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Post Office Card Account

Volume 450: debated on Monday 16 October 2006

7. What progress has been made in developing a replacement for the Post Office card account for the payment of benefits after 2010. (93404)

Instead of a single replacement for the Post Office card account, there will be a range of alternative banking products. Post Office Ltd has already launched one new product and is developing others, likely to be launched in the near future.

The objective remains to migrate customers onto accounts which will do more for them than the POCA. But for those who, for whatever reason, cannot do that, there will be a new Government-supported product. Discussions are already taking place with a view to tendering for that product.

I am grateful for that answer, and I am sure that Ministers at the Department of Trade and Industry will be grateful for it too, given their frustration—expressed in today’s Financial Times—at the Department for Work and Pensions’ resistance on this issue. Will the Minister assure the House that, whatever products follow the Post Office card account, procedures will be put in place for people to be migrated automatically to those new products, so that they do not have to face Government-induced hurdles to collecting their benefits and pensions at the post office when the change takes place?

Of course we are going to make the migration as smooth as possible. The migration process is the joint responsibility of ourselves and the Post Office, as the hon. Gentleman will know, having seen the preamble to the contract for the Post Office card account. We have done some piloting on the migration, and I have placed the results in the Library. The Post Office will also begin a migration exercise shortly, and it will be a very smooth exercise, just as the hon. Gentleman requests.

It is quite clear that the 4.5 million people who use the Post Office card account thought that they had an agreement with the Government when we introduced the account, at the time when it was first threatened to take away all forms of post office benefit payments. If anything happens to the account and people are not migrated to new accounts, this will cause great problems not only for the elderly who do not have bank accounts but for the small businesses that are our local post offices, run by postmasters and postmistresses throughout the country. Is the Minister willing to give those small businesses a guarantee that their livelihoods and futures are not threatened by the withdrawal of the Post Office card account?

First, it is not a withdrawal of the account. We are simply honouring the contract that was signed in 2003 and which runs until 2010, and we will continue to do so. There is no change whatever on that. My hon. Friend would be right, if it were the case that there was to be no alternative to the existing Post Office card account. However, there will be a range of alternatives. Some are already in place, and some are being brought in by the Post Office. As I have said throughout, there will also be a successor Government-backed account for those who do not take up any of the other, better options that are available now and that will become available in the near future.

I think that the Minister is saying that the 4.5 million people who thought that they had the ability to get their benefits from their post office will still have that ability. Will he make that clear: yes or no? Will he also make it clear that his and other Departments have a commitment to the future of our post office network? One third of the post offices in Ryedale have closed since 1997. If we lose any more, the Post Office will not be able to provide a proper service to a great many people, especially the elderly.

I recall about 3,500 post offices closing under the last Conservative Government, by the way. However, I entirely understand the hon. Gentleman’s point about the importance of being able to collect pensions and benefits from the post office, and we have repeatedly said that we shall continue to honour our undertaking on that. At the moment, one vehicle for achieving that is the Post Office card account, but it is a very limited type of account—the Post Office itself says that. It does nothing to promote financial inclusion, for example. So if we can replace it, as we are now beginning to do, with alternative accounts that are post office-based and that are better and offer greater functionality, that will provide a better deal for our customers receiving their benefits and pensions, and potentially a better deal for the Post Office as well.

My hon. Friend will be aware that, in the poorest communities in many parts of the country, the only way in which people can access cash without paying a fee is through the Post Office card account. I understand what he is saying about successor accounts, but will he give the House an assurance that those accounts will be operated through the existing network? It is okay for someone to have an account, but without a post office, it would be useless.

Yes, I can give my hon. Friend the same answer that I have given to previous questions. The objective is to ensure that those who wish to receive their benefits and pensions at the post office can continue to do so. Even today, 25 bank accounts—with a potential 20 million account holders—have post office accessibility. At the moment, however, only 2 million of those account holders choose to exercise the right to use their local post office as a bank branch. I am having discussions with the Post Office about ways in which we might be able to promote this facility and encourage more people to use their local post office to access their bank account.

People in Bingley in my constituency are at risk of losing their post office altogether, not because the Post Office wants it to close but because it is difficult to find someone to take on the franchise that has just been given up. Is the Minister aware that the dismantling of and uncertainty about the Post Office card account is one of the main reasons preventing someone from taking on the franchise? Can he therefore pull his finger out and sort this out so that people in Bingley can retain the post office that is crucial to them and to the businesses that it supports?

I am sorry if the hon. Gentleman is in doubt, but I assure him that the Post Office is not, and nor is the National Federation of SubPostmasters. Recently, I met its general secretary, Colin Baker, and since then he has published an article commenting on the meeting, which I shall quote for the benefit of the hon. Gentleman and his constituents:

“There is an understanding on behalf of Government to work with both Post Office Limited and ourselves to put together a range of products to offer customers a greater choice.”

It is understood by the Post Office and postmasters, and I hope that it is now understood by the hon. Gentleman.

In Rhondda, 16,300 people draw their benefits through the Post Office card account system every week, and they are bewildered about what will happen in future. If, over the next three years, we are to migrate 16,300 people on to some other system, is it not vital that that system should be simple, easy to transfer to and well publicised? Would it not make a lot of sense if post offices were fully able to advertise all the financial services that they can offer, rather than just some of them?

I agree with my hon. Friend that the process needs to be simple and that transfer needs to be easy. I think that he will find that the migration exercise that the Post Office is about to undertake will confirm that all of that is possible to achieve.

On 8 May, when I asked the Minister what replacement account the Government would offer to POCA holders, he said:

“It is not for me to say what accounts it”—

the Post Office—

“will come up with; that is a matter for the Post Office.”—[Official Report, 8 May 2006; Vol. 446, c. 10.]

The Opposition therefore welcome the Minister’s apparent change of heart today. Can he guarantee, however, that the more vulnerable, unbanked, Post Office card account holders who want to keep their existing POCA will be able to do so?

The problem with the hon. Gentleman is not his volume but his vertical hold.

We have always made it clear that Post Office card accounts will have a range of replacements. The hon. Gentleman suggested that I had somehow changed position on the Post Office introducing its own accounts. I have not. The accounts that it has already introduced, and those that it plans to introduce, are its accounts, its design and not a matter for me. Of course, however, we remain in discussion with the Post Office about that. I have also said throughout, as I have repeated today, that a successor product to the Post Office card accounts will be available to those who do not transfer to any of the existing alternatives or other options that will come into being between now and 2010.