shall refer to a document which states: Have your pension paid straight to your account. That is the opening headline. I will read not the entire document but the following paragraph. It reads: Wherever you are you can draw your pension from any branch of your bank, building society or the post office if you have a Girobank or National Savings bank account. You don't have to make special arrangements if you are away from home for a few weeks visiting family or friends … And it's easier to get your pension abroad. 443 The key point is that someone can go to any branch of his bank, building society or the Post Office if he has a Girobank or National Savings bank account.
People are sent a form if they are applying for income support. It reads: You can choose where to have your income support paid. We can arrange to pay your money straight into a bank or building society account. Or we can arrange for you to get your money at the post office, either by direct payment into a Girobank or National Savings bank account or by order book. Please read these notes before you decide which option you want to choose. We then go into Payment straight into an account. The next form relates to those who are coming up for a retirement pension. The relevant pension reads: Where do you want to be paid—you can choose. I said that this was deceit of a high order, and indeed it is. The form states: You can choose where you want your Retirement Pension to be paid. We can arrange to pay your money straight into a bank or building society account. Or we can arrange for you to get your money at the post office, either by payment straight into a GIRO account or National Savings Bank account, or in cash by order book or Payment Card. There are more of these documents, and they all say the same thing. They are designed to tell the individual the accounts into which the money can be paid.

§ Mr. Rooker
Obviously the hon. Gentleman's quotes are correct. Is he implying that the language in the documents that he has quoted has changed since 1 May 1997?

§ Mr. Nicholls
I shall move on to that.
The Government's line used to be, "We are better than you." Now we have someone of the Minister of State's reputation—the great progenitor of the Rooker-Wise amendment during those high moral days—reduced to thinking that he can hide behind the statement, "You're no better than we are." I shall deal with what the right hon. Gentleman is saying.
When the forms refer to the various accounts into which benefits can be paid, the Girobank sounds like a nice, homely account, but these days the Girobank is a current account run by the Alliance and Leicester bank. It is a bank account that comes with a cash card and a cheque book. Will such a bank, of its own free will, as an exercise in philanthropy, extend banking facilities to elderly people who want such facilities for the sole purpose of collecting their state pension and receiving it in cash? If the Minister of State or any other Labour Member thinks that banks behave in that way, three years of government should have disabused them of their naiveté
The documents refer lovingly and cosily to the Girobank, but that will not work. They also refer to the National Savings bank. That is very clever indeed. Although I do not pretend that I have carried out a survey, as a member of the Liberal party would, I have spoken to the constituents who brought me these forms. A number of people thought that the National Savings bank was like the old Post Office book account, which no longer exists.
When the forms tell people that they can take their money through the National Savings bank account, that is just about correct, but only if they have an investment 444 account with the National Savings bank. With an investment account, people can have their money paid in in an automated way. The problem is that they must then give four weeks' notice of their intention to draw it out.
Does anyone believe that elderly people, who are wholly dependent on state benefits and have never had a bank account in their life, will find it practical to open an investment account with the National Savings bank and then give notice in that way? It does not begin to stack up.
The documents are deliberately calculated to make people think that they have no alternative. We need to hear from the Minister tonight either that I am wrong, that he has been in contact with the Alliance and Leicester, and that it has assured him that it will be delighted to extend free banking facilities to the range of people in question, or that I am factually wrong and that it is possible to use an investment account at the National Savings bank in that way.
If that is the case, we need to hear about it because, as the Minister well knows, the ordinary account operated by the National Savings bank is a manual-based account. There is no way that money can be automated into it. The Minister knows that, because he has been briefed and he is an honest man. His honesty may be partial at times, but that is politics.
The Minister knows that the accounts mentioned will not be suitable vehicles for dealing with money. What does he intend to do? Either he must say—which even he will find it hard to do with a straight face—that there is a real prospect that, out of kindness, the banking industry will make facilities available to people who are on the poverty line, or he must say that the Government will compel them to do so.
I do not believe that, but it is not my problem—I am not a Minister any more. The Minister will have to come to the Dispatch Box and say that he will compel banks to do that, or that he believes that they will do so of their own accord. If he does not, there is a great, big lacuna in his argument.
In the Minister's letter to me, he states that after 2003 people will be able to take their money in cash. If he says that, he will know that that is a version of events which is incompatible with the truth. That is the politest way that I can put it.

