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| Extract from the debate in the House of Commons on Wednesday 15th February 2006. |
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| Mr. David Ruffley (Bury St. Edmunds) (Con): |
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| It is always a pleasure to serve under your chairmanship, Mr. Bercow. |
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| I congratulate the hon. Member for Leeds, East (Mr. Mudie) on securing this debate and on a superb speech. |
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| The future of the Post Office card account is escalating into a major political problem for the Government. More than one third of the Members of |
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| 15 Feb 2006 : Column 491WH |
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| the House of Commons have signed early-day motions 147 and 1531, which express concern about the future of that account. The Post Office card account cannot be debated in isolation from the future of the sub-post office network, as many excellent contributions today made clear. |
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| I have no desire to play Punch and Judy politics on this issue. There is a great deal of cross-party agreement and I am prepared to accept that the Government have put many millions of pounds into social network payments and the urban reinvention programme, but there are still some serious questions that the Minister must address because Government rhetoric is simply not being matched by Government action. |
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| The Cabinet Office performance and innovation unit's report of June 2000 assured us that over the next five years, there would be development of |
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| "a shared understanding of the role that post offices should play in the longer term" |
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| and that advice would be given to the Government on the options for the policy framework after 2006. It is now 2006 and there is not much sign of a framework. The Government have not said whether the social network payment will extend beyond 2008. They have not said whether Post Office Ltd will have its current duty to prevent avoidable closures in rural areas extended beyond March 2006. We are now told that after 2010 there will be no Post Office card accounts and that everyone should have realised from day one that that was the deal. Even worse, three pilot schemes have been introduced this year out of the blue, as hon. Members made clear, with no consultation and, as the hon. Member for Leeds, East said, without Parliament being properly informed. |
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| The pilot schemes are likely to have the effect of ensuring that well before 2010 a large number of Post Office account holders will have their accounts closed, 35,000 existing customers will receive a letter from the DWP asking for their account details, 3,000 new benefit claimants will not have a right to open a Post Office card account, and 2,500 existing customers will unilaterally be told that their payments must be paid into a bank account and not an existing Post Office card account. |
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| As the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) and my hon. Friend the Member for North Shropshire (Mr. Paterson) said, all that echoes the rather high-handed, bullying tactics deployed by the Department when the order books were phased out. |
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| Post Office card accounts are very popular and more than 4.5 million people use them. Some do so purely to support their local post office, as the hon. Member for Stroud (Mr. Drew) said in a powerful observation. In other cases, as Age Concern's director general made clear, people opened Post Office card accounts because it was "easier for older people without a bank account to receive their cash securely without the fear of becoming overdrawn or paying extra charges." |
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| That was the beauty of that simple, straightforward account. Many pensioners who did not have traditional bank accounts found that even basic bank accounts did not meet their needs. |
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| The paper from Citizens Advice on banking benefits makes it clear that basic bank accounts are not a panacea. There may be difficulties getting a credit score |
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| 15 Feb 2006 : Column 492WH |
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| to obtain eligibility for such an account. There may be problems with identification documents and the length of time it takes to open an account. Pensioners in my constituency said that they did not want a basic bank account because they would be bombarded with banking bumph trying to sell them things that they did not want. That put them off the whole idea of getting involved with the basic bank current account system with Barclays or any high street bank. Those are reasons why the Post Office card account was the choice of so many people. |
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| We have heard that the National Federation of Sub-Postmasters was not told when the Post Office card account was created that it would be a temporary contract or that it might end in 2010. Most of us—the Minister is the exception—agree that that is the case. There was never a clear statement that the account would go beyond 2010, but nor was there a statement that it would not. In the Government's response to the Trade and Industry Committee's report, "People, Pensions and Post Offices", in September 2003, they said: |
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| "This is the first year of a seven-year contract and it is too early to speculate about what might happen in the future." |
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| I took the trouble of listening to the Minister on that great programme, "Moneybox" on 21 January. You may think that I should get out more, Mr. Bercow, but it is a very good programme. It disclosed a lot of information and the Minister said of the contract for card accounts: |
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| "Well, they were always an interim arrangement." |
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| Paul Lewis, the interviewer, said: |
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| "Well you say it was always intended" |
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| to be interim |
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| "but I asked your office for any evidence from 2000 to 2003. They couldn't produce any." |
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| The Minister replied: |
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| "It's always been in the contract. Now we didn't speak publicly about the contract for commercial reasons." |
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| The Government are speaking publicly now, but it is a bit late. It really is unacceptable for the Minister to say that people knew about the interim nature of the account. How on earth could they have known something that was stated in a contract that nobody could see or know about for commercial reasons, as the Minister said on the radio? Such logic is usually found in the pages of "Alice's Adventures in Wonderland". |
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| The Minister tried to get out of the hole he had dug for himself by saying that there are four years left on the contract and that the Government would now start helping people in a sensitive way to migrate to other accounts. The Minister talks about new accounts that will be developed by Post Office Ltd. That sounds fine, but, unfortunately, the sub-postmasters in my Suffolk constituency to whom I have spoken know only that they have no chance of planning their business for the long term. They fear that the pilots will be extended and that they will drive people away from POCAs long before 2010, with a commensurate loss of subsidy to urban and rural post offices. It is for that reason that the National Federation of Sub-Postmasters referred to the DWP tactics as underhand. I believe that there is another word for them. |
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| Direct payments removed more than £400 million of annual revenue from the post office network. Not coincidentally, that move resulted in the closure of 2,500 |
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| 15 Feb 2006 : Column 493WH |
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| post offices. The announcement of the termination of the POCA in 2010—in effect, before 2010, for the reasons that I gave—will be a further grievous blow to post offices. They will lose income; it is as simple as that. If post offices close, not only will pensioners stop accessing benefits and pensions through the POCA, but no one will be able to access money from basic bank accounts, or any bank account, because there will be nothing at all in the village, settlement or suburb. |
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| In conclusion, we need an urgent review of the future of the POCA and the strategy for the post office network. First, it would be useful to know on what basis the Government say that it costs £1 a time to pay pensions or benefits on the POCA, compared with 1p on a traditional bank account. Sub-postmasters get about 15p for every £100 withdrawn from a POCA, but no one seems to know what the remainder of the money is or whether it is a subsidy that the Government will continue in the future. |
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| Secondly, we need a clear indication from the Minister today that he has spoken to his colleagues at the Department for Environment, Food and Rural Affairs and the DTI about doing a cost-benefit analysis of the overall cost to the whole of Government should the change go through and lead to closures of post offices. My hon. Friend the Member for North Shropshire also made this point. What about the loss of jobs? More than 14,500 sub-post offices employ more than four people, many of them part-time. What will happen to them, and what will be the social and economic costs of those job losses? |
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| I conclude by quoting the words of Sally Reeves, who is an NFSP representative in East Anglia and the sub-postmistress of the excellent Stowupland post office in my constituency. She stated: |
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| "If you listen to the DTI and what they are saying about Government investment you want to give them credit for that. But when you hear the DWP talking about the scrapping of the post office card account . . . you ask yourself 'whatever happened to joined up government?'." |
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| Perhaps the Minister can tell us. |
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