People, Post Offices and Pensions

HC Deb 11 December 2003 vol 415 cc1256-90

[Relevant documents: Eleventh Report from the Trade and Industry Committee, Session 2002–03, on People, Pensions and Post Offices, HC 718, and the Government's response thereto, HC 1102; and the Department for Trade and Industry Departmental Report 2003, Cm 5916.]

Motion made, and Question proposed, That resources, not exceeding £2,101,186,000, be authorised, on account, for use during the year ending on 31st March 2005, and that a sum, not exceeding £3,749,956,000, be granted to Her Majesty out of the Consolidated Fund, on account, for the year ending on 31st March 2005, for expenditure by the Department of Trade and Industry.—[Mr. Heppell] [This Vote on Account is to be considered in so far as it relates to the modernisation of the post office network, with particular reference to the impact on post offices of the direct payment of pensions (Resolution of 2 December)]

Mr. Deputy Speaker (Sir Alan Haselhurst)

Before I call the hon. Member for Ochil (Mr. O'Neill), may I say that a great many hon. Members are seeking to catch my eye in a limited time? The 10-minute rule does not apply to the hon. Gentleman whom I am about to call and Front Bench spokesmen. Hon. Members will understand what a difficult situation that creates, so I hope that they will be tolerant and sympathetic to their colleagues' needs.

3.58 pm

Mr. Martin O'Neill (Ochil) (Lab)

I hope that I shall speak for less than 23 minutes, Mr. Deputy Speaker.

When preparing for our debate, I went through my files and discovered that the Trade and Industry Committee, which I have chaired for eight years, has been looking at this issue since the mid-1990s. On about seven occasions we have taken evidence and reports have been produced, and we shall doubtless revisit the issue in the coming weeks and months. Our 11th report for the Session 2002–03, HC 718, was published on 17 July and the response from the Secretary of State appeared on 23 September. That response identified our two main areas of concern. For the purposes of debate, it may be better to focus on the concerns that the Government identified rather than on those that we identified, but I am sure that other Members will seek to widen our discussion.

The Government identified two main areas of concern—the unnecessarily complicated procedure for opening a post office account, and the character of the customer information provided by the Department for Work and Pensions, which was considered insufficient for people who were applying for a card account.

I recognise that in some respects, therefore, the responsibility for answering these charges lies at the door of the Department for Work and Pensions, as much as with the Department of Trade and Industry. I entirely understand the reason for the absence abroad of my hon. Friend the Minister for Energy, E-Commerce and Postal Services, and I welcome the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), to the minefield that is this topic.

There is a degree of consensus about offering the option of direct payment of welfare benefits. It is technically possible to pay salaries and private pensions into people's bank accounts, so why not extend that to state pensions and a range of social security benefits? Since the proposal was first mooted in the past decade, the practice has become more common as more recipients have come to recognise the advantages of automatic teller machines and the like.

The Government have long felt that the cost of providing benefit books is excessive, and as theft, forgery and general fraud have increased, the need to counter them has become ever more expensive. It has been suggested that that represents a cost to the taxpayer of some £80 million. It should be stressed, however, that there is no ministerial statement, and no consensus, on how much will be saved by the introduction of swipe cards, direct payments and so on.

A sizeable number of people find it convenient to take their books to the post office and receive their benefit in cash over the counter. They include mothers who receive child benefit and who, although they may have a bank account of their own or have joint arrangements with their spouse or partner, may prefer to have access—for example, on a Saturday morning—to money that they have earmarked for specific purposes, such as children's clothing.

The late Barbara Castle, as the Minister introducing the measure in the 1970s, stressed that the nature of the payment was important, as it would go exclusively to the mum. and would be spent independently of the rest of the family income. As I know from experience in my constituency, there are still men who do not tell their wives how much they earn, and who have a bank account of their own and hand out the money with a teaspoon at irregular intervals. Child benefit is important because it gives young mothers financial independence.

There are others who just like going to the post office. It is an outing. Pensioners meet their friends and contemporaries there, and they can buy post office goods, such as stamps for their TV licence, and make utility payments.

Mr. Nigel Waterson (Eastbourne) (Con)

rose—

Mr. O'Neill

I do not have much time, but I shall take the hon. Gentleman's intervention.

Mr. Waterson

Does the hon. Gentleman agree that it is a matter not just of wanting to go to the post office but of finding one that is still open? Five post offices have closed in my constituency. Does he agree that we should examine the consultation process involved in such closures, which in my experience has been wholly inadequate?

Mr. O'Neill

The hon. Gentleman may have the chance to catch the Deputy Speaker's eye. Such interventions are helpful, but their helpfulness is limited.

There is a more important group covering the entire range of benefit recipients, including pensioners and mothers, who are dependent on the post office as the source of their family or individual income. Anyone who passes a post office at 8.30 on a Monday morning will see those who need their benefits to buy the day's food, to heat their home, to pay their debt collectors or to get money to get to work. I have no problem with the Government's programmes to end child poverty, which we discussed in the previous debate, or to improve social inclusion. A number of people still live on the economic margins, however, and have no cushion of savings. Such people do not have money in an envelope behind the clock and do not have bank accounts or credit cards. For them, a hole in the wall is merely a hole in the wall, and they do not have access to ATMs and the like. I make that point because we contend that, for many people, the processes of securing alternative means of payment are at best daunting and at worst unhelpful. The agenda of the DWP-instructed call centre staff is unduly biased towards securing maximum take-up of direct payment.

Ms Joan Walley (Stoke-on-Trent, North) (Lab)

Will my hon. Friend give way?

Mr. O'Neill

I am sorry, but I want to make progress.

Internal memos provided to me by the National Federation of Sub-Postmasters and the Communication Workers Union make it clear that the attitude is hardening. In respect of a Jobcentre Plus pay modernisation project, I have a document from a Mr. Alan Linton dated 7 October in which he states: This letter is to inform you how we are aiming to issue robust and consistent messages on the importance of Direct Payment as due to commercial and political constraints, previous material issued has contained many 'soft' messages. I do not think that one has to be a textual expert or some sort of Noam Chomsky to get the feeling that there has been a step change in attitude. The document in question was issued in October, after the Secretary of State had given us his response, and it was produced within the confines of the DWP. There is a change in attitude, and it serves to underline the malign motives of the DWP in this matter. Some issues repeatedly arise: Paying by order book costs 30 times as much as paying into standard or basic bank accounts. Paying into a Post Office card account costs even more and was designed to meet the needs of those who cannot gain access to standard or basic accounts. The last bit of information is:

Order books will start to be phased out from October 2004. The tone of those instructions does not suggest that they are an attempt to instruct people about how to help the disadvantaged. That serves to underline the fact that, in the seven months or so since we took evidence, things have not become better but have got worse—a view that is reinforced by the sub-postmasters and postal workers themselves. The objective is not to give an informed choice so much as to direct people to use existing bank accounts where appropriate, to say that they should acquire Post Office cards through a complicated procedure, or, last and least, to seek to discourage refuseniks by saying "It's going to go through anyway, so you had better get your act together and sharpen up."

The Post Office card account is probably the best compromise, and I think that the DTI and Post Office Counters have sought to introduce it with reasonably good intentions. The DWP, however, has made applying for the account more difficult and complicated and has been able to load the choice system with active discouragement. Postwatch, the postal consumer watchdog, put it succinctly, saying that the POCA application process requires the customer to retain and assimilate documents they receive at different stages in the process. Duration between receiving these different documents is often quite long. It can be confusing and is potentially off putting. Postwatch makes several suggestions. People can apply to the Post Office, avoiding any contact with the call centre, or they can take the migration letter from the DWP agency and go to their post office with identification such as a benefit book, which seems as good a means of identification as any, after which the form would be completed at the post office and sent on by post. Another option is to issue the Post Office card account instead of a new order book, so that once the customer tells—I had better get the name right—the customer conversion centre that they want a card, it can be issued at a nominated post office. Alternatively, it would be possible simply to use the existing bureaucracy, so that once the customer receives the POCA information she has to give the relevant DWP agency her details, and the Post Office can inform the DWP agency of the account details. That would streamline the existing application process by removing one stage.

The DWP's response to those suggestions by the consumer watchdog for postal services has been somewhat slow, or tardy—the vulgar among us might suggest other expressions—but suffice to say that it was, simply, "Get lost." A proposal by the body that is charged with protecting consumers at post offices is dismissed because it would probably result in too many people taking it up and undermine the cost-effectiveness of the grand design.

Mr. Nick Hawkins (Surrey Heath) (Con)

Will the hon. Gentleman give way?

Mr. O'Neill

I am sorry, but I am under time constraints. I do not want to be awkward, but I have a wee bit more to get through.

The statistics suggest that a lot of people are making applications—some get to the first stage and drop out, while others carry on. If the situation continues, the findings of Postwatch suggest that by the appropriate time next year several million people will be in considerable difficulty: without an exceptions arrangement, a card or a bank account, they will be left in a distressing limbo. The Minister must deal with that problem, because it is becoming more evident as time goes on.

I have to say, however, that progress has been made on exceptions. Some of those who cannot get to post offices, do not have accounts, or simply cannot cope will get something along the lines of the old giro cheque. We must give credit for the fact that there has been movement there, but I wish that there was more movement on the non-exceptionals—those who are doing it for other purposes.

We must recognise that many people are dependent on the post office network as a source of income and employment. A great deal of disquiet has been expressed about the programme of network reinvention and the medium to long-term protection of rural post offices. Other hon. Members will want to raise those issues: all I will say is that anecdotal evidence provided by Members on both sides of the House questions the approach taken by Post Office Counters—the pursuit of soft options involving voluntarism, whereby taxpayers' money is available for closure, rather than the more attractive option of a clearly defined programme of reorganisation where customer need is pre-eminent.

Mr. Hawkins

Will the hon. Gentleman give way?

Mr. O'Neill

I am sorry, but I do not have time.