§ Mr. Leigh
All the Minister has to say in answer to my hon. Friend is that people will be able to take cash at the post office, with no cost to themselves. That is the end of the argument, is it not?

§ Mr. Nicholls
I am not sure that I understood my hon. Friend. I do not think that it is the end of the argument. If people are to be able to take cash, they must continue to take cash from the post office, and the present arrangements must stay, but that is not what the Government are offering. The Government are saying that people can take cash, provided that they have an account through which to do so. That simply is not correct.
I want to make two further points, one of which has already been touched on by my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles). I heard the Prime Minister at the Dispatch Box today do what he so often does. He says, "I can't help it. The Tories did this, and I must carry on doing it." He suggested that the arrangements proposed were what the previous 445 Conservative Government were in the business of doing. That is simply not true. It is not a matter of argument or of opinion. It is an absolute matter of fact. The Conservative Government intended to use swipe-card technology, but the Government abandoned that because of the job losses that it would have caused in the public sector.
When I heard the Prime Minister today I wondered how one could accurately describe what he had said in the Chamber, but I decided that it simply could not be done; it would be unparliamentary. When I returned to my office still seething, two messages were waiting for me from sub-postmasters in my constituency saying, "Did you hear what the Prime Minister said today? It was an absolute"—as I say, I do not want to dwell on that at any great length.
It has been suggested that the solution may be for banks to put cash points in sub-post offices. The figure of 3,000 has been mentioned, but what about the other 15,000 sub-post offices? Are we really expected to believe that banks will put cash points into other people's private premises when a business might collapse? Independent businesses can become insolvent for all sorts of reasons not related to this. For example, a sub-postmaster might die. It just is not commercially viable. The idea that that will happen is simply not true.
The Minister, as so often, will have got the tactics right. We want to hear no more nonsense about how the present arrangements will enable people after 2003 to obtain their money in cash. Tonight he must say that he, by force if necessary, will provide such facilities, or that the banks have privately assured him that they will do so. I just do not see it happening.

§ Mr. Browne
Will the hon. Gentleman tell the House the date that the leaflet that he described as being deceitful was drafted and approved? If it is the same leaflet as I have in my hand, entitled, "Have your pension paid straight to your account", it was last revised in November 1996, when his party was in government.

§ Mr. Nicholls
The hon. Gentleman digs a nice big hole and then throws himself into it. There is no doubt that at one stage the Conservative Government were thinking of going down this road and not using swipe-card technology, which they subsequently decided to adopt. That Government did what any decent Government would do; they listened to frail and vulnerable people who said that that would not work.

§ Mr. Browne
rose—

§ Mr. Nicholls
I shall deal with the hon. Gentleman's first intervention and, if he cannot contain himself, I shall give him another shot at it.
I was told by those who gave me the form that I have quoted from today that it is still current. If the hon. Gentleman has other forms which say something entirely different, he had better give them to his right hon. Friend the Minister now, because that would be the best piece of news that his right hon. Friend could hear this evening.

§ Mr. Browne
I realise that most of us want to get home tonight, but I cannot possibly allow the hon. Gentleman to change his argument from the argument that he so 446 confidently and articulately set out before the House when he was the only one who had one of these leaflets. He said that the leaflet's language was deceitful and he accused the Government of producing and circulating that leaflet. He was in government when the leaflet was drafted and circulated. His Government were responsible for the deceitful language, and it has not been changed since.

§ Mr. Nicholls
I must have spoken too quickly. I am sorry. The Labour party is now in government. [Interruption.] The penny has dropped. The Government are now responsible for the forms that they distribute. Let us be clear that the policy that the Government are trying to railroad through was not the Conservative Government's policy, which was to use swipe-card technology which would have dealt with the matter.
The fact is that, throughout Britain, our constituents have been receiving letters from the Minister saying that there will be no problem and that they can continue to get their money in cash. That simply is not true. If the Minister is to retain any credibility in the matter, he will have to explain to the House tonight how he will get out of a jam which is entirely of the Government's making.

