§ . In section 5(1) of the Social Security Administration Act 1992, at the end of paragraph (i) there is inserted ", but the regulations may not require automated credit transfer to be the only manner of paying a benefit.".").
§ The noble Earl said: My Lords, last March on the way back from my party's conference in Plymouth I stopped off at Chippenham to visit my mother-in-law and father-in-law, both of whom have recently cleared 90. My father-in-law came to the station to see me off and I chatted to him about the conference as we waited for the train. I told him about a motion that we had debated, to some profit, about the need to defend post offices. I noticed that a woman who was sitting next to us on the bench was particularly interested. She asked, as I wound down, whether my party was committed to fighting to defend rural post offices. I said that it was. She said, "In that case, your party has my firm and undying support. By the way, which is your party?" There we have the paradigm voter of the 21st century who has no brand loyalty and believes that the consumer is king. We also have a reason why there has been a good deal of emulation between the two Opposition parties about which of us is in front on this cause.865
§ However, in this Chamber we manage these matters rather better. I have had nothing but kindness, courtesy and co-operation from the Official Opposition. I should like particularly to thank the noble Lord, Lord Higgins, and the noble Baroness, Lady Byford—who comes in promptly on cue and appears to be the unofficial postmaster general on the Opposition Benches!
§ At present, nothing but regulation prevents the Government from departing from the existing legal situation, according to which people in receipt of benefit have a choice whether they receive benefit through the post office or go over to ATC. We all know that it is painfully easy to alter regulations. Although we remember an occasion as recently as last February when a regulation was voted down in this House, it was on the understanding that it will not be a usual occurrence. We on these Benches believe that there is a need for greater security. We need to create a situation where the Government must change primary legislation if they want to cease payment of benefit through post offices.
That is the purpose of the amendment. It is fairly clear that there is official influence—I was going to say "pressure" but influence is perhaps a more just word—to encourage new benefit claimants to receive their benefits through ATC. I have the leaflet AC1 issued to new pensioners. An enormous headline states:
Have your pension paid straight to your account".
§ It is a little more than subliminal. The message that this is the preferred option is very clear indeed. The trouble is that benefits are a crucial part of the income not only of the post office but most particularly of the sub-postmaster. Without the network of sub-post offices as well as that of Crown post offices we would not have a Post Office service worth the name.
§ The matter is generally regarded as a rural issue, as very largely it is. In any normal village the post office is usually the shop, the meeting point and the social centre of the village. But it is also an urban problem. I must declare an interest. My post office, Brondesbury post office in NW6, was closed through fire quite a long time ago. There is no sign that the Post Office is doing anything towards reopening it. It makes me even more grateful for the Post Office services of this House. It has taken over from car parking as the second most valuable privilege of membership of this House. I must have a thought for those who do not enjoy that privilege.
§ Post office closures have been taking place for some time. They are accelerating. They have increased to as many as 500 in the current year. That is a considerable number of closures. I appreciate that the Government say—the Minister will doubtless repeat it—that they intend that everyone will retain the right to claim benefit at a post office. Yes, they do so if they can find a post office. But if closures are running at 500 a year, the right to go to a post office may be a little like the right which everyone has of having tea at the Ritz: it is fine if one can do so, but the fact that one has the right does not necessarily prove that one can exercise it.866
§ Something has to be done to shore up the post office network especially since the DSS's planned saving of £400 million will be achieved only if almost all benefit claimants do switch to ATC. Many are reluctant to do so. Not all claimants have great confidence in banks. Not all of them are in a position where they would be well advised to do so. Banks were once described by one of my American colleagues as impenetrable except to bank robbers. I recall the economic recovery conference in 1991 organised by the Independent. After we had debated bank charges for half an hour I asked for a show of hands by all those who understood the system of bank charges they were paying. There was a moment of horrified immobility; and then one solitary hand crept up. It belonged to Andrew Buxton of Barclays. A number of hands followed then but they were, I think, all his employees.
§ If one has a minimal income and is budgeting down to the last 10 pence each week, unpredictable bank charges are not what one wants.