There is suspicion that several closures could be announced just before the forthcoming holiday period, thus reducing the time available for consultation, disquiet that insufficient consultation is being carried out with local authorities to ascertain further development, especially in areas of urban regeneration where social housing programmes are to be carried out on brownfield sites, and great worry about the future of Post Office Counters—the Crown post office network itself.

My colleagues on the Select Committee and I have stuck with this issue for the best part of a decade—through three Parliaments under Tory and Labour Governments, but the anxieties that we have repeatedly expressed have not all been addressed. There are better ways of paying benefits than using a book—that is not in dispute—but we have moved on from the days when social security benefit distribution could be regarded as a privilege for which the recipient is answerable to the terms laid down by a generous donor. In a modern welfare state run by what I would like to think is a modern, social democratic Government, the poor and disadvantaged—and, frankly, the cussed and determined—are entitled to have their views heard on how their benefits should be paid and how they can be advised on their rights. Sadly, on the issue of direct payment the Government are paying attention neither to the many nor the few.

4.14 pm

Mr. Patrick McLoughlin (West Derbyshire) (Con)

I am grateful to the hon. Member for Ochil (Mr. O'Neill) for the way in which he introduced the debate. I say to hon. Members who have not yet been afflicted by the reinvention programme that "reinvention" would qualify as the most misused word from a Government to whose misuse of words we have become accustomed.

In my constituency, several post offices have closed in the past few years. Indeed, since 1997, those at Cubley, Longford, Roston, Flagg, Lea Bridge, Kniveton, Fenny Bentley, Clifton and Taddington have closed. Some closed because people wanted to retire and no one could be found to replace them. I accept that there will always be some post office closures. It was almost inevitable when nearly 20,000 post offices covered the United Kingdom.

However, I was shocked and horrified to receive a letter from the Post Office a few weeks ago to inform me that in Belper, which has five post offices, four are set to close. That is a reduction of some 80 per cent. in the service. Belper is a large town with a population that exceeds 20,000. Even the Post Office's consultation document describes the terrain as hilly. That is a good description; we are not considering a flat part of the United Kingdom. It is just to the south of the start of the Peak district.

The Chairman of the Select Committee on Trade and Industry commented on the brevity of the timetable for consultation and for people to make representations. That is felt strongly in Belper. The consultation period ends on 23 December. Most people would accept that other things are on people's minds in December.

Mr. Harry Barnes (North-East Derbyshire) (Lab)

Has the hon. Gentleman experienced the specific problems with consultation that I shall describe? When he and his constituents make their objections, they receive a reply from the Post Office, 80 per cent. of which argues the general case for the closure programme. That happens in the middle of the consultation. When a post office's closure is confirmed, it is found that a document to that effect has been published months previously, even before the consultation. In a case in my constituency, the document was published in March but the decision was made on 28 September.

Mr. McLoughlin

I do not know the exact case to which the hon. Gentleman refers, but I say to the Under-Secretary that he must get a grip on the issue because it affects many constituents. He should note, from the attendance at the debate and the fact that the Speaker has had to impose a time limit on speeches, the growing anxiety in all parties.

The position is unacceptable. Earlier, the Leader of the House assured us that if people still want to collect benefits from post offices, they should be able to do that and obstacles should not be put in their way. It is all very well making that point from the Dispatch Box, but if, as is suggested in Belper, four out of five post offices close, the Government are forcing people not to take the option of going to the post office.

Mr. Hawkins

Will my hon. Friend give way?

Mr. McLoughlin

I would rather not because many hon. Members want to speak and I shall not take 10 minutes. I want to be short and specific.

The Government must reconsider the matter. Recommendation 20 of the Select Committee report states that is far too early to reach a view on the reinvention programme. I suggest that the Committee conduct an urgent review of it. When the reinvention programme—what a name—hits other constituencies, other hon. Members will experience the same anxiety about it as me.

Ms Walley

Does the hon. Gentleman agree that the urban reinvention programme is flawed because it does not provide the kind of safeguards that we need in deprived urban areas?

Mr. McLoughlin

The hon. Lady is absolutely right. I know that many people wish to participate in this debate, so I shall attempt by other means in the House to secure another debate, in which I can talk at greater length about the problems that I face in my constituency. I must warn the Minister that he will find himself answering a lot of Adjournment debates unless he changes this policy, because one thing that we are not seeing is reinvention. I see none at all; I see a closure programme. That is what it is, and the British people are now seeing that. They are not seeing a reinvention programme or a saving of the post office network; they are seeing its closure. I do not believe that that is what the Government intended, but that is what the Post Office is achieving for them. The Government need to be aware of the dangers that they face in this regard.

4.20 pm

Rachel Squire (Dunfermline, West) (Lab)

I welcome the Select Committee report and the speech made by my hon. Friend the Member for Ochil (Mr. O'Neill). I would particularly like to express my opposition and that of many of my constituents to the closure of three sub-post offices in the Dunfermline area as part of the so-called reinvention and modernisation proposals. They are at Baldridgeburn, Townhill road and Netherton.

Dunfermline is a town with many hills, some of which are very steep. It is clear from a letter from Post Office Ltd. that, during its survey, its representatives failed to walk along those hills or to go along the routes that it was suggesting that people should take if those sub-post offices closed. Given the difficulty that I have in walking up those hills without pushing a wheelchair or a buggy or carrying heavy shopping, I dread to think what the impact will be on many of my constituents if the closures go ahead. To pick up on a point made by the hon. Member for West Derbyshire (Mr. McLoughlin), the Post Office's survey says in respect of the alternative post offices that it proposes people use in the event of the closures: This office is on a hill. There is a continuous and steep hill. The route is hilly. There is a steep climb up the New Row While the sub-post office at Townhill road is itself on a hill, it is very well located to reduce the climb that people have to make to reach it.

I should also like to mention the timing of these proposals. I find it unacceptable that the consultation period includes both Christmas week and the week of the new year, when almost no community organisations meet and when many people have other things on their mind, especially their own families. I shall urge Post Office Ltd. to show that there is some meaning to its commitment to consult by extending the consultation period by at least two weeks.

Mr. Hawkins

The hon. Lady is clearly facing the same kind of issues that I face in my constituency. I am battling to save Mytchett post office. The alternative post office is situated beyond a bridge that floods regularly. The consultation period was so short that there was no time, following the recent heavy rain, to take photographs showing the flooding on the road under the bridge, which elderly people and mothers with children could not have got through. I got a letter yesterday, within a week of the consultation period finishing, saying that Mytchett post office was to close. It was quite apparent that the consultation had been a sham. Does the hon. Lady agree that in her constituency, as in mine, it is a sham?

Rachel Squire

I suppose I live with a glimmer of hope that it is not a sham, but I fear that the hon. Gentleman may be right.

I worry about just what pressure has been put on sub-postmasters and sub-postmistresses to agree to closures. There may have been at least the implied threat that if they did not co-operate, they might forfeit the compensation that was being offered.

Judging by what Post Office Ltd. says about the community role and urban regeneration, it takes little account of the fact that Dunfermline is one of the fastest-growing areas in the country—in Scotland, certainly—with hundreds of new homes and with existing businesses expanding or relocating. While it notes that Netherton sub-post office is near a large office development housing a work force of 600, it seems to consider that irrelevant.

Finally, let me echo what my hon. Friend the Member for Ochil said about pensions. Evidence from my constituents suggests that they were never really encouraged to open Post Office card accounts, as opposed to being pushed in the direction of bank accounts.

When debating a subject connected with a Select Committee report and under the overall heading of "Estimates", we should bear in mind not just the financial but the human costs of policies. I hope that, along with other Members, I shall be able to campaign effectively against proposals that demand such a heavy price from the communities that will be affected by them.

4.26 pm

Mr. Roger Gale (North Thanet) (Con)

I want, briefly, to raise three issues. I want to return to the issue of card accounts, to say something about the way in which the Post Office defines the difference between rural and urban sub-post offices, and to discuss the way in which the Post Office measures distances between the old offices and those to which business will be transferred. I make no apology for being parochial, as the parochial examples illustrate the wider problem.

We all have evidence from the National Federation of Sub-Postmasters to suggest that while the Government say, "We will be even-handed, open and honest, and will promote all kinds of account", the Department for Work and Pensions is making it as difficult as possible for elderly people in particular to obtain Post Office card accounts. It is sending the message that that is not the best kind of account, and should not be encouraged. Postwatch resents its interference, as do the National Federation of Sub-Postmasters and individual sub-postmasters who, as private business people, are trying to promote what they regard as their product rather than anyone else's.

As it is so difficult to obtain a Post Office card account, many people are being driven away from post offices and into banks, as the Department wishes them to be. That is damaging the business of sub-post offices, and making it easier for the Post Office to say "These outlets are not viable, so we must close them". It is hardly surprising that, faced with such a situation, sub-postmasters are taking the money—a lot, in some cases—and running. They have no business left, and when they see a financial way out, they go for it. When we say to the Post Office "If you want to shut that outlet, there is another just down the road that is prepared to take on the business", the answer is "No. We are not looking for alternatives in the vicinity; we are looking for closure". That is what letters from the Post Office now say. Forget reinvention; that is out of the window. This is about closure and nothing else. It is a sham, and the Post Office card account is a charade. The Minister must take that on board, and do something about it.

Let me now deal with the definitions of rural and urban post offices. Let me cite Greenhill post office in Herne bay, in my constituency. Greenhill is a village in its own right. It is separated from the rest of Herne bay by a very major road, the same road that separates the oldest part of the area—the original village of Herne—from the rest of the town. The two communities are almost identical in terms of demographics. Each has a church, pubs, schools, shops and roughly the same population. Herne is regarded, quite properly, as rural; Greenhill, the Post Office says, is urban. I asked the Post Office to take a look at Greenhill, and it sent a senior manager. Greenhill post office has been shut. I wanted it to be reopened, and to be offered to another outlet that wanted it.