§ Miss McIntosh
I want to make a brief point, which arises from the comments of the hon. Member for Northavon (Mr. Webb) and those of the right hon. Member for Birkenhead (Mr. Field). The new clause deals with choice, which several hon. Members' speeches have covered this evening.
Consultations that I have held on the Bill with constituents in the Vale of York who receive the sort of benefit that we are discussing through CSA provisions show that they want to retain the choice that is currently available. That does not detract from the Minister's earlier comments about Labour Members' constituents, who may choose to change to automated credit transfer payments in a good-will gesture to the Government to whom they owe their allegiance.
A third of constituents in the Vale of York choose not to have a bank account. They have never had a bank account and they do not wish to have one. [Interruption.] From a sedentary position, the hon. Member for Lewisham, West (Mr. Dowd) makes a point about the 40 per cent. of my constituents who fall into a different category and choose to have a bank account. However, that choice has been taken from them. The speed with which bank branches have closed in the past two and a half years is disgraceful. Perhaps the hon. Gentleman will take that up with the usual channels from a non-sedentary position. He is in a privileged position if he wishes to do that.
It is no laughing matter, and it causes anxiety to those who live in villages in the Vale of York, especially people who live in towns such as Bedale and Easingwold, where there is not just one bank but a choice of banks. That choice may disappear.

§ Mr. Nicholls
My hon. Friend's constituents, like mine, have probably received a form on retirement pensions called BR1, which was revised in June 1999 and gave 447 them the impression that they had to accept that their money would be paid into an account through automated credit transfer.

§ Miss McIntosh
That is a helpful comment, which is worth placing on record. I am most grateful to my hon. Friend for making it.
I want to respond to the comments of the right hon. Member for Birkenhead by saying that most Opposition Members have been in regular contact with our sub-post offices in the past two and a half years. We have nothing to fear from a mass lobby, which we would welcome.

§ Mr. Field
I shall learn the lesson about walking around in hobnailed boots from the Opposition Front Bench spokesman who usually walks around the Chamber so gently. I suggested that it was the views not of Opposition Members but of Labour Members that were important tonight.

§ Miss McIntosh
I could not agree more. The right hon. Gentleman's comments this evening have been courageous. I simply want to underline the fact that the Minister should take account of the fact that consultations have taken place and that if the Government had been more mindful of people's anxieties, they would not face a mass lobby.
I share the anxiety of the hon. Member for Northavon about the future of the post office network, but I want simply to place on record that the majority of my constituents do not wish to move to automated credit transfer as the only way in which they can receive benefit. They would like to retain the current arrangements, whether they are with a bank in a market town or with remaining sub-post offices.

§ Mr. Rooker
I apologise for the delay in rising; I thought that the hon. Member for West Dorset (Mr. Letwin) wanted to contribute and I did not want to deprive anyone of the opportunity to speak.
I shall do my best to answer the debate. There will be some shortcomings in my response, and I shall not be able to answer all the points because not all the decisions have been made. I have to be as open as possible.

§ Mr. Pickles
Tell us now.

§ Mr. Rooker
No, that is not possible. It does not work like that.
I want to get a couple of points on the record. I gave the hon. Member for Northavon (Mr. Webb) the figure of 20 people a week changing to automated credit transfer. That was referred to, in her graceful way, by the hon. Member for Vale of York (Miss McIntosh), when she said that the change might be a good-will gesture to Labour Members. How did I get that figure? The reality is that every week, in every one of our constituencies, 20 people change to ACT. [Interruption.] There are not 600,000 members of the Labour party.

§ Mr. Leigh
People choose to make that change. So what?

§ Mr. Rooker
That is my point. People make that choice voluntarily, either as new beneficiaries of child support 448 after the birth of a child or as new pensioners. Others swap from current weekly payment, for whatever reason. There is a move to ACT, on a pretty vast scale, but it is unplanned and unmanaged.
I followed the argument of the hon. Member for Teignbridge (Mr. Nicholls). I say to him honestly and sincerely that, when I asked my question, I thought that he was about to assert that he had discovered a change in the language or the terminology. I thought that I would have to answer an allegation, but he did not make one. I know that the language has not changed since May 1997.
We had difficulty last year over child benefit, which has always been paid every four weeks. Exceptions allow it to be paid weekly, but it was thought that too many people were receiving it on those terms instead of returning to a four-weekly payment after their need changed. I genuinely was not making a cheap point against the hon. Gentleman, his Government or his former ministerial role. However, he laboured the point about the language in the leaflets and the forms, and I thought that he was about to make an assertion.

