Oral Answers to Questions

Sarah Newton Excerpts

Monday 23rd January 2012 Commons Chamber

[Maria Miller]

My hon. Friend is absolutely right. We need to ensure that that expertise is protected and retained. That is why I have given a personal commitment to the colleges for provision to continue through to summer 2013. Indeed, other parts of DWP are supporting colleges to broaden their approach, particularly those such as Enham in Hampshire and near my constituency, which delivers the Work programme in the Thames valley and on the Isle of Wight.

[Sarah Newton (Truro and Falmouth) (Con)]

5. What assessment he has made of the information technology systems which will support universal credit.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Universal credit is on track and on budget. The systems are not new or complex. After all, more than 60% of the total developed system is based on reusing existing IT. New developments will use tried and tested technology. The key difference between how this Government are doing things and how they were done before is that we have adopted commercial “agile” design principles to build the IT service for universal credit in four stages, each four months long.

[Sarah Newton]

I thank my right hon. Friend for his answer. Given the billions of pounds that were wasted by the previous Government on failed IT programmes, this matter is vital to me and my constituents. Will my right hon. Friend therefore explain to colleagues more about the testing regime before the new system is implemented?

[Mr Duncan Smith]

I should tell my hon. Friend that I am not complacent about delivery. Hon. Members on both sides of the House know that IT developments can have difficulties and can go wrong at key points, even when we are not expecting them to do so. I am trying to ensure that Ministers are directly involved at every turn. We get weekly updates and have fortnightly meetings with those in charge. I set up a programme board, which I chair, and a senior sponsorship group, which includes Her Majesty’s Revenue and Customs, the programme board and the Department for Work and Pensions. The major projects review group has regular reviews. “Agile” principles make it easier for us to pinpoint where there might be failures.

Living Standards

Sarah Newton Excerpts

Wednesday 30th November 2011 Commons Chamber

[Mr Duncan Smith]

I can look at the Library’s figures and decide whether they or our figures are correct. We will have a look at them. My view is that the figures that we have show that more women than men benefit from that change. We can debate that if the right hon. Lady likes, but at least she is admitting that, one way or the other, a significant number of women benefit dramatically. That is a good starting point.

I want to move to an important subject. Given that this is an Opposition day debate, I had rather hoped––

[Sarah Newton (Truro and Falmouth) (Con)]

Before we move from the topic of hard-working women such as those in my constituency, especially those on the lowest incomes, who depend on informal care from grandparents, perhaps my right hon. Friend could share with the House the many things we have done to support grandparents on low incomes.

[Mr Duncan Smith]

I am grateful to my hon. Friend who, as ever, talks sense, and I agree with her.

This is an Opposition day debate and I had hoped to hear something about what they would do to fix things. My right hon. Friend the Member for Wokingham (Mr Redwood) asked a very specific question but never received an answer from the right hon. Member for Birmingham, Hodge Hill. We have today had to endure the usual waffle and confusion. On the one hand, the Opposition criticised us yesterday for borrowing too much, but on the other they seem to think that more borrowing is the only way to fix the deficit. The director of the IFS was pretty clear yesterday on the Opposition’s position on borrowing more to spend. He said:

“You would have to believe some pretty surprising things about the way the economy works to think that if you reduce tax by a pound then borrowing would go down rather than up.”

Does the right hon. Gentleman agree with the director?

Pensioners and Winter Fuel Payments

Sarah Newton Excerpts

Tuesday 22nd November 2011 Commons Chamber

[Mr Dodds]

Let me press ahead and make a little progress, and I will take more interventions in a short while.

I want to refer to the situation in Northern Ireland. Last winter, we had the coldest December in 100 years. In 2009-10, there were almost 1,000 excess winter deaths, 80% of which were of people aged 65 or over. On average, we get 910 such deaths per year, and that figure compares with 590 in 2001-02, so there has been a massive increase over that period. We have to understand that in addition to the stark figures on mortalities, for every death from cold there are eight hospital admissions and more than 100 visits to general practitioners and health centres. This is suffering on a vast scale.

