MANNER OF PAYMENT OF BENEFIT NOT RESTRICTED TO AUTOMATED CREDIT TRANSFER (Hansard, 29 March 2000)

§ Mr. Webb
I beg to move, That the clause be read a Second time.
431 A large number of hon. Members—representing five political parties—have put their names to new clause 26. For the avoidance of doubt, although the amendment paper lists the most recently added names and those who tabled the amendment, other hon. Members, some of whom are here tonight, have also put their names to the new clause, demonstrating the broad concern around the issue.
The future of the post office network is a matter of concern to all our constituents. The depth of public concern about the threat to the post office network caused by the intended movement of benefit payments to automated credit transfer has stirred communities up and down the land. My regional newspaper, the Western Daily Press, has led the way with a petition that now has more than 2 million signatures and is growing by thousands every day. That campaign has voiced the concerns of people in the west country, but it is now spreading across the country. People are responding because of the affection in which they hold their local post offices.
The new clause would include in the regulations that apply to the payment of benefits the notion that the Government could not require people to receive benefits by means of automated credit transfer. There is a question as to whether that is the Government's intention, and the answer seems to depend on whether one listens to the Department of Social Security or the Department of Trade and Industry. In the autumn of last year the Secretary of State for Trade and Industry wrote to the National Federation of Sub-Postmasters saying that by the end of the period 2003–05 all benefits would be paid by ACT. The letter was marked "for publication". Since then, the Government have softened their language a little, saying that there will be no compulsion, yet the Department of Social Security plans to save £400 million. The Department will not save £400 million unless pretty much everyone switches over to ACT. Regardless of whether the word "compulsion" is used, the sums involved imply the expectation that pretty much everyone will receive their money by that means.
New clause 26 seeks to restrain change until we—many other hon. Members and I—have assurances that the post office network will be safe. The critical backdrop to the debate is that the post office network is ebbing away. It has been ebbing away not only since 1 May 1997, but for a decade or two. What is very worrying, however, is that the pace of change is accelerating. In the past decade or two, about 100 post offices have closed each year. In the past couple of years, since the general election—I do not suppose that the two things are necessarily directly related—more than 200 post offices have closed each year. My hon. Friend the Member for Bath (Mr. Foster) met the Minister for Competitiveness and was told that, this year, there will be no fewer than 500 closures. If that figure is correct, it is horrific, and it certainly demonstrates the urgency of the issue. That many closures would wreak havoc in communities across the land.

§ Mr. Paul Tyler (North Cornwall)
Does my hon. Friend accept that, to some extent, it is academic whether the Government wish to employ some compulsion? If so many post offices have ceased to be viable in rural areas, there is really no access to post offices for many people.

§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. May I assist the House? As new clause 26 does not deal 432 with post offices, we should not be talking in detail about post office closures. That issue can be raised in an Adjournment debate or by some other means.

§ Mr. Webb
I am grateful to you, Mr. Deputy Speaker. The connection that I am seeking to make—which I hope that you will feel is in order—is that, in the new clause, we are trying to prevent the Government from doing something that they seem to be threatening to do: require benefits to be paid by automated credit transfer. We believe that, if there were such a requirement, it would have a devastating affect on the post office network.

§ Miss McIntosh
Can the hon. Gentleman assist me in explaining to the one third of my constituents who do not have bank accounts what the impact would be if the Government were to proceed with payment by ACT? Would they perhaps lose out on that payment?

§ Mr. Webb
The hon. Lady highlights a very important grey area in the Government's proposals. We really do not know what will happen if ACT becomes the norm or compulsory. We do not know what the accounts will look like, or on what basis people will be able to withdraw money.
There is a critical point here. Ministers always say, "Don't worry, you'll still be able to go to a post office to get your money." However, that rather presumes that there will still be a local post office at which to get the money. The nub of the issue is that, if we move to compulsory ACT, it will so undermine the post office network that many of our communities will not have a post office to go to.

§ Mr. Bercow
Although the hon. Gentleman is correct to say that Ministers regularly offer the assurance in the House that people will still be able to claim in person, does he agree that communications from both the Benefits Agency and the Royal Mail have given the impression that there will eventually be no alternative to ACT, and that that is the source of grave anxiety for hundreds of thousands of people across the country?

§ Mr. Webb
The hon. Gentleman is quite right to say that there is grave anxiety. Very often, for benefits recipients, information on whether to choose ACT is presented in a very loaded manner. It is not really a free choice at all.

§ Mr. Browne
As the hon. Gentleman is explaining the thinking behind new clause 26 and the effect that it may have on poor people, and given his very obvious expertise on social policy, will he share with the House his view on whether the one third of unbanked people—who are denied access to a whole range of services—should be encouraged in proper social policy to have bank accounts and access to the United Kingdom's financial networks?