§ Mr. Nicholls
My point is that the policy has changed and the language has not. The Minister has been writing letters implying that people will be able to get their benefits in cash from post offices after 2003. There is nothing wrong with writing letters, but people will be able to get their benefits in cash only if they have a bank account. It is unrealistic to expect that, on the evidence, unless the Government or the banks take action to make them open accounts. That is the simple point.

§ Mr. Rooker
I promise to address that important matter.
I have prepared statements to make because I want to get some remarks on the record. The hon. Member for Teignbridge laboured the point on the shortcomings of national savings accounts, although I accept everything that he said. Some of the manual books are ridiculous—they are from the ration book era—and the technology has not caught up. However, he did not mention the Co-op bank for a start. It does not have many branches, but it has hundreds of thousands—perhaps millions—of customers who operate successfully. I declare an interest. After Black Wednesday, when my bank speculated with the currency, I moved to the Co-op bank. I left after 33 years and my bank was so concerned about customers withdrawing standing orders and direct debits—I did all that myself—that it never once said, "By the way, it looks as though you have left us after 33 years. Have we done anything to upset you?" I was just a cog in the wheel. Lloyds bank did not give a tinker's cuss about the loss of a customer.

§ Mr. Pickles
It does now.

§ Mr. Rooker
That is right, but here is the other side of that coin, as I want to strike a balance and be fair. The hon. Member for Teignbridge laboured the point about national savings, but customers of Lloyds TSB and the Co-op can cash cheques and have full access at the post office. That is an important point to put on the record.

§ Mr. Leigh
This is a key question for pensioners. After 2003, will pensioners be able to go to their post office and draw their pension without facing bank charges?

§ Mr. Rooker
I shall come to that later, but I do not want to avoid answering the question. That is our 449 intention—which is as near to a yes as could be provided. We intend that pensioners will be able to obtain their cash at post offices without incurring charges. We do not want the banks to take money out of the pensions of people who are a bit overdrawn, for instance.
The hon. Member for Brentwood and Ongar (Mr. Pickles) said that only one in 10 pensioners had opted for ACT. In fact, one in three new pensioners opts for it. According to figures issued in November last year, 35 per cent. of the Department's customers were paid by that method, 50 per cent. of new retirement pensioners chose it, and 54 per cent. of new child benefit customers chose it. I do not have all the figures with me, but I know that when I check I shall be able to confirm that 10 per cent. of income support recipients chose it.
I believe that income support is the latest benefit that can be claimed through ACT. When I dealt with a member of my family's circumstances back in the early 1990s, I had to go to the post office to claim the pension; it could not be paid into the bank, because income support was involved. In the last three or four years, however, I have dealt with the affairs of a friend whose income support was paid into the bank. Anyway, one in 10 income support recipients opts for ACT.
The hon. Member for Northavon (Mr. Webb) said that people did not realise that they had a choice. If he can find such a pensioner, I shall certainly acknowledge that he or she was misled, although pensioners can of course return to a weekly arrangement. I find it unbelievable that someone—probably confused, perhaps without much of a cash flow, perhaps without many savings, perhaps without two halfpennies to rub together—would say, "I will wait four weeks to have my pension in the bank, although I could claim it weekly at the post office".

§ Mr. Peter Bradley (The Wrekin)
Is not one of the reasons for the number of confused people—especially pensioners and other vulnerable individuals, and especially in the south-west—the fact that both the Liberal Democrats and the Conservatives have pursued a scurrilous scaremongering campaign in regard to the proposals for the Post Office? Will my right hon. Friend join me in asking them to support the Government's effort to convey the correct information to pensioners, so that they can feel secure about their future?

§ Mr. Rooker
The issue of choice is important. We recently provided all sub-postmasters with two leaflets explaining the system of payments of benefits and pensions, entitled "You Have A Choice", in letters an inch high—I am old-fashioned; I was brought up on "tenths of a thou" in the factories where I worked. Some sub-postmasters, however, refuse to display the leaflets that explain that pensions can be paid through the bank or by them, across the counter. We must have a mature and adult debate about this, because there is a serious issue at stake, affecting both the future of the post office network and the choice that people have.
My right hon. Friend the Member for Birkenhead (Mr. Field) may remember, as I do, the last big rally and lobby of the House by the National Federation of Sub-Postmasters, in about 1981 in Westminster Hall. Most hon. Members who are present now probably were 450 not here then. I was an Opposition Front Bencher at the time. There may have been a few such rallies since, but the problems that were raised then—

§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
You were fomenting them.

