HL Deb 20 March 2003 vol 646 cc384-6

3.22 p.m.

Baroness Blatch

My Lords, on behalf of my noble friend Lady Miller, who has been called away urgently from the House for a family emergency, and at her request, I beg leave to ask the Question standing in her name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what progress is being made on the introduction of the Universal Bank; and what the impact is expected to be on the future of the Post Office.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, good progress continues to he made on the introduction of universal banking services. The migration of benefit payments to direct payment begins this April and the Post Office's strategy is to respond to that challenge with a range of banking and other services. The impact that the migration of benefit payments has on the revenue of post offices will depend on a number of factors, not least how benefit recipients and other post office customers respond to change.

Baroness Blatch

My Lords, given that the switch of the benefit payment system will result in a loss of 40 per cent of the Post Office network income, which is some £400 million per year, can the Minister tell the House how much of the savings resulting from this exercise the Treasury will contribute annually to stop the haemorrhaging of post offices in our country—some 635 in the past few years alone before the scheme has even begun?

Lord Sainsbury of Turville

My Lords, it is important to realise that there is no alternative to this change. We cannot continue with a system that is effectively dying on its feet, for the simple reason that people are voting to go over to banking services. No assessment has been made of the total impact of the change on the finances of the post offices. But, as the noble Baroness will be aware, we are making substantial commitments to rural post offices. Subject to state aids clearance, we shall be making available £450 million—£150 million a year for the three years 2003–04 to 2005–06—in order to make certain that the rural post office network is in good condition.

Lord Razzall

My Lords, in view of the imminence of the transfer of payments on 1st April to the new system, will the Minister accept that many of the reservations expressed over recent years from all sides of your Lordships' House about the new system have proved to be well-founded? Will he accept that there is a significant danger that many of the elderly, and in particular many of the elderly infirm, will, at best, be confused by the new system and, at worst, be deprived of their benefits?

Lord Sainsbury of Turville

My Lords, we have yet to see the introduction of the new system. It will be introduced in April. Therefore, it is not possible to say that we have the evidence to show that reservations are justified. We do not yet have any information on how it will work. A careful process has been put in place to transfer people across to the new system. I have no reason to believe that that is not working perfectly well.

Lord Clarke of Hampstead

My Lords, I declare my usual interest as a former postman. During the proceedings on the Postal Services Bill in May 2000 does my noble friend recall the response he gave to me and to the House regarding beneficiaries being able to get their benefits in cash in a post office? In an earlier response today my noble friend mentioned people voting to transfer benefits into bank accounts. Does he agree that there is no alternative? Beneficiaries must go into one of the systems, and if nothing else, the one that the Post Office is providing. Therefore, he is no longer able to say that people have the right to get cash: they have to go through a banking system.

Lord Sainsbury of Turville

My Lords, I remember well the answer I gave. The answer I give now is exactly the same. The point of the Post Office card account is so that people can receive their benefits in cash. What is different is simply that it is not a paper-based but an IT-based system. Their ability to get cash is exactly the same.

Baroness Byford

My Lords, perhaps I may press the Minister further following his response to the noble Lord. Can he confirm that post offices are being denied the opportunity to offer their first choice to recipients? The Government are deliberately not offering the universal banking system as first choice, but are pushing people into using banking systems as first choice and post office systems as second choice. That could undermine the future viability of sub-post offices.

Lord Sainsbury of Turville

My Lords, the Government are not managing people's choices, as has been suggested by some. They are simply informing individuals of the available choices. There are no eligibility criteria. There is no cap on the numbers of the Post Office card accounts. I should have thought that giving people choice was something of which the noble Baroness would approve.

Earl Russell

My Lords, is the Minister able to give an undertaking that the Universal Bank and post offices will be able to provide facilities that are adequate for the use of the blind and the partially sighted?

Lord Sainsbury of Turville

My Lords, a system has been introduced for PIN numbers which is, I believe, widely used without any problems, but the Post Office is committed to finding ways to improve such provision. The PIN pads that have been installed are widely used without problems across Europe and elsewhere. The Post Office is committed to three things in order to meet the needs of their customers: first, to improve the current PIN pads by fitting a guard over buttons to help guide customers; secondly, to provide further training for sub-postmasters and post office staff to enable them to help customers; and, thirdly, in the longer term, to look at technological opportunities to provide a secure alternative to PIN pads for people with disabilities.

Baroness Blatch

My Lords, the Minister said that there has been no impact assessment of this on the future of the Post Office. Why not?

Lord Sainsbury of Turville

My Lords, as I explained to the House in the, I think, second answer I gave, there is no alternative. We were embarked, as a result of the previous government, on a system to computerise the service which the Post Office gave. When one has a system that has such very obvious economic benefits—the difference between the cost of this system to the DWP is 1 pence compared with £1.40 for every giro direct payment—there really is no alternative to going forward.

Baroness O'Cathain

My Lords, is not the impact of all that the Minister has described for the benefit of the Government, not at all for the benefit of the customer? When discussing PIN pads, does he not realise that elderly people never remember their PINs? I am sure that many people around here forget them too. Small post offices in rural areas serve all those elderly people who have no alternative and do not like those new-fangled banking methods.

Lord Sainsbury of Turville

My Lords, as I explained, most people are now voting clearly with their feet. More than 80 per cent of benefit recipients already have access to a bank account; 58 per cent of all new child benefit recipients and 59 per cent of all new pensioners have their money paid directly. The idea that in today's world we can continue with a paper-based system and bury our heads in the sand about change is simply not an option.

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