Pensions and Post Offices
24 March 2004
In a speech to the Commons, David Willetts criticises government plans to prevent pensioners from continuing to receive Pension and Benefit payments through a Post Office Card Account

Mr. David Willetts (Havant) (Con): I beg to move,
That this House believes that all Post Office customers who wish to continue receiving their benefits, pension payments and tax credits through the Post Office should be able to do so through a Post Office Card Account opened at the counter of a Post Office or sub-post office; notes that the Government has encouraged Post Office customers to use their own bank accounts or basic bank accounts, whilst preventing the promotion of the Post Office Card Account; further believes that the Government should use the roll out of Direct Payment to encourage the take-up of all benefits and tax credits; calls on the Government to clarify urgently how housebound, disabled and older people who are not able to cope with the three direct payment options will be able to claim their pensions and benefits after 2005; recognises the significant role played by local post offices in both rural and urban areas; appreciates that ending cash benefit payments will deprive sub-postmasters of an average of 35 per cent. of their income; notes that this will make many post offices commercially unviable and is likely to lead to yet further closures; further calls on the Government to ensure that the urban post office closure programme is conducted systematically and only after consulting all relevant parties including Post Office users; and condemns the Government's failure to deliver benefits and tax credits in a simple, easy to understand manner while at the same time jeopardising the future prosperity of the Post Office.

The motion reflects a widespread belief not just among those on the Opposition Benches but in all parts of the House about the importance of post offices as part of the local community. We have deep concerns about the long-term viability of the post office network under the Government's approach. Those concerns were powerfully expressed by my hon. Friend the Member for Eddisbury (Mr. O'Brien) in the debate in the House on 13 January. That debate focused on the post office network and the importance of sustaining it and investing in it. Today I shall consider the post office network from the point of view of the people who use it—from the demand side, rather than the supply side. I shall consider the point of view of benefit claimants and the pensioners whom we represent, who wish to have access to a viable post office and to claim their benefits in a way with which they are long familiar and comfortable.
Although it is always good to see the Secretary of State in the Chamber, it is a great pity that she was not present for the debate on 13 January, which was about her responsibilities for support for post offices. Today, even though we are talking about services for benefit claimants, the Secretary of State for Work and Pensions is not present. I regret that, because I want to consider the crisis in our post offices from the point of view of those claiming benefits, many of whom are very unhappy with the Government's approach.

Mr. Patrick McLoughlin (West Derbyshire) (Con): May I tell my hon. Friend about Belper? Under the reinvention programme, which seems to be more like a programme of mass destruction, of the five post offices that were opened in Belper, four were closed. We were assured that the one remaining post office would be able to cope, but last week there was absolute chaos in it. When the Government made a commitment to allow people to collect their benefits, they did not say that they would make it impossible for them to do so—but that is just what they have done.

Mr. Willetts: My hon. Friend reflects the views of many constituents across the country who face practical problems that give the lie to some of the complacent assurances that we received from Ministers. The Trade and Industry Committee report "People, Pensions and Post Offices" contains powerful evidence about the scale of the problem that our post offices face and confirms why we are right to press for the right of people to choose how they receive their benefits. Paragraph 12 of the report states that the "old" system—the so-called old system—
"offered the choice between a bank or building society account or an order book for use at a post office to collect benefits and pensions.
Direct Payment essentially offers the choice between a bank or building society account which may or may not be usable at a post office, or the Post Office card account, but not the order book. It is difficult to see that customer choice has, in practice, been extended significantly. Offering the full range of customer choice would entail allowing those who wish to persist with the order book system to do so."

The Opposition are committed to the order book system as an option not because we are retro or old-fashioned, but because we believe in choice. If there are millions of people in Britain, including many pensioners, whose choice it is to use such a system, why should the Government try to deprive them of the choice that they reasonably wish to exercise?
People are right to be wary of some of the options that are in front of them instead. I shall quote the experience of a constituent of mine—Mrs. Mortain, who lives in Havant—whose case I have heard about literally in the last few days; I have her permission to do so. She has been receiving her pension via her bank account, in exactly the way that Ministers are trying to encourage, but she has not received a bank payment for the past five weeks. They have suddenly ceased. She got on to the Pension Service and it told her that it is currently experiencing what it called
"a glitch in the system",

and that hundreds of others are affected.
The Secretary of State for Trade and Industry may not be able to respond to this, but I hope that in the winding-up speech of the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), we will learn whether he is aware of problems in delivering pension payments into bank accounts, and whether my constituent is not alone and there is a glitch in the system affecting many others. It has reached the stage where the Pension Service is saying, "The only way we can get you the money is to issue you with a giro cheque that you can cash at your local post office." That will be the fallback when computerised payments to bank accounts have not worked. Is that not why so many pensioners do not trust the Government's assurances on payment in other ways?

