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Baroness Hollis of Heigham: My Lords, the noble Lord, Lord Higgins, mentioned the issues in terms of the position of recipients, post offices and communities. I hope that we are now all agreed that, provided post offices continue to exist, recipients face not only no disadvantages from the system that is proposed but many additional advantages. They will be able to have part payment of benefit and they will have greater security against fraud. I understand that they will be able to use their card at any post office in the country, rather than just at their local one. Therefore, when they go to visit their mum, their daughter, their niece or their nephew they will have that convenience. Therefore, in my view, customers have everything to gain--they will gain far more advantages than they currently have--from a card system.

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The noble Baroness asked about the cost implications of a card as opposed to a book. I cannot give a precise figure. However, the card is not a smartcard. My understanding of a smartcard is one that has information encoded on it. That is done through expensive technology. However, I am talking simply about an ID card like a storecard. I am talking about the kind of card one gets at Tesco or Boots. I cannot say whether the costs of such a card are less or more than those of an existing giro book, but I have no reason to think that they are extensive.

Lord Boardman: My Lords, does the noble Baroness believe that sub-postmasters, who have studied these proposals in great depth, do not feel that they will damage their small, rural businesses?

Baroness Hollis of Heigham: My Lords, I am trying to deal with the points in order. I was discussing the position of the recipients and whether they will be able to draw their benefit in cash. That will be the case. The card will not constitute a charge on them. They will not face any charges for using the card. However, they will have additional service facilities. They will have greater protection against fraud. They will have greater convenience of use, including out of hours use and the use of cash machines. I hope that I have dealt with that bundle of concerns.

Whether one refers to post offices or banks and whether one says that people draw their money from a post office which also offers banking services, or whether one wants to call it a universal post office bank does not matter provided that people can obtain the amount of money they want at a time and in a way that is convenient to them and which offers greater security.

Lord Higgins: My Lords, has the noble Baroness tried putting a cashcard into the cash machine downstairs? Has the machine issued a notice saying that she may be charged for that transaction? How much does the noble Baroness think that she will be charged? That is much the same point as we are now discussing.

Baroness Hollis of Heigham: My Lords, I have used the cash machine and I do not get charged. As my noble friend Lady Gale rightly said, people will have a choice. Some people may use cash machines, of which we understand there will be about 3,000 in the 18,000 existing post offices. However, that figure may increase. They may have access to their existing bank for which the post office acts as an agent in the post office branch. That would be exactly the same situation as now. Already a large proportion of banks have made arrangements, including Barclays, Lloyds, the TSB, the Alliance & Leicester and so on.

The third proposed method is for a universal bank--a Post Office bank, if you like--in which, whether you call it a bank or a holding account, the post office will hold the account. You will not be able to write cheques on it; you will simply draw your benefits out. The only difference customers will notice

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is that they will go in with their card rather than their order book--and it will be a darn sight safer as a result. Whichever method the customer chooses, he or she will have those options within a post office.

That was the first point made; I hope that I have addressed it. We seem to be making extraordinarily heavy weather of something that most of us do two or three times a week when we go into stores and so on.

The second point concerned the position of the post office and the owner. The noble Baroness is absolutely right: we are expecting the PIU report very imminently. As of 21st or 22nd June, the Prime Minister said it would be within the next few days; it is very imminent indeed. I should feel more comfortable discussing the possible future of the network of post offices in the context of that report. I hope and believe that that, taken together with the commitments given in the Postal Services Bill, will address the noble Baroness's point. I shall have to ask her to wait for that, I am afraid--otherwise I should be in severe danger of contempt, if you like, of the other House.

The third point was raised by the noble Lord, Lord Higgins--it was also raised by the noble Lord, Lord Boardman--and concerned the position of rural communities and what was happening to them. It is true that in the past 10 years something like 10 per cent of the rural post office network has been lost; about 25 per cent of the banking network has been lost; and about 30 per cent of rural community petrol stations have been lost. For various reasons, people are choosing to go elsewhere.

But it still remains the case that in the UK something like 70 per cent of all communities with more than 500 people have a post office; 30 per cent of communities with populations of 100 to 500 have a post office; and, in terms of density of post offices compared to France, Germany and the rest of the world, we have a greater density of post offices than almost anywhere else. Some 90 per cent of people live within a mile of a post office. So in that sense we have a very good network.

The question is whether what we are doing is likely to enhance and strengthen the network or likely to see it slide. As I said, some of these questions must await the publication of the PIU report. I hope that your Lordships will not pursue this matter tonight but will wait for the report and come back at Third Reading if you are dissatisfied. That is the only way we can have a fair debate without putting me in the impossible position of being asked to divulge information that is not yet in the public domain.

At the end of the day, the point made by my noble friend Lord Warner is absolutely right: post offices cannot stand still. If nothing happened to benefit books, post offices would continue to close at an accelerating rate because people increasingly find that the order book/ration book system is not a convenient way of getting their money. They are choosing to vote with their feet and to leave the post office behind. That leaves as a result the footfall, if I may use that phrase,

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of the quarter or so of moneys which comes out of the post office and is immediately recycled into the local community.

If post offices are to survive, they have got to stop the leakage of customers. Some 500,000 customers a year are choosing to stop using a post office and to go to a bank because they find it more convenient. How will post offices do that? By offering the same facilities, and, as a result, being able to recycle that quarter or third of moneys into other facilities--the local shop and so on--that often run in parallel with the post office. If they do not do that, the Post Office will shrink and shrink and shrink. People are not prepared any longer to live with the ration book service--the long queues, the inconvenient hours, the lunchtime closing, the half-day closing, the Saturday afternoon closing and so on. They want a more generous and expanded service. That can be achieved through machines, through a universal bank, through bank accounts being held at post offices and so on.

I am confident that, at the end of the day, post offices will survive because their communities support them. The Government have given broad undertakings on their position in regard to subsidy. That will be looked at again in terms of the PIU report and succeeding debates. But your Lordships will know that we are not expecting to move to the new system until 2003 and that there will be a two-year transition after that. Some of the fine detail--about which post office, what access criteria, what level of subsidiarity and so on--is quite commercially sensitive to be discussed between government and POCL and POCL and the sub-postmasters. Noble Lords will understand that.

I return to the basic questions of the noble Lord, Lord Higgins. As regards the recipients, I am confident that they will see an enhanced service and they will wonder why anyone ever argued the virtue of order books and giros. The more I learn about this, and the more I read the draft copies of the PIU report and so on, the more confident I am about it. With regard to the position of post offices, they will survive only if they meet their communities' needs and as a result get the footfall of that money circulating. We believe that this way of doing it is the better way forward for them to do so.

As for the communities, at the end of the day post offices will survive because people choose to support them, in the same way as pubs, village halls and schools survive. I ask your Lordships to defer any decision or vote on this issue until the PIU report has been published. I guarantee that the PIU report will be out before we come to Third Reading. There will be ample time. In the light of that, some of the concerns, which in all good faith I cannot address today for reasons noble Lords will understand, will I think be met.

I hope I have satisfied noble Lords on the point about the recipients. On the point about post offices and their communities, I suggest that noble Lords await the PIU report. If they are dissatisfied following

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that, they can return to the matter at Third Reading. Therefore, I hope that noble Lords will not seek to press their amendments.

10 p.m.

Earl Russell: My Lords, I am extremely sorry to have baffled the Minister. I think the Minister has forgotten quite how reluctant noble Lords on the Opposition Benches are to accept government assurances.


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