To give the Post Office its due, it confronted me face to face. It said, "We understand why you feel, and why the people of Greenhill feel, that this is a village community, but our book—the Ordnance Survey book—says that Greenhill is part of the town. So that's all right then: the post office stays shut." It is not all right: it is all wrong, bad and doctrinaire. I said to the Post Office, "Aren't you prepared to apply common sense?" The answer, in effect, was, "No, because if we do that in one case, we will open the floodgates." As a result, Members on both sides of this House would say, "Me too!" The Post Office knows that it cannot afford that. There is also the small matter of managers being paid bonuses for shutting post offices.

Another issue is distance. Studd hill, in my constituency, is another community that is almost a village in its own right. The distance to Sea street post office, the nearest suitable post office, is measured—miraculously—as just under a mile. That mile is post office to post office in a straight line: as the crow flies. The pensioners in my constituency do not travel by crow; they travel on foot. They will have to travel—as the hon. Member for Dunfermline, West (Rachel Squire) said of her constituency—literally up hill and down dale. The hills in question are very steep, and the real distance is well over a mile. It is quite dishonest of the Post Office to behave in this way—to pretend that the straightest route on a map between A and B is the relevant route.

The Ramsgate road post office—which is at the other end of my constituency, in Margate—serves a very large area on one side of a major road, on one side of the town. The distance measured to the main town post office is under a mile, but again the journey is up hill and down dale. What we are dealing with is not the real world in which our constituents live—the elderly, mothers with prams, people who actually want to get to a post office—but a bureaucratic world that understands straight lines on a map, bonuses for closure, and reinvention, which actually means closure.

I finish with an aside. So cavalier is this process that I am told that, in the case of Margate's Ramsgate road post office, alternative methods of transport include a train and an underground. Although I have represented North Thanet for 20 years and would agree that I may have missed certain things, I have yet to travel on a Margate metro. This policy is nonsense. I ask the Minister, on behalf of all those whom we represent, to rethink this issue. I ask him to get the Department for Work and Pensions to rethink its own attitude, and to compel the Post Office to understand that we have to maintain a service that meets the needs of the elderly, the sick, young mothers and single parents—the most disadvantaged in our society. Those are the people in my constituency who are missing out as a result of this policy.

4.33 pm

Mr. Mark Todd (South Derbyshire) (Lab)

I do not want to dwell for the most part on the closure programme. In my area, much of which is rural, some post offices—at Egginton and Walton-on-Trent, for example—have actually re-opened through the efforts of villagers. That is commendable, although I hold my breath in respect of how the urban programme may work in the small part of my constituency that is urban; however, I shall not comment on that now.

Although the Select Committee report is excellent, I want to begin by touching on a point that it missed: having done so, I shall discuss some of the points that it did touch on. It missed the fact that the Government are participating with the banks in the promotion of financial products that, admittedly, all of us in this Chamber have taken for granted throughout our lives. Nevertheless, those products are being promoted to people who—through choice or denial—have not had them before. They are often pensioners, and elderly ones at that.

I do not believe that the banks are entirely benevolent in this respect. It is clear that they see some business advantage in widening access to their products. I looked at the Select Committee's questioning of the Minister on the matter, and that showed that he believes that, too.

The products are basic, by and large, but they carry some risks. I asked the Department for Work and Pensions about the advice available to people to ensure that they knew about the products that they were buying into, and I was told that people with concerns should go to the citizens advice bureau. There is only one CAB office in my constituency, and getting there can involve a long journey. People seeking help have to queue for a long time to get it, despite the best endeavours of the people who work there.

The large-scale promotion of financial products to people who are unfamiliar with them carries some risks. We need to provide access to advice, so that people can know exactly what they are signing up to. That is especially important, given that some more advanced banking products are being promoted as part of the range of available options.

My next point has to do with the promotion of the Post Office card account. The promotion is not equivalent to that available for the banking options. One has to read the literature very carefully to understand that it is possible to continue to receive money through the post office. In addition, the timings are out of synchronisation. A constituent who wanted to make use of the Post Office card account was told that it was not available and that the choice was either to sign up to one of the options, or to stick with the existing arrangement. However, many people do not understand that it is possible to stick with the existing arrangement until the card account becomes available. The clear inequity there was not accidental but entirely preconceived.

The process is also woefully complex. I was startled when one of my sub-postmasters showed me the form that had to be filled in if one wanted even an absolutely basic financial product. It required a lot of effort, and that is wrong.

Mr. Paul Truswell (Pudsey) (Lab)

The position is even worse than my hon. Friend describes. A constituent of mine had to fill in four application forms before receiving the card, and another, who completed all the procedures punctiliously, was then subjected to the usual catechism of hard sell about the alternatives.

Mr. Todd

My hon. Friend is right. That seems to be many people's experience.

The Select Committee report touches on another matter, although it does not bring out all the relevant aspects. The problem has to do with the collection by a nominated person of another person's pension. At the moment, people can obtain an extra card, which can be given to a trustee of some kind who can collect the benefit on their behalf.

The difficulty is that pension or benefits recipients cannot rely on only one person in those circumstances. For instance, the nominated person involved may not always be available to obtain the money when the recipient cannot do it personally. That is a real risk for any such arrangement.

I have already debated the development of an exceptions service in correspondence with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), who has left the Front-Bench firing line for a moment. My hon. Friend the Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee, has given that service a hesitant commendation for the progress that has been made, but I think that the Government response on the matter has been poor. They have said that they did not want to design an exceptions service before seeing the whole system in operation, but that they would set something up based on that experience. Of course, I would expect some flexibility, based on experience, in any service, but I would not expect no design to be in place to deal with entirely predictable exceptions before the scheme was launched. That stems from an attempt to introduce the scheme without dealing with, as my hon. Friend put it, the cussed and those in genuine difficulty, of whom there are many. I am indebted to one of my constituents, Mrs. Smedley from Aston-on-Trent, who described the experience of someone who collects pensions on behalf of other people and the difficulties that might arise.

I also wish to comment on the change programme for the Post Office, and on that point I am indebted to Mrs. Mason, the sub-postmistress in Hilton. As an enterprising lady, she wishes to develop the service she provides further, but she was appalled by the standard of training offered to sub-postmasters and mistresses on the introduction of the programme. She wanted some training on how to offer the full range of financial services available through the alliances that the Post Office has with various banks, but that was not on offer in the training programme that her husband attended. That is appalling. If we are not training the key participants properly to take full advantage of the freedoms that will be available, we will be making a big mistake.

It is also unacceptable that sub-postmasters and mistresses are unable to take up the option of setting up a PayPoint in their post offices. It is obvious to most of us that paying bills through the post office has become harder and harder as organisations claim that it costs too much to accept that means of payment. PayPoint provides an alternative method, but the Post Office—by contract—says that no sub-post office may set one up. That restriction of business enterprise and opportunity is unacceptable. The Minister has many points to respond to, from my contribution and others, and I shall listen with interest when he winds up.

4.42 pm

Pete Wishart (North Tayside) (SNP)

I congratulate the Select Committee on an excellent report. As for the Government's response to it, I have rarely read such self-congratulatory, irrelevant nonsense. Like other hon. Members, I have spent an inordinate amount of time in post offices in the past few months in pursuit of my save the pension book campaign. In the process, I have spoken to many people who use post offices regularly and several sub-postmasters who run them. I have not found overwhelming support for the plans, as the Government's response suggests, but overwhelming hostility.

People do not like the plans. They do not like the fact that the pension book will no longer be an option for pensioners. They do not like the fact that pensioners have been corralled into opening bank accounts at the expense of the Post Office card account, which is what is happening— regardless of what the response says. The most compelling evidence was given by Postwatch, which told the Committee that it is appearing to be much more difficult to open a card account at the post office than to open a basic bank account. Consumers have to go through eight steps". The Government's response contests the number of steps, but it concedes that customers have to go through three steps for a Post Office card account, as opposed to two steps for an ordinary bank account. That is a slight concession by the Government that it is more difficult to open a Post Office card account, and I hope that the Minister will confirm that when he winds up the debate.

Direct payment suits many people; it may suit most people; it may even suit the vast majority of people; but it does not suit everybody. Even those who now receive their pension through direct payment acknowledge that, and agree that those who do not want a bank account should still have the option of receiving their pension through their pension book.

Mr. Hawkins

In the hon. Gentleman's experience of this issue, has he come across pensioners who believe that they have been conned by the system? Pensioners using post offices such as Mytchett in my constituency have discovered that the minute that they fill in a form that gives their bank details, it is treated as a request to have their pension paid into a bank account, even though the form did not say that that would be the result. Pensioners are asked to give their details and, when they do so, it is treated as a request. It is then impossible to return to using the traditional system that they prefer. That procedure, and the way in which the leaflets are written, is dishonest and is another aspect of what is making pensioners in my constituency—and, doubtless, in his—very angry.

Pete Wishart

I am grateful to the hon. Gentleman for that intervention; he makes the point very well and I agree with him on that issue.

After the debate, I shall, on behalf of my constituents, be presenting a petition of thousands of names. The petition insists that the pension book remain an option and asks the Government to think again about their plans.

Many of the pensioners who signed the petition probably have their pension paid directly to their bank, but they believe that pensioners without a bank account and who do not want a bank account should be left with the option of receiving their pension through a pension book as they have always done. Many pensioners simply do not understand why they can no longer use their pension book. For them, if it ain't broke, why bother trying to fix it? Many pensioners have an attachment to their pension book that the Government have either failed to understand or have chosen wilfully to ignore. That attachment goes back to post-war times when the old age pension was introduced.

Of course the Government will call their plans modernisation. They are determined to foist that modernisation on the group in our society who are the most resistant to it. Pensioners want to be left alone; they do not want to be modernized—if they want to be anything-iced, it is to be traditionalised.

For many pensioners, collecting their pension at the post office in the normal way is a social activity, as the hon. Member for Ochil (Mr. O'Neill) mentioned. For many, it is an opportunity to meet friends and to organise social engagements, but it is more than that. The post office can act as an early warning system for some of the most frail and vulnerable members of our society. I have observed sub-postmasters acting in an almost pastoral way. They look out for their frail and vulnerable customers. If those pensioners fail to turn up at their usual time, the postmaster raises the alarm. A lot happens in the post office and it is central to much of the life of our communities.