§ I know that the Government are putting forward all kinds of possibilities about things they might do. We have an amendment to the Post Office Bill that I have in front of me. It provides that the Secretary of State "may" by order make the scheme for the making of payments. It provides that he "may" do something, but it does not state what he may do or how he may do it. Those are three very big questions to leave open. Since the key thing is that money must come into the system and that money must be from a guaranteed and recurring source, a provision saying that the Secretary of State "may" is not good enough.
§ I know that the Minister will also refer to the report of the PIU. I understand that publication is due later this week, but I have heard conflicting reports as to the day. It is not coming apparently in time for this debate. There is at least one report in today's newspapers which suggests that it might not be able to offer to guarantee more than half the Post Office network existing at present. If that were true it would be a disaster. I do not believe everything I read in the newspapers. The report may well be untrue, and if the Minister can tell us I will accept her assurance with great gratitude. If I see a report about something not yet available I quote it in the hope, very often, of hearing a refutation. I have seen one, and I look forward to hearing it.
§ It is unfortunate that that report was not due in time for this debate. That is no fault of ours. The date of the publication of the report and the date of this debate were both under government control; they are two bits of government that do not seem to have joined up. I do not see that either of the two opposition parties need take responsibility for that.
§ I can think of two possible explanations—either the Government do not believe that the report is likely to satisfy us or they have lost control of their own timetable. I shall leave them to tell us which is true. I beg to move.
§ Baroness Byford
My Lords, I rise to support the comments made by the noble Earl, Lord Russell.
§ Baroness Hollis of Heigham
My Lords, I sent a written reply to the noble Baroness, and to the noble Lord, Lord Higgins, and also the noble Earl, Lord Russell.
§ Baroness Byford
I thank the Minister for that reply which arrived today. It helps, but I have questions as a result of it.
In supporting the noble Earl, Lord Russell, I refer to waiting for the PIU report. My latest information is that it will be available as soon as tomorrow. If that is true, I am sure that the Minister and I will be delighted. On Thursday this week we have amendments down for the Postal Services Bill. It would be enormously helpful to have the PIU report beforehand.
I am sure that I followed the Minister's argument that the Government, in trying to persuade people to have their benefits paid through banks, will save the DSS some £500 million. However, when I realise that this year, for the first time, the Post Office made a loss because it had to spend money on upgrading its Horizon facility in post offices, I wonder whether or not we are in danger of taking money from Peter to pay Paul. That would not be wise.
My questions to the Minister tonight will be fewer than previously and I am sure that she will appreciate that. First, following on from what was said by the noble Earl, Lord Russell, it has previously been the responsibility of a person to opt into having benefits paid through the Post Office. I would rather see people being able automatically to collect benefits from the Post Office rather than see them having to opt into another system. However, the Minister may not agree.
Secondly, if more post offices disappear as a result of the change in the system, and if more banks close—many banks have withdrawn their facilities from rural areas and those on the edges of inner cities are seeing the closure of local banks—it will be as difficult to collect benefits from banks as it will from post offices. Fewer post offices will mean that many people will have a problem in collecting their benefits.
As I said during previous stages, 40 per cent of the income of sub-postmasters comes from handling the payment of welfare benefits. In Committee, we argued long and hard about what might happen when the present system ends, whether a smart card might be introduced and what that would cost. I do not want to repeat those arguments because the Minister has answered many of the questions I asked and I am grateful her. However, although I have queries about one or two of her answers, rather than press her tonight, I want to wait until publication of the PIU report tomorrow or on Thursday.
It may be that there is information in the report which the Minister cannot announce tonight because it is not yet published. Perhaps the Government can go 868 some way towards helping the sub-postmasters as regards the service they provide to people who receive benefits. I understand that the Government want to prevent money being wasted in fraud and all noble Lords would support that. However, many people who have bank accounts and other facilities still choose to collect their benefits from their local post offices. I am not pushing hard tonight, but because we have not received the PIU report we remain in limbo over one or two issues.
Finally, although the Minister answered my many questions, I still do not know what the cost of the smart card will be. We talked about the transactions costing as little as 1p, but, if the Government intend to do away with the book which identifies the claimant, a smart card must be introduced and that must have a cost implication. The Minister suggested that it would not cost much and I should be delighted to hear that. It would be brilliant news. However, ongoing costs will be involved and I should like to know who will pay them.