The recent interim report from the Government’s independent review of fuel poverty, conducted by John Hills, states:

“Living in cold homes has a series of effects on illness and mental health.”

I will not go into all the repercussions of cold weather and of living in cold and damp housing on people’s mental and physical health. The interim report outlines those very clearly.

The winter fuel payment was introduced in January 1998 as a tax-free annual payment. Its purpose was and is to alleviate fuel poverty by giving specific help to encourage older people to spend more on heating during the winter. What is happening this year? For the past three years, the winter fuel payment has been £250 for those aged 60 and over, and £400 for those aged 80 and over. Despite spiralling fuel prices—we had a debate only a couple of weeks ago in this House on the crisis in the energy sector—and despite the extremely cold recent winters and the forecasts of a very cold winter to come, in 2011-12 the payment for pensioners aged 60 and over has been reduced by 20% to £200, and the payment for those aged 80 and over has been cut by a quarter to £300. That does not affect just a small group of people; it affects more than 9 million households and about 13 million people throughout the United Kingdom. Some 12.7 million of those people are in Great Britain and some 317,000 are in Northern Ireland.

As a result of the changes, the expenditure on winter fuel payments will fall from approximately £2.75 billion in 2010-11 to some £2.136 billion in 2011-12. That is a substantial monetary saving for the Treasury, but at what cost? That is the question that many people are asking. People in charities or third sector organisations who deal with older people’s issues are making it clear that they fear that this cut, which directly hits the pockets and incomes of pensioner households throughout the United Kingdom, will result in more illness, more disease and more deaths.

[Sarah Newton (Truro and Falmouth) (Con)]

The right hon. Gentleman is making a very moving case. I am sure that there is not anybody in this Parliament who is not concerned about excess winter deaths and this nation’s terrible legacy of not tackling fuel poverty among the poorest and most vulnerable. In his analysis for this debate, has he looked at the wide range of other measures that the Government have put in place to tackle the issue this winter and to make more lasting, wholesale changes in winters to come?

[Mr Dodds]

Interventions have an uncanny knack of happening at the precise moment when one is coming on to deal with the very issue that they raise. I will deal with the issue that the hon. Lady has raised. Of course there are other measures aimed at dealing with fuel poverty and coldness-related illness among elderly people. There are the cold weather payments, to which I referred, which some may argue are more specifically targeted. I will come on to that in a moment.

There is also the warm home discount. Recently, the Northern Ireland Assembly unanimously passed an appeal to the Government to think again on this issue, and when the Minister replied he referred to, among other things, the warm home discount scheme. However, the scheme applies only in Great Britain, because the legislation did not apply to Northern Ireland. Half a million pensioners benefit from that scheme in Great Britain, but pensioners in Northern Ireland do not. I am sure that the Minister will address that point.

There are also other measures. On the practical health side, there is the flu vaccination scheme. Northern Ireland has its own warm homes scheme, which I am glad to say was introduced under devolution by a Democratic Unionist party Minister. It has helped 80,000 households and has received widespread support in Northern Ireland. Northern Ireland also has a boiler replacement scheme and the social protection fund, which the Executive have brought forward. I understand that discussions are under way to address the specific issue of fuel poverty and the elderly in Northern Ireland. So yes, there are a range of measures, and we need to keep investing in such things as energy efficiency and home insulation to prevent fuel poverty in the long term.

--- Later in debate ---

[Steve Webb]

Obviously, the VAT increase does not affect fuel prices directly as they are on a reduced rate, but the hon. Gentleman is right that competition in the energy sector is a key concern of the Government, whether that is in gas, electricity or oil. Our colleagues at the Department of Energy and Climate Change are in regular and close contact with the competition authorities, but one thing the Government are doing is ensuring that people are aware of their ability to switch and get much better tariffs—that is particularly the case with electricity and gas. Clearly, we can do things for the long term, such as sort out the housing stock, but we can also do things for the short term, such as ensure that people get the best price available. There is huge potential to do a lot more that does not necessarily involve hundreds of millions of pounds of Government spending but would benefit people substantially.