I do not believe that the Government really know about the role that post offices play, especially in our rural communities where the post office is so often the centre of community life. We are witnessing the erosion and degradation of community infrastructure in rural villages and settings, and that threatens the viability of the Post Office card account.

I represent the fifth-largest constituency in the United Kingdom, an area of small towns and villages with no obvious urban centre. We are witnessing the disappearance of banks and post offices throughout the constituency. In Scotland, most people bank with one of the three big banks—the Royal Bank of Scotland, the Bank of Scotland or the Clydesdale—none of which has an arrangement with the Post Office, so people in my constituency are denied access to the Post Office card account. That means that 90 per cent. of the people of Scotland will no longer have that option.

There are big problems in Scotland, not only in our rural areas but in our urban areas where there are also serious threats to post offices because of the Government's plans to have benefits paid directly into bank accounts. Sub-postmasters do not deserve that. I have spoken to many of them and find them a modest bunch. Sub-postmasters take their community responsibilities and social obligations very seriously. Most of them went into the business thinking it would be their own pension book—their little nest egg. However, the nest egg will not take care of their future; they have found a cuckoo in the nest and it is devouring their whole livelihood.

Postmasters are being encouraged to diversify and to take on "extras". Indeed, any hon. Member visiting a marginal post office in their constituency would hardly be able to move for greeting cards or ready-made meals, but if sub-postmasters lose their core trade from pensioners and benefit claimants they will lose that extra business, too.

Many post offices have been put up for sale recently. In my constituency, there are post offices that have been on the market for three years, and they can no longer be sold as a going concern. To buy a post office nowadays would be financial suicide.

Under the Government's plans, more closures are inevitable. This is no reinvention: we are witnessing a closure programme. I hope that the Government will think again about what they are doing and that perhaps they will put the interests of our post offices and those who operate them closer to the top of their agenda.

4.49 pm

Linda Perham (Ilford, North) (Lab)

My starting point in this debate is that there is a threat to four of the 13 post offices in my constituency—plus one just along the road from my home, which was closed a few months ago, because of a dispute between the postmaster and the council over the lease, which means that five out of 13 may go. However, I am working with Postwatch to see what support there is for keeping those post offices open—Claybury Broadway, Great Gearies, Tring Close and Woodford Bridge.

On 29 November, I met large numbers of residents at each of those post offices—mainly elderly or disabled people or young parents, all concerned about the alternative facilities available. Some of these alternative branches are more than a mile from the closing post offices—this in Greater London, in a London borough with nearly a quarter of a million residents. One of the main alternative post offices, in Barkingside high street, already has queues stretching out of the door, so that is not really much of an alternative. Many residents have now signed petitions and flooded my office with responses and reasons why they want to retain their local branch.

Of course no one wants to see the loss of a community resource. I prefer to call local post offices "shops in a social setting", because that is what they have become. However, it is all too easy to blame the Government of the day for failing to prevent post office closures and in particular at present to point the finger at the introduction of the direct payment of benefits. The debate on the Committee report is therefore timely; as a member of the Committee, I have taken a great interest in this issue.

One conclusion of our report commended the assurances of Post Office Ltd. that it would make decisions about the future of individual post offices by reference to strategies for communities and areas, rather than in isolation; but I am not convinced that the programme of closures can be termed strategic if the postmasters or mistresses are volunteering to go, because it could lead to under-used post offices staying open while well sited, better-supported post offices are shut—such as Woodford Bridge in my constituency, which is in quite a large shopping parade.

The Committee voiced concern at the reduction in customer choice with the phasing out of order books, which my hon. Friend the Member for Ochil (Mr. O'Neill) mentioned. It questioned the savings expected for using the increase of direct payment to combat fraud. It questioned the failure to have in place "exceptions" procedures for blind or other disabled people, and—the point that my hon. Friend emphasised at the beginning of his remarks—criticised the accuracy of information on the options and the unnecessary complications involved in opening a Post Office card account.

A couple of days ago I received a letter from a constituent about the fact that he had filled in no fewer than six forms for such an account, only to be rejected by the Post Office. He wrote that the post office say they can't fill in the form for me, despite my being poor sighted. I have today filled in yet another form and await the reply…Please can you help? Our report was very well received, especially by the Communication Workers Union and the National Federation of Sub-Postmasters. My constituent, Iain Stanford, the counters sectional secretary of the CWU in Romford, wrote to me on 21 November, saying that

the main conclusions and recommendations of the report have provided a strong platform to support and save our Post Offices". However, both organisations expressed their disappointment in the Government's response to the report, published on 16 September, and both are critical of the DWP's approach on direct payments. The CWU claims that the DWP intends to move nine out of 10 new claimants to direct payment as quickly as possible. Indeed, in a written answer to the hon. Member for Vale of York (Miss McIntosh) on 8 December 2003, at column 321–22W, the Minister, my hon. Friend the Member for Gravesham (Chris Pond), said that the DWP had published a public service agreement that by 2005, 85 per cent. of customers would have their benefits paid by direct payment.

There is no doubt that in recent years the Post Office, even though it is a monopoly, has managed to lose millions of pounds, including £194 million last year. It has had and is having considerable problems. There is equally no dispute that hundreds of post office branches have closed in each of the past 20 years, the worst so far being 1991–92, when 478 shut. Since DP was introduced in the early 1980s, increasing numbers of people are opting for it.

I should like hon. Members to take note of something that the Select Committee said in the summary at the beginning of the report: The change in policy on benefits payment presents Post Office Ltd with a serious challenge as it tries to bring its business back into profit, but it cannot be seen as a root cause of the problems faced by the business. The trend away from the use of the post office network for benefit collection started a long time before the introduction of Direct Payment. We as a country must face up to the consequences of changes in lifestyle and habits, which have led to those with the best transport options expressing their choice to range further afield to gain access to consumer goods and services, so that we make the best provision that we can for those with restricted transport availability.

I welcome the Government's assistance to the Post Office, including investment grants to improve post offices and other substantial financial support running into hundreds of millions of pounds, as the Prime Minister pointed out a couple of weeks ago. I strongly reinforce the Select Committee's recommendation that urges the Post Office to make progress on introducing new business activities and flexible working to open new possibilities to maintain a healthy local post office network. I note that when the Minister replied to the debate on post office closures in Wales on 9 December, he said the company had been slow to develop new income streams and offices had become over-dependent on making benefit payments.

As has been requested, the Select Committee promised to return to the impact of DP on the post office network's income and on individual sub-postmasters and mistresses, and to monitor the progress of the urban reinvention programme and the effect of Government support for rural post offices in the near future. On those extremely important matters, which have caused so much interest in the House and throughout the country, our constituents—certainly mine—would expect no less of us.

4.57 pm

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)

This debate is welcome as we are trying to focus the Government's mind on some of the key issues that the Chairman of the Select Committee on Trade and Industry raised in opening the debate. This is about a fair choice for the customers. Fort-our rural post offices are left in my constituency, and I am pleased to say that I have been able to attend the reopening of some that had closed. I recognise how vital they are to many communities, but the people who want to use those post offices have grown up with different lifestyles, different ways of working and different ways of operating their money. It is arrogant of the Government to assume that they know best about how people should operate and that they must have hank accounts and run their weekly budgets using them. It is the Government's desire to force people down the road faster than they wish to move.

The move to direct payment was an option; it was part of the fair choice. No one can deny people the right to use their banks to manage their benefits, but if they wish to separate their savings in a bank account from their weekly cash budget by taking that through post offices, they should be entitled to do so as easily and simply as though they were doing so through a bank, and they should not have to go through hoops to open a Post Office card account. The submission from Postwatch suggests three ways to make that simpler, so the Government need to reconsider the current options and recognise that, even if they have written to people with an invitation to migrate to direct payment, that should be the only trigger that they need to go to the post office and start the process, as though they were opening a bank account. Why do people have to go through hoops if it is not to put barriers in their way? There is no explanation from the Government.

As the hon. Member for South Derbyshire (Mr. Todd) made clear, the Government need to recognise the danger of the kind of advice that they are giving to people, given the pace at which they want them to transfer their way of operating. If people move their weekly traditional cash budgeting even to a basic bank account they may be told that they cannot go overdrawn, but there is a great danger that they will lose control of their budgeting if they switch to systems that allow automated payments to come out of their accounts. If people are living on the basic minimum that the Government provide to protect them from poverty, the last thing that they want is a £30 letter from the bank saying that they are overdrawn.

Clearly, the Government are in danger of going too fast down that road and, by accelerating the process, they have accelerated the challenge for the Post Office. If they had allowed things to move at the pace at which customers were adapting naturally, the Post Office could have adapted its services to the way in which the market was moving. Because the Government have accelerated the pressure on our sub-post offices, the Department of Trade and Industry must now pick up the pieces at the other end of the scale and try to sort out the mess facing post offices to keep them open. The Government have promised people that they will still be able to collect their benefit at the post office, but that is a hollow promise if there is no post office from which to collect it. I hope that the Government, who promised on page 6 of their reply to send the Committee follow-up research on the cost-benefit analysis in October, will deliver that research eventually. It would be helpful to know when they plan to do so.

If the Government are so confident about the way in which they are handling this matter, they should also respond more positively to Postwatch's request to send out research material, the production and postage cost of which Postwatch will pay for. The Government's excuse for not allowing Postwatch direct access to consumers is data protection, but they could do more to work with Postwatch to facilitate its research, which could reassure us and the wider public about how the system is being processed.

I repeat that the key is to operate a fair choice. The National Federation of Sub-Postmasters has pointed out that, in reality, there are eight steps to opening a Post Office card account. That is a long-drawn-out process, and the Government need to look at that again if their reassurance is genuine that people who are entitled to a Post Office card account, and who want one, should have an easy option.