§ Mr. Webb
They should have access to financial services of an appropriate nature. My view is that those should be delivered ideally by the post office network. If the amendment is not passed and the Government go for compulsory ACT, that option may be closed, as the post office network may not be there to allow financial inclusion for just those people about whom the hon. Gentleman and I are concerned.
433 I have conducted a survey in my constituency, and I have the responses here—they can be independently verified, should that be required. I wrote to my sub-post offices on the subject of ACT, and asked what the implications of our failing to get the amendment through tonight would be for their businesses. I asked: How would it would affect your business if the Government go ahead with plans to pay benefits into bank accounts? That is an unloaded question, as one would expect. The first response I had was It would close us down. Others said that the post office and shop went hand in hand, and that one would not survive without the other on the basis of present turnover. Many sub-post offices depend on benefits transactions; not just the money that they get for handling benefit transactions, but the other business that that brings in. The one depends on the other.

§ Mr. Field
I am sure that the hon. Gentleman did not write the press release before he sent out the survey. Did he ask sub-postmasters whether they would favour a system in which the Government moved to ACT, but used some of the substantial savings that taxpayers would receive to make sure that all sub-post offices could run simple banking services? What would he write in the press release before he sent out that survey?

§ Mr. Webb
I am not convinced that the subject of my press release falls within the scope of the amendment. However, banking is seen as an important adjunct to what post offices do, and measures along the lines proposed by the right hon. Gentleman would be valued by the post offices.

§ Mr. Bercow
You rightly reminded us, Mr. Deputy Speaker, that we are talking not about post offices but about the possibility of compulsory automated credit transfer. Could the hon. Gentleman tell me how many people currently collecting in person—roughly, if not precisely—in the Northavon constituency would be affected in the event that his amendment were not successful?

§ Mr. Webb
I am glad that the hon. Gentleman takes such an interest in my constituency. The proportion of new pensioners who opt for ACT is about half, and the proportion is similar for child benefit recipients. However, it is significant that those two benefits are the two most likely to go for ACT. Given a loaded choice, only half the public choose to have those benefits paid through ACT. Only 10 per cent. of income support recipients go for ACT.
A Labour councillor wrote to my local paper to say that I was trying to force people to go to their post offices. This is not about forcing people; that is what we fear the Government are trying to do. We want to give people choice; not a loaded choice or compulsion, but a genuine free choice. If the Government reject the new clause tonight, they will leave open the option of compulsion. If they reject new clause 26—which says that the Government may not force people—the only possible reason is that they do want to force people. They want to leave open the option of forcing people, and that is what we oppose.

§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
It is clear from what he has said that the hon. Gentleman 434 would be happy to accept the idea of ACT if the Post Office could offer a banking platform. That is not what the new clause says.

§ Mr. Webb
We are not happy to give the Government carte blanche to go ahead with ACT until we know what will make up for the loss of businesses that post offices will face.

§ Mr. Rooker
I do not want to provoke the hon. Gentleman, who has told us about his survey of post offices. However, what about his constituents? In his constituency last week, 20 people moved to ACT; another 20 will do the same this week. That is what is happening in every constituency, as it is the choice that people are making. Does he think that they are wrong, and would he like to stop them? Does he think that they should not have the right to make that decision?

§ Mr. Webb
I recently addressed a meeting of the Bristol branch of the National Federation of Sub-Postmasters, attended by about 60 or 70 angry people. They told me that people were confused by the communications that they receive from the Benefits Agency and from other bodies, and did not understand that they had a choice. Sometimes people who run sub-post offices are told by people whom they do not see very often that they have opted to get their money through their bank account. On being asked why, they say that they have received a letter from the Government saying that they had to.
The Minister must remember that we are talking about people who are not very sophisticated financially.

§ Mr. Rooker
Come off it.

§ Mr. Webb
The Minister says that, but in a recent Adjournment debate he accused sub-postmasters of telling porkies. That is what he said and it is on the record.

§ Mr. Rooker
Well, they did.

§ Mr. Webb
In a recent Question Time on this issue the Government accused Liberal Democrats of scaremongering. That is not what we are doing. The rate of closure of sub-post offices is accelerating every week.

§ Mr. Rooker
I am grateful to the hon. Gentleman for letting me in, and I will not intervene again. Is he seriously saying that pensioners—unknowingly and through confusion—choose to get their pensions four weeks in arrears, rather than every week? That delay happens when people move to ACT. Does he maintain that pensioners—all unknowing—say, "Oh, yes, I'll wait four weeks and get my money in arrears through the bank, but I don't understand why I can't continue to have it weekly."? That is abject nonsense, and the hon. Gentleman knows it.