§ Mr. Rooker
No, I was not!
My noble Friend Lord Orme and I were in Westminster Hall. I had never experienced a lobby or rally like it. I can honestly say that I have not experienced one like it since, so I am well aware of the—

§ Mr. Kirkwood
Newcastle will not be far enough away.

§ Mr. Rooker
My diary had me on ministerial business in Newcastle on 12 April, but I have insisted on being at the rally in London. I will have my own constituents coming to see me on that day. It is important to be in London.
10.45 pm
There is an important issue to be dealt with, which has been touched on by hon. Members on both sides of the House. We must take it on board.

§ Mr. Kirkwood
Will the Minister give way?

§ Mr. Rooker
I shall make a little progress and then I should be happy to give way.
New clause 26 is designed to retain people's current choice as to method of payment—it applies to the year after, really, irrespective of circumstances. We have announced that automatic credit transfer will be the norm for paying benefits from 2003. I cannot say in March 2000 what the rules and procedures will be. It is not possible. It will probably take the best part of the rest of this year before the negotiations are completed—they may go a little into next year—between the Benefits Agency and the Post Office, and between the Department of Trade and Industry and the Post Office.
There is much detail to go into, some of which I have alluded to. For example, we pay 1 million emergency payments a year. Emergency payments are emergency payments; the cash is needed. It may not be possible for ACT to be even a runner for such payments. That must be taken account of.
Some people will never be able to have, or to run, a bank account. The figure is a lot smaller than the percentage of people who do not have a bank account now, but some people are not allowed by law to operate a bank account. Clearly, we must take all that into account before we make those changes.

§ Mr. Pickles
Could the right hon. Gentleman help us? He says that he is in negotiation on this issue. Given that it is cross-departmental, is he doing the negotiation, or is the Department for Education and Employment doing it?

§ Mr. Rooker
No. The Department of Trade and Industry is the sponsoring Department for the Post Office. It is leading on the Horizon project. A departmental issue 451 is at stake, but we want some joined-up government, because it is obviously cross-departmental, as the hon. Gentleman implied.
The transfer to ACT is planned to begin in 2003 and to be completed by 2005. However, those who wish to continue to collect their cash at post offices will still be able to do so before and after the change in 2003.

§ Mr. Nicholls
Whether or not they have a bank account of their own?

§ Mr. Rooker
I emphasise: those who wish to collect their cash at post offices will still be able to do so before and after the change in 2003. At present, until the cash in the post office crosses the counter, it is, in effect, the Secretary of State's cash. With ACT, the bank has the cash the minute that it is transferred to the person's account, so it is their cash.

§ Mrs. Jacqui Lait (Beckenham)
Taxpayers' cash.

§ Mr. Rooker
No. It is legal terminology. The money that would be accessed via a post office is already the cash—

§ Mrs. Lait
Of taxpayers.

§ Mr. Rooker
No. It is already the cash of the beneficiary—it is already in the beneficiary's account. It is no longer in the Secretary of State's account, it is no longer in the Benefits Agency and it does not belong to the Post Office. The cash is already in the account of the payee: the pensioner, the child benefit recipient, the mother. That is the point.I am making. It will be the payee's cash. At present, the cash at the post office remains the Benefits Agency's cash until it is transferred.

§ Mr. Kirkwood
The Minister is trying to be helpful and I am sure that the House is grateful for that. In my understanding, the key piece of law that underpins all this—never mind the leaflets, the wording, the jargon and whether leaflets are being displayed—is the Social Security (Claims and Payments) Regulations 1987; I think that it is regulation 21, from memory. That makes payment by ACT a consensual act. The claimant has to opt in and the Secretary of State has to comply. The moment that the Government repeal that regulation without guaranteeing the sub-post office network an alternative stream of income, they will kill off the sub-post offices. The Minister can say that there will be arrangements and I understand that there will be negotiations. I hope that he will listen carefully to the representations that are being made, but he must be certain that the repeal of that legislation will potentially sound the death knell of the post office network.