I shall not take any more of your Lordships' time tonight. I thank the Minister for her contribution in answering my many questions. I shall not go through them all now, but questions still remain to which we need answers. I suspect that the Minister may have inside information and may be able to share a little of that with us. Certainly, I should be grateful if she could tell us a little more about where the Government are going and answer the crucial point as to whether the report will hit our desks tomorrow morning or whether we shall have to wait for some time to come.
§ 9.30 p.m.
§ Baroness Gale
My Lords, each year many people choose to receive payments by ACT. That is their preferred method of payment. For example, 50 per cent of all new pensioners choose to use that system, as do 54 per cent of new claimants of child benefit. Of course, some people still want to be paid in cash at the Post Office, but that trend is moving towards payment by ACT, with 500,000 people each year now moving to that system. Over 80 per cent of claimants already have a bank account. However, the Government have made it absolutely clear that the choice of receiving payment in cash will remain available. The Prime Minister said in another place that no one will be prevented from continuing to receive benefits in cash at the Post Office if that is what he or she wants; and not only monthly but weekly, if that is what they choose.
In Committee, the Minister said that three possible routes were available for payment in cash. The first was network banking with the Horizon system, which could offer potential for the Post Office to extend its arrangements with high street banks. Those arrangements appear to have worked well in areas where banks have disappeared. The second method was via cash machines. The Post Office will install 3,000 cash machines by the year 2001, many in rural post offices. The third option was the development of a universal bank, which could be available in all 18,000 post offices. In effect, it would be a Post Office bank. The Minister said that a switch-type card or banking 869 card could be used to access money at the Post Office universal bank. People would be able to access their money at any post office in the country at any time. Therefore, I believe that there is a clear commitment for cash payments to remain for those who choose and want their payments in cash at the Post Office.
§ Lord Boardman
My Lords, I strongly support the amendment proposed by the noble Earl, Lord Russell. I have a slight reservation, in that, if the Government should be wise enough to accept the amendment, undoubtedly they would recover a substantial number of votes that they would otherwise lose in the next general election, and that would be a pity.
The Government seem unconscious of what is happening in the countryside as regards the effect on the local post office and its impact on village and rural life. The fact that they wish to destroy the local post office and not to support the amendment moved by the noble Earl seems to indicate that they are unaware that the post office is a centre of so much that affects country life.
Those who are aware of rural life will know that the local post office is the focal point of the local community. Unfortunately, rather than the church which provided the focal point for so many centuries, it is now the post office where people meet and chat, draw their pensions, buy their local bread and so on. And, by God, it is essential that the local post offices are kept alive if the nucleus of local communities is to be kept going. Therefore, I plead with the noble Baroness to give consideration to this amendment and to recognise that failure to pass it inevitably will mean the elimination of an extremely important part of local life.
§ Baroness Pitkeathley
My Lords, perhaps I may declare an interest. I may sit on the Government Benches hut, as the past chair and current president of a rural community council, I declare a strong interest and support for rural post offices. However, I have more faith than the noble Lord in the ability of rural post offices to adapt to changing situations. I fully support what he says about their being a meeting place and so on, but how much more is a rural post office going to be a meeting place when it becomes a sort of Internet café so that people actually use that rural post office in that particular way? So I declare that one interest.
The other interest I have to declare is that of being a social worker. As to the issue of fraud, of lost books, of books being taken by somebody else, of books not arriving in time and so on, as the Minister said in her reply during a Committee debate, if we had wanted an efficient system we would not have started from here.
I do believe that we have to think about consumer choice. The fact is that whether we like it or not consumers are increasingly choosing to have their benefits paid by automatic credit transfer. I personally have a great deal of faith in the ability of the post offices to respond to those changes.
§ Lord Hylton
My Lords, I should like to say how much I agree with the remarks of the noble Lord, Lord 870 Boardman. He put rather better than I could the kinds of points I was trying to make at the last stage of this Bill.
