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This is a happy day for the noble Baroness, Lady Thomas of Winchester, and I am really pleased about that. She asked whether this was a permanent change. We have made it clear that the award is a contract to 2015, with the possibility of renewal. She also asked whether we will compensate bidders for their costs. We are certainly prepared to entertain reasonable claims for costs for bidders who remained in the final process. This will add to the viability of the Post Office network. At Question Time today, my noble friend Lord Mandelson explained his focus on this and his determination that the Post Office should be sustainable and viable for the future.
Lord Skelmersdale: My Lords, I think the Minister said in one of his responses to me that the lawyers were originally consulted in the circumstances pertaining at the time. Can he go a little further and tell us in what respect the circumstances have changed?
Lord McKenzie of Luton: My Lords, the noble Lord will know full well that it is the convention of the House not to disclose the processes by which legal advice is sought on behalf of the Government or the detail of that. The point to bear in mind is that we are in turbulent financial circumstances in which particularly vulnerable people question the use of bank accounts or accounts of any sort, and whether they should have faith in the financial system. Given the strong brand that the Post Office has, it seems to be increasingly important that we do everything we can to make sure that its viability is sustained. It will be an added opportunity to encourage people into bank accounts, quasi-bank accounts and accounts such as the Post Office card system, which is different from where we were a couple of years ago. That fundamental backdrop and focus on the overriding public policy issue has generated this change.
Lord Faulkner of Worcester: My Lords, I assure my noble friend that we on these Benches at least are more than happy for him to make the Statement. We are aware that the Statement in the other place was made by the Secretary of State for Work and Pensions, and it seems very fitting that my noble friend should be here, particularly since his noble friend and mine answered my Oral Question little more than one hour ago. Perhaps the noble Lord, Lord Skelmersdale, did not hear that exchange, but he could have spoken to his noble friend Lord Hunt who asked my noble friend Lord Mandelson a number of the questions which he raised a few moments ago.
Without going over the ground that we covered earlier, first, now that the Government have saved the Post Office card account, will they give urgent attention
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Lord McKenzie of Luton: My Lords, my noble friend will understand that these questions come more directly under the responsibility of BERR rather than the DWP. I believe that my noble friend Lord Mandelson was very clear on that first point at Question Time today in response to my noble friends questioning. Issues around the Royal Mail are subject to review at the present time. I think that we share a desire to make sure that the Post Office and the Royal Mail are sustained in a robust form.
Baroness Byford: My Lords, since 2000 several Members in the Chamber today have sought to establish the future of post offices. It is a common drive, which I first raised during the passage of the Pensions Bill. The noble Baroness, Lady Hollis, is nodding. I have two direct questions. Will this announcement require the Post Office to look at those post offices whose future has already been put under jeopardy and will they be reviewed again? In his response earlier, the noble Lord, Lord Mandelson, said that he will talk to various government departments about ways in which they could get more trade going through post offices. Will the Minister particularly pay attentionthe noble Baroness, Lady Hollis, will not agreeto the way in which the DWP does business? Clearly, the pensions and benefits department put enormous pressure on anyone who is entitled to a benefit to have it paid through their bank if they have one. That is not fair to post offices. I hope that the Minister will say that that practice will not continue.
Lord McKenzie of Luton: My Lords, perhaps I may deal with that second point first. Although I think that it was an omission the first time around, in leaflets now being prepared to notify people who are paid by cheque or giro about the alternatives to bank accounts, the Post Office card account has been added to that list of facilities which people are encouraged to use. The statistics are that, of the payments made by the DWP, something like 78 per cent are made into more mainstream bank accounts, 20 per cent into POCA accounts and 2 per cent are still made by giro. Under these new contractual arrangements, there are improvements to the Post Office card account. Card account holders can access their accounts through ATMs and the opening of such accounts will be more streamlined. That has been a bit bureaucratic and has deterred people. People will also be able to have the benefit of the fast-track payment system that is part of the financial services system.
