Post Office Card Account

House of Commons

Peter Luff (Mid-Worcestershire) (Con): I intend to speak primarily as Chairman of the Business, Enterprise and Regulatory Reform Committee, which this morning produced a report on this very subject. We published it because we were so concerned about the extraordinary delay in reaching a decision that was originally trumpeted as coming in early 2008, then hinted at before the summer recess, and now here we are in the middle of November still with no decision. I commend the report to the House. I am grateful to the hon. Member for Chorley (Mr. Hoyle) for waving a copy.

However, I also want to speak as a constituency Member of Parliament, because it is from our constituents that we understand the importance of this issue. An 84-year-old man from Droitwich rang my office this morning to say how worried he was about the future of the Post Office card account. He explained that he and his elderly friends find it increasingly difficult to sort out their affairs because they can no longer speak to anyone to in order do it. He said that they find all these "touch machines" - his words - "for statements of accounts and so on very confusing, and that even parking the car and using ticket machines is worrying. He said how important the post office was to him and his friends because, as the National Federation of SubPostmasters pointed out in its submission, they get advice there on how to do these things. That personal touch is what the card account brings to elderly, disabled, worried, confused or deprived people.

I shall speak as a Select Committee Chairman, but I want to make one brief partisan comment first. I thought that the Liberal Democrats's motion was extremely good, and I discovered that that was because the hon. Member for Chorley drafted it. They have copied his early-day motion word for word and comma for comma, as he said. That explains the excellence of the drafting, which I commend to the House, and I invite the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) to vote for it in view of its origins, which are honourable indeed.

I was a little surprised and disappointed by the Government's amendment in two respects. First, touching on an issue we have already debated, it trumpets the fact that there was no subsidy before 1997. A word in the Secretary of State's ear: that is the wrong attack. Royal Mail Group is in trouble because the Conservative Government probably took too much money out of it, denying it the investment it needed, because it was making so much money. It did not need subsidy. I strongly advise the Secretary of State not to repeat the line about no subsidy before 1997. If he wants to attack my party, there is a better way of doing it. Subsidy is not a particularly good thing to trumpet anyhow because the Post Office does not want to be subsidised; it wants to be commercially viable again and it wants a plan to work towards that. That is really important.

On an even more partisan note, I would like to deal with this idea that the card account can be replaced with the

"potential for future ID management business for the Post Office"

So we replace a much-loved card account used every week by pensioners, through which they receive money, with an ID card that they do not want, which they replace perhaps once every 10 years, and for which they have to pay for the privilege. I find bewildering and surprising the idea that ID management in some sense replaces the Post Office card account. I shall vote with pleasure for the Liberal Democrat motion, knowing its origins, and with pleasure against the Government's amendment because it is so outrageously wrong.

We are talking a lot about the future of the post office network and the potential for up to 3,000 closures. That potential certainly exists, but this debate is all about the 4 million vulnerable people who choose to use the Post Office card account. As we say in paragraph 12 of our report:

"the POCA caters for precisely the people who do not want to, or cannot, use conventional bank accounts: in the very nature of things, they are disproportionately likely to be poor or elderly."

They actually want the Post Office card account as a separate pot of money. Some of them have bank accounts, but they want that separate pot, too, because it helps them to manage their affairs. I sometimes think that the Department for Work and Pensions has a slightly patronising attitude of, "We know better than you how you should run your financial affairs." Actually, 4 million people still choose to run them this way, in the face of massive incentives not to have a Post Office card account, and those wishes deserve to be respected. As we say in our report:

"Their needs should be paramount"

as the Government reach their decision.

I would like to highlight the question of state aid, which is a thorny question for the Government. The state aid permission for subsidising the network was given on five specific grounds, and as the hon. Member for Cardiff, Central (Jenny Willott) said, at least two of these depend directly or indirectly on the continuation of the card account:

"the processing of social benefit and tax payments"


"universal access to basic cash and banking facilities and Government savings instruments, especially for rural customers and those on social benefits".

As we say in our report:

"The Government must consider the implication of the state aid decision".

If the Post Office does not get the card account, the Government could also lose the ability to subsidise it. That will be necessary until the post office network makes money once again, as I believe it can under its new and very good leadership.

