§ Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Sutcliffe.]9.30 am
§ Mr. David Drew (Stroud)
This debate on the future of sub-post offices could not be held at a more appropriate time. The level of interest shown here today and the number of colleagues who have expressed an interest in the outcome of the debate demonstrate what a live political issue it is. During what I hope will be a relatively short speech—it had better be even shorter now, given the number of people who will no doubt want to speak—I hope to identify clearly that sub-post offices have a future, to illustrate by my own experience in my constituency how to deal with the problems that we face and to look to the future with interest and hope.
I have tabled this subject for debate because, in recent months, if my local and regional newspapers are anything to go by, the matter has become a live issue. So much has been written and so many column inches covered—or perhaps nowadays I should say column centimetres—that it is no exaggeration to say that the stories on the subject have dwarfed those on the dome, the flu epidemic and even what David Beckham wears under his football shorts.
I was told last night that my regional newspaper, the Western Daily Press, has collected some 150,000 signatures for a "save our post office" campaign. Much of that is laudable, because it displays the heartfelt love and trust that are felt towards local post offices—it is important that people also use their post office. The petition will be presented in due course; today, I want to examine the underlying causes of the current position and advance the debate, so as to secure the future of the post office network and put it in a stronger position.
My interest in sub-post offices is not new. Stroud is fortunate to be one of the first areas in the country to introduce the new Horizon system into its offices. In fact, the first two offices to do so were in Leonard Stanley and Kings Stanley in my constituency. Unfortunately, the former has since had to close for reasons beyond anyone's control, although it was pleasing to witness a community initiative led by the parish council, especially Phil Herbert and Jean Smalley, to try to reopen it.
During my investigations, and especially over the past few months, I have spoken to as many people as possible in an effort to understand the prevailing circumstances and what the future may hold. I have talked to Post Office Counters Ltd., the National Federation of Subpostmasters, the Countryside Agency, Stroud district council and the Department of Social Security Benefits Agency. I visited ICL Pathway in order to examine properly and explore the Horizon system and to talk to those responsible for its integration into every 48WH post office by the end of 2001. I also read the Select Committee on Trade and Industry's report on the inquiry into the Horizon project.
I have also visited, spoken to and corresponded with several sub-postmasters in my constituency, especially Penny Knibbs, the area secretary of the National Federation of Subpostmasters, who runs Kings Stanley post office, and Max and Ayreen Ahmed of Bath road, Stroud, who showed me how Horizon works in their businesses. Subsequently, I visited Tony and Vanessa Walsh at Chalford, who opened my eyes to computerisation in all its glory, and showed me how ways are being conceived to access the new technology. I have also been contacted by John Stone at Upton St. Leonards, Mr. and Mrs. Appleby at Painswick, Tony Hinsbey at Brimscombe, Maria and Rick Bailey at Frampton on Severn, and Simon Lewis at my own post office in Stonehouse. Many of my illustrative points depend on their views.
We are fortunate to have such a network. As hon. Members know, there are more than 18,000 post offices, spread throughout Britain. Although most of my speech will concentrate on the rural part of the network, many of my points relate just as much to market town or even suburban offices. I am sure that other hon. Members will speak from their own experiences and their own contexts. The sub-post office network is crucial if we are to stop rural decline. Although my interest is not exclusively in rural issues—I spoke in the debate on the Postal Privilege (Suspension) Order 1999 (Revocation) Order 1999 on 8 December—many of my examples will show how important the network is to the rural domain.
My main anxiety relates to benefits, and I start my analysis by examining the current hoo-hah about the payment of benefits. Hon. Members will know how important the payment of benefits is to the Post Office. Various figures relating to the extent of its importance can be cited, but the facility generates up to 35 per cent. of Post Office income. It is easy to cast aspersions on the decisions taken by and the motives of the Benefits Agency, whose decision to encourage recipients to have their benefit paid directly into bank accounts may have a serious impact on the revenue of individual sub-post offices. The possiblity of wholesale closure of post offices has become a major social and political issue, although, as I shall show, opportunities are available that match and outweigh that threat.
The decline of the network did not begin in May 1997, much as the main Opposition like to allege otherwise in certain publications that I have read. Statistics show that we have been losing post offices—mainly sub-post offices—at a rate of approximately 1 per cent. a year for the past 20 years. That decline has a variety of causes, not least because the post offices are independent small businesses that can fail for all sorts of reasons or, indeed, be closed for all sorts of reasons other than failure.
Automated credit transfer is part of a wider programme to computerise the post office network, the Horizon project, which was initiated by the previous Government and is being developed by this Government and ICL Pathway personnel. My hon. Friend the Minister for Competitiveness might want to make some comments about that, because allegations have been made about the decisions that have been made, why they were taken and their impact.
49WH Like the Select Committee on Trade and Industry, we should consider the implications of the adoption of ACT and whether it precludes smart card application. Many of us hope that it does not and that a middle way will be found that combines the best elements of the two. It has been suggested to me that we are dealing with a killer application. If we can implement the smart card, it will prove how beneficial that software and, indeed, the hardware that supports it can be, because it presents all sorts of opportunities. Likewise, it would be good to hear that, even with the introduction of ACT, the timetable of 2003 to 2005 is flexible and that we can monitor and evaluate the impact on the different parts of the Post Office.
Our bywords should be choice, responsibility and reasonableness—choice in that no benefit recipient should be denied the right to choose where they want their benefit to be paid; responsibility in that we should make it as easy as possible to provide payment to those most in need; and reasonableness in that the place where payment is drawn should be made as accessible as is practicable. In so doing, we highlight the advantages of the post office network. The opportunities presented to sub-post offices by the introduction of new technology throughout the network has been given far too little attention. If the postal network is to modernise and not be left behind by technological innovation, it needs to be positively encouraged and supported in developing new services that local communities will value and use.
Today's debate serves to highlight the vital role that sub-post offices play in their local area. The post office, often combined with the village shop, is the focal point for most communities, especially rural communities, which have already lost too much. The loss of such post offices, where they still exist, would be a serious blow to the vitality and sustainability of those communities, so it was pleasing to hear the Government's announcement over Christmas about strengthening the mechanism whereby local communities can appeal against the closure of their local post office. Perhaps my hon. Friend the Minister will tell us how that will affect the role of the Post Office Users National Council and local advisory committees.
§ Mr. Patrick McLoughlin (West Derbyshire)
The hon. Gentleman makes many sensible points. However, does he accept that one of the main reasons for closure is that, when a post office becomes available for re-let because the person running it retires, the Post Office tries to reduce its opening hours, so creating the cause of the closure? An appeals system on whether a closure should take place will be no good unless an assurance can be given that the hours offered to the previous incumbent of a sub-post office will be offered to the new one.