The noble Baroness asked me about the current closure programme. We do not believe that there will be an impact on that. Decisions on the last of the
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Lord Cotter: My Lords, the Minister rightly referred to the turbulence in the banking sector, and the solid and reliable service that post offices give in this country, which is why we welcome the announcement today. But I should like to press the point made by my noble friend that this solution for the five-year period will develop into a permanent solution. In response to the question asked by the noble Baroness, the Minister seemed to imply that the closure programme would carry on even had this agreement been instituted before today. That makes me very worried that the Government are not committed to a permanent answer for post office services as more businesses depend on the local post office for their transactions. An experiment was carried out which delivered services of one sort or anotherit could extend to the services for small businessesthrough the post office system, and it was abandoned. We are looking for a permanent solution.
Lord McKenzie of Luton: My Lords, we should recognise that many sub-post offices are small businesses in their own right. I do not think that I could put it more eloquently than my noble friend Lord Mandelson did at Question Time on the Governments determination to build and sustain a viable network for Post Office Ltd. The noble Lord asked again about the term of the award of the contract. It is a five-year contract. The current contract ends in 2010, but with the prospect of renewal thereafter. That does not seem to be an unreasonable length of time for a contract and would give some assurance to Post Office Ltd.
Baroness Hollis of Heigham: My Lords, like everyone else, I am delighted, for social grounds, particularly in rural areas, that we are going to sustain the post office network. I hope, as I am sure that other noble Lords will do, that, as a result, sub-postmasters take the opportunity to build their businesses to ensure that they are used. A sizeable chunk of the post offices that closed in the past year had fewer than 20 transactions a week. Consequently, if we do not use post offices and if they cannot or do not provide the services that we all want to see, they will not survive and enjoy the footfall rightly referred to by my noble friend.
I was concerned when the noble Baroness seemed to suggest that it was the DWPs responsibility to pay over the odds, if necessary, for transactions in order to keep afloat an institution which we all want to see stay afloat for social grounds. Perhaps my noble friend would remind the House of the cost per transaction of a DWP benefit payment, whether it be a pension or whatever, into a bank account, via POCA and a paper transaction. Perhaps he could give us a steer as to the relative costs, which used to be very alarming.
Lord McKenzie of Luton: My Lords, I am afraid that I cannot give my noble friend the specific detail, but I shall write to her. It is right that the comparative cost of paying people by cheque or giro is significantly greater than doing so through bank accounts and the Post Office card account. As I indicated, all the bidders in the final stage came forward with terms that were, in a sense, more favourable than the current arrangements, although obviously those are contractual terms between DWP and Post Office Ltd. How those terms translate into the cost of individual transactions is not something I can respond to specifically at the moment, but I will follow up the point and give my answer in writing. What is absolutely clear is that encouraging people to be paid by means other than through the giro system is safer, more secure, more flexible and generally better for them and considerably cheaper for DWP and HMRC.
Lord Eden of Winton: My Lords, first I should declare a long-out-of-date interest as a former Minister of posts and telecommunications. The Statement refers to the completion of the modernisation programme. Can the Minister assure the House that the Post Office has now secured more sensible manning and handling practices by the unions concerned? Will he also confirm that this Statement, welcome as it is, means that the plans that had been in existence for the closure of sub-post offices will no longer go ahead?
Lord McKenzie of Luton: My Lords, I cannot give an assurance on the latter point. I have made it clear in my previous two answers that this announcement does not affect the change programme that has been under way and is now heading towards a conclusion. We certainly believe that if the announcement had been other than that which I have been able to make today, there could have been a further impact on the network, but it will not change the restructuring proposals that are in place. They have been consulted and deliberated on over a considerable period of time.
On what the announcement means for the Post Office in the future, my Statement included a welcome from Post Office Ltd and an acknowledgment that together with the other government funding that has gone in, another £1.7 billion between now and 2011, a considerable difference is being made to the continuing viability of Post Office Ltd.