Mr. Crispin Blunt (Reigate) (Con): That news will be of great concern to old people in Reigate, where three post offices have been closed—in fact, the latest one is closing on Saturday—and they are left with the main post office in Reigate, which is hosted by Safeway. Morrisons, which is taking over Safeway, has been quite unable to provide me with any reassurance that the post office will stay open. Meanwhile, the Post Office is pressing ahead with closing the branch in Holmesdale road. It is a dreadful state of affairs if it cannot guarantee to pay people their money. The reinvention programme should be stopped immediately until the matter can be sorted out.

Mr. Willetts: My hon. Friend is absolutely right. He rightly draws my attention to the fact that, given all the changes in the world of supermarkets at the moment—in my constituency, Tesco has just taken over our local one-stop shop—many of the established arrangements for post offices in such shops are in question. That is another source of uncertainty and instability. I hope again that we will hear from the Secretary of State about what steps she is taking given that significant communities—towns—face the uncertainty that my hon. Friend describes.

Gregory Barker (Bexhill and Battle) (Con): Does my hon. Friend accept that a great deal of insult seems to be added to injury when post offices are closed in the circumstances that he has just articulated, because of the mechanistic and formulaic way in which the Post Office goes about closing them? In Bexhill, three post offices have closed, yet when I have tried to make representations, I have received only a computer-manufactured letter, and even when errors in the reply have been pointed out, I have merely received a further computer-generated letter.

Mr. Willetts: My hon. Friend is quite right. One problem with the so-called consultation is that it is not real. Instead, we have something of which the Government have made rather a speciality: bogus consultation during which one never gets the sense that one is receiving a genuine, individual letter or that any response will be properly assessed by an individual. The Opposition wish to respect the views of the people whom we represent—the pensioners and the many people claiming benefits. We are in favour of choice and in favour of the customer. That is the philosophy that underpins our approach to the Post Office.
There is further evidence in the direct-payment statistics produced by the Department for Work and Pensions about what people prefer. They show the responses that it has had when it has invited benefit claimants to convert to the new payment systems. We see from the latest statistics that it has so far approached approximately 2.5 million pensioners, of whom 1.9 million have responded. Of those 1.9 million responses, only about 750,000 have said, "Here are my bank account details; of course you can pay my money into my bank account." Some 1.2 million people have said that they want a Post Office card account. Similarly, with regard to Jobcentre Plus, 2.5 million letters have been sent out, eliciting 1.3 million responses. Of those, about 800,000 have said, "Here are my bank account details", and 600,000 have asked for a Post Office card account.
The Department's latest statistics show that we have already had 2.5 million requests for a Post Office card account. The Government's limit was to be 3 million, and they have already received 2.5 million, so does the Secretary of State accept that their statistics are, first, evidence of a widespread preference for a Post Office card account rather than bank account, and secondly, very different from the Government's forecast? In the light of that clear evidence about what real people in the real world prefer, what is her new forecast for the use of the Post Office card account?
The evidence about people's preferences is even more powerful in the light of the clear bias at every stage in the system against people having a Post Office card account. Those people have expressed their preferences for Post Office card accounts despite every attempt by the system to push them in a very different direction.

Mr. Michael Weir (Angus) (SNP): Does the hon. Gentleman accept that, even after the initial stages, the procedure for obtaining a card account is complex and difficult for many elderly people?

Mr. Willetts: The hon. Gentleman is quite correct, and that is a point to which I will turn in a moment.
The evidence of the bias in the system that I was about to cite is from a report in The Sunday Telegraph of 7 March, in which a member of the DWP staff quoted an instruction received from head office, which is devastating evidence that the Government have not stood by their assurances that there will be equity and fairness in the system. The instruction states:
"We need to pay most of these customers into bank accounts which cost 1p rather than into Post Office card accounts which cost up to 30 times more. You should be aiming to get 9 out of 10 new claimants (to use) bank accounts, with a small proportion paid through Post Office card accounts."