§ Mr. Drew
That is a fair point. Clearly, every case is different and we must take each one on its merits. Businesses must be viable, and the more viable they are, the more secure their future is likely to be. We cannot exclude the planning system from such considerations, because people often have to get planning permission to open such a facility; more particularly, permission for change of use is involved when it closes. The decisions are intricate and difficult. We all await the performance 50WH and innovation unit report, which was initiated directly on the orders of the Prime Minister and is due out at the end of February. I do not wish to put the Minister in an invidious position, but I hope that we can debate the parameters of the report and examine what progress it makes and what impact it has on the Post Office Bill, which I hope will appear soon.
Sub-post offices provide a social as well as commercial service, especially to the elderly, the disabled and those on low incomes, who face isolation and social exclusion.
§ Mr. Anthony Steen (Totnes)
If the sub-post office in a village in a far-flung rural constituency, such as mine and that of many other hon. Members, closes, how are elderly people to get cash? If they go by bus to the local town, which may be 15 or 20 miles away, it might cost around £5 or £6 and take a day of their time. If local post offices close, how does the hon. Gentleman envisage elderly people getting their weekly cash?
§ Mr. Drew
Constituents, especially those who run sub-post offices, have made that point to me. The simple answer is that we need to turn post offices into banks, or branches of a bank. If we can join that circle, we will get the best of both worlds. I hope that the ways in which we can secure the future of the sub-post office network will be highlighted in both the rural and urban White Papers, which are to come out after the PIU report—although I hope that, in the interests of joined-up government, they all come together.
What are the issues facing the Government? The Government want to modernise the service and have negotiated with the Post Office to make that happen. We are talking about a £1 billion investment in 18,000 outlets by the end of next year—a not inconsiderable achievement on which my hon. Friend the Minister might want to comment. We are talking about tackling benefit fraud and thus gathering a not inconsiderable saving, about addressing social and financial exclusion and about promoting sustainable communities.
The Horizon project, of which I am sure all hon. Members know something, is the method and mechanism by which that can be achieved. There is no alternative but to computerise the network. The vital questions are how that is to be done, at what speed, and whether we can get the best application from the project software and hardware, rather than allow it to become a missed opportunity. As I said, I have visited the ICL Pathway project and seen it in operation in the post offices in my constituency.
We will concentrate on the threat that that poses to the benefits system, without looking at the three benefits that it can bring, which I mentioned in the debate on 8 December. First, enhanced postal and communication services will make it advantageous for the Post Office to take back business from couriers, which exist close to almost every community. We have seen how that can be taken forward in various projects. Secondly, although entering the banking network is a somewhat fraught question, it is pleasing that a number of banks have already signed deals with the Post Office, such as the Co-operative bank—as a Co-operative-sponsored Member of Parliament, I declare an interest—Girobank and Barclays. Other banks have also entered or will enter into such arrangements. That needs to be encouraged: 51WH although the Minister may say that it is not directly his responsibility, ways in which the Government can encourage the Post Office should be considered. Thirdly, there is electronic government—or, as the network refers to it, the gateway.
§ Mr. David Heath (Somerton and Frome)
The hon. Gentleman may be right to say that technology offers potential in the long term. However, does he agree that the problem is short-term loss in income to those businesses and short-term lack of transferability of business? That is the real threat to the network. Once the network has gone, it will be very difficult to rebuild it.
§ Mr. Drew
The network has been depleted, but, rather than be defensive about that, I say that it should be opened up again. People do not talk about the other side of the coin—that it could lead to communities taking back their services. However, I agree that, unless we get hold of the issue, there will be a decline in service.
How can we advance in this respect? I am pleased that an electronic government group in Gloucestershire is examining co-ordinating services and considering what can be provided through the local government network. My challenge to the Minister is how to take that forward in national Government. With smart card technology, it should be possible for people to renew their driving licence or passport and engage in all the front-line services on which the Government annually spend around £8 billion. If we can tap into the major investment that is being made, as well as save the benefits business—people want to draw their benefit money from post offices—there will be real opportunities which will save the Government money and make the service much better and more accessible. All those benefits can give the Post Office and the various parts of the network a real competitive edge. It is about giving people the choice of where to draw their money from.
I have used the words choice, responsibility and reasonableness. I hope that everyone can agree with those objectives and see ways in which they can be taken forward in their own area. Community sustainability and social exclusion are important considerations: people often choose not to have a bank account or to use one because they prefer, for all sorts of reasons, to use their post office. That has something to do with social exclusion, but more to do with the trust that people feel for the institution. Why should they not have trust in it and want it to flourish? I have talked to people from a variety of backgrounds and to the Countryside Agency, which has tracked the future of the rural network in particular. It is pleasing to hear of the many ideas from Norfolk and Cumbria about improving the service.
What is on offer? Twenty-eight million people a week visit their post office, which must make it far and away the most popular service in the country. There are 18,000 outlets. People trust and believe in their post offices and see them fulfilling the community functions for which they were designed. We must overcome the benefits payment issue and be reasonable in giving enough time to allow a natural changeover. The problem is not insuperable and additional benefits may be derived from the solution to it.
52WH In conclusion, I would like—with apologies—to compare the situation to a cake. We have baked the cake and now have a choice: we can cut it into slices, which means that the cake will ultimately crumble away, or we can put icing on it, to show people that it belongs to them and has a future. Only then can we receive all the benefits of using the service.
Mr. Deputy Speaker
Order. Before I call the next speaker, I should like to say that, because many hon. Members want to speak, brief contributions would be appreciated.
§ Mr. Peter Lilley (Hitchin and Harpenden)
I congratulate the hon. Member for Stroud (Mr. Drew) on securing the debate and on the thoughtful way in which he introduced it. It follows on from a debate on 15 July, introduced by my hon. Friend the shadow Secretary of State for Trade and Industry. We have had two debates in a relatively short time on the subject of sub-post offices and the post office network because every Member of Parliament knows that post offices perform a vital function in our constituencies, be they rural or urban. The sub-post office is invariably a shop as well. It serves families, the elderly and the disabled. It becomes a focus for the whole community and helps to sustain it, especially in country areas.
My interest in the subject deepened when I became Secretary of State for Trade and Industry—or, as I subsequently realised I was, President of the Board of Trade. I realised that I had responsibility for the network and was instrumental in ensuring that we made a 1992 manifesto pledge to sustain a nationwide network of post offices.