The final point that the wider public need to understand from this debate and the information provided by the Government is that if they want to stick with their pension book, for the moment, they can do so, and they are entitled to do so. They are entitled to say, "Don't rush me, I want to carry on using my pension book." We need to reassure people that the pension book is still there for the moment. I welcome the movements being made on the exceptions service, and reassurance is also necessary in that regard. Above all, a fair, level playing field is required—for those people who want to stick with their post office and the card account, opening a card account should be as easy as if it were a bank account.

5.2 pm

Mr. Brian Jenkins (Tamworth) (Lab)

I am grateful for the opportunity to join this interesting debate. It is always a pleasure to follow the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith). I welcome the opening comments of the Chairman of the Select Committee and was pleased that he restricted the area of debate this afternoon in so far as he did not want to talk about the past failures of the Post Office and its management.

There is no doubt that we all recognise that post offices have been suffering from falling business, with many more people using bank accounts. We recognised that, so we went out promoting the Post Office card account system, using the local media to try to attract as many people as possible to take it up. We promised them that they could go to their post office and draw out cash. We said that they did not have to draw it out all at once—they could draw it out on a daily basis if they wanted, which would leave them less open to the difficulties in our society, such as being mugged on their way back home.

Members can therefore imagine my surprise when last Thursday a pamphlet from the Post Office dropped on my desk that said that it was investigating the 24 post offices in the town of Tamworth, and that, by the time that it had finished, the investigation could lead to the closure of one or more branches. The one or more turned out to be nine out of the 24. But that is the not the best part of the Post Office plan. That plan is a very cunning plan—the only very cunning plan that I have seen to match it was Baldrick's in "Blackadder".

I doubt whether any Member can beat my record today—please try—because it is either the worst or the best option imaginable. Let us imagine a town of 77,000 people, which, around the periphery, has a river on one side and a bypass on the other, which forms a wedge. Within that wedge are nearly 20,000 people, and at present six sub-post offices. How many of those is the Post Office going to close? Surprise, surprise, it is going to close six. It will open one in a petrol station shop. The consultation document says that people will be able to get to the petrol station by public transport but, unfortunately, no buses go across there from one part of town because the bus routes go into the centre of town rather than around it—as happens in any town with a radial pattern.

Let us consider the situation for a disabled person with his account card who used to go to Hockley post office. He will trundle down there only to find it shut. He will think, "I know, I'll go to Wilnecote post office", so he will trundle down the road for nearly three quarters a mile to find it shut. He will think, "I know, I'll go to Belgrave post office", but he will go down the road to find it shut. He will think, "I'll go to Kettlebrook post office", only to find it shut. He would have to travel 2.5 miles into the centre of town to access a Post Office outlet.

The Post Office says that the alternative option is to use Dosthill post office, but there is no public transport between Hockley and Dosthill. Dosthill has got one thing: a big hill. People might be able to come down the hill but I am certain that a less able pensioner will be unable to walk up it. A person would have to be built like Arnold Schwarzenegger to get a pushchair up the hill—it is a difficult and hard route.

When I received the consultation document, I thought that I would telephone the Post Office because a report about it appeared in my local paper on the very morning I received it—my local paper had got the information before me. I asked it what it was playing at and why it had not told me about the plan upfront so that I could have made preparations and got my act together. I got a surprising answer: "Who are you?" I was told, "We don't even recognise MPs. We just treat them the same as everyone else. We talk to the press first." I was treated with total disdain by Post Office management.

When I think about the set-up with 20,000 people being served by one outlet, I start to ask myself questions. Has Postwatch been consulted on the document? It told me that when it asked to hold discussions and consultation, the Post Office said, "Go away. We're not interested." However, the documents that the Post Office sent out recommend that people get in touch with Postwatch, despite the fact that it will not hold local meetings with that body.

I now know that the sub-postmasters have taken the money. The generous handout that the Government have given has not been to maintain the post office system but to shut it down. I do not blame the sub-postmasters for taking the money because life is tough out there and if they have been read the riot act by the Post Office itself, they should probably cut and run. However, we have been offered no extra outlets, so how does the Secretary of State for Work and Pensions intend to get benefits to pensioners and others who have a right to receive them? Does he intend to send Securicor round with money every Thursday? How will he make arrangements for individuals to go to a post office?

People have to pay a bus fare to go to the post office, and if there are no buses they must pay for a taxi. Do we intend to reimburse those people for the cost of picking up their benefit? One can imagine a different situation. My town contains dozens of people who ride around on little electric buggies. Every Tuesday, they should collect together at a starting point in Hockley with policemen at the front and back of the group. They could then trundle down the town for 2.5 miles picking up new passengers as they went along while other buggies could continue to join what would become a modern wagon train. People would be able to get to the post office, pick up their cash and trundle all the way back.

Did the Office of the Deputy Prime Minister consider what would happen as a result of the proposal? If six outlets are shut, meaning that 20,000 people must use one post office that is not served by public transport, they will all have to drive there. Hundreds of extra car journeys will be generated in a town in which I am trying to encourage fewer car journeys. I am trying to encourage parents to walk their children to school by using school walking buses. The Post Office is undermining such activities.

David Taylor (North-West Leicestershire) (Lab/Co-op)

A town that will be very familiar to my hon. Friend, Ashby-de-la-Zouch, about 12 miles east of Tamworth, may have a similar problem now that Westfield post office has closed. There is now just one post office serving a population of about 13,000, and the capacity of that post office was inadequate before Westfield was flagged up for closure. Is that similar to the position in Tamworth?

Mr. Jenkins

Very similar. My hon. Friend reinforces my point. The Post Office is not providing a service.

The Post Office has enjoyed a unique relationship with the Government. It delivered benefits through its network; it provided a service; and it enjoyed a monopoly position. It now sees itself as a business, not a service provider. Unfortunately, regulators have forced the Post Office to become more and more competitive. I have seen regulators operating in different service areas, and I would like to tell the Secretary of State and the Minister—I feel sorry for my hon. Friend; I realise that everyone has run away and left him to be the whipping boy—that we may now have a regulator who knows the price of everything and the value of nothing. Will the Minister assure the House that the golden shareholder does not hold that principle?

5.10 pm

Mr. Owen Paterson (North Shropshire) (Con)

It is a great pleasure to follow the hon. Member for Tamworth (Mr. Jenkins), who described the difficulties of getting about his constituency. I have direct knowledge of mine because, with huge incompetence, I chose the hottest day of the year, 6 August, to drive 150 miles around it, visiting 28 post offices. I apologise to the four that I did not get to.

The consistent message that I got on that journey was striking. First, I would like to stress the clear link between the village post office and the village shop, and the way in which they hold the community together. Apart from providing postal products, almost every post office that I went to doubled as a supplier of fresh and frozen food and stationery and household goods, and many were off-licences. The two services are inextricably linked.

Colin Doyle, of Knockin post office, has worked seven days a week as a postmaster for 22 years. He said bluntly, "If the post office goes, the shop goes, and if the shop goes, the village goes." It is critical that the Government understand that post offices are the centre of village life; they have the village notice board, and everything revolves around them.

Last week, I went to see the Minister for Energy, E-Commerce and Postal Services, the hon. Member for East Ham (Mr. Timms). Perhaps it was after that meeting that he decided to go to an urgent meeting today and leave the wretched junior Minister to face the flak from all sides. I took Colin Doyle along to that meeting, but, sadly, other postmasters could not attend because of travel problems. I was pleased that the hon. Member for East Ham agreed that post offices are vital in rural areas, and he confirmed that it is the Government's intention to place a requirement on the Post Office to make "no avoidable closures".

We agreed on that, but the hon. Gentleman did not agree on the root problem, which is of the Government's making and which numerous hon. Members on both sides of the House have mentioned—that of brutally forcing customers to take their benefits direct. I was struck by the number of post offices that take a high proportion of their turnover from benefits payments. In my constituency the figures are as follows: Gobowen, 60 per cent.; Willow street, Oswestry, 75 per cent.; Treflach, 80 per cent., Pant, 70 per cent.; West Felton, 60 per cent.; Baschurch, 50 per cent.; Wem, 75 per cent.; Prees, 50 per cent.; and Cheswardine, 40 per cent. Even one postmaster with only 30 per cent. of his turnover from benefits said: We cannot afford to stay if we lose the benefits. Nearly all those post offices have already lost child benefits, but time and again I was told that the Department for Work and Pensions has made it as difficult as possible to acquire a card. We have heard that numerous times this afternoon. That is despite the fact that, as one postmaster said: the majority of those taking cash do not want a change. Another said: The Benefits Agency is bullying people to change. The Government has not been fair. Another said: The Benefits Agency has been very difficult. The forms are designed not to help. Yet another said:

The initial letters give a clear idea that customers must go direct. They are misleading. The bank section is deliberately put before the card section. To give an idea of the anger that I encountered, I have one final quote from my tour: The Government have no idea of what they are doing. They are totally clueless. They are destroying the infrastructure of country life. The procedure for applying for cards is deliberately hugely complex. The National Federation of Sub-Postmasters has described 22 steps to acquire a card, yet the Government claim that there are only three. Last week, Mr. Doyle explained to the Energy Minister that people who struggle through the system and finally acquire a card do so with a huge amount of help from the local postmaster. Benefits represent £400 million of income for post offices, which will close in ever increasing numbers if a substantial proportion of that income is removed.

Having created a hideous problem for themselves, the Government have put their hand in the taxpayer's pocket and promised £450 million to tide rural post offices over until banking services are in place. Last week, the Energy Minister stressed time and again that everyday banking should eventually replace benefits. I hope that he is right, because I want post offices to prosper. A senior analyst, however, dismissed the card as the amoeba of banking—the most basic form of banking life available in the UK. That is not a great start. Three major banking groups—HSBC, Halifax and Bank of Scotland, and the Royal Bank of Scotland—do not offer access to their accounts through the post office network, and 80 per cent. of basic bank accounts are not accessible at post offices. As Mr. Doyle told the Energy Minister, banking would only be the "icing on the cake". I am afraid that I share my postmasters' scepticism about the chances of banking replacing benefits income.

