Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 40-46)

TUESDAY 29 OCTOBER 2002

RT HON PATRICIA HEWITT MP

  40. Not a very good market under those circumstances.
  (Ms Hewitt) No. I think there are some real issues there.

  41. The Treasury's concern may be the financial health of the industry concerned, which is fine. My point is the Department of Trade and Industry may be looking at the implications for some of the high risk businesses, in manufacturing for example, who are being asked to pay 250-300% increases in premiums.
  (Ms Hewitt) Of course we are looking at that. As I said we are doing it with the Treasury which has to look at the overall state of the insurance market but we are concerned also about the overall state of the market because it is very clear, or at least the story we are hearing from more and more employers is that competition is not working in some sectors of this market and they find themselves trapped or simply reliant on only one company which is prepared to offer that particular company in that particular sector employers' liability insurance and the price is a 200-300%, whatever, increase in the premium. There is a real concern there and we are trying to get to the bottom of it and see what appropriate action might be.

  Chairman: Doubtless we will return to this issue but we have a couple more questions. Roger.

Mr Berry

  42. A quick question on where we are in relation to the universal bank and post offices because clearly there are a number of post office managers, not to mention pensioners, who are very concerned about the uncertainties for the future. Where are we on this?
  (Ms Hewitt) We are making good progress on the universal bank, in fact rather than use that phase "universal bank" I think it would be more accurate to talk about banking at post offices. This has really got three strands to it. One is the basic bank account, which we have got all the banks signed up to effectively, and of course it is inherent in the basic bank account that it is accessible at the post office and that agreement has been reached with all the banks concerned. That is the basic bank account. Then we have the Post Office card account which the Post Office itself will be launching before April of next year. Then we have also ordinary current accounts which for many banks, not all banks but many banks, can also be used at the post office so you can draw your cash out and pay your cheques in, do your banking using a regular current account at the post office. The introduction of ATMs into 3,000 post offices in the fastest roll out of ATMs that has ever been done makes it easier for even more customers to do a significant part of their banking at post offices. All three routes to banking at the post office will not only generate direct payments, transaction payments, to the sub-post masters and mistresses but will help also to keep up the foot-fall that they rely on to buy the other products that they are selling in those shops.

  Mr Berry: I think given the time I will leave it there.

Sir Robert Smith

  43. In a recent debate there was a commitment to bring forward the announcement on how you plan to implement your commitment to keep rural post offices open. I just wonder if you are in a position to provide more information on how this is to be funded?
  (Ms Hewitt) We will make an announcement on that very, very soon. I am afraid I cannot pre-empt it this afternoon but it will be good news for rural post offices and particularly rural communities.

Linda Perham

  44. On company pensions lastly. Last week the Secretary of State for Work and Pensions announced that he wanted to take action to prevent solvent companies winding up their final pension schemes; but more generally against the background of growing concerns of the adequacy of pension provision in the UK we wonder if there is any scope for use of employment law to require and encourage the expansion of company pension schemes, perhaps by including pension arrangements with collective bargaining or other measures which could help alleviate the potential crisis in the pensions industry?
  (Ms Hewitt) This is an enormous issue and obviously a very complicated issue as we look at how Government, employers and individuals share the whole challenge of making proper pension provision in a time when life expectancy is growing really very rapidly and, particularly for men, working lives have been shortened. There are a number of issues there and of course we are working very closely with Andrew Smith and his team who are in the lead on this issue. We will address a lot of those issues, I think, in the Green Paper that Andrew will be publishing later this year. Of course we are looking at how this particular issue of occupational pensions fits within the employment relationship as a whole but are very conscious of the fact that we have to balance here the objective of getting a good pension provision and adequate savings levels for people's retirement against imposing excessive burdens on business. It is an issue that we are looking at very carefully but of course I am aware of what the TUC and others have been saying on the collective bargaining issue.

  Linda Perham: I shall wait for the Green Paper.

Chairman

  45. That was to have been the last issue but I am very conscious of the fact that you have not been given the opportunity to tell us that it is still your objective to reduce the number of assistance schemes to industry. I have had, I think, as Chairman of this Committee something like six Secretaries of State and every one of them has told us this. I feel it would be unfair of me not to give you the opportunity. Because of the shortage of time maybe you can tell us how many there were when you arrived and how many there are now and maybe you could write to us and give us a list of the ones which are being cut back and the savings which have been made and the money which has been transferred elsewhere. If you can give us the bold headline figures I am sure we will go away with a skip in our step. We have some other people to talk to but it would brighten our day.
  (Ms Hewitt) Thank you, Chairman, for the opportunity. I cannot give you the whole figure at the moment because we are still working on it but when we counted all the schemes we did find about 186/183, a very large number. Rather than simply look at which of those we can cut off we have actually started from a blank sheet of paper and said "What are the objectives here? What are the ways in which we can help companies become more productive and more successful? What is it appropriate for us to be doing?" Then we will simply put in place much simpler ways of delivering those objectives. That new system will gradually replace all of those existing schemes. What we are doing, by using the evaluation that has been done on many, not all but many of those schemes, we can really build on what works so that, for instance, on something like the SMART Scheme, which has been hugely successful, grants to companies, to small firms to prototype new products, that has been responsible for the survival and growth of many world beating manufacturing companies that we have got now, we are going to keep the essence of SMART but it will become something much bigger.

  The team that I have got working on this have been making fantastic progress and, again, I expect to make an announcement on that certainly before Christmas. I would be delighted to come back and share the details of that with you but I will certainly, if I may, accept your invitation to write to you with the details as soon as I make that announcement.

  46. We can take it that there are 183 and we have got one that is saved and 182 have the axe hanging over them. Maybe I am putting words in your mouth, I do not think I need to but never mind. Secretary of State, thank you very much, that has been extremely helpful. You have been very frank and lucid with us. Last time you said you would come back next year, we will have you back next year but it will be sooner rather than later.

  (Ms Hewitt) I shall look forward to it. Thank you very much.





 
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