When I moved to the Department of Social Security, my interest deepened further, as I saw how essential the network was to the effective delivery of benefits to many of the most vulnerable people in our communities. I helped to ensure that that delivery mechanism and the network would continue by agreeing to the Horizon project, about which the Government are now trying to rewrite history; I shall set the record straight. The contract was originally awarded to ICL Pathway because it had experience of setting up a similar system in Ireland, which, for historic reasons, has a similar network of sub-post offices. ICL Pathway had practical experience and we knew that it could do the job. We also knew that computerisation and mechanisation of the sub-post office system would be paid for by the potential savings from eliminating the fraud that was possible under the old order book system.
Contracts have to be not only signed, but managed. It is important that those who manage—Ministers—make sure that they know what goes on. I have always made it a practice, in business and in government, to ensure that I know the bad news, which travels slowly up large organisations. If the person at the top is no good, he will not know what has gone wrong. I asked always to be told what went wrong, as well as what went right. If there were problems, we addressed them immediately and announced the changes.
It is not clear that the current Government have been aware of what is going on—I do not want to go into the history at length, as I set it out on 15 July. We are still 53WH waiting for answers from the Government. Why did Ministers assure the House—they did so on four or five occasions over two years—that the contract was proceeding and was likely to be completed on target by the end of 2000, but then suddenly perform a volte face? Were the Ministers who gave those assurances simply ill informed or did they mislead the House? The Select Committee on Trade and Industry concluded that there were suggestions thatMinisters have been less than candid in their responses to the House and to this Committeeabout the problems facing the Horizon project. Unfortunately, the report was slipped out during the recess, so that grave indictment of Ministers did not receive the publicity it needed.
The only explanation is that the Treasury won. It has always been determined to close down the network of sub-post offices, if possible, to move to ACT and to make what it regards as a short-term saving in public expenditure. I doubt whether that saving will ever arise, and I doubted it when I was a Minister at the Treasury, at the Department of Trade and Industry and at the Department of Social Security. It was only when two former Chief Secretaries to the Treasury occupied the Department of Trade and Industry and the Department of Social Security that the announcement was suddenly made that the project would be scrapped and people would be compelled to have their payments made into bank accounts.
What really matters is not the history but the future and the consequences of that decision for some of our most vulnerable people. Fifteen per cent. of those on benefits do not have bank accounts, so how will they receive their benefits if they live in areas where sub-post offices have to close down because of the changes the Government are making? The Government admit that 1 million of that 15 per cent. of people could not reasonably be expected to operate a PIN number system because they are elderly or frail. Such people would be vulnerable if they gave PIN numbers to neighbours or others to receive their benefits. We need answers today as to how the Government will tackle the problems of people without bank accounts, and of people too elderly and confused to handle PIN numbers for themselves.
We want to know whether banks will be compelled to give accounts to those whose income derives solely from benefits, such as those who are dependent on income support and jobseeker's allowance. If they are to be compelled to take such people as customers, how will that be enforced? Which banks will be forced to take which customers? Will people have to pay a pound or two in bank charges from their benefits, which no one here pretends are excessively generous?
What will be the impact on families? Many wives use child benefit separately to pay for some of the needs of their children, as was specifically foreseen when it was introduced instead of a tax allowance. If that money must be paid into an account, and if a wife has only a joint account with her husband, how is she to keep the money separate for her children's needs? Must she open 54WH a separate account? Will she then have bank charges deducted from the child benefit paid into it? We need answers to those questions.
§ Mr. James Gray (North Wiltshire)
Is my right hon. Friend aware of an allied problem? When there is an overdraft, possibly for perfectly good reasons, the benefits money will go straight to pay off the overdraft, rather than to people in need.
§ Mr. Lilley
My hon. Friend makes a good point. That is why the existing arrangements have been satisfactory. They were largely introduced by the Labour party in 1978, so it is odd that it is now threatening and undermining them.
We need to know what the impact will be on the revenues of sub-post offices. How much revenue to the post office network will be lost because of the changes? If there is a saving to the Treasury, there must be a loss to the sub-post offices, but how much? What will be the subsequent loss to post offices through the loss of footfall—people coming into the shops, dispensing money and creating revenue? That creates no gain to the Treasury, but it is a loss to the system and so undermines its viability. Sub-post offices are very unusual in that people usually leave with more money than they had when they entered. They dispense some of that money in the process, but that will not be possible if their money is paid out through ACT.
How many sub-post offices will be closed throughout the country? If the Government are seriously determined to maintain a network of sub-post offices, will they not have to renegotiate the contract with Post Office Counters Ltd. as they do every two or three years? That contract is made up of two elements, one of which is about keeping the network open, while the other relates to actual usage of post office services. We will have to jack up the lump sum that Post Office Counters Ltd. is paid to keep the network open, offsetting any savings that it is making on the individual transactions; therefore, the saving that the Treasury is hoping to make may well prove to be illusory.
We must recognise that the Government's decision to scrap the Horizon project will damage the quality of life for disabled people, elderly people and families throughout the country. It will undermine communities, especially in rural areas. It is another threat to the countryside and, ultimately, it will be a threat and a cost to the taxpayer. Questions have been asked in previous debates, but they have not yet been answered by Ministers. I hope that we shall receive some answers today.
§ Mr. Lindsay Hoyle (Chorley)
I, too, thank my hon. Friend the Member for Stroud (Mr. Drew) for enabling today's debate to take place. We all want to participate in it because we believe in the future of sub-post offices in rural and urban areas. However, if we are not careful, the debate will end up rewriting history and defending 18 years of neglect of our post offices. We have at heart the best interests of sub-post offices in our constituencies. I hope that this debate will ensure that they have a future and that their plight is taken seriously. That did not happen during the 18 years of 55WH Conservative government—in fact, the majority of closures took place during that time. It is no use Conservative Members trying to defend themselves. The previous Government were guilty of turning a blind eye to the closures that took place throughout the country.
What can we do to save the future of the post office? I have received letters from those who manage sub-post offices. Mrs. Friend from Brindle in my constituency told me of her worries about the future for local people, and about what will happen to the post office and the business she runs. I agree with her that we must do something. There is a lot of uncertainty at the moment and the newspapers rightly publicise that worry. There are no two ways about it; we must explain what we want to happen and make sure that those who run post offices have a long-term future. Local communities will then become more settled, too.
We hear questions about whether all post offices should be able to sell tax discs, but tax discs alone will not make a future for sub-post offices. By all means, let them be able to sell tax discs and national lottery tickets and operate a new rural banking system for people who have so far been excluded from holding bank accounts. At present, high street banks want only a certain clientele; they operate an exclusion procedure for people who can hold bank accounts. We must ensure that high street banks face competition by opening a chain of rural banking facilities. That will put banking back into the rural community and allow all people in society to open a bank account. There do not necessarily have to be bank charges: free banking can be given to the people.