The £450 million intended to tide rural post offices over until 2006 is vital, and I am grateful for the letter that the Energy Minister sent me, as promised, on 8 December, in which he outlined the totals available for Post Office Ltd. I should be grateful if the Under-Secretary of State for Trade and Industry, the hon. Member for Bradford, South (Mr. Sutcliffe) provided a follow-up letter that I could send to my postmasters telling them what steps they have to take and what hoops they have to jump through to get their hands on some of that money before 2006. Not one of the postmasters whom I have talked to knows anything about that money.

I am afraid that we are on the brink of a rural catastrophe. In the past two years, 80 per cent. of all closures have been in rural areas. The Government have got it badly wrong. The benefits changes are extraordinarily unpopular and penalise many of the oldest and most vulnerable people in isolated rural communities. The Government should suspend the current programme, redesign the forms and make it easier for my constituents to receive benefits through their local post offices as they have done for years, and as they wish to continue doing.

5.17 pm

Richard Burden (Birmingham, Northfield) (Lab)

I, too, should like to make a few remarks about the consultation associated with the urban reinvention programme. In particular, I draw hon. Members' attention to early-day motion 236, which I tabled on that very issue

. We were assured by Post Office Ltd., both in the Select Committee and elsewhere, that the urban reinvention programme was not simply a closure programme. We were told that it was aimed at creating a sustainable urban post office network. Some post offices would close, but others would remain open and new business opportunities would be explored. The needs and circumstances of different areas would be taken into account. However, that was not what was happening on the ground. In my own area, the Shenley lane post office was slated for closure. It was having difficulties and the sub-postmistress wanted to get out. However, when the Post Office was looking at the area's needs and assessing the viability of that sub-post office, it either missed or did not take into account the fact that there was a multi-million pound regeneration programme for the community. I pay tribute to the Bournville Village trust, which is involved in that programme, and to Postwatch, local councillors, the local church and, most of all, the local community, for banding together and winning a reprieve for that post office.

I was pleased when I learned that Post Office Ltd. was adopting a new approach. We were told that instead of looking at post offices branch by branch, it would develop area plans at constituency level so that everybody would be aware of what was happening. A letter to MPs from Royal Mail dated 14 August said that this will bring greater certainty for everyone, should improve the consultation process, making it more meaningful for our customers and MPs, and will settle the future shape of our urban sub-post office network much more quickly". That is all very well, but, reading on, I found that the only people whom the Post Office was going to consult about that plan were itself and sub-postmasters and mistresses. Only after the plan is drawn up will local communities, MPs and other people be consulted. Where in that is there any attempt to identify the opportunities, not just the threats, or to engage local communities? If I read that letter right, we will all, as hon. Members have said, simultaneously be trying to shut a number of stable doors after the horses have bolted.

I have been trying to get some straight answers from the Post Office, and it has taken a while. I did, however, get a straight answer from my hon. Friend the Minister for Energy, E-Commerce and Postal Services on 18 September when I put the matter to him. I was encouraged by his reply. He said that he agreed with me both about the benefits of the changed arrangements and about the importance of thorough and careful consultation throughout"— I emphasise "throughout"— particularly involving local communities, on the plans for an area. I will certainly ensure that the points that he makes that is a reference to me are passed on to Post Office Ltd."—[Official Report, 18 September 2003; Vol. 410, c. 1060.] I hope my hon. Friend did so.

This week I received a definitive response to my letter from Post Office Ltd., which says that it is not practical to consult people at the strategic stage, as that would take too long. However, Post Office Ltd. reassures me by stating that Postwatch is involved in drawing up the plans. Let me tell the House how Postwatch is involved: it is given two weeks to comment before publication, on condition that it does not tell anyone else about the plans. Postwatch must make its comments in confidence. We are told not to worry—Post Office Ltd. will take everything into account. That reassurance comes from the people who did not notice the regeneration programme at the Shenley lane post office.

We are told that there is a sophisticated modelling system for the needs and opportunities in an area. That is good news. The Select Committee was encouraged by that. One of the things our report requested was to allow us to see the sophisticated modelling system. The answer contained in the Government's response is no. We cannot see the sophisticated modelling procedure because it is commercially confidential, so we do not even know how the Post Office is going about its activities.

That is not good enough. If the urban reinvention programme is to command confidence, people need to have a say in it—not just a say in the closure of post offices, but a say in the strategy for those closure programmes. Consultation will not take longer, because the programmes are being prepared anyway. Consultation will take place as they go along. But if it does take a little longer and the plans are improved as a result of the expertise of local people, what is the Post Office scared of?

In conclusion, I again draw the attention of my hon. Friend to the assurance that I received in the Chamber from my hon. Friend the Minister for Energy, E-Commerce and Postal Services on 18 September and ask him to ensure that Post Office Ltd. abides by the assurances that he gave me about that consultation, and that it changes course and agrees to consult hon. Members and the local community on the strategy for the area plans, not just on their effects. If Post Office Ltd. fails to do that, we must draw a simple conclusion: the Post Office may be interested in stamps, but if this is the way it goes about its affairs, the only stamps it is interested in are rubber ones.

5.22 pm

Mr. Mark Francois (Rayleigh) (Con)

I am pleased to have been called to contribute to this important debate. It is a pleasure to follow the hon. Member for Birmingham, Northfield (Richard Burden). We may not agree on much, but, curiously, this evening he and I are largely in agreement. I shall focus my remarks on the unfortunate effects of Government policy on the closure of post offices, particularly as it affects people in my constituency.

There are some 17,500 local post offices across the United Kingdom, 97 per cent. of which are operated by sub-postmasters, under contract to Post Office Ltd. Collectively, those offices comprise the largest retail network in the whole of Europe, receiving some 45 million visits a week. Despite that, the so-called urban post office reinvention programme is scheduled to close about one third of the current 9,000 offices designated as being in urban areas.

We have faced several closures in my constituency in recent years. For example, two years ago the Post Office announced the closure of the village post office in Rettendon, which was then part of the rural network. A few months ago, it went on to close the urban network post office at Eastwood road in the town of Rayleigh. Now two further urban network closures are proposed, at Golden Cross in Ashingdon and at Apex corner at Plumberow avenue in Hockley. The two latest proposed closures, particularly the last one, have led to considerable anxiety in my constituency, which I take the opportunity to highlight directly to the Minister this evening.

I am concerned about the way in which the Post Office has gone about announcing the programme of closures. The pattern appears to be one of trickling them out over a period of time, which only creates further uncertainty about what further closures, if any, may be in the pipeline. Frankly, it is also difficult for the associated consultation system to retain much credibility. A closure will often already have been agreed with the sub-postmaster in question before it is even announced to the general public, and, crucially, little emphasis is then placed on attempting to find a replacement. There is an understandable degree of cynicism and a perception that the Post Office is merely going through the motions in many instances when it initiates a consultation exercise on a proposed closure. Even the highly standardised consultation letters that are sent out to MPs tend to lend themselves to that conclusion.

Those are my criticisms of the way in which the process is being carried out, but I should like now to consider the two individual cases to which I have referred. The proposed closure at Golden Cross in Ashingdon worries me. The alternative office proposed in the consultation document is at Ashingdon road and is 0.8 miles away—only slightly less than the Post Office's recommended maximum distance for an alternative office, which is one mile. Ashingdon road itself, with which I do not expect the Minister is personally familiar, is very busy. That could be a hazard to pedestrians, and especially those such as women with young children, who will have to keep their children under close supervision if they are attempting to walk as much as a mile to use the proposed alternative office.

I am also very concerned about the proposed closure of the post office at Apex corner, Plumberow avenue, in Hockley. Again, the alternative post office, this time in the centre of Hockley, is cited as being 0.8 miles away from the office earmarked for closure. However, I reiterate a point that has been made by a number of hon. Members: that is the distance as measured on the map, but the ground in question is undulating, which means that the journey travelled is much nearer to the full mile in practice.

The Plumberow avenue office is located in an area that has a high proportion of senior citizens. A range of bungalows is situated nearby, and there are several local care homes. That happens to be an unfortunate coincidence in the context of the proposed closure. Most of those people will now have to walk to a busy main road, under a railway bridge and into the centre of Hockley to go to the post office. That could be a hazardous journey, especially in the wet, because of the nature of the ground, and especially for someone whose mobility is impaired, perhaps by their age. Moreover, the nearest bus stop to Apex corner is half a mile away. Even if people get to that bus stop, there is no direct bus link to the proposed alternative office in the centre of Hockley. For a range of reasons, the proposed closure is particularly unsuitable. If it goes ahead, it will cause considerable anxiety and inconvenience to my constituents, and not only senior citizens, although it will affect them in particular.

What has upset my constituents is the feeling that nobody is listening to them. They have been denied even a little conversation, let alone a big one. They believe that the matter is effectively a fait accompli and that a large organisation, which is ultimately owned by the Government and over which they have little or no influence, is taking decisions in its interests without regard for their interests. I seek sincerely to drive that point home to the Minister this evening.

I shall summarise, as I am conscious that other hon. Members wish to speak, and I want to facilitate that. It must be apparent to the Minister from this debate that we are not discussing a purely partisan issue. He has been in his bunker taking artillery fire from all parts of the House, and I think that some artillery fire is yet to come. I genuinely ask him to appreciate that there is serious concern in all quarters. The programme has obviously started to go seriously wrong, and this should be exactly the point at which Ministers, if they are listening, should step in to take a grip on the situation and try to do something to put it right.

I am responding to the consultation exercise, so I hope that my points will be taken seriously. Is there anything that the Minister can do, or any advice that he can offer, that would be of benefit to my constituents in Ashingdon and Hockley and to those of other hon. Members who are in the same boat?

The important social role that post offices play was stressed by many Members, from the Chairman of the Trade and Industry Committee downwards. For the sake of brevity, I do not intend to rehearse the argument, but it would be a great shame if the Minister did not take that particularly important point on board.