[Sarah Newton]

Does my hon. Friend agree that the recently commissioned and reported Office of Fair Trading document that specifically, at the Minister’s request, investigated off-grid energy competition was able to recommend a series of actions to improve the market for heating oil this winter, avoiding the terrible problems we experienced last winter? The OFT has now gone on to look at liquefied petroleum gas. The Ministers in DECC are doing everything they can to ensure that the off-grid energy markets are fully functioning.

[Steve Webb]

My hon. Friend is quite right. In Northern Ireland, dependence on heating oil is substantially greater than it is on the mainland and even in a semi-rural constituency such as my own, oil prices, oil supply and so on are big issues. I am grateful for her kind words about our ministerial colleagues as these are important matters.

Let me go back to the issue of fuel poverty. Clearly, it has a number of components and one is income. We focused on a change from last year’s rate to this year’s of less than £1 a week in the winter fuel payment and that is what we are talking about today. Instead, we have taken the basic state pension, which for 30 years has been declining relative to wages, and put a triple lock on it so that every year from now on, pensioners in Great Britain and Northern Ireland will see their pensions rise by the highest number of inflation measured by the consumer prices index, earnings and 2.5%. We are in a strange period in which inflation is greater than earnings, but in most years, earnings have grown faster. That will mean that as we return to more normal times, pensioners will enjoy above inflation standard of living increases year after year.

The cost of that commitment—I hope that the Chancellor is not listening at this point—will add a total of £45 billion to the amount we spend on pensions by the mid-2020s, which gives a sense of the magnitude of what we have announced. That is rather invisible at the moment, because prices are higher than earnings. When I signed the legislation into law last year, I expected bells to peal and for there to be confetti on the floor and so on. That has not quite happened yet, because people have not seen the impact. In the longer term, it will give a sustained boost to the real incomes of pensioners in Northern Ireland and Great Britain.

--- Later in debate ---

[Jackie Doyle-Price]

I am pleased that the right hon. Gentleman agrees with the point about the quality of housing stock. There is a lot of Government support for people to invest in such improvements. The difficult is in take-up. He focuses on the winter fuel payment and identifies it as a cut. Instead of having a broad-brush, one-off payment that is available to everyone, we must tackle the root causes of fuel poverty and identify the households that will benefit the most from such help.

[Sarah Newton]

Does my hon. Friend agree that many of the solutions can be found locally in our communities? For example, Community Energy Plus is working with Cornwall council to use the Government incentives to tackle fuel poverty by offering free insulation to vulnerable households living in fuel poverty in Cornwall right now, this winter. The critical role that we can play as MPs is to work in partnership with organisations in our communities to ensure that people know about and take up the good schemes that are available.

[Jackie Doyle-Price]

My hon. Friend makes a constructive point, which goes to the heart of the point that the Minister made earlier about the lack of take-up, particularly of means-tested benefits. That happens for a host of reasons, including that they are too difficult to take up, that people are too proud, and the lack of awareness among pensioners about the support that they can get to improve the quality of their housing. That is because many of the schemes are nationally designed and rolled out, and the information is not readily available. We can do a lot to push people in the right direction so that they can find help, such as through the project that my hon. Friend mentioned. All Members can play a constructive, championing role, because we are all community leaders. We need to pay our part in pointing pensioners towards the sources of help that they can access to tackle this growing problem.

--- Later in debate ---

[Jackie Doyle-Price]

It is always a challenge for the Government and the public sector to deliver such schemes in a user-friendly way that makes them available to people and does not dissuade them. We need to continue our principle of using all organisations in society and making them approachable. As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) mentioned, we need to use voluntary groups and the other groups that are closest to pensioners, to encourage them to engage. We can see elements of that starting already in welfare reform. The Government are looking to local authorities to be stronger delivery partners, because they tend to be the organisations with which pensioners have the closest day-to-day contact. We need to think carefully about making support people-friendly and easy to access.