As I said in my intervention on the Secretary of State, the Committee had some reservations about the access criteria, but broadly speaking we endorse them in the current circumstances. What a shame they were not spelt out in the tender documentation in the original advertisement in the Official Journal of the European Union. The journal entry contained an important phrase. It said that the ATMs and personal teller outlets should be "located throughout the UK". It is an important phrase that the Secretary of State needs to note carefully. I believe that it gives him the opportunity to make the right decision on the future of the card account.

There are two criteria that the Government need to bear in mind relating to that remark about the distribution throughout the UK. In paragraph 13 of our report, we say:

"A tender which offered far more teller outlets than the 10,000 specified,"

the advert specified 10,000"

"but could do so only in urban or relatively densely populated areas would not, in our view, meet the needs of POCA users."

It is important to understand that. Paragraph 15 states:

"Moreover, the new service will have to provide reliable access to cash for those using the card account. No tender should be accepted if it cannot demonstrate that it can meet this need, at the branch most convenient for users."

That is important.

Mr. Weir: Paragraph 14 makes the point that, under the LINK network, the nearest free ATM, apart from that in a post office, can often be many miles away. If that post office goes, it will be difficult in rural areas to get free access to cash.

Peter Luff: I am grateful to the hon. Gentleman - my hon. Friend for these purposes -who is a valuable member of the Committee, even though he was not with us last week; I believe that he had other business in Glenrothes. However, he makes an important point, which I would like to have made, if I had time. Our report is short, but I cannot read it out in 10 minutes, even at the speed at which I normally speak.

Only the Post Office offers guaranteed access to cash. The ATM network cannot be guaranteed, because many of those machines are located in post offices that might close if they do not get the Post Office card account business. Only the Post Office has the cash and transit operation to take the cash to the post offices so that it is there when pensioners, whose most basic financial inclusion right is having access to cash, want it on a Monday morning. There is no guarantee that any other provider could deliver the cash at the moment that it is needed. In our view, that is a crucial criterion.

The problem appears difficult for the Secretary of State to resolve, but I do not believe that it is. I am pleased that he remains in his place - it is typically
courteous of him to be here, listening to the debate, rather than leaving after making his contribution, and I greatly appreciate that. There is a solution. The contract has been advertised on the basis of the most economically advantageous tender. That is important, because it is not a simple question of cost. Even if one bidder offers a cheaper option than another, the Secretary of State has the right to choose the one that will give the best overall result. As the report states:

"This allows the Government to take a wide range of criteria into consideration. It must do so, to ensure that easy and reliable access to cash and access to benefits remains possible for those who currently use the Post Office Card Account."

We had an exchange about access criteria during the Secretary of State's remarks. Those criteria should underpin his judgment. Anything that falls short of them is, according to the Government's judgment, inadequate and wrong.

We conclude our report by saying:

"There is very little time for the Secretary of State to come to a decision, but when he does so he must take the needs of POCA users, and of the community as a whole, fully into account."

It would be strange, when this country is in a recession and many thousands of small businesses face a difficult and challenging time, for the Government, who claim that they support small businesses - they did so in the amendment to the previous motion - to make a decision that directly threatened the future of at least 3,000 businesses.

I do not understand the reason, but the Department for Work and Pensions and its predecessor have never liked the post office network. Those of us who were Members of Parliament between 1992 and 1997 remember that the Conservative Government played with the same idea and speculated about ending payments through post offices. There was a huge outcry from those of us who then sat on the Government Benches and the Government quickly retreated, realising the error of their ways. Clearly, civil servants in the then Department of Social Security kept the idea in the back of a drawer, brought it out and offered it to a new set of Ministers, who willingly and unthinkingly embraced it. They were wrong to do so. The civil servants in the Department have something against the network. It is the job of Ministers to say "No. There is something immensely important and valuable here that we mustn't allow the country to lose."

I therefore say to the Secretary of State: fight the prejudice and enable the Post Office, which has fine new leadership, strong commercial ambitions and a genuine prospect of making a go of it again in the harsh new environment in which we live, to succeed. Please help the Post Office do that - do not get the decision wrong.

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