§ Mr. Webb
Today, the Minister's Department has sent out 2 million letters to pensioners.

§ Mr. Rooker
No, it has not done so yet.

§ Mr. Webb
But it is planning to. Why are those letters being sent? Because pensioners are not claiming one of 435 their entitlements under the benefits system. One of the reasons for that is the complexity that they encounter in the system.
The form needed for transfer to ACT has a big blank space for bank details. The Minister has just said that no pensioners receiving the form will think that they are being instructed to fill in that space, but I assure him that they do think that, and that they fill in the space and send off the form.
I offer the Minister a challenge. If I can come up with the name and address of someone who has been misled in that way by the Government—even if not deliberately—will the Minister publicly apologise for accusing me of misleading the House on this matter? I should be happy to give way if the Minister wants to respond to that challenge.
We want to protect vital community facilities and to give people choice. The Minister asked whether we considered that those who opted for ACT were wrong to do so, but that option is absolutely fine for those who prefer it. However, we are interested in the people who do not mind too much whether their payments go into a bank account or are made through the post office. If the Government force people to move to automated credit transfer, there will be a critical mass that will make post offices unviable.
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We are most concerned about pensioners and disabled people, for whom the post office is often a lifeline. If they do not turn up, the postmaster or postmistress will know. They are thereby part of the community.
I happened to glance at the Evening Standard tonight in the Tea Room to see what the Government are doing for pensioners. I saw the headline "Ministers want trendy name for pensioners". The article says: Some of Whitehall's finest minds are working on the problem, while the Government is also seeking outside help to come up with the new title.

§ Mr. Deputy Speaker
Order. We have a new clause before us, and the hon. Gentleman should be speaking to it.

§ Mr. Webb
I am grateful, Mr. Deputy Speaker. We are trying to defend Britain's pensioners, considering that we have a Government who come up with nonsense like giving them 75p. We are tabling the new clause to protect the network of post offices that all our constituents have told us they value. I hope that the new clause will have the support of the House.

§ Mr. Field
The new clause will test whether political parties can see beyond the next press release and whether they are serious about the concern expressed on both sides of the House about the future of our sub-post office system.
The House has not yet had a lobby from outside which puts the fear of God into Members of Parliament representing marginal constituencies. Next month, when the sub-postmasters and postmistresses come to town, it is likely that some people may not feel that the result of the next election is quite as certain as they thought.
We want the Government to behave as constructively as possible. Concern has been expressed on both sides of the House about the future of our sub-post offices, not 436 only because of the reasons outlined by the hon. Member for Northavon (Mr. Webb) about the effect on vulnerable groups, but because of the key role that those post offices play in keeping local communities together. Those local communities are as real in Birkenhead, which is formed of six villages, as they are in more traditional country areas.
The test is how to use our voices—perhaps not our votes—to further that goal tonight. I agree that, if we divide the House, there may be press releases in it for some people. We must judge whether, if we accept the new clause on the method of payments, we will secure the long-term future of our post offices more effectively. As we know, the Bill will go to another place, and it is inconceivable that an amendment such as this will not be moved there, probably successfully. By then, this Parliament will have been subjected to its first serious lobby. Some of my colleagues may realise for the first time that they may not have an automatic ticket back to the House of Commons after the next election. They may be more anxious to preserve their sub-post offices than they are at present.
I hope that the aim is not merely to preserve the method of payment. I had responsibility for the benefit card for 14 weeks, as I had for so many other issues in the Department of Social Security. It seemed that such gains would come from automated credit transfer that we should think positively about it. Because the gains were so great, it also seemed that we, as taxpayers, should put aside some of those savings to secure the future of sub-post offices, not merely by subsidies, but by ensuring that they were in a position to offer simple banking services. If they could offer those services, not only would they be able to participate in an ACT system, they could take on a role from which banks are progressively withdrawing in all our communities.

§ Mr. Patrick Nicholls (Teignbridge)
Does it not amount to the fact that the Government have to convince the House—Labour Members more than Opposition Members, perhaps—that there is a real prospect that banks will open facilities for elderly people, who will want them only to receive their pensions and make disbursements at post offices? In the light of the right hon. Gentleman's experience, which spans a period far longer than 14 weeks, will he tell us whether there is any realistic prospect that banks will be prepared to do that unless compelled to do so by the Government? Does he think the Government will do that? That is the nub of the debate.

