HL Deb 04 April 2000 vol 611 cc1196-9

2.51 p.m.

Earl Peel

asked Her Majesty's Government:

Whether they will take any action to protect the economic base of rural areas from the effects of the current programme of bank branch closures.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty)

My Lords, the Government are taking a wide range of steps to support rural economies, including funding for rural regeneration and development of rural transport. The Government recognise the importance of access to financial services in rural areas. They are fully committed to maintaining a nationwide network of post offices, which are increasingly giving bank customers convenient access to their accounts. The Government are investing £500 million in the Horizon programme to automate every post office in the country by 2001. That will enable the Post Office to extend its arrangements with the banks.

Earl Peel

My Lords, I thank the Minister for his reply. However, following the recent remarks in another place of his honourable friend Chris Mullin—which reflected, to put it mildly, a pessimistic view of the effect of bank closures on rural areas—and today's media report of his other honourable friend Alan Johnson, who is now predicting that over the next year between 400 and 500 rural post offices are likely to close, does the Minister accept that these developments will seriously threaten the Government's rural regeneration project? Will he, at the very least, assure the House that he will reconsider the Government's policy of removing benefit payments from post offices?

Lord Whitty

My Lords, the Government accept that there are parts of the Post Office rural network which are under social, economic and technological pressures. That is why modernisation is necessary in all 19,000 branches of the Post Office. That is why the Government have put the Horizon project—which is the major technological advance for the Post Office— back on track. It will enable the payment of benefits and other banking transactions, but those drawing benefits who wish to retain cash payments will be able to do so.

Lord Ackner

My Lords, does the Minister find anything objectionable in a Minister suggesting to a disgruntled customer of a rural bank that he always has the alternative to change banks?

Lord Whitty

My Lords, I do not regard that as objectionable. Those were almost exactly the terms used by my honourable friend Chris Mullin. Clearly where a bank has let down a rural community, it is open to its customers in that area, and to those in other areas who sympathise with them, to change their banker. That is understandable in those circumstances.

The Lord Bishop of Salisbury

My Lords, does the Minister accept that it is not only the economic but also the social base of rural communities that are affected by bank closures? Can he spell out, in more detail than he has, exactly what help he intends to encourage so that post offices can take over more of the banks' roles?

Lord Whitty

My Lords, it is certainly the case that the existence of the post office is vital to the continued social well-being of many rural areas. The steps that the Government and the Post Office have taken include: the major investment programmes to which I have referred; plans to install 3,000 cash machines in smaller towns and villages; and the possibility of having Post Office cash points outside the post offices themselves. The Post Office is already engaged in joint arrangements with some banks to cover their facilities. It has such arrangements with the Co-op Bank, with the Alliance and Leicester and with Lloyds Bank. The problem which gave rise to this Question is that, apart from an experiment in Cornwall, Barclays Bank has not made the same nationwide arrangement with the Post Office.

Baroness Miller of Chilthorne Domer

My Lords, it is all very well to have cash machines for taking money out, but does the Minister accept that, for many rural businessmen, paying money in is very important? They do not want to have to drive around the countryside with their takings. Does the Minister further accept that the Government's delay in acting on the White Paper is inducing a scattergun approach to a very important question of infrastructure?

Lord Whitty

My Lords, we accept the substance of what the noble Baroness said. I do not accept her criticism of the Government. In the White Paper on the Post Office, we indicated our intention to publish access criteria which the regulator and the Post Office Users National Council will have to follow in terms of the provision of financial services by the Post Office. This should ensure that in most rural areas there will be continued access to a post office. At the same time, the Post Office will be able to provide a wider range of financial facilities than at present.

Lord Clinton-Davis

My Lords, does the Minister agree with the attitude displayed by Mr Chris Mullin in relation to the programme of closures announced by Barclays Bank Limited?

Lord Whitty

My Lords, I support the position taken a week ago by Chris Mullin in another place. As I said in reply to an earlier question, he indicated that it is of course always open to customers of Barclays who are disgruntled by what seems to be its cavalier disregard of rural interests to change their bankers. That is what my honourable friend said, and that is all that he said. It is true that one of our national newspapers reported that as a call for a boycott. It is not. It is an indication that consumers within rural areas have a choice, and that they should exercise that choice.

Baroness Byford

My Lords, does the Minister accept that it will help in one way if cash machines are installed in post offices, but not in a second way? Some 40 per cent of a post office's income arises through the receiving and handing-out of benefits and welfare payments. If those benefit payments are not made, post offices will not be profitable; therefore there will not be a post office for people to go to.

Lord Whitty

My Lords, I accept that a substantial part of the transactions currently carried out by post offices involve the benefits system. We are making choice available to benefit recipients, as we are to other consumers. We believe that a significant number of benefit recipients will continue to use post office services. The point we are making is that by more extensive and sophisticated arrangements with the banks, the Post Office will be able to introduce a wider range of facilities to all consumers, within both rural and urban areas. In the future, the Post Office will take on and provide a much more widespread network of financial services than is currently available from even the largest clearing banks.