I welcome the Governments decision todayindeed, it would be churlish not to do sobut at the same time I draw attention to the fact that over the past six years a number of noble Lords on all sides of the House have been trying to guide the Government into understanding the need for a public service. Today we have seen, perhaps rather belatedly, the Government coming to the same conclusion. I am tempted to respond to an earlier comment about cherry picking, but that is for another day. The prophecies made on both sides of the House have all come true: we have
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I have some specific questions to put to my noble friend. First, can he put to bed once and for all the idea that Post Office workers and sub-postmasters serving behind counters are not allowed to promote Post Office business? There have been instructions not to talk about the Post Office card account and to refer to other forms of banking. Secondly, building on what the Minister said at Question Time today, does my noble friend consider todays decision to be a building block on the way to getting a peoples bank, something to which I referred earlier? There is no need to reinvent the wheel. We need only to take down the file for National Girobank, when the bank was given to the Alliance & Leicester Group, and start it up again. It would be as successful as it was during the 22 years of its existence. Specifically, I ask my noble friend this: when the Secretary of State says, Let us look at all these products, will that be taken into account?
Lord McKenzie of Luton: My Lords, I thank my noble friend for his support for the announcement. He referred to the Government taking business away from the Post Office, but we live in a changing environment. In the debate just last week reference was made to the fact that many more people are now doing business via the internet, which has driven some of the changes that have been necessary in the network.
On the proposition that Post Office employees and sub-postmasters are not allowed to promote Post Office business, I simply do not believe that that is the case. The market for the Post Office card account has declined from its peak of 4.3 million cardholders down to around 3.9 million at the moment. One development is that some people are moving from the Post Office card account, which has the advantage of simplicity as a channel for benefit paymentsthat is quite important in relation to the current legal advice that we have receivedon to more traditional, mainstream bank accounts. By doing so, they can use the facility of direct debit, which as we know is one route to getting discounts on utility bills. Obviously we want to encourage that opportunity.
My noble friend also raised the issue of the peoples bank. This is a matter for colleagues in the Department for Business, Enterprise and Regulatory Reform, but again the remarks made this morning by my noble friend Lord Mandelson were as clear as they could be on his determination to explore a range of options in the financial sector and possibly others to enable the Post Office to flourish.
Lord Clark of Windermere: My Lords, I thank my noble friend for the Statement, which I welcome because I know that millions of post office users up and down the country will join me in doing so. I was particularly interested in the declaration in the Statement that in the future there will have to be more involvement in financial services. Perhaps I may return yet again to the suggestion that has just been made. We will never achieve real success until we get more support from the centre for the idea of a central peoples bank. Is it
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Lord McKenzie of Luton: My Lords, again I welcome the support of my noble friend for the announcement and for the proposition about further involvement in financial services. I am sorry that I cannot give as full an answer as I might like in relation to plans around a peoples bank and broadening the business opportunities for Post Office accounts. That is simply because those issues are not the responsibility of DWP. I know that I answer for the Government today and I apologise for the somewhat restricted presentation I have made. However, I take the point that it is right that everyone should be able to have a bank account. In many ways, it is the best route for the most vulnerable, for the reasons that I have just set outlower utility bills and the assurance that their finances are as secure as anyone elses. A range of bank accounts and bank facilities can currently be accessed through Post Office LtdI have forgotten the exact percentage, although it is in my briefand there is the basic bank account, which must be provided through the Post Office network. There is much to build on and I will liaise with colleagues in DBERR to ensure that the issues raised by my noble friend are rightly pressed.
Lord Borrie: My Lords, my noble friend will take from this discussion the strong desire from all parts of the House that we should take advantage of the present difficult economic situation to create and develop a peoples bank and certainly to develop further todays Statement on the Post Office card account. That should be the first of many developments. Will my noble friend comment on the point, not so far mentioned, that Her Majestys Government is, at least in part, responsible for a reduction in choice for the consumer in banking services by allowing rather rapidly a merger between Lloyds TSB and HBOS, which will reduce the number of clearing banks from five to four? The reduction in choice for customers could be made up for if, out of this crisis, the development of the Post Office becomes a government objective.