It so happens that I recently received a copy of the annual report of the Royal Mail. The thing that no doubt everybody noticed was that in this last year it made a large loss, after having made consistent profits over a number of years. It might be imagined that that loss was due to some kind of inefficiency. I would argue very strongly to the contrary: that it was due to making large capital write-offs all in one single year. One notices that the turnover of the Post Office and Royal Mail does in fact increase year by year.
The second point that emerged from the report was the very high proportion of the network of sub-post offices which depend on social security benefit payments passing through those sub-post offices. I stand open to correction, but I think the proportion is something like 30 per cent of the total. That alerts us to a very real danger. The network has been severely damaged already, and I would ask that we do everything possible to preserve it as it now stands for the benefit of future generations. Time will be required for sub-post offices to develop alternative sources of income, and that was the point so well made by the noble Baroness, Lady Pitkeathley.
On those grounds I am strongly in support of this amendment, or of its alternative, No. 122, whichever the Government would look upon more favourably.
§ Lord Warner
My Lords, perhaps I may just intervene to refresh the memory of the House on some of the history of this subject. In 1979 I was a jobbing civil servant and the previous administration, led by the now Baroness, Lady Thatcher, and with a Secretary of State who is now the noble Lord. Lord Jenkin of Roding, asked me to undertake a study in this area.
As a historian, the noble Earl, Lord Russell, might care to go back into the archives and look at the report that we produced in 1980, which I believe is still in the public domain. He will see that this subject has been around for a very long time: about 21 years. The arguments have not changed all that much. He will also see that the implications for the sub-postmasters' network was brought out very clearly in the report.
It was the previous administration who were reasonably enthusiastic about these changes and who tried immensely hard to press on with many of them. However, there were a series of problems. One was that people had become very attached to a system of paying benefits that is extraordinary in the 21st century. It involves large numbers of antiquated machines in Newcastle central office cranking out books with tissue paper in them that are exchanged for money in post offices.
I suggest that it may be possible to help the rural sub-postmasters network without preserving that system. It is high time that we provided people with more choice in how their benefits are paid. The issue has been around for 20 or 21 years and the arguments have not changed much. They are still about how best 871 to give encouragement, support and perhaps a little subsidy to rural sub-postmasters to keep those community facilities going. Keeping foil systems of paying benefits is probably the least effective way of doing that. We should be prepared to move on and not freeze the system of paying benefit.
§ Lord Higgins
My Lords, I shall speak to the amendment of the noble Earl, Lord Russell, rather than mine, which is somewhat different. I thank the Minister for the copy of the letter that she wrote to my noble friend, Lady Byford, which covered a number of the points that were of interest to us. My noble friend has made a considerable study of the issue—an issue as regards which he has great expertise and enthusiasm.
There are three separate groups with an interest in the issue: the benefit recipients, those who own or work in the post offices and the communities that they serve. Each group is very important.
The same statistics tend to get recycled rather rapidly from one speech to the next in debates such as this. I have some doubts about some of the figures. In her letter, the Minister said that 80 to 85 per cent. of benefit recipients already have a bank or building society account suitable for receiving ACT payments. I find that a surprisingly high figure. For years, many people insisted on being paid in cash. That gave rise to problems such as the possibility of robberies as the cash was transmitted to their workplace.
We all recognise that a lot of people prefer to be paid in cash. That leaves open the question of how the payment is made. So far, the Government's response has been rather opaque. I have been told not to worry because everything will be all right and people will be able to continue drawing benefits in cash, but I confess that I remain puzzled as to exactly how that is to be done. No doubt the Minster can enlighten us this evening.
§ Lord Higgins
My Lords, after 10 minutes in Committee, I still did not understand what the Minister was saying. Perhaps it would be better if she could explain the issue in one minute.
One cannot doubt for a moment that a number of people believe that they are entitled to receive their benefit payments in cash. That brings me to the second point—the position of the post offices. It is generally recognized—this is one of the statistics that I do not doubt—that they have been closing at a rate of about 200 a year. That is a matter of concern. If the changes that the Government appear to be envisaging come about, post offices are likely to suffer considerably, because many of them gain anything from 20 and 80 per cent. of their income from these payments and 40 per cent. of them get 40 per cent. of their income in that way. Clearly, this is a very dramatic change in the profitability of post offices, especially small ones. The worry here is that they will go out of business.
