Examination of Witnesses (Questions 40-46)|
TUESDAY 29 OCTOBER 2002
40. Not a very good market under those circumstances.
(Ms Hewitt) No. I think there are some real issues
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.
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
Mr Berry: I think given the time I will leave
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
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.
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
(Ms Hewitt) I shall look forward to it.
Thank you very much.