§ Mr. Rooker
As the hon. Gentleman says, we must be very careful about how we implement the changes. We have to be sure that the system will work and that people will be able to get the money to which they have a right and which the House instructs the Government to pay. We are unable to make proposals for changing primary legislation and regulations because we do not have answers to all the questions. We need those answers before the changeover.

§ Mr. Nicholls
Will the Minister give way?

§ Mr. Rooker
Let me make some progress before I give way again.
452 Let me remind hon. Members why the changes are necessary. The current system belongs to the days of ration books. The technology has hardly changed at all. The Department has to look at the best use of taxpayers' money. We spend £2 billion a week—or £100 billion a year—on issuing benefits. The running costs amount to some £3.5 billion a year. An ACT costs 1p in transaction costs compared with 49p for an order book foil and 79p per giro cashed. The overall costs to the Department are 1p per ACT, 54p for an order book transaction and £1.36 for a giro. Those costs include the paperwork, the production and the printing. The transaction costs vary slightly, but giros are more costly. We have to take that big jump into consideration. In addition, we estimate—we can only estimate—that we lose about £150 million a year in fraud such as counterfeiting and forgeries. I am not saying that there is not, and will not be, any fraud in ACT; it is fraud of a different nature. Obviously, we would have to adjust the anti-fraud programme to make sure that we do not lose what we have gained.

§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
Are not the pensioners who want to receive their cash over the post office counter the same people who have contributed over the years to the creation of my right hon. Friend's Department? Might they not find his arguments about the cost of each transfer singularly unconvincing when they are faced with the difficulty of either having to run bank accounts that they are unable to maintain or being required to use an artificial machine to obtain their cash?

§ Mr. Rooker
I could argue that all machines are artificial. I was simply explaining the costs to the Department. We do not know what sub-postmasters receive; that is commercially confidential information between themselves and the Post Office. We pay an annual fee to Post Office Counters of some £400 million to £500 million. How it pays sub-postmasters is a matter for the Post Office.
What is happening now is unplanned and unmanaged. More people are choosing to use the banking system in an unplanned and unmanaged way.
When I was at that rally, in 1981, there were 22,000 sub-post offices. That figure stuck in my mind. We have fewer than that number now—but more than 18,000—and we have heard the figures on the losses. They are all independent private sector businesses. As I understand it, they are all also on a three-month contract. They could all disappear. The Government do not run them or own them. They are operated by individual business people, doing a first-class job. Some of them are more dependent than others on what they receive for benefits transactions.
If nothing happens—if no action is taken at central level by the Government and by the Post Office headquarters, and if the current changes continue—in a few years, we could lose the post office network. That change would have been unplanned and unmanaged, and every hon. Member would ask, "How on earth did it happen? Why didn't we do something about it?" The very purpose of our change is to provide planning and management. We want a transfer to ACT that will in turn protect the post office network. The Government are determined to help maintain a post office network.
My hon. Friend the Member for Stroud (Mr. Drew) mentioned work being done across government. The transfer is not being dealt with or led by the Department 453 of Social Security or by the Department of Trade and Industry. As was mentioned earlier in the debate, the Prime Minister asked the performance and innovation unit to do work on the post office network. It has been doing that work since October 1999, and it will report fairly soon. That important work is being chaired by an independent Minister who has no role at either the DTI or the DSS. We should take that important fact on board.
The Government want to retain a post office network, which is crucial in rural areas. I take second place to no one in making the important point about the contribution of the rural post office in villages that have been deserted by the banks. The network is crucial. A post office may not always be in the right location to ensure its economic viability, but that is a consequence of the current lack of planning. We certainly want to be able to provide that planning.
We have to have a more modern system and to bring both the Post Office and the benefits system into the 21st century. They are certainly not there yet. The way in which we pay benefits, with orders books and old-fashioned giros, and the way in which the Post Office has been operating have not been consistent with a modern service delivery programme. There is no question about that. However, what we do not want to do is to lose post offices by accident—by lack of management and lack of foresight.
There will be no quick or easy fix, but we are attempting, first, to modernise the benefit service, which is important; secondly, to save public funds in administering that service, which is crucial—if we cannot, the Public Accounts Select Committee and other people will want to know why we are not using the best available economic processes; and, thirdly—but equally important—to maintain a viable post office network in rural areas and in urban areas. That is not to say that there will not be change. There will have to be change if the post office network is to survive. That is the reality of this debate.
I therefore hope that hon. Members will think twice before they consider pressing the new clause to a vote.