872 When we previously debated this matter, I asked the noble Baroness whether the Government have some view as to the extent to which they wish to preserve the post office system, both in rural areas and in cities. But, again, we are not very clear as to the exact nature of the Government's policy in this respect. It is of considerable importance to those operating post offices, many of whom have invested their savings in the business. They may well feel that they are in danger of losing their capital—in the same way as if you increased the number of taxi-driver licences, existing taxi-drivers would get very upset about the value of their plate. It is that sort of small entrepreneur situation. Moreover, if someone simply comes into the post office, sticks a card into, say, a machine and then walks out again, there is some cause for concern as regards the business that post offices currently attract from a rather more social sort of environment. Indeed, as my noble friend Lord Boardman said, in many cases the post office represents a social centre.
There is one further relevant point here; namely, the question of the cost per transaction. Again, the cost of 1 p per transaction has been bandied around. As a former and very successful chairman of the National Westminster Bank, I was rather hopeful that my noble friend Lord Boardman would give us some idea as to whether he thought that that was a credible figure. It seems remarkably small to me. At the same time, if there are that many people with hank accounts, one has to ask: what are they paying at present in terms of charges and, more particularly, what will be the charges to people who, apparently, will only have this one bank account (operated through the post office) and only use it for the one purpose?
These are very difficult questions and it is right that the House should express concern. However, as has been pointed out, we do so in something of a limbo. We are told that the PIU report is about to arrive, though somewhat late after a number of delays. Obviously that may be relevant to the final conclusion that we reach on the issue. In the meantime, it is only right that the Minister should make clear what is her reaction to the noble Earl's amendment which says that the system and,the regulations may not require automated credit transfer to be the only manner of paying a benefit".
§ 9.45 p.m.
§ Baroness Hollis of Heigham
My Lords, I have to say that there is a faint air of unreality about this debate. Indeed, we have been through this discussion over and over again. I do not know where the problem lies. However, before I go into the main part of my text and try to deal with the detail, perhaps I may point out that people seem to be confusing the method of getting the money to the post office and the method employed by the benefit claimant in getting the money out of the post office. I am absolutely baffled by the failure to comprehend the situation. Frankly, it does not matter tuppence whether the money comes through ACT, through Securicor vans drawing up at the post office, and so on, as long as the person in the village or the 873 small community goes to the post office with some form of identification—in this case, the card—and draws the money out. That is what will happen.
People will draw their money in cash; it will be paid to them by the post office in cash. How it gets to the post office, which is the mode of ACT, or, alternatively, to a bank account held at the post office, does not matter. That is irrelevant from the point of view of the recipient. I cannot comprehend why we seem to be at cross-purposes here. Instead of having an order book in their pocket when they go to the post office—the equivalent of a ration book—people will have their card. When they go to the post office counter, they will decide how much they wish to withdraw and that will be the money they receive. All that will happen is that instead of an order book there will be a card. I am baffled and genuinely cannot comprehend—if I may be so rude as to say this—why noble Lords are making such heavy weather of this.
§ Baroness Byford
My Lords, I am grateful to the noble Baroness for giving way. I am trying not to labour the point, but I hope that if the noble Baroness can answer one or two of the questions that we have asked we can then move on. I have no argument with the prospect of people being able to draw benefit in cash. However, there are two critical matters. First, will the post offices still exist for them to be able to draw the cash? I think the Minister will accept that 40 per cent of the income of many sub-postmasters is gained from handling benefits. If they lose that 40 per cent of their income, unless another payment is made, those post offices are likely to close. The noble Baroness has not responded to that point. That is why I mentioned the PRI report.
The noble Baroness said that it did not matter whether a card or a book was used for the purpose we are discussing. However, a book or a smartcard will still constitute a cost. Whatever form of identification is used will still constitute a cost. I accept the Minister's assurance that claimants will be able to draw cash from the post office. However, unless the postmasters are compensated for the 40 per cent of their income that they will lose under the system that is proposed, I repeat that the post offices are likely to close.