5.30 pm

Malcolm Bruce (Gordon) (LD)

The Minister should be aware that destroying the post office network and the services that people rely on is unlikely to prove a vote winner, either in this House or outside it. Indeed, he has been under attack from all sides. He needs to recognise that our network of dedicated, but extremely demoralised sub-postmasters and sub-postmistresses, as well as millions of customers, are confused and angry about what is happening in their local post office, which they thought was there to provide a service to them and which is a Government agency in their own community that is behaving inconsistently and incomprehensibly.

On a personal basis, I may have been an early victim of urban reinvention in my constituency when a member of the Post Office's national management sidled up to me and said, "I have just written a letter to you to designate Inverurie as an urban area", to which I replied, "How is it up to the Post Office to decide whether it is an urban area?". He said, "We have decided that it is an urban area because we have to close one of the post offices." I asked, "What is the purpose of all this?" He replied, "To close the post office." The phrase "urban reinvention" had not been touted around at that stage, but I can assure the Minister that no reinvention took place: I simply have one fewer post office.

People are worried that these products were developed not to meet the needs of customers and claimants, but to buy off the anger and confusion that they feel about not being able to carry on using the products that they want. I entirely accept that the move towards bank transfer has been carrying on and will continue to carry on, and that the Post Office would have to respond to that. However, the reality is that many people knowingly rejected that option for the purpose of their benefit, even if they wanted to make other transactions through their banks, and others did not want it because they preferred, for good reasons, to do their business in cash. Not only is it difficult to get a card, but it is such a basic product that many people ask why they could not have kept using the book, because the only difference seems to be that the card is a plastic version, but one that involves a great deal of difficulty.

Mr. Alan Reid (Argyll and Bute) (LD)

My hon. Friend makes an important point. I have received many phone calls from elderly people, some of whom are disabled or blind, and who are very frightened by the letters that they get from the DWP because they think that if they do not move to a bank, they will lose their pension. Their freedom of choice is vital, and the Government should make that clear.

Malcolm Bruce

That is right. It is particularly true in the case of elderly people who feel confused and uncertain about the future, but it even applies to people who collect child benefit, many of whom believed after the first round of letters that they had to transfer the payment to the bank, only to discover afterwards that that was not necessarily so. Moreover, they were not told—because sub-postmasters and sub-postmistresses were not allowed to intervene to explain it to them—that the probable consequence of their making that transfer was that the post office would close within the foreseeable future, particularly if it was in a rural area. Several people have told me that if they had appreciated that the consequences would be that severe, and that there was no real guarantee of a long-term future for those post offices, they would not have taken the decision that they did.

I turn to the consequences for the network. It has been stated that when the transfer programme is complete, it will result in a loss of about £435 million to £440 million a year in revenue to the Post Office, and that that gap has to be filled by people using the post office for bank transfers and bank transactions. I am not at all sure that the effect will be as major as the Post Office and the Government argue.

I make the next point not just because I represent a Scottish constituency, although that makes the position more acute. The Scottish banks' refusal to sign up is bad for the United Kingdom because they are UK banks and it diminishes the choice in every branch. However, in Scotland, it means that the option of using cash does not exist for the majority of customers because the banks on which they most depend have not been prepared to cooperate with the Post Office. Bank transactions and the new proposal for financial services, welcome as it may be, are unlikely even to approach making up sub-post offices' income deficit.

If there were a genuine programme of rural and urban reinvention, one would like to believe that one of its actions would be a review of the services that post offices can provide over and above benefit transactions. It is a constant source of frustration to many hon. Members, who are often asked why different branches cannot provide passport forms or issue vehicle excise duty licences. One is passed from pillar to post. First, one is told that one has to approach the appropriate vehicle licensing agency or the Passport and Records Agency. Those agencies say that they have contracted with the Post Office and it has told them that "x" number of

branches deal with licences and passports but that they do not know which ones; they simply pay them. We thus get passed backwards and forwards. However, we cannot get a single review of a post office that states that there is willingness to extend the service.

Let me give a specific constituency example. Keith, a town of 4,000 people, has a post office that provides an excellent service and is run by the owner of another post office in a different part of the county that has a passport service. The person who runs the Keith post office is therefore fully trained and capable of providing a passport service. There are many demands for such a service in Keith. However, for the reasons that I have described, the sub-postmaster has been told that there is no possibility of that. The nearest post office with such a service is in Banff, 14 miles away. That is absurd and unrealistic. Reinvention should mean that if we change circumstances, we meet people's needs, give them the products that they want and recognise that they want services.

I should like the Under-Secretary to comment on the updated information from Postwatch about uptake and the gaps that appear. As of 14 November, the uptake of card accounts was 33.8 per cent. That constitutes just over half the people who were contacted. There may be 5 million or 6 million cardholders at the end of the process. However, in spite of all the frustrations, 2.5 million people have put up two fingers to the process and not responded. Perhaps that is wise, given the frustrations, and many more people should have done that.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe)

Let me emphasise that, so far, 1.5 million people have taken up card accounts and the business target was 3 million.

Malcolm Bruce

If people do not respond, how will the process conclude? What will happen if millions of people say, "I haven't talked to you about a card account or a transfer. I'm still a benefit claimant and I've still got a book." I presume that at some point, they will be told that their book is not valid. We could have a huge crisis, whereby millions of people suddenly need to take up card accounts or opt for banked transfers. How will that be tackled?

If the result is that those people, for whatever reason, do not wish to opt for a banked transfer or a card account, what is the solution? Millions currently say that they cannot or will not go for that. Let us consider those who cannot—those who are blind or confused, those who cannot use PINs and those who do not find a new system appropriate—as opposed to those who will not. The Chairman of the Select Committee suggested that people might get something like a giro at the end of the process. Could it be a book of giros? Will it resemble the book that people currently get? If, at the end of the long drawn-out process people get a benefit book to enable them to claim, millions of people, who wanted to keep the book in the first place, will be furious because they had been denied that right and forced to accept a second-best option.

What is happening is the exact opposite of what a public service from a public agency should achieve in recognising consumers' rights to deliver a service in a way that is appropriate to them. It has been echoed on all sides of this debate that nobody wants us to be where we are at the moment. There has been much valid criticism of the management of the Post Office, particularly on the closure issue, but on the issue of payments and of the survival of the post office network, the Post Office has been presented with a fait accompli by the Department for Work and Pensions and forced to come up with solutions, many of which are less than adequate to meet the needs of its customers.

5.40 pm

Michael Fabricant (Lichfield) (Con)

There was considerable cross-party agreement in the debate on child care, and there seems to be agreement in this debate, too, on the question of choice. We debated choice in regard to child care, and we are now debating choice with regard to post offices. That involves choices about how benefits might be paid, and about which post office it is convenient to visit. As we have heard, those choices have been stripped away.

I should like to take this opportunity to congratulate the Trade and Industry Committee on its excellent report. The hon. Member for Ochil (Mr. O'Neill) said to me a few days ago that he suspected that I might agree with its conclusions, and he was right: I do agree with the conclusions of his very hard-working Select Committee. In the few minutes allotted to me, I want to talk about direct payment and the future of urban and rural post offices. Those issues have all been raised by hon. Members today, and they all affect people and pensioners.

The hon. Member for Ochil opened the debate, and quite rightly said that there had been no consensus or ministerial statement on how much would be saved by direct payment. Perhaps the Minister will take this opportunity to outline to us what is being saved by this rather unpopular measure. The hon. Member for Ochil also rightly said—as did other hon. Members; this has been echoed on both sides of the Chamber—that people like going to the post office, and that it was an outing for them, a part of village life. That should not be taken away from them.

My hon. Friend the Member for West Derbyshire (Mr. McLoughlin) spoke of the closure of four fifths of the post offices in Belper in his constituency, and pointed out quite rightly that the measure of one mile can be quite arbitrary. We hear time and again from our constituents—as we heard from my near-neighbour, the hon. Member for Tamworth (Mr. Jenkins) today—how one mile is an arbitrary figure, in that it might be measured as the crow flies, but people do not fly like crows. Indeed, they do not fly at all. If only they did, perhaps the Post Office's mysterious model might make sense. However, it does not, and it is of course a great secret as to what the model is, because the Post Office will not show it to us.

Mr. Andrew Turner (Isle of Wight) (Con)

Will my hon. Friend give way?

Michael Fabricant

I will not give way, because I have only a short time to speak.

The hon. Member for Dunfermline, West (Rachel Squire) talked about how impractical it was that the consultation was being carried out over Christmas and the new year. My hon. Friend the Member for North Thanet (Mr. Gale) said that it was dishonest of the Post Office to maintain that the shortest route between two points was the distance that people actually had to travel, because that is not the case. The hon. Member for South Derbyshire (Mr. Todd) made some interesting points about the woefully complex process required to get a card account. He pointed out that a card account is a very basic financial product, so why does it require seven steps to obtain one, when it is far simpler to obtain more complex products from a bank?

I could go through the long list of other hon. Members who have spoken, including my hon. Friend the Member for North Shropshire (Mr. Paterson), who talked about the link between the village post office and the shop. He said that if the post office goes, the shop goes, and that if the shop goes, the village goes. He is absolutely right; the post office is an intrinsic part of village life and it needs to be protected.

The Trade and Industry Committee report on the impact of direct payment highlights the many concerns expressed by people who are in receipt of benefits. It referred to complicated bank accounts, complicated application forms for Post Office card accounts, and a lack of information on other ways to collect benefits. It also referred to closures in the post office network. The Government have justified the change to direct payment as necessary, maintaining that it is more modern, efficient and reliable. However, 83 per cent. of claimants who collect benefit from post offices already have bank accounts and 79 per cent. of them said they wanted to keep their benefits separate from those accounts. How can the Government say that by removing payment books they are increasing consumer choice? They are not. It appears to me, and to the Committee, that however modern direct payment is some customers simply do not want it. Their choice is being reduced rat her than increased.