§ Mr. Dafydd Wigley (Caernarfon)
Rural post offices should always be able to dispense electricity tokens, which does not happen in all areas. Such a service will also help to sustain post offices.
§ Mr. Hoyle
I agree. Whether electricity tokens or stamps for gas and water, sub-post offices should be able to provide all the services that are offered by main post offices. We must ensure that sub-post offices have a future. We must remember that they are part of the community—they are probably the last piece of communal rural society. Many public houses have been converted into domestic houses and rest homes; they have been removed from community. Traditional butcher shops have gone. We are left with the post offices, which have become the newsagent and local shop. They are the last piece of the jigsaw.
We must add more pieces to the jigsaw to ensure the future of the sub-post office. Without doubt, we can achieve that and, hopefully, end social exclusion in rural areas. People on low incomes do not have a chance to hold a bank account. Furthermore, pensioners may not want a high street bank account—and rightly so because of their difficulty in accessing it. Bringing banking services to the rural community should be the Government's goal. We want to engage rural society; we want to ensure that there is no exclusion in rural areas and that there is a future for all sub-post offices. We must end the 18 years of closures.
§ Mr. Lembit Öpik (Montgomeryshire)
Is the hon. Gentleman saying that technology should be used not to 56WH close post offices, but to expand the facilities available, especially in important areas such as Powys and Ceredigion?
§ Mr. Hoyle
I am sure that that will happen, especially when such places receive electricity—indeed, the two services might run in tandem in Powys. We should not take a luddite approach to new technology. We must embrace it and ensure that we all benefit from it, and that rural areas do not suffer exclusion.
§ Ms Rachel Squire (Dunfermline, West)
I, too, congratulate my hon. Friend the Member for Stroud (Mr. Drew) on enabling this debate to take place. I agree entirely that rural and sub-post offices have been promoting social inclusion for several years, well before the current Government began to implement their policies.
I also agree with my hon. Friend about the importance of choice. That is of great concern to many of my constituents. For example, at my surgery last month I received a deputation of 15 people from the community of Blairhall: they handed me a petition signed by nearly everyone in the community expressing concern about the future of the local sub-post office. People were especially worried about the possibility of benefit payments in cash being ended. Many similar representations have been made to me. By my calculations, villages in west Fife have 13 sub-post offices and Dunfermline has at least six sub-post offices. This is certainly a matter of concern to the many, not the few.
I accept that the current system of benefits paid in cash is costly, bureaucratic and open to fraud, but I welcome the Government's assurances that many people will be able to pick up their pension or benefit from the post office, if they wish to do so. I wish to pass on to the Minister questions that my constituents have asked me. Will the payment of a pension or benefit from a post office be in cash if that is what an individual wants? Will existing claimants be able to maintain their cash payments and will future recipients be able to opt for cash payments from their local post office?
Why is the claiming of cash payments from post offices so important? First, about a third of the income of sub-post offices is linked to the payment of cash benefits over the counter. It helps to make them viable businesses, especially because, as has already been said, many of them are also shops.
Secondly, the Government should accept that some form of saving is derived from the fact that many people—especially pensioners on low incomes—pay out a large part of their cash as soon as they pick it up. They pay their gas and electricity bills, or buy power cards and power tokens. That used to be the case in Scotland until the Post Office and Scottish Power ended their contract, which is a matter that I hope the Government will pursue. Pensioners pay for their television licence, telephone, rent, council tax and so on, thereby ensuring prompt payment of bills to large commercial companies and to central and local government. Those savings should be recognised.
Thirdly, many of my constituents have always relied on cash in hand to manage a very low income—whether a weekly wage or a pension. They take their money and 57WH immediately pay their bills so that they know exactly what they have left to live on. That has helped to keep people away from making demands on central and local government services—an additional saving.
Fourthly, picking up the point made by the right hon. Member for Hitchin and Harpenden (Mr. Lilley), I have met women for whom the only guaranteed cash that they have for their children for that week or fortnight is their child benefit. The problem exists in every constituency in the country. Women in relationships with unreliable husbands and partners cannot depend on money being put in their bank account, or on money that they have handed over being used to provide for the family. All too often, it is spent in the local pub, betting shop or elsewhere. That, too, should be recognised.
A fifth reason why cash payments are so important has already been mentioned: many people do not have a bank account. I reckon that about one fifth of the pensioners in my constituency do not have a bank account and do not want one. Having cash is how they have managed their money all their lives. The banks are not interested in them. In the west Fife villages, where there are 13 sub-post offices, there is only one small bank branch. To those who have spent their lives following the rule, "neither a borrower nor a lender be", the idea of paying bank charges or living on credit is totally alien.
Although I accept that payments in cash and the use of order books can be open to fraud, the Government must recognise the value of staff at sub-post offices being easily able to detect a stranger who comes through the door, or someone who tries to claim cash using an order book that the staff know does not belong to that individual.
I support my hon. Friends the Members for Chorley (Mr. Hoyle) and for Stroud and many others who have urged the Government to look at ways of combining the tradition of sub-post offices with innovation. They should consider introducing cashpoint systems and using other means to attract even more business. Sub-post offices in my constituency have an arrangement whereby repeat prescriptions can be either collected by pensioners, or delivered to them, thus saving a costly bus trip. Why cannot other systems of shopping be developed, so that sub-post offices can become even more of a focal point for the community?
I hope that my hon. Friend the Minister and the Government will recognise how crucial sub-post offices are in maintaining strong community links. It is possible to combine the tradition and innovation—to look at new ways of working, while ensuring that policies of social inclusion continue to be delivered effectively and well by the sub-post offices in our communities.
§ Mr. Steve Webb (Northavon)
I congratulate my constituency neighbour, the hon. Member for Stroud (Mr. Drew), on securing the debate and on his characteristically thoughtful and well- informed contribution. The hon. Gentleman and I tabled an early-day motion on the subject some weeks ago, which attracted support from hon. Members on both sides of the House. The turnout today is indicative of the support that there is for sub-post offices.
58WH The drafting of our early-day motion revealed the Government's lack of honesty about their intentions. The original draft was suggested by the National Federation of Subpostmasters. The federation used the C-word—not choice, but compulsion. I asked one or two hon. Members whether they would be willing to state that they were unhappy about the compulsion to have money paid into a bank account; they said, "No, it will not be compulsory," but this is the Government's intention. I hope that the Minister will be honest and use the C-word—compulsion, rather than choice.
The Secretary of State for Trade and Industry wrote to the Federation of Subpostmasters in a letter that was meant for publication that he envisaged that all benefits would be paid into bank accounts by 2005. Answers from the Department of Social Security have said that payment into bank accounts will be the norm, with limited exceptions. I asked what "limited execeptions" meant, and the only example that I was given was those who are bankrupt—not poor people who did not have bank accounts. In other words, people will not have a choice. If we are about anything in the House, we should be about choice.