§ Baroness Hollis of Heigham
My Lords, the noble Lord, Lord Higgins, mentioned the issues in terms of the position of recipients, post offices and communities. I hope that we are now all agreed that, provided post offices continue to exist, recipients face not only no disadvantages from the system that is proposed but many additional advantages. They will be able to have part payment of benefit and they will have greater security against fraud. I understand that they will be able to use their card at any post office in the country, rather than just at their local one. Therefore, when they go to visit their mum, their daughter, their niece or their nephew they will have that convenience. Therefore, in my view, customers have everything to gain—they will gain far more advantages than they currently have—from a card system.
874 The noble Baroness asked about the cost implications of a card as opposed to a book. I cannot give a precise figure. However, the card is not a smartcard. My understanding of a smartcard is one that has information encoded on it. That is done through expensive technology. However, I am talking simply about an ID card like a storecard. I am talking about the kind of card one gets at Tesco or Boots. I cannot say whether the costs of such a card are less or more than those of an existing giro book, but I have no reason to think that they are extensive.
§ Lord Boardman
My Lords, does the noble Baroness believe that sub-postmasters, who have studied these proposals in great depth, do not feel that they will damage their small, rural businesses?
§ Baroness Hollis of Heigham
My Lords, I am trying to deal with the points in order. I was discussing the position of the recipients and whether they will be able to draw their benefit in cash. That will be the case. The card will not constitute a charge on them. They will not face any charges for using the card. However, they will have additional service facilities. They will have greater protection against fraud. They will have greater convenience of use, including out of hours use and the use of cash machines. I hope that I have dealt with that bundle of concerns.
Whether one refers to post offices or banks and whether one says that people draw their money from a post office which also offers banking services, or whether one wants to call it a universal post office bank does not matter provided that people can obtain the amount of money they want at a time and in a way that is convenient to them and which offers greater security.
§ Lord Higgins
My Lords, has the noble Baroness tried putting a cashcard into the cash machine downstairs? Has the machine issued a notice saying that she may be charged for that transaction? How much does the noble Baroness think that she will be charged? That is much the same point as we are now discussing.
§ Baroness Hollis of Heigham
My Lords, I have used the cash machine and I do not get charged. As my noble friend Lady Gale rightly said, people will have a choice. Some people may use cash machines, of which we understand there will be about 3,000 in the 18,000 existing post offices. However, that figure may increase. They may have access to their existing bank for which the post office acts as an agent in the post office branch. That would be exactly the same situation as now. Already a large proportion of banks have made arrangements, including Barclays, Lloyds, the TSB, the Alliance & Leicester and so on.
The third proposed method is for a universal bank—a Post Office bank, if you like—in which, whether you call it a bank or a holding account, the post office will hold the account. You will not be able to write cheques on it; you will simply draw your benefits out. The only difference customers will notice 875 is that they will go in with their card rather than their order book—and it will be a darn sight safer as a result. Whichever method the customer chooses, he or she will have those options within a post office.
That was the first point made; I hope that I have addressed it. We seem to be making extraordinarily heavy weather of something that most of us do two or three times a week when we go into stores and so on.
The second point concerned the position of the post office and the owner. The noble Baroness is absolutely right: we are expecting the PIU report very imminently. As of 21st or 22nd June, the Prime Minister said it would be within the next few days; it is very imminent indeed. I should feel more comfortable discussing the possible future of the network of post offices in the context of that report. I hope and believe that that, taken together with the commitments given in the Postal Services Bill, will address the noble Baroness's point. I shall have to ask her to wait for that, I am afraid—otherwise I should be in severe danger of contempt, if you like, of the other House.
The third point was raised by the noble Lord, Lord Higgins—it was also raised by the noble Lord, Lord Boardman—and concerned the position of rural communities and what was happening to them. It is true that in the past 10 years something like 10 per cent of the rural post office network has been lost; about 25 per cent of the banking network has been lost; and about 30 per cent of rural community petrol stations have been lost. For various reasons, people are choosing to go elsewhere.
