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Post Office Card Account

Volume 404: debated on Thursday 1 May 2003

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What assessment her Department has made of the impact on the profitability of the Post Office of the current level of take-up of the Post Office card account. [110638]

The Department has made no such an assessment. The Post Office card account is one element of the Post Office's strategy to restore the network of post offices to profitability. The strategy requires the Post Office to develop new, higher value activities such as banking and other financial services, which is made possible by the Government's investment in technology in every post office in the country.

I thank the Minister for his response and encourage him to undertake such research. Does he agree that a seven-stage application process for a Post Office card account acts as a deterrent, as does the lack of information about the account? That will lead to lower take-up, which will affect the profitability of the Post Office and post offices, and could lead to further closures, such as the threatened closure of Westmead road post office in my constituency.

Many people are applying for Post Office card accounts. I do not agree about the difficulties that the hon. Gentleman believes exist. As we take advantage of the implementation of universal banking, which went live on 1 April, as planned—I recall Opposition Front Benchers expressing some scepticism about that, but it was delivered on time—people will be able to continue to collect their benefits in cash at the post office, as we always promised, through a bank account or through the Post Office card account.

The key for the Post Office is that universal banking services will allow post offices to offer services to a new generation of customers. Sub-postmasters in the hon. Gentleman's constituency should consider the new opportunities that universal banking offers them. For example, since last week, every Barclays bank current account holder can obtain cash at any post office in the country, using their existing bank card, so 10 million Barclays current account holders have a new and compelling reason to go into their local post office. The post office will, of course, receive a payment for every such transaction, and once customers are in the post office, they will buy other things there. That is the way forward for post offices in the hon. Gentleman's constituency. Other banks will have a similar arrangement, and what the hon. Gentleman—

I accept what my hon. Friend says as he waxes lyrical. We must rebuild the network, but the biggest single problem is the relationship between the Department for Work and Pensions and sub-post offices. It is difficult to pretend that it is not off-putting if people have to go through the Department for Work and Pensions to get to the sub-post office. There is another bizarre twist. We know that, under the network reinvention programme, there must be some closures, but in my area we seem to be saving rural post offices, whereas those in the more urban areas are being sacrificed. That is unacceptable. People are worried about whether they will have access to the Post Office card account. Will my hon. Friend comment on that?

I gather that, so far, nearly 100,000 people have requested a Post Office card account. There is a difference between rural and urban areas. Quite a few urban areas have 15 or more post offices within a one-mile radius, and, as my hon. Friend rightly says, there is no longer the business to sustain such a dense network. However, 3.5 million people in the UK do not have a bank account, many of whom would be better off with one, and the process of changing to benefit payment through automated credit transfer gives each of those people the chance to consider whether they would like to open a bank account. That is the purpose of the arrangements that we have put in place, and for that reason there is merit in them.

May I relay to the Minister the very real anger of people in Watlington in south Oxfordshire who, like many others, face the closure of their post office? A problem that has been raised with me by the manager there is that housebound pensioners do not find it easy to depute another person to pick up their pension or any other benefit for them, which used to be possible with the old pension book system. What can the Minister do to address that problem and bring people back to the post offices to do their shopping so that post offices can continue to play a part in the life of the village?

We have ensured that those who are housebound can receive a second card with a separate PIN that will be available for use by a nominee. We would be concerned if large numbers of different people were obtaining the money, as that would be a rather insecure arrangement. One of the benefits of the changes that we have made is that the new arrangements will be much more secure than the old ones were.

Is the Minister aware of the line that the Post Office takes on these matters? I have been in touch with the Post Office in an attempt to save Hilltop post office in Dronfield and, while it says that it will note and carefully consider the points that I have made, given the contents of its letter I am not hopeful. It says that

"the introduction of Direct Payment options … undoubtedly, means fewer customers using our network of Post Office branches".
That is one of the arguments used for closures. I can send the Post Office the information that the Minister has just given about the wonders of Barclays bank accounts, which might help us save post offices in future, but would it not be of assistance if the Post Office card

could be obtained in a sensible and reasonable way by simply ticking a box in the same way that one can obtain a bank account?

We have put in place arrangements with Postwatch and provided substantial funding so that it can manage the consultation process. I encourage my hon. Friend and others who might be concerned about particular post office closures to raise their concerns with Postwatch.

There are many advantages in having a bank account that are not available through a Post Office card account, which is why we want people to take the opportunity of this change to consider whether they would be better off with a bank account, which would give them access to discounts on utility bills and so on. Many people, as we are seeing, are deciding that they want a Post Office card account, and no impediment will be placed in their way, but this is an opportunity for others to consider whether a bank account would help them.

Is not the truth of the matter that the Government do not want people to continue drawing pensions and other social security benefits in cash at post offices? How else can the Minister explain the constant denigration of the Post Office card account and the obstacles that are put in the way of people who wish to open one? He has been at it again today from the Dispatch Box. He is promoting Barclays bank and commercial bank accounts and saying that the Post Office card account is the second-rate option. Does he understand that that policy will make life difficult for thousands of elderly and vulnerable people and that it will threaten the survival of post offices throughout the country whose existence is often a lifeline for the communities that they serve?

I am disappointed; I thought that the hon. Gentleman was going to congratulate the Post Office on the successful implementation of universal banking on time, contrary to the fears that he expressed during Question Time a few weeks ago. I do not agree with his allegations. The Post Office card account is a very important element in the strategy, but it is only one element. In the past, the problem has been that the Post Office has locked into a declining market in which people simply want to cash giros. When people retire, more and more of them now want to carry on using the bank account that they have used throughout their lives. The £500 million investment that we have made, benefiting every post office in the country, has opened up that market to the Post Office and held out the prospect of a much more attractive commercial future for the post office network. I agree about the importance of post offices in our communities, which is why we have made such a substantial investment in their future.