That was the aim set for benefit claimants. I hope that either the Secretary of State or the Under-Secretary will say whether that is an accurate record of instructions sent out by the Department.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): Is the hon. Gentleman being disingenuous? Does he understand that people who seek work need to be job-ready, and that the Post Office card account, although it has many favourable characteristics, does not allow the payment of wages into it? Does he not, therefore, understand that it would be quite irresponsible for Jobcentre Plus to advise people to take out a Post Office card account, which would not leave them job-ready? May I underline the fact that the 3 million figure is not a limit on the number of Post Office card accounts? We have never said that there is a limit. If people want the Post Office card account, they can have it.

Mr. Willetts: Was the 3 million figure a forecast then? The Government themselves put that figure into circulation, so if it is no longer accurate, what is their forecast? Not only the Opposition but many people working for the Post Office would wish to know where the Government think things now stand. Of course I accept the Minister's point about wishing people to be job-ready, but assurances have been given that the system will not be biased. Nevertheless, the evidence is that it is biased, and the Minister has just cited a reason why it should be so. That is a very different position from the one that they have taken so far.

Mr. Pond: The system is not biased. It is a matter of choice for the customer. Customers must know their full range of choices, and that is what we provide. It is not for the Government or the Opposition to tell people whether they should have a Post Office card account, a current account, a basic account or a building society account. It is for the customer to decide and it is our responsibility to ensure that they fully understand their options.

Mr. Willetts: It is, of course, for the customer to decide, and that is what we believe. Contrary to the claim made by the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), that the Government allow the customer to decide, we all know that they are trying to push customers in one direction rather than the other. All we are asking him to do is to ensure that the Department of Trade and Industry and the Department for Work and Pensions stand by their assurances that all they are doing is extending choice. Conservative Members want to see fair and open choice, which is not available at the moment.

Mr. Owen Paterson (North Shropshire) (Con): Does my hon. Friend agree that the Minister is talking nonsense? I visited 28 post offices last summer, and I shall briefly quote three postmasters. The first said:
"The Benefits Agency is bullying people to change. The Government has not been fair."
The second said:

"The Benefits Agency has been very difficult. The forms are designed not to help."

The third said:

"The initial letters give a clear idea that customers must go direct. They are misleading. The bank section is deliberately put before the card section."

The Minister should apologise.

Mr. Willetts: My hon. Friend is absolutely right. His point is repeated by Labour Back Benchers in early-day motion 648, which was tabled by the hon. Member for Falkirk, East (Mr. Connarty). Many hon. Members support early-day motion 648, which recognises the problem—we can all see the problem, our constituents experience it and people who run post offices are concerned about it. It is not good enough for the Minister to come to the House and say that the system is fair and even—it is not, and that is the nature of the problem.

Mr. Nick Hawkins (Surrey Heath) (Con): One of the things that most concerns pensioners in my constituency, where Ash Vale Station and Mytchett post offices have closed, is that if they even inquire about the system, as a result of Government instructions, their inquiry is treated as a request for automatic payment. That is part of the Government's dishonesty. Does my hon. Friend recognise that one of the problems is that the Government are not putting any pressure on the many banks and financial institutions that will not allow cheques to be cashed at post office counters? Only three of the banks currently allow their cheques to be cashed in that way. Does my hon. Friend agree that all banks should allow cheques to be cashed at all post office counters, which would reintroduce footfall into post offices and help sub-post offices to survive?

Mr. Willetts: Both my hon. Friend's points are absolutely right. First, we are all concerned about the insidious process whereby people are pushed towards the bank account option rather than the Post Office card account at every stage. Secondly, Conservative Members do not want to subsidise post offices; all we want is people to enter post offices because that is the service they want to use. We seek increased footfall, which is the best way to ensure that as many post offices as possible are viable in the future.

Andrew Selous (South-West Bedfordshire) (Con): Is my hon. Friend aware that the Work and Pensions Committee visited the telephone call centre for the Pension Service last year? We were shown the script that the call centre operators use when new pensioners request a pension. The script made it clear that the Post Office card account is the last option. Does my hon. Friend think that it would be useful if the Minister were to ensure that a copy of that script is placed in the Library?

Mr. Willetts: Yes. I recall that that important point came up in the Select Committee, where my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) does sterling work. Yet again, the evidence that the system is biased is building up. All we are asking for is fairness for the millions of people who want their benefit to continue to be paid at the post office, which is not too much to ask of the Minister.