There is evidence that people do not want to be forced to have bank accounts. Child benefit and the retirement pension are the two benefits that are most likely to be paid direct into bank accounts. Barely half the new claimants of those two benefits opt for payment into a bank account, despite the loaded question that they are asked. For income support, which presumably applies to the most vulnerable in our communities, the figure is just 10 per cent. Nine out of 10 income support recipients do not choose to have their money paid into a bank account. How will they be provided for?
Although we have talked about 2003 and 2005, I warn my hon. Friends and others that things are already starting to go wrong because of the working families tax credit. I tabled a question recently, which revealed that the working families tax credit, which currently can still be paid through sub-post offices, had 300,000 new awards in the 10-week period before Christmas paid by giros in post offices. Three hundred thousand people went to post offices to pick up their working families tax credit, as it is now called. From April this year, virtually none of those 300,000 claimants will go to post offices. Lone parents will be forced to receive the credit in their pay packet, as will most others. The damage is being done now, so today's debate is timely.
The cost of an ACT payment is 1p, so the Government will save a great deal of money by switching to ACT, but how much of that saving will post offices retain? It is not good enough for the Government to say that people can still use a post office if there is no post office there through which the money can be delivered. If we go over to ACT, what will post offices get for handing over the cash that has gone through a bank account, for acting as an agent? Unless it is comparable to the sums that they currently receive, the measure will tip many post offices that are already on the borderline over the edge.
It is not sufficiently reassuring to tell my constituents that they can still go to a post office, unless they are sure that one will be there. I hope that the Minister will give an assurance that, for the foreseeable future, the sum that post offices receive for handling transactions and 59WH for acting as agents for banks will be comparable to that which they now receive. If they lose such a vital stream of revenue, many will simply cease to exist.
§ Mr Alan Hurst (Braintree)
I am pleased to contribute to the debate introduced by my hon. Friend the Member for Stroud (Mr. Drew). I hope that he will forgive me if I have not recorded every elector in his constituency—we had a fair spread. Like everyone else, my speaking time is limited, so I shall not dwell too long on the benefits of the proposals.
In the age in which we live, like it or not, computerisation is with us. If post offices are to compete in the financial world, they need to be udpated with such machinery. It would be foolish to stand against that trend, so the scheme must proceed. I also understand the benefits that will come from reducing fraud in the collection of benefits, if there is a move towards direct payment.
Like other hon. Members, I am concerned, first, about the consequences for the poor and elderly in our communities if real choice disappears and, secondly, about the financial effect that such a lack of choice will have on small post offices. I have a letter from the Department that says that people will still have a choice, but the hon. Member for Northavon (Mr. Webb) doubts that. I look forward to the Minister's conclusive answer on that point.
There is a difference between choice and choice: between the choice that leaves people free to choose and the choice that people were given in plebiscites in middle Europe during the 1930s—woe betide those who did not vote for the winning side. At the moment, it seems that direct computerised payment into bank accounts is winning. A constituent from Essex kindly sent me a copy of a child benefit form. It claims to be a letter, but it is a standard form, the main purpose of which is to encourage people to receive their child benefit every four weeks in arrears instead of weekly. There are exceptions, but that is a subject for another debate.
That form mentions choices of the method of payment, but not much emphasis is put on payment by cash: the choice is mainly between direct payments, either through the bank or building society, or through Giro or the Post Office National Savings bank. One can choose to receive cash, but that is not made abundantly clear; indeed, when the letter was sent to me I was told, "There is no choice." We must make it abundantly clear that people do have a choice; equally, those who campaign for rural and suburban post offices must say, loudly and clearly, that people have a choice. Those of us who fear the loss of post offices may be agents in engineering their end if we do not encourage people to exercise their choice in favour of cash.
Choice is not sufficient in itself. Every person who moves to direct payment will be one person fewer going to the post office, which means one small item of cash revenue less for the post office. That will result in fewer people buying Mars bars or boxes of tissues—or whatever else people buy when they go to the post office. That will be equally true if they go to the post office only once every four weeks rather than once every week; the number of visits to the post office will be diminished and the number of purchases that can be made will be 60WH reduced. Small village post offices operate on narrow profit margins. A few people electing not to use them may make the difference between profit and loss, staying open or closing.
As my hon. Friend the Member for Stroud said, post offices have been closing for many years. In the village where I lived 25 years ago, the post office was to be found in a man's house. When he retired, the post office disappeared because no one wanted to take it on. I went back to that village recently, and there is still no post office; there is no longer a chapel, any form of shop or a school. The village post office, the school and the village shop are all part of the chain of community that has rapidly disappeared. I realise that other factors are involved: for example, as villages become home to commuters or weekenders, less purchasing power is available to be used in the post office.
Banks seem almost to rule the world these days—I hope that it is not terribly unfashionable to say so—and they work on computer systems. If post offices are to operate on equal terms with the banks, they, too, will need to use a computerised system. As mentioned earlier, they will also need to be able to act as the village, small town or suburban bank. Not only are banks unable to fulfil that function, but they seem almost purposely to have gone out of their way not to fulfil it. Within a two-mile radius of my law office, there used to be five branches of Barclays bank; now, there is only one.
I regularly go to the bank in Earls Colne, one of the villages in my constituency—except that it is no longer a bank, but the office of the National Farmers Union. We can go to lots of banks that are no longer banks but restaurants, printing works and so on. The choice is no longer available. All of us know of villages that have lost their banks or that have only one branch hanging on by a thread. The post office could be the answer to that problem, but we must ensure that it still exists, that customers still use it and that it still forms part of the community.
The newest phrase is "social exclusion". We use some funny phrases nowadays; I wonder whether people in the countryside understand what we are talking about. One of the biggest factors that makes people feel socially excluded is new technology that they cannot use or that they are not minded to use. For instance, if I were to start talking about Switch cards and PIN numbers to an 80-year-old who has lived all her life in the countryside and has never been further than 50 miles from her place of birth, she would not have a clue what I was saying, and I can understand why. We are creating the mechanisms that prevent such people from taking advantage of the benefits that are being created. However, it is worse than that: we are also taking away from them things that they have known all their lives. Because of the decisions that we and the world have made, some of their local—and social—facilities no longer exist.
Although I welcome progress, hand in hand with it must go the public assurance that traditional methods of receiving pensions and benefits will remain intact and on an equal footing with computerised banking. That must go at the same pace as the Government's initiatives to ensure that post offices enjoy full clearing bank facilities and to turn them into local bank branches.