But it still remains the case that in the UK something like 70 per cent of all communities with more than 500 people have a post office; 30 per cent of communities with populations of 100 to 500 have a post office; and, in terms of density of post offices compared to France, Germany and the rest of the world, we have a greater density of post offices than almost anywhere else. Some 90 per cent of people live within a mile of a post office. So in that sense we have a very good network.
The question is whether what we are doing is likely to enhance and strengthen the network or likely to see it slide. As I said, some of these questions must await the publication of the PIU report. I hope that your Lordships will not pursue this matter tonight but will wait for the report and come back at Third Reading if you are dissatisfied. That is the only way we can have a fair debate without putting me in the impossible position of being asked to divulge information that is not yet in the public domain.
At the end of the day, the point made by my noble friend Lord Warner is absolutely right: post offices cannot stand still. If nothing happened to benefit books, post offices would continue to close at an accelerating rate because people increasingly find that the order book/ration book system is not a convenient way of getting their money. They are choosing to vote with their feet and to leave the post office behind. That leaves as a result the footfall, if I may use that phrase, 876 of the quarter or so of moneys which comes out of the post office and is immediately recycled into the local community.
If post offices are to survive, they have got to stop the leakage of customers. Some 500,000 customers a year are choosing to stop using a post office and to go to a bank because they find it more convenient. How will post offices do that? By offering the same facilities, and, as a result, being able to recycle that quarter or third of moneys into other facilities—the local shop and so on—that often run in parallel with the post office. If they do not do that, the Post Office will shrink and shrink and shrink. People are not prepared any longer to live with the ration book service—the long queues, the inconvenient hours, the lunchtime closing, the half-day closing, the Saturday afternoon closing and so on. They want a more generous and expanded service. That can be achieved through machines, through a universal bank, through bank accounts being held at post offices and so on.
I am confident that, at the end of the day, post offices will survive because their communities support them. The Government have given broad undertakings on their position in regard to subsidy. That will be looked at again in terms of the PIU report and succeeding debates. But your Lordships will know that we are not expecting to move to the new system until 2003 and that there will be a two-year transition after that. Some of the fine detail—about which post office, what access criteria, what level of subsidiarity and so on—is quite commercially sensitive to be discussed between government and POCL and POCL and the sub-postmasters. Noble Lords will understand that.
I return to the basic questions of the noble Lord, Lord Higgins. As regards the recipients, I am confident that they will see an enhanced service and they will wonder why anyone ever argued the virtue of order books and giros. The more I learn about this, and the more I read the draft copies of the PIU report and so on, the more confident I am about it. With regard to the position of post offices, they will survive only if they meet their communities' needs and as a result get the footfall of that money circulating. We believe that this way of doing it is the better way forward for them to do so.
As for the communities, at the end of the day post offices will survive because people choose to support them, in the same way as pubs, village halls and schools survive. I ask your Lordships to defer any decision or vote on this issue until the PIU report has been published. I guarantee that the PIU report will be out before we come to Third Reading. There will be ample time. In the light of that, some of the concerns, which in all good faith I cannot address today for reasons noble Lords will understand, will I think be met.
I hope I have satisfied noble Lords on the point about the recipients. On the point about post offices and their communities, I suggest that noble Lords await the PIU report. If they are dissatisfied following 877 that, they can return to the matter at Third Reading. Therefore, I hope that noble Lords will not seek to press their amendments.
§ 10 p.m.
§ Earl Russell
My Lords, I am extremely sorry to have baffled the Minister. I think the Minister has forgotten quite how reluctant noble Lords on the Opposition Benches are to accept government assurances.
§ Earl Russell
My Lords, while the Minister was speaking I recalled the days when the noble Lord, Lord Peston, was in Opposition, observing that the Government's basic policy was, "It'll be all right on the night". There is a great deal about government which does not change with a change of party.