Mr. Pond: The House will have noted the hon. Gentleman's statement that the Opposition do not want to subsidise post offices. Are the Opposition confirming their opposition to the Government's £2 billion investment in the post office network? I shall quote Postwatch research—the research was conducted on a small scale, but it was, nevertheless, conducted by Postwatch—to those hon. Members who suggest that the process is biased to encourage people in one way or another. The vast majority of pensioners said that advice from the customer conversion centre
"was given in a clear and unbiased manner".

Mr. Willetts: I began my speech by saying how much I regret the absence of the Secretary of State for Work and Pensions to answer on behalf of the benefits system, which is why we called the debate. The junior Work and Pensions Minister has intervened on me three times, but so far we have heard nothing from the Secretary of State for Trade and Industry. The Secretary of State for Trade and Industry did not turn up when we debated the issue from the point of view of the post office network, and now she is silent when we discuss the subject from the point of view of the claimant—instead, it is a Minister who has intervened.
My response to the Minister's challenge is to examine the seven-stage process to open a Post Office card account, which clearly shows the bias:
"1. Wait for the letter from the Pension Service or the DWP saying your benefit will in future be paid direct.
2. call the helpline number on the letter and say you want a post office card account
3. the DWP then will send you a 'Personal Invitation Document' to open an account
4. This document must be taken to your local Post Office. They will give you an application form".
By stage four, one has obtained an application form.
5. That application form must be filled in and handed back to the Post Office
6. The Post Office will then post you two letters—one containing your PIN, the other called a Pick Up Notice
7. The Pick Up Notice must be taken to the local Post Office to collect your card. The account is then activated."
That is not skilled mass marketing. The system has not been designed to be customer friendly in order to maximise people's opportunities to obtain Post Office card accounts. The process contains a set of bureaucratic hurdles that are designed to put off the millions of people who want to receive their payments at the post office.

Mr. Weir: The hon. Gentleman missed out a stage. After the form has been taken to the post office, one must obtain information from the post office to fill in on the original letter from the Pension Service, and return that letter to the Pension Service before the account is activated.

Mr. Willetts: I am happy to be corrected by the hon. Gentleman, and I apologise to the House for having made the system sound simpler than it really is.

Mr. Alan Reid (Argyll and Bute) (LD): The hon. Gentleman is right that it is difficult to open those accounts. I draw his attention to the fact that if an elderly person writes outside the correct box when they fill in the form, the whole form is rejected. As he says, the system is biased against the Post Office card account.

Mr. Willetts: The problems with the computer recognition system form a whole subject, and there have been many such cases. One gentleman wrote his sevens in the continental style—Conservative Members do not object to the continental method of writing seven—and the computer could not recognise them, so his benefit claim could not be processed, which is not a good way to operate.

Richard Burden (Birmingham, Northfield) (Lab): The hon. Gentleman may know that I am a member of the Select Committee that made some observations about the complexity surrounding the Post Office card account. Given what he said about order books, does he want to improve the Post Office card account or does he want to abolish it?

Mr. Willetts: I do not want to abolish the Post Office card account—we accept that we are too far down the track for that. We want a user-friendly system that allows people to choose a Post Office card account, which is a way to maximise footfall through the post office. In a moment, I shall turn to the important subject of the exception service, which is needed to supplement the Post Office card account.

Richard Burden: I want to clarify the Conservative policy. The hon. Gentleman says he wants to improve the Post Office card account system, but he has not said that he wants to return to an order book system.

Mr. Willetts: The Post Office card account does need to be improved, but I am also talking about the form that the exceptions service should take. I intended to cite evidence from a range of charities about the problems involved in opening a Post Office card account, but so many of my hon. Friends have intervened with evidence of their own that I need not detain the House with it, save to quote Age Concern, which says in an appendix to the Select Committee report:
"We are concerned at the considerable hurdles that seem to be being put in the way of opening a POCA. One cannot simply go to a Post Office and open an account."