61WH 10.26 am
§ Mrs. Diana Organ (Forest of Dean)
I, too, congratulate my neighbour, my hon. Friend the Member for Stroud (Mr. Drew), on securing this debate. Many hon. Members are worried about the future of post offices, and those who represent rural seats are deeply concerned about the future of rural post offices, which are often the only service centre within their communities. Rural post offices are vulnerable. It is interesting that my hon. Friend did not say that the future of the sub-post office was rosy, but many of us think that it would have been better if he had said that it was bleak. The policies of local authorities and of Government are not improving matters. It is crucial that rural post offices are not only service centres but that they become financial centres. As other hon. Members have said, they should become rural banking centres.
I am concerned about the performance and innovation unit's December 1999 report. It was about rural economies, but contained not one mention of post offices or the financial services that they provide. It spoke at length about the need to build up IT centres, business link centres and financial centres, but no mention was made of the role that the post office already plays. I hope that the rural White Paper takes closer note of the post office network and ways to enhance it, so that we can have the financial centres that we need in rural areas.
In the Forest of Dean, that change is beginning to happen in a big way. Ruardean Woodside post office is small but necessary. It is running the first of eight pilot schemes in Gloucestershire with a grant from Gloucestershire rural community council. It has set up an information site, and it has access to Glosnet. One can e-mail from there, use the worldwide web, use the system as a word processor, print from it and do all the things that can usually be done in a telecottage. Because of the grant from the rural community council, it is being provided free to the local community, and people pay only for the telephone charges. It has been most successful, and it has brought more people into the post office, especially kids doing their homework. Such a project can help to prevent information poverty in rural areas.
§ Mrs. Linda Gilroy (Plymouth, Sutton)
Does my hon. Friend agree that there is a danger of social exclusion for the information poor? Will she go further and join me in urging the Minister to consider introducing a citizen's entitlement to time on the internet, for which post offices could serve as the access point?
§ Mrs. Organ
That is a very good suggestion, which might be the way forward for local post offices.
I have two issues for the Minister arising from my meeting with rural postmasters in my constituency. They expressed concern about the future, 2003 and the changes to the payment of benefits. First, I hope that we shall retain choice. Many people cannot have a bank account—indeed, many people would not be able to use one, have never had one and do not know how to start. I want people to have a real choice, so that they can get their cash over the counter. I also want to know what my hon. Friend the Minister means by cash. Does he mean a cheque that has to be cashed or the current system?
62WH Secondly, the Government and the Post Office could set up an advertising campaign, or the Government could put money into advertising services already provided by the post office network. Post offices currently provide 162 services, but we are not even aware of some of them. People can obtain health insurance, foreign currency and a range of other services at post offices; if they knew that, they would use post offices more. The Post Office does not have the money to do all the advertising, but I hope that the Government and the Post Office will invest some money together, so that the Post Office can extend its services and make people more aware of them.
It is crucial that post offices remain in our local community. The local post office should be the financial centre and the social centre of rural communities. Many rural post office staff are very aware of the people they serve and notice when, for example, a pensioner does not come in to pick up his or her pension. Those staff fulfil a social function as well as a financial one, and they must have a rosy future.
§ Mr. Brian Cotter (Weston-super-Mare)
I, too, thank the hon. Member for Stroud (Mr. Drew) for initiating the debate. He may be building up a record on the number of times an hon. Member has been congratulated in a single debate. I also congratulate my local paper, the Western Daily Press, on its campaign against the Government's plans to pay benefits directly into the bank. I believe that it has so far collected about 150,000 signatures for its petition.
Much has been said about the importance of post offices in the community. They give people in their area a chance to meet, interact and, most importantly, to access vital services that they need in their everyday lives, which might in future include the internet. The post office is at the centre of community life, especially in rural areas but also in towns. The sub-post office is also a small business. About 90 per cent. of the post office network is run by small business people, and a recent report asserted that about 90 per cent. of small businesses with fewer than nine employees used post offices for banking and deposit facilities, for obtaining cash and for access to mail services. That is an important aspect of the service provided by sub-post offices.
Postmasters and mistresses are concerned that they will lose money because of the reduction in Benefits Agency business and that related problems will build up. They are concerned that, if the Government's plans go ahead, by 2005 they will have less business from benefits. They believe that it will be difficult for post offices to be viable, even if they are given extra business.
I agree with comments made by other hon. Members about freedom to choose how our benefits are paid. My hon. Friend the Member for Northavon (Mr. Webb) made some key points, and I look forward to hearing the Minister's response. Having visited several post offices during the recess, I was concerned to hear that people read the letters sent to them and assumed that they had to ensure straight away that their benefits were paid through the banks. Perhaps those people did not read their letter well, although some have suggested to me that it was misleading. Several post office staff told me that they would like to display a notice in their post 63WH offices informing people that they can still get their benefits paid there. What is important is that many people appear to have been misled, whether intentionally or not.
I have referred to the importance of sub-post offices both to and as small businesses. Many people have put their savings into a sub-post office with a view to retirement or selling up. Such people feel dispirited that they may not now have a resource to sell. We are concerned about closures of sub-post offices not only because of their impact on rural communities and communities generally, but because of jobs. A recent survey conducted by the National Federation of Subpostmasters states that as many as 30,000 jobs will be lost if the predicted number of sub-post offices closes because of the Government's action. That is concerning, especially as many sub-post offices are situated in rural areas where jobs are difficult to find.
The Minister has been reported as saying:In many ways the Post Office has had an unhealthy over-reliance on benefits work.It may be fair to say that, but it is not an answer. We want the Minister to answer today. The benefits work given to post offices was felt—especially by sub-postmasters taking on the job of running sub-post offices—to be an integral part of their income. The removal of that income will worry sub-postmasters and be a defining point for them.
The issues to which I have referred are clear and are relevant to all constituency Members of Parliament. Some of those issues might be regarded as small, but the ability of retired people and people on low incomes to go into a post office, to obtain their cash and to decide what to do with the money on that day is very important. Sometimes such people will want to spend a little bit here and a little bit there or buy a Mars bar, as the hon. Member for Braintree (Mr. Hurst) said. All such transactions help the local community, perhaps through a nearby shop. It has been pointed out to me that sub-post office staff are aware of local people: they are likely to notice if an old person does not arrive to collect a benefit payment and to try to find out whether that person is ill. Such action can often be the first line of defence for vulnerable people.
I hope that the Minister will have time to deal with all of the points made, so I shall draw my remarks to a conclusion. I hope that he will convince us that things will not be as bad as we believe. I look forward to hearing his comments.