Of course, I understand the distinction that the Minister is making between how the money reaches the post office and how it reaches the claimant. But I think the Minister also understands the point made by the noble Baroness, Lady Byford, about the income of the sub-postmaster. At present I do not understand how a saving of £400 million is compatible with a continuing secure income for a sub-postmaster. It is perfectly possible that that question may have an answer. It is perfectly possible—
§ Baroness Hollis of Heigham
My Lords, I should have thought that my noble friend Lord Sainsbury gave the noble Earl and other noble Lords that answer during discussion on the Postal Services Bill about the capacity of the Secretary of State to devise a subsidy where he and POCL thought it was appropriate.
§ Earl Russell
My Lords, I touched on that point in moving my amendment. The words are "the Secretary of State may". It does not say he will; it does not say what he may do. The Minister is asking us to take a good deal on trust. I appreciate that before the publication of the PIU report she may have no other option. But it is not that long since she was in Opposition. She cannot have completely forgotten what it felt like. If, in the meantime, we do feel a desire for belt and braces, or, if she prefers it, for elastic and safety pins, I do not think that she should be too surprised.
I heard the points made by the noble Lord, Lord Warner. Those were serious points and I listened to them carefully. I appreciate the force of what he says. But what concerns us is that we should not be too far embarked on the new method of doing that before a secure method of making the post offices work has been worked out. We have come very close to that already. We on these Benches have no wish to come any closer.
It may be that by the time we come back again there will be no need to return to this matter. We will read with an open mind what the Government have to say 878 in the PIU report. In the meantime, I shall withdraw my amendment. But should I be justified in the suspicions I see of the fullness of the Benches opposite, we are quite ready to stretch our legs if the Government wish us to. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendment No. 122 not moved.]
§ Schedule 7 [Housing benefit and council tax benefit: revisions and appeals]:
Baroness Hollis of Heigham moved Amendment No. 123:
Page 144, line 37, leave out ("(4)") and insert ("(3)").
§ The noble Baroness said: My Lords, in moving Amendment No. 123, perhaps I may speak also to Amendments Nos. 124 to 126. These are minor and technical amendments to Schedule 7.
§ I apologise for trying the patience of the House with further amendments, but I can assure noble Lords that these amendments, although minor and technical in nature, effect a necessary correction to an oversight in the current draft. They ensure that standard parliamentary procedure is followed in respect of all regulations made under Schedule 7 and clarify the scope of those regulations. I therefore ask noble Lords to accept the amendment. I beg to move.
§ On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendments Nos. 124 to 126:
Page 144, line 39, leave out ("of the Secretary of State").
Page 144, line 40, leave out ("his powers") and insert ("any power").
Page 144, line 48, leave out ("by the Secretary of State").
§ On Question, amendments agreed to.
§ [Amendments Nos. 127 and 128 not moved.]
§ Clause 75 [Contributions in respect of benefits in kind: Great Britain]:
§ [Amendments Nos. 129 to 132 not moved.]
Baroness Hollis of Heigham moved Amendment No. 133:
Page 76, line 40, at end insert—
("( ) In paragraph 8(1)(ia) of that Schedule (power to provide by regulations for repayment in prescribed cases of the whole or a part of a Class 1B contribution), after "part" there shall be inserted "of a Class 1A or.").
§ The noble Baroness said: My Lords, in speaking to Amendment No. 133, perhaps I may speak also to Amendments Nos. 139 and 142 to 145. This group puts into effect a technical, consequentiail amendment which was unfortunately missed when the legislation was drafted. The purpose is to allow refunds of Class 1A national insurance contributions to continue to be made where relevant information reaches the employer late and leads to him overpaying Clause 1A NICs through no fault of his own.
§ Paragraph 8(1)(i) of Schedule 1 to the Contributions and Benefits Act confers powers on the Treasury to provide by regulations for the refund of Class 1A 879 NICs, in particular where an employer is told relevant information about his employee's business mileage which affects the valuation of a car benefit after he has paid his Clause 1A NICs. The change in valuation for tax in turn affects the liability for Class 1A NICs so, where appropriate, a refund is made.
§ I could go into further detail on what I promise noble Lords are technical amendments, but perhaps I may ask that the amendment be accepted. I beg to move.
§ On Question, amendment agreed to.
§ Lord Goodhart moved Amendment No. 134:
§ After Clause 75, insert the following new clause—