The Secretary of State must tackle that fundamental charge regarding the bias in the system.
Does the Secretary of State recognise the problems that particular groups face? We have all heard sad stories about the problems that many disabled people have experienced when using the new post office devices. It is a sad irony that the House is finally considering the draft Disability Discrimination Bill at the same time as the Government are introducing a measure that is the most hostile to disabled people, and in respect of which their interests and views have been least well considered, in many years of public policy. The Secretary of State knows about the problems, because the Government have already had to admit that the PIN machine will have to be changed. Some people find it difficult to reach the keypad and others—for example, blind and visually impaired people—find it difficult to manipulate. Will the Secretary of State tell the House where the redesign of the keypad stands and when we will see the user-friendly keypads in our post offices for which many disabled users are crying out?
The Secretary of State must deal with the problem of multiple users, which arises where, for example, claimants are housebound and receive support from carers and social services. In an ideal world, those people might have one carer or social services support worker who is with them all the time, but, sadly, it is not like that in the real world. Many of our housebound constituents face an ever-changing cast of support workers coming to their houses to assist them, which makes it very difficult for them to access the system that has been designed by Ministers and the Post Office. Citizens Advice says:
"Direct payment will bring few advantages to claimants who need someone else to collect their benefit for them, or to help them operate an ATM or pinpad. This is a significant issue that needs a solution".

It believes that in order to resolve such practical problems, the DWP should allow housebound people and those who cannot cope with a PIN to choose the exceptions service as their normal method of payment and that it should be accessible for claimants who do not have a permanent collector.
I do not blame the DTI for failing to understand this, but I do blame the DWP—after all, it is responsible for delivering benefits and should understand claimants' needs—for failing to put up the Secretary of State to respond to the debate and for failing to ensure that such problems were tackled as the system was being designed. I am afraid that that has done much damage to the Department's reputation for understanding the needs of disabled or housebound people.
In response, the Government have proposed an exceptions service. I should be grateful if the Secretary of State could give us some reliable information about how that will work. So far, Ministers have failed to inspire confidence when offering us assurances about that. The Minister for Pensions sounded like Corporal Jones from "Dad's Army" when he told the Select Committee on Trade and Industry:
"The advice to people at the moment is do not panic."

I am afraid that that is not good enough as a piece of serious ministerial advice on how the new exceptions service will work. The only response to, "'Do not panic', says Minister" is, "Panic!". He advised people to hold on to their pension books and not to worry. He also said that the exceptions service is not being offered as a "fourth option"—in other words, that it is not an option for anyone dissatisfied with the other three options. Will the Secretary of State tell us more about who will be able to access it, on what terms they will access it, and for how long they will have to wait?
The Select Committee's report is highly condemnatory on this point. It states:
"It is clear from the evidence presented to us that the failure of the DWP to develop its ideas for the Exceptions Service in advance of the introduction of Direct Payments has led to uncertainty and confusion over the means by which some groups of disabled people will receive their benefits in future. At the very least, the Government should take steps to allay their concerns by making clear that claimants do have the choice of continuing to use order books until 2005 or until such time as the Exceptions Service has been developed."

There is widespread concern about this issue, and I hope that the Secretary of State will deal with it.
Standing back from this individual disaster, we see a wider picture of a catalogue of problems and failures going right back to the original decision in 1999 to abandon the Horizon project and go for this option instead. I think we all know what happened then. Ministers thought to themselves, "There is this hidden subsidy coming into the Post Office from the benefits system. We can save money by paying the benefits in a different way and we will remove the hidden subsidy for post offices." That is what they thought they were doing. Instead, they have ended up putting even more money into post offices than they would otherwise have had to, because they have taken away the footfall of benefits claimants, while finding that many benefits claimants are deeply distressed because they have been unable to continue with the reliable system for claiming their benefits. During those five years, the Government have not taken us forward—instead, they have managed to perform the extraordinary double trick of weakening our post offices and leaving many people who wish to claim benefits with a less adequate system than they had before.
This is a classic example of a failure of public policy; yet another example of this Government's failure to deliver; and, even more significantly, a failure to understand the needs of millions of people, especially elderly people, who wish to carry on being paid in the same reliable way. [Interruption.] The Under-Secretary of State for Work and Pensions is giggling. I have to tell him that it is no accident that this policy was decided in 1999. If we date it from the geological fault lines of this Labour Government, it is a classic "cool Britannia, modernising Britain" policy, which says, "Let's get rid of the old order books: we're going to have spanking new systems and gleaming new technology." It is a classic example of a policy cooked up by people who had no understanding of the views of disabled people or of pensioners. It comes from the time when the right hon. Member for Hartlepool (Mr. Mandelson) said that what he really thought about pensioners was that there was "no mileage" to be had from them, and when the chairman of the Labour party denounced them as "racist", then, as a final insult, as "predominantly Conservative". That is why they took no account of the interests of the many people using the post office, and that is why it is Conservative Members who are pressing for their interests today.