§ Mrs. Angela Browning (Tiverton and Honiton)
Today is a marvellous opportunity for the Minister. Since the debate on post offices in the Chamber on 15 July, which was initiated by the Conservatives, hon. Members have had the chance during the long summer recess to visit post offices in their constituencies to see how they are coping with the changes facing them. We have heard about some such visits today. We have also had the chance to hear post office staffs predictions on how the Government's policy decision of May to move to ACT payments will affect them. As a Front-Bench Member of Parliament, I have insisted when visiting the constituencies of other hon. Members on being taken to local post offices. The picture is the same throughout the 64WH country, wherever one goes, whether it be Wales, England or elsewhere. Hon. Members of all parties have expressed grave concern about the impact of Government measures on communities and individuals and about the future of sub-post offices.
At the beginning of the debate, my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) spelled out clearly the track record of the Conservative party. The hon. Member for Chorley (Mr. Hoyle) had a good go at the party, as he usually does, but the facts are clear. When we left office, we left in place a framework in which the future payment of benefits through post offices would continue, funded from the taxpayer by remuneration made through Post Office Counters to individual post offices. That function represents, on average, 30 per cent. of post offices' annual revenue.
As we have heard, the Labour Government not only accepted that policy, but told the House of Commons in both oral and written answers that the new Horizon project was going ahead, that all would be well and that they were trialling it. They gave the impression that, apart from one or two hiccups with the technology, which were being overcome, we had no reason to believe that any substantial changes would be made.
§ Mrs. Browning
I hope that the hon. Gentleman does not mind, but I have only a short time to speak.
I congratulate the hon. Member for Stroud (Mr. Drew) on bringing the matter to our attention again. Unless the Government reconsider in short order, we shall pass the point of no return. I should say that we are already passing that point. I have a huge rural constituency containing more than 50 sub-post offices. Post offices often come up for sale when those running them retire and want to dispose of them. Those considering taking them on look and say, "In two years' time, we will have to run the business"—and they are businesses—"with a 30 per cent. drop in revenue." The Government flagged up during the summer several proposals in the pipeline to boost the revenue and the viability of those businesses. If the measures have common sense and tangibility behind them, I welcome all of them.
The use of computers will help especially the tiniest post offices to offer a range of services. In my constituency, some really tiny post offices do not have room even for a proper shop—they have a few postcards, a bit of stationery and that is that. Being able to sell tickets and to provide other services will be a help, but we should not forget that we are poised on a technology revolution whereby ever more people will be able to access services at home through either their PC or, as we see coming up and as is more likely, through interactive digital television. Post offices will not be able to offer services exclusively, helpful though that might be to pensioners unable to access them otherwise.
Let us not think that the computer in the post office will solve post offices' problems—it will not. I was concerned during the summer when we heard that the Post Office was to join forces with Camelot in the new lottery bid. The Secretary of State for Trade and Industry immediately announced that that would be a great help to post offices. I question that view because it 65WH will not be viable to put a lottery terminal in a rural post office or shop, unless it can process 3,000 transactions a week.
The Government have shown one of their hallmarks. They have taken a Treasury-driven political decision to save £400 million a year for the taxpayer or, rather, for the Treasury, because the taxpayer would be willing to see the money continue to be so used. They have created a huge problem and are now clutching at straws to discover how they can shore up the situation and solve it.
I should say to the hon. Member for Dunfermline, West (Ms Squire) that people have been assured that they will be able to collect their benefits in cash. There will be a transaction between the clearing banks and whatever form of terminal is in a village post office, if there still is one. The Government have failed to answer the question, although we have repeatedly asked it, about who will bear the transaction costs. Again, they do not seem to have a clear view of how they will process and advance that.
The Minister recently appeared in national newspapers saying how concerned he was. He knows that I genuinely have great respect for him. He is well placed in the House to know the post office sector and to feel from the heart its need for a future. The answer is in his hands. He is the one person present with the power to do something about the problem with which we are all concerned. He is not tainted by having served in the Treasury. Will he please stand up to the Treasury? We have already heard that it is unlikely to save that much money. There is time—just—to think again, to change the decision and to advance the matter so that we will not have to keep coming to beg the Minister to save our fragile communities.
§ The Minister for Competitiveness (Mr. Alan Johnson)
It is a great pleasure to reply to the debate, which is not the first on the Post Office with which I have dealt. There have been three such debates, and an Adjournment debate on this precise issue soon after we returned from the summer recess.
I should like to join the fan club of my hon. Friend the Member for Stroud (Mr. Drew) and perhaps to become its honorary secretary, and thank him not only for having raised an important and currently vital political issue, but for the way in which he addressed us. His speech was balanced, intelligent, well informed and, most of all, it was about the future of rural post offices rather than the past.
The hon. Member for Tiverton and Honiton (Mrs. Browning) touched on an important aspect of the debate. If we are not careful—if we surround the debate with gloom and doom, as if it is about a negative future for post offices—we shall create the very climate that we should all be seeking to prevent.
§ Mr. Bob Russell (Colchester)
Will the Minister reflect on what he has just said? He said "rural post offices". They have dominated the debate, but will he accept, as 66WH I do, that we are considering a national network and that the situation also affects urban and suburban post offices?
§ Mr. Johnson
I agree absolutely, and I shall address the matter. It is important that I put the Government's position on the record during the debate.
I hope that the hon. Gentleman accepts that, as my hon. Friend the Member for Stroud made clear, it is important that we consider the matter constructively. The beauty of this and of all other debates on the Post Office is that I have an opportunity to reassure hon. Members again of our commitment to a nationwide network of post offices.
The right hon. Member for Hitchin and Harpenden (Mr. Lilley) mentioned what happened in the past. We are unable to access some of the records from the benefits payment cards project. The project was well intentioned, and I supported it in a previous capacity. However, when we took office, the contract was running three years late and was vastly overspent.
§ Mr. Lilley
If the project was running three years late when the Government took office, why, on four occasions over two years, did Ministers assure the House and the Select Committee on Trade and Industry that it would be complete on time by the end of 2000?
§ Mr. Johnson
I shall correct that. It was running three years late when we took the decision to move to the new arrangements. When we took office, the contract had already been renegotiated; and it had been established in May 1996 and renegotiated in February 1997. I was party to those discussions in a previous capacity. The previous Government spent two years trying to privatise the Post Office, two years trying to plunder it and a year establishing a well-intentioned project that the Trade and Industry Committee said was "blighted from the outset".
On assuming office, our choice was between continuing with a failing private finance initiative scheme running well behind schedule and well over budget, and getting a proper grip on the issues through a workable arrangement to computerise the network with a phased approach to the migration of benefit payments to ACT. There is no doubt that the process has accelerated, is accelerating and will accelerate. There has been a concerted and co-ordinated push to attract new business.
