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Lord Graham of Edmonton: My Lords, that was me?

Lord McIntosh of Haringey: My Lords, my noble friend did that all by himself! Then my noble friend gets the Office of Fair Trading to issue a press release on the subject yesterday. Then he gets the Link board to meet in a hot, steamy room in Harrogate from 11 o'clock in the morning until 4.30 in the afternoon, agonising over the issue which my noble friend has raised. Then, best of all, he gets the noble Baroness, Lady Greengross, to make an excellent maiden speech in this debate. I think that he has done pretty well.

The noble Baroness, Lady Miller, questions that because she thinks that our views ought to have been available to the Link board at its meeting today. Indeed, she has a point. However, I notice that although all noble Lords who have taken part in this debate have received briefing from Barclays Bank--except me--every single speaker has been antagonistic to Barclays Bank, even the noble Baroness, Lady Miller, who, like me, is a customer of Barclays Bank. At the end of her remarks, she felt some need to curry favour with her bank manager. I do not know what her overdraft is like at the moment! Therefore, I should have thought that the briefing Barclays sent to noble Lords for the debate was particularly counter-productive.

It is important to reach common ground, as far as we can, on the nature of the agreement which the Link board reached today. Certainly the resolution from the Link board meeting, which was issued as a Link interchange press release today, is pretty thin. It really does not explain much and it leaves open some questions. I believe that we can welcome some points without hesitation. As has been universally agreed, we welcome the transparency which will make charges known on screen to people withdrawing cash who will be able to change their mind if they do not like the charges which are to be levied. The Government have urged that on the British Bankers' Association for a number of months and it has taken an awfully long time to do anything about it, but let us welcome it while we can.

The decision that the Link network should be open to all--including customers from bodies other than banks and including those who do not have their own ATMs--is welcome because that will involve a new element of competition. It is much less clear what the benefit or disbenefit is of the decisions on surcharges. Indeed, it is not entirely clear what the decisions are. My understanding is that a disloyalty charge is out. A disloyalty charge is a charge made by a bank to its own customers for using a cash machine of another bank. However, as far as we can see, that will be replaced by what is called a "surcharge", which is a charge imposed by a bank when customers use machines other than those of their own bank--but that is a charge raised by the other bank rather than the customer's own bank.

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It is not entirely clear to me that consumers will benefit from that. A charge made by one bank is just as damaging to the pocket as a charge made by another bank. In any case, the customer will pay. It is certainly not clear to me that the decision not to impose a limit on the surcharge--I understand that that decision was taken on a vote in the Link board--is to the benefit of customers. We shall have to study the decision in a good deal more detail before we reach a firm conclusion. There is even some ambiguity in the Barclays press release about whether the disloyalty charge will be abolished for good. That point was raised by the noble Lord, Lord Newby, as well as by my noble friend Lord Graham.

What do we think about these measures? Clearly, our views are only provisional until we have more detail. We welcome transparency and opening up the network. We welcome the removal of double charging, if that is the case. However, we cannot be entirely clear about that. We are much less clear that the surcharge decision is to the benefit of consumers. On the face of it, it is disappointing that the cap on charges, which Don Cruickshank explained the need for, has been rejected.

As many noble Lords have said, we must also consider the implications for social exclusion. In banking terms, we want there to be available a basic bank account on which there are no charges for access. Of course, as a price for that, there are to be no overdraft facilities or frills. The question we have to ask ourselves is whether the availability of a basic bank account will be undermined to any significant extent by the decision taken by the Link board today.

It is appropriate for me to say what government action has been taken on banking questions, on competition and on social exclusion. We have been active in this area. First, we appointed Don Cruickshank to investigate banking efficiency and competition. We await his full report which will be produced by the end of March of this year. In advance he has given us some indication of his views on the issues which are before the House today. In advance he has approved the decisions with regard to opening up the network and with regard to transparency. He wanted to open up cash banking considerably, but I do not think that that has been achieved in the decisions.

The Government too have observed that the Office of Fair Trading, in a fairly effective press release yesterday, has indicated that it will keep a very beady eye on banking. It will do so using the powers under the Competition Act, which, as has been said, comes into effect at midnight tonight. The Act introduces two new prohibitions. One relates to agreements, whether written or not, which prevent, restrict or distort competition and which may affect trade within the United Kingdom (the Chapter I prohibition); and the other relates to conduct by undertakings which amounts to abuse of a dominant position in a market and which may affect trade within the United Kingdom (the Chapter II prohibition). It will be

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interesting to see whether the Director General of Fair Trading thinks that those prohibitions may apply to the banking industry.

The Director General has already expressed his concerns to the Link executive, indicating that he would be concerned if charges which were out of proportion to the cost of service provision were imposed on customers, a point made by a number of noble Lords. He has indicated also that he would not want such charges to penalise disproportionately the less well off or those who have limited access to ATMs. Clearly the role of the Office of Fair Trading under the regime of the Competition Act will have considerable effects on banking competition and will complement whatever conclusions Mr Cruickshank comes to.

But the Government's actions have not been confined to Cruickshank or to the Competition Act. As I have said, we have been encouraging basic accounts with banks that already offer them. The no-frills free access account is clearly to the advantage of the least well off in our society. It would be good if it included free access to cash machines, a point made by the noble Baroness, Lady Greengross.

Reference has been made in public--although not so much today--to the benefit changes announced by the Department of Social Security. I can assure the noble Baroness, Lady Greengross, that even after these changes take place in 2003 there will not be compulsion on anybody drawing benefits or pensions to have a bank account and to draw from that bank account. There will still be the option of cash payment through post offices.

In encouraging post offices to provide a better service, we are investing no less than £500 million in the Horizon IT project for improving the computerisation of the 18,000 post offices in this country. We want them to provide quicker and more efficient services. We want them also to provide new services, which may well include new cash machines in rural towns and villages and in deprived areas in our cities which currently have inadequate banking facilities.

Lord Graham of Edmonton: My Lords, the Minister has touched on post offices. I asked whether he had in mind that when these services were provided in post offices a charge would be made.

Lord McIntosh of Haringey: My Lords, I was just coming to that point. That decision, of course, will be for the Post Office and not for the Government. Certainly the Post Office will take into account the freedom which will exist for it either to charge or not to charge. I am sure that it will be influenced by my noble friend's views.

The Post Office is under investigation at the moment by the Cabinet Office Performance and Innovation Unit. The study, which is being carried out at the moment--and which will be reported to the Prime Minister by the end of March of this year--will assess the social value of the counters network; it will research new business opportunities for the Post Office

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within the government and private sectors; it will consider how the Post Office can best contribute to the Government's objectives in future; and it will assess the case for providing further support for post offices in rural and socially excluded urban areas which have high social value but may not be viable commercially. When that report is issued we shall be closer to an answer to my noble friend's Question.

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This has been a most valuable debate. It has given me an opportunity to express on behalf of the Government our concern both for proper competition between banks to the benefit of consumers and for the issue of social exclusion, a matter dealt with most powerfully by a number of noble Lords in this interesting debate.

        House adjourned at fourteen minutes before nine o'clock.


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