The performance and innovation unit supported the creation of a universal bank, and the National Federation of Sub-Postmasters has found little evidence that the claimants have an unmet need for a simple, trusted, secure means of gaining access to their benefit income. The Government have made it very difficult for a claimant to opt for a Post Office account, as we have already heard. Postwatch discovered that the DWP stopped the Post Office advertising the fact that cash would still be available after the introduction of direct payments. Again, how does that increase customer choice?

The hon. Member for Ochil cited much evidence provided by the National Federation of Sub-Postmasters. I have here a memorandum issued by Jobcentre Plus, which makes it clear that paying into a Post Office current account costs even more than paying into a bank account, and that the system was designed to meet the needs of those who cannot gain access to standard or basic bank accounts". Time and again, Jobcentre Plus tries to discourage people from opening Post Office accounts. That must be wrong.

Postwatch wanted to undertake a survey of public awareness of direct payment, but the Government, objected, hiding behind customer confidentiality legislation. It is clear that they do not want to encourage any independent regulatory bodies. We have already seen the abolition of independent community health councils. We now have a Government quango for them, and if it were possible we would have one to control post offices.

If it were allowed to do so, Postwatch could regulate levels of awareness and produce a response free of any kind of party-political interference. Why are the Government so keen to obstruct that? Will the Minister tell us in his reply?

What of the difficult process of acquiring a Post Office card account? The Government say that they do not accept that it is a "particularly onerous process". The National Federation of Sub-Postmasters disagrees, along with—as we have heard today—many other bodies. There are seven steps involved in getting a card account running. Even the National Consumer Council thinks that far too much bureaucracy and complexity are involved in opening one.

Why should that be so? Could it be because the DWP originally anticipated that only 2 million card accounts would be needed? We now know that 5 million will eventually be needed. Where will the Government's much-heralded choice be then? Where will the money come from? Will it come from the prudent Chancellor? I think not. That is another question that the Minister must answer.

As we have heard, the Post Office is closing 3,000 of the 9,000 urban post offices. As we have heard, its decisions are arbitrary. Many people have described the closure programme as a complete sham. Let me give an example of that. The Post Office announced on 26 August that it proposed to close the City Way branch in Rochester, Kent: it was, it said, "considering closing this branch". When the branch was eventually closed, a leaflet entitled "Getting the most from the Post Office" was made available. It was dated March 2003, six or seven months before the sham consultation process had even begun.

What of rural post offices? They are supposed to be protected. There are some 9,000 of them, yet we do not know whether funds will be available after 2006 to protect them. I hope that the Minister can reveal today whether there will be a rural postal network after 2006. To be somewhat cynical for a moment, I should point out that the next general election might well occur before 2006. Perhaps that is why that date was chosen for the provision of such a service.

I have asked the Minister a whole series of questions about direct payment, the closure of urban post offices and the future of rural post offices. But in reality, these are questions about the future of our community and our nation's duty of care to the vulnerable. The question is: has the Minister got any answers? As my hon. Friend the Member for West Derbyshire said, in respect of post offices choice is being diminished. It has now become clear that the urban reinvention programme is in fact a closure programme.

Today, we have had the big conversation that the Prime Minister boasted about. That conversation has given rise to a very clear message from both sides of this House. I hope that the Minister will listen.

5.50 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe)

I welcome the opportunity to respond to the issues raised today. An incredible level of interest has been shown in the Select Committee's report, and I congratulate the Committee's Chairman, my hon. Friend the Member for Ochil (Mr. O'Neill). I will not be able to respond to all the issues raised in the nine minutes available to me, but I will try to respond to the common themes. I shall write to Members to ensure that the other issues raised are dealt with.

Mr. Andrew Turner

The Minister for Energy, E-Commerce and Postal Services told the right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang): Other than in exceptional circumstances", the network reinvention programme will not extend to post offices in the 10 per cent. most deprived urban wards".— [Official Report, Westminster Hall, 21 May 2003; Vol. 405, c. 312WH.] When the Minister writes to us, perhaps he could say who defines "exceptional circumstances".

Mr. Anthony D. Wright (Great Yarmouth) (Lab)

rose—

Mr. Sutcliffe

I shall try to respond to that point, but first I shall give to my hon. Friend the Member for Great Yarmouth (Mr. Wright), who was unable to speak in the debate.

Mr. Wright

Two of the post offices that closed in my constituency were in wards that number among the 50 most deprived wards. The consultation process certainly took into account many issues, but they were never dealt with. Will my hon. Friend assure us that he will look into the way in which the Post Office has consulted, and has acted on that consultation process?

Mr. Sutcliffe

I will respond in a manner in keeping with the genuine spirit of constituency involvement that Members on both sides of the House have shown. I am grateful to the House and to the Chairman for accepting the reasons why the Minister for Pensions has been unable to attend today; I am really pleased to be here in his place. [Laughter.]

Some serious issues have been raised, and I refer Members to the Government's response to the Select Committee report. It is in no way arrogant, and it genuinely addresses the question of direct payments. However, today's debate was about the urban reinvention programme, rather than direct payments, so I shall concentrate my remarks on that issue.

Kate Hoey (Vauxhall) (Lab)

I am grateful to my hon. Friend for giving way, as I, too, was not called to speak. In the light of the document leaked by the Department for Work and Pensions, it is a pity that the relevant Minister cannot respond. Can the Minister confirm that that document actually reflects Government policy?

Mr. Sutcliffe

Governments of all persuasions do not respond to leaked documents, but I will refer to the general issues raised—if I have time left in the seven minutes now available to me.

I want to show my hon. Friend, the Chairman of the Select Committee, the appropriate courtesy by pointing out that we value the Committee's work, the evidence it has taken and the views that it has expressed. I recognise that Members have deeply held views about the problems in their constituencies. When I attended a recent debate in Westminster Hall on post office closures in Wales, I experienced at first hand some of the concerns about the consultation process—a point to which I shall perhaps return. I accept the individual constituency cases that hon. Members have described, but I do not accept the partisan political points that have been made. It is rather sad that that happened, given what the Government have tried to achieve with the Post Office. A viable post office network is important to all hon. Members.

The performance and innovation unit report of June 2000 on the post office network concluded that the business had not kept pace with change and was not exploiting its very highly trusted status as a provider of financial services. It was losing business. As the hon. Member for North Thanet (Mr. Gale) said, sub-postmasters are business people. They have found it increasingly difficult to make a living and have left the network in increasing numbers. Doing nothing was not an option; that would have led, simply, to the uncontrolled collapse of the network, and left deeply damaging gaps in it.

The problems date back more than 20 years. Under-investment has been a factor, but the real drivers have been greater mobility, changes in shopping habits and increased choice—including through new technology. People have simply decided not to use the Post Office. The business must face up to the challenge and make itself more relevant to modern customer needs, or it will not survive.

The Government accepted all 24 recommendations in the PIU report. The change has to be managed properly. As many as 3,500 post offices closed before 1997. Opposition Members champion the post offices' cause, but they should remember the lack of investment in that period. However, important matters must be taken into consideration as we move to direct payment.

In the past, Post Office income was heavily dependent on benefit payments, but that business has been dwindling. As the hon. Member for Gordon (Malcolm Bruce) said, direct payment is not new: it is something that increasing numbers of benefit recipients have been choosing.

Ahead of the Government's decision to switch to making all payments by direct payment, it should be noted that more than 43 per cent. of benefit recipients already received their cash paid directly into their bank accounts. In addition, 62 per cent. of all new child benefit recipients and 68 per cent. of all new pensioners already get their benefit money paid directly into their bank accounts.

The current order book system is outdated. It is inefficient, open to fraud and abuse and costly to administer. It needs to be modernised to keep in step with changing customer needs, and to reflect the fact that owning and using a bank account is now the norm. More than 87 per cent. of benefit recipients and around 90 per cent. of pensioners have access to a bank account.

However, given that there has been some scaremongering, I want to make it clear that people can still get their pensions across the counter at the post office. The development of any future system will be based, as in the past, on work with the full range of representative groups. As Minister with responsibility for consumer affairs, I can tell the House that I am deeply involved in making sure that consumers are protected, and that I will make sure that I have that input. I hope that that will put an end to the scaremongering that has been noted, and which has been aimed especially at vulnerable elderly people.

The Government remain absolutely committed to ensuring that those who wish to can continue to collect their benefits at post offices, in full and free of charge. That will remain the case even after the move to direct payment. The launch of universal banking services on 1 April this year is delivering that promise. We have provided £480 million to automate every post office branch. That investment has enabled the establishment of the technical infrastructure to support electronic banking services. That not only provides the means for the Post Office to continue to make benefits and pensions payments in cash, but it also gives the Post Office the vital opportunity to widen its customer base by increasing its offering of banking products.

Under the new arrangements for benefits payments, customers have three account choices when deciding how they want to be paid. They can use a standard bank or building society account, some of which can be accessed at post offices; they can use a bank or building society basic account, many of which can be accessed at post offices; and, finally, they can opt for the Post Office card account.

Customers choose the account that they want. If post office access is important to them, I do not doubt that they will choose accordingly. We want people to use post offices because they want to, not because they are forced to do so.

There is some concern that the Government are steering people away from opening Post Office card accounts, or making it difficult for them to do so. Such concerns are misplaced.

The Department for Work and Pensions is running a national and comprehensive information campaign to give customers the facts that they need to choose which account option is most appropriate for them. The campaign, which is costing £25 million, has been produced in consultation with the Post Office, with the aim of ensuring an unbiased and balanced message.

The Government do not accept that the process for opening a Post Office card account is particularly onerous, and there is no evidence that it is putting off customers from applying for card accounts. The Post Office card account is proving popular with customers. More than 1.6 million people have chosen this account to have their benefits paid into. Take-up to date means that the eventual number of card accounts is now expected to exceed significantly the operating assumption of 3 million, but there remains no cap on numbers or eligibility criteria. It is clear that we will have to return to the subject, and I look forward to the many Adjournment debates that we will have. Consultation is vital and it has to be meaningful— It being Six o'clock, MR. DEPUTY SPEAKER proceeded to put forthwith the deferred Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates etc.) and Order [29 October 2002].