Had we not created the need to consider the future, we would not be having the debate. The post office network that everyone is applauding, saying how vital it is to our communities, has been seeping away at the rate of 1 per cent. a year for the past 20 years. There would have been no debate. The choice might have been easy for Government—to leave alone and to walk away, with it becoming someone else's problem in five, six or 10 years' time. There would have been a continual, gradual decline until it became too late to do anything about it. The push to attract new work for the network and the discussion about getting network banking back to rural areas that lost it years ago is a crucial element of the debate. It is also important to take advantage of the computerisation from 2001 and the access criteria that we are introducing, which will be established in law and 67WH monitored by an independent regulator so that the random effects of the past 20 years' gradual erosion can be tackled.
We recognise that there are concerns about how the matter is being approached and the requirement for what today's jargon calls a cross-cutting response from Government, if what we propose is to be successful. That is why, on 21 October, very quietly and before any local newspaper campaigns or fuss in the press—in fact, we tried to make more of it than we managed to, probably because of my inexperience as a Minister—we announced that the Cabinet Office would set up a performance and innovation unit study, reporting directly to the Prime Minister, to identify post offices' contribution to the vitality of communities; to consider how the post office network could best contribute to the Government's objectives for the future; and, in the process, to formulate objectives for the network itself. The report is important. It takes into account ideas such as internet cafes and bringing back services such as electricity payments in Scotland; I, too, remember that those disappeared years ago.
The transition from paper-based methods of paying social security payments to ACT does not start until 2003—a full three years from now. I know of the fuss about the letter sent by the Benefits Agency and mentioned by several hon. Members. I do not have time to explain that, but I assure hon. Members that child benefit payments have been paid monthly since 1982; there was no change in that respect. Some ambiguity was found in the relevant form, but we are tackling that. It was a one-off exercise that will not be repeated. The implications of the transfer to ACT are being given particular attention in the PIU study. We are taking positive and concrete steps to establish a framework for the network's future.
Of course, we are computerising. By spring 2001, we shall have dealt with the whole vast network—vast even after it has shrunk: if W. H. Smith, Tesco and Boots were added together and multiplied by 10, they would not amount to the Post Office network of 18,500 offices. To computerise it at a rate of 300 offices a week is an immense task which is being undertaken very successfully. We are up to date and the new project will produce a proper computerised network which will be essential to the future of the business.
The access criteria that we are planning to announce in the next few months will be the benchmark against which the Post Office Users National Council— revamped and given more teeth—and the new independent regulator, the Postal Services Commission, will monitor the Post Office proposals for the network and its evolution. For the first time, there will be a requirement in law for close, independent monitoring of the nationwide network of post offices to ensure that proposed closures that would present significant problems of access to Post Office Counters services will be taken up with the Post Office and ways of maintaining access investigated.
The question that was raised about how services might be guaranteed should a sub-postmaster move away misses the point, which is that post offices have closed and that prestigious, main post offices on the high street have been converted—that took place under the previous Government; we put a moratorium on the process from day one in office—and the services they 68WH offered moved into the back of hardware stores. That had been happening for years: the public's complaint was that they were not consulted properly and that there was no proper system of appeal; the community could not decide together how best to replace the facilities.
The appeals procedure is, in the light of such issues, very important. It is one of a range of pragmatic proposals to ensure the future of not only rural post offices but the post office network as a whole. It is not enough to admire the history of this vital piece of our social fabric, or merely to read "Lark Rise to Candleford" by Flora Thompson, which I advise hon. Members to read if they do not understand how important post offices were in the 19th, never mind the 20th, century. We do not need to make those places into a rustic museum. We need to think about how the network can face the future, given the changes going on.
Our decision to make a substantial contribution to the capital cost of the Horizon counters automation project, which we have radically restructured and put back on track, represents a major investment in the future of the network. The Post Office already provides banking services for Alliance and Leicester, Girobank, Lloyds TSB and the Co-operative bank. Given that 60 per cent. of rural villages have a post office and only 5 per cent. have a bank, that is a tremendous opportunity. Already, as hon. Members may have read last week, the Post Office is installing 3,000 cash machines in post offices as part of the drive to reintroduce banking to rural areas. Currently there are only a couple of hundred.
What is being done—and this is joined-up government—will help to tackle social exclusion. The terminology bores us all sometimes, but that is an important aspect of the programme. Every study demonstrates conclusively that financial exclusion is a cause and an effect of social exclusion. We want to encourage and support people without access to a bank. I shall deal later with the points that were made about the C-word. We want banks to offer people proper facilities, because that is an important part of the attack on social exclusion.
We have set a time scale in which the transfer will not even begin until 2003, and will then continue until 2005. We believe that, with the developments in banking technology and the introduction of new, simple banking products, it will be possible to cater to individual circumstances and provide accounts suitable to individual needs. While the vast majority—80 to 85 per cent.—of benefit recipients already have access to bank accounts, we recognise that some may still be unwilling to use a bank account. We will not compel them to do so. For those people, we are considering what alternative, simple electronic money transmission system using ACT that could also be accessed at post offices might be commercially available. We recognise that benefit recipients want to withdraw every penny of their benefit at one time. That means, first, that the facility must ensure that a person who is entitled to £20.68 gets £20.68—it is the Government's commitment to pay them that benefit—and, secondly, that no charges should be made against that £20.68, otherwise that person would not receive his or her full benefit.
My right hon. Friend the Secretary of State for Social Security made it clear—I invite hon. Members to read the report of the Select Committee on Trade and 69WH Industry—that we are not aiming to withdraw, reduce or dilute benefits that people draw. I emphasise again that there will be no change before 2003 to existing methods of benefit payments. All benefit recipients and state pensioners who want to will continue to be able to access their benefits in cash, across the counter at the post office, both before and after the changeover.
There is much more to do—in urban as well as rural areas. My points about those who are socially excluded are important in constituencies like mine. We can achieve much if we set our minds to planning the future of the network, which was unhealthily overdependent on the benefits system. There would have been a gradual move to ACT, and even a benefit payments card was not conceived as a solution that would last for ever.
The Post Office has had some marked success in introducing new work, such as bureaux de change and lottery work, but more can be done. The easy choice would be for us to allow the network to seep away in an uncontrolled fashion, to ignore the increasing shift to ACT, to refuse to tackle the deep-seated problems of financial and social exclusion, and to allow a failing PFI to continue. We could put the problem off until decline becomes crisis and crisis becomes collapse. These are difficult problems, but rural communities can be assured that we intend to resolve them, so that post offices will continue to meet the changing needs of the communities they serve as effectively in this century as they did in the last one.