Lord McKenzie of Luton: My Lords, I thank my noble friend for his questions and for his support for the Statement. It is interesting that the Post Office can add some diversity to the financial services system, which has been made less diverse by current arrangements. My noble friend will understand why the merger was proposed and is proceeding and why other arrangements have been put in place to recapitalise the banks and to provide liquidity in the financial services sector. This is not to support those institutions in themselves but because the banking and financial services systems underpin everything else that we do in our day-to-day living and the trade and commerce on which we all depend. I note again the comments about a peoples bank. I am sure that that issue was recognised by my noble friend Lord Mandelson earlier today.
Let me highlight one point on the Post Office card account. We need to be careful about broadening the remit of that instrument because, as I said, its particular benefit is in its simplicity if it is perceived as a channel for the payment of benefits, particularly in the current climate. That proposition was key to the legal advice that we received. The announcement, the restructuring that preceded it and the review that is under way in respect of Royal Mail provide a real opportunity for the future.
Lord McNally: My Lords, I am aware that the time for questions on the Statement is over; I am not trying to intervene in that time. The Minister has answered the questions with his customary skill. However, there have been frequent references to the Secretary of State. The reason why the Works and Pensions Secretary made the Statement at the other end is that the Secretary of State responsible is at this end. If the Lord President were in her place, I would ask heras I certainly shallto raise this issue. When a major Statement is made where the Secretary of State is a Member of this House, it should be made by the Secretary of State.
Lord McKenzie of Luton: My Lords, I should make it absolutely clear that the department responsible for dealing with the Post Office card account is not BERR but DWP. The Secretary of State with responsibility for it is the right honourable James Purnell, who is making the Statement today in the other place. I do not want any misunderstanding on that point.
Lord Hunt of Wirral: My Lords, so that there is no misunderstanding, it is important to recognise the validity of the point made by the noble Lord, Lord McNally. The Secretary of State, the noble Lord, Lord Mandelson, chairs the Cabinet committee that is responsible for the Post Office network and on which sits James Purnell, the Secretary of State. It would clearly have been possible for the Secretary of State, the noble Lord, Lord Mandelson, to have come here and made the Statement, because he chairs the relevant Cabinet committee.
The noble Baroness said: My Lords, noble Lords will remember the many excellent debates we had during the passage of the Housing and Regeneration Bill, which was much improved by the contributions of Members of this House. Today we are considering the draft of an order, the Housing and Regeneration Act 2008 (Consequential Provisions) Order 2008, which will make a number of amendments to legislation which are necessary once certain provisions of the Housing and Regeneration Act 2008 are commenced.
Before going into the substance of this technical order, I should perhaps explain how it fits as part of a wider package of orders coming forward. In addition to this affirmative order, there are also two orders subject to the negative resolution procedure before the House. The first, the Housing and Regeneration Act 2008 (Consequential Provisions) (No. 2) Order 2008, is similar in nature to this one save that it amends secondary legislation. The second, the Transfer of Housing Corporation Functions (Modifications and Transitional Provisions) Order 2008, transfers the existing functions of the Housing Corporation to the HCA and the TSA. All of these orders are linked in timing to the commencement of Section 5 of the Housing and Regeneration Act 2008. There is nothing special about Section 5, other than that it is the first section that we have not yet commenced. All being well, this will all come into effect on 1 December 2008.
It was a great pleasure to take the Housing and Regeneration Bill through the House because of the tremendous amount of cross-party support for the main purposes of the Actthe creation of the Homes and Communities Agency, bringing together investment and delivery, and the creation of a new regulator of social housing in line with the recommendations of the Cave report, Every Tenant Mattersand the many interesting and constructive debates we had on issues around these central principles. Noble Lords may be aware that these new bodies have been created, albeit in very limited form for now so that they can, for example, appoint board members. This order will come into force when the main powers and functions are turned on by or transferred from the existing bodiesthe Commission for the New Towns, the Urban Regeneration Agency and the Housing Corporationto the new ones.
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