§ Mr. Field
I am not sure whether that is the nub of the debate, given the substance of the new clause. I am not against Governments trying to compel people but, if one takes that course, it is good to ensure that one can succeed. Two banks in Birkenhead have announced their closure. We could compel banks to provide certain services but, if they are not there, we are dealing only with theoretical circumstances.
I appeal to Opposition Members to make their voices heard as clearly as possible on the new clause. The Bill is only part of the way through its proceedings; it will go to another place. The House will shortly receive one of the more effective lobbies of this Parliament. If the other place tabled an amendment, the Government would have to accept it or make alternative proposals.
Our aim is genuinely not to score off the Government with press releases and so on but to win some advances for the most vulnerable people in our constituencies. The 437 best way to do that is to convince the Government that we support the move to ACT, provided that some of the considerable gains that it will bring to taxpayers will be invested in our sub-post offices so that they can offer simple banking services. In that way, we shall keep the largest possible number of our sub-post offices; and financial exclusion, which now rightly seems to concern both sides of the House, will be tackled more effectively.
I realise that to follow the course that I advocate would be to deny some of us press releases. However, we may be denied them only for a few weeks, because, when we consider the Bill on its return from another place, we may be able to issue press releases stating that we have secured real advances for our poorest constituents, rather than that the Government have failed to accept a new clause.
I appeal to hon. Members: let us make our points as effectively as possible. Let us convince the Government that many of us may go into the Lobby against them on another occasion, if we do not obtain the changes that we want. Let that significant lobby of Parliament work on those with marginal constituencies. Let us return to the measure when the Government have had a chance to introduce more constructive provisions.

§ Mr. Pickles
You rightly ruled that this matter relates to automatic credit transfer, Mr. Deputy Speaker. However, ACT also relates to post offices and to the provision of banking services in various areas. To avoid any doubt, I declare an interest. My wife works for Barclays bank, although I suspect that my remarks will not endear her to the board.
It is a pleasure to follow the right hon. Member for Birkenhead (Mr. Field), although I lost count of the number of times that he told us about press releases and about what the Opposition are supposed to do tonight. I have always held the old-fashioned view that such nuances of political life as whether one presses a matter to a vote are among the few things best conducted by consenting adults in private. Nevertheless, the right hon. Gentleman chose to tell us with a megaphone what we are supposed to be doing. Believe me, we have worked out the tactics for ourselves. Whatever we, along with other hon. Members, decide to do about the Liberal Democrats' new clause, it will be in the best interests of ensuring that the Government have plenty of time to reflect on this important issue.
I am a little concerned because we are beginning to polarise into two groups. There are those who say that the matter is about post offices, and those on the sunlit upland, moving towards automatic credit transfer. The Prime Minister tells us of all the savings that are to be made.

§ Mr. Swayne
Will my hon. Friend give way on the point concerning the Prime Minister?

§ Mr. Pickles
I knew that I would provoke my hon. Friend by saying the words "Prime Minister".

§ Mr. Swayne
This afternoon, the Prime Minister told the House that the Government had inherited the proposals from the previous Administration. I heard my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) say on the record in the House that the 438 proposals were put to him but that he rejected them because he believed that the savings were illusory and that the social costs were far too great.

§ Mr. Pickles
My hon. Friend's recollection is absolutely correct. I caught only the latter part of Prime Minister's Question Time today, but it was pretty clear that the right hon. Gentleman was fairly flustered. I suppose that he can be forgiven for saying such a thing. I am sure that he will be at the Dispatch Box at the earliest opportunity tomorrow to correct it. My hon. Friend is right to say that my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) rejected the idea—I know this because I have had discussions with him—because of the problems that it would cause rural post offices.
We know that, despite the steady trudge of the 20 people a week in the constituency of the hon. Member for Northavon (Mr. Webb) who have changed to automatic credit transfer—I hope that, before the debate is over, the Minister of State will name them, because we would like to know who they are—only one in 10 pensioners have opted for ACT and, even among new pensioners, only one in three have done so.
The rather glib statement that simple banking services will cure everything concerns me. Frankly, they will not. Simple banking services will not meet the needs of people who draw pensions or benefits. Let us look briefly at some of the problems. We know that a large number of recipients of pensions and benefits are described as the "unbanked". We know that part of the Cruickshank report, to which my hon. Friends have alluded, may contain a deal under which banks will provide services for everybody.
If that occurs, we shall need to consider several practical things. First, help in understanding the operation of a bank account, particularly the management of it and the withdrawal of cash, will need to be offered. Anybody who doubts that cannot have an accurate recollection of their constituency surgeries. I have had to deal with a relatively elderly and confused person who had never had a bank account and who was dreadfully worried about how ACT would operate and whether it would result in debt. Some serious thought must be given to offering such people assistance. The obstacle is not insurmountable, but it will remain an obstacle unless we are able to do something about it.
Quite a number of people have joint bank accounts. Will the money transferred reach the people for whom the benefit is intended? We debated earlier the problems of transfer of money from a parent with care to a child. There is a particular problem concerning accounts shared by those who are not husband and wife, which we need to address.