§ Mr. Webb
We have had quite an extraordinary response to the debate from the Minister. I should like very briefly to consider the logic, such as it was, of his argument.
The Minister said that there is a drift—or something faster than a drift—towards ACT. He said—I think that the record will show this—that, for the sake of the Post Office, the Government want to hasten ACT and make it compulsory. That statement will cause hollow laughter in sub-post offices across the land. They will simply not believe that Ministers are telling them that forced ACT is for their own good. I think that the record will show that the Minister said something very similar to that.
The hon. Member for Stroud (Mr. Drew), who has taken a serious interest in the issue, raised a key point about the savings that the DSS will make from the change. It is good to see the Secretary of State for Social Security, in a rare lapse, in the Chamber while I am speaking. I would be happy to give way to the Secretary of State if he wanted to offer a share of the £400 million savings to be made from ACT to the DTI to keep post offices open. 454 If he could guarantee that that money would not just go to the Department, we would feel more comfortable. However, that is not what is planned.
11 pm
If ACT is happening already out of choice, why is there a need to force the pace? If it is causing damage to post offices—which it obviously is—why speed it up? Why not let it go on as people choose, because choice is the key? If we let it go slowly, that gives the post offices more time, as the hon. Member for Stroud said. Stopping forcing people, but letting the drift happen, gives the post offices more time to adjust.
I take seriously the remarks of the right hon. Member for Birkenhead (Mr. Field), who will chair an all-party group on sub-post offices. It is critical that we build up an all-party consensus on the issue. Those who suggest that this is scaremongering in the south-west ought to open their eyes to the closures of post offices. Our constituents do not ask why we are making all this fuss; they say that their post offices are being threatened, and they ask what we are going to do about it.

§ Mr. Peter Bradley
In typical Liberal fashion, the hon. Gentleman is conflating two separate issues; one is the future of post offices—which is not the subject of the debate this evening—and the other is how pensioners and other benefit claimants will receive their payments in future. Will he confirm my understanding that, in future, according to the new arrangements, pensioners will not have to open bank accounts; that those who do receive ACT through their bank accounts will not incur additional bank charges; and that pensioners who do not choose to receive their benefits by ACT will still be able to go to the post office and draw their pensions in cash over the counter? Those are the facts as the Minister has stated them. Does the hon. Gentleman accept them or not?

§ Mr. Webb
No, I do not accept that. A post office is needed for people to be able to get the cash from. The point is that the switch to ACT is hastening the closure of post offices. It is no good having the option of going to a post office if the nearest one has closed and one has to go miles to another. It is not a worthwhile choice if the post office network has been undermined. That is the consequence of the Government's policy.
There are people who want to choose ACT, and that is fine; there are people who do not want anything to do with bank accounts and will still go to the post office; and there are people in the middle—they are critical to the survival of post offices—who do not care very much but, if they are forced to go to ACT, will tend more and more to get their money from a bank, and that will kill the post offices. That is what we are trying to stop with the new clause.

§ Mr. Field
Although there is clearly a dispute on what the Minister did or did not say—even on this side of the House—was not the crucial thing that my right hon. Friend said that the key date is 2003? If so, is it not worth thinking about how we could most effectively use our votes?

§ Mr. Webb
The right hon. Gentleman is chairing an all-party group on sub-post offices, and the hon. Member for West Dorset (Mr. Letwin) will be a leading light in that campaign.

§ Mr. Martlew
That will be a first.

§ Mr. Webb
I say to the hon. Gentleman that, because we are not trying to make party politics out of this, and 455 because we want to bring all parties on board for the sake of post offices, we will not force him into the Lobby to commit himself to force people to go to ACT. We want to give time for all-party work to save the post offices. We hope that the other place will come up with something that will unite all parties and allow us to say that we together saved the post offices.
I beg to ask leave to withdraw the motion.