I wish to set the winter fuel payment against the broader context of what the Government are doing for pensioners. They have confirmed that they will be keeping other benefits, such as free TV licences, prescriptions and eye tests, and they have set aside £650 million to help local authorities freeze council tax. We should all recognise that council tax has been a real problem and has contributed to pensioners’ financial difficulties. As we know, if local authorities can limit their budget increases to 2.5%, the Government will meet the cost of the freeze. In recent years the average increase in council tax has been quite significant, and it has been a pernicious bill for many households.

I particularly wish to congratulate the Government on restoring the earnings link to pensions and introducing the triple lock to guarantee an increase in the basic state pension of the highest of earnings, prices or 2.5%. That measure will go further than any other in addressing pensioner poverty. It will give pensioners a firm financial foundation from the state and guarantee a more generous state pension. That is the essential goal of what we are trying to do—we want to ensure that everyone is guaranteed an income that will prevent them from being in poverty.

[Sarah Newton]

I completely agree with my hon. Friend’s point about improvements and annual increases in the state pension. Does she agree that some of our reforms to the NHS will also have a hugely beneficial effect on older people? Integrating social care with the NHS and giving the health and wellbeing boards a key health outcome of reducing fuel poverty represents a more holistic approach. We are considering pensioners, their families and their lifestyle in the round, and we are supporting them.

[Jackie Doyle-Price]

The broader point is that many of the issues that face us in later life have been parked for too long. I congratulate the Government on gripping them, and in the ongoing debate we will have to ensure that we have good provision for people in their later years. I believe that will occupy the House’s attention for quite some time, because we cannot afford to get it wrong. We all need to get behind the Government and help to tackle the matter.

Youth Unemployment

Sarah Newton Excerpts

Wednesday 9th November 2011 Commons Chamber

[Chris Grayling]

The point of the Work programme is very straightforward. We have a team of organisations throughout the country helping people to get into work. We pay them if they succeed. Fortunately, they seem to be making a good start. In due course, when I can do so, under national statistics rules, I will publish information for the benefit of the whole House. I want to expose to the whole market who is doing well and who is doing less well, so that there is competitive pressure on organisations to become the lead provider. I will publish those figures as soon as I can according to national statistics rules, and as soon as the programme has been going long enough for them to be reliable.

The third point—

[Sarah Newton (Truro and Falmouth) (Con)]

Will my right hon. Friend give way?

[Chris Grayling]

I will give way once more, and then I must make some progress and wind up my speech.

[Sarah Newton]

I am grateful to my right hon. Friend, who has been very generous in giving way. Does he agree that this is all about local partnerships? Organisations such as Cornwall Works will help the 105 young people in my constituency who have been unemployed for more than six months to get back to work. Those young people will benefit from the new apprenticeships created in my constituency in the last year—more than 660. Local partnerships enable such people to find real jobs with real employers.

[Chris Grayling]

Local partnerships are immensely important, and now the Work programme providers have complete freedom to forge partnerships that will make a genuine difference.

The third element of our strategy is apprenticeships. Over the past 12 months, we have launched 100,000 new apprenticeships. I believe that more apprenticeships are now available in this country than ever before. We have many apprenticeships that are targeted at young people. The previous Government’s track record on apprenticeships was, as usual, full of rhetoric but lacking in delivery. They repeatedly made promises for an overall number of apprenticeships, and they repeatedly failed to deliver what they promised. We are hitting targets for apprenticeships. That is the first time in a long time that that has happened, and I pay tribute to my hon. Friend the Minister for Further Education, Skills and Lifelong Learning for that.

Oral Answers to Questions

Sarah Newton Excerpts

Monday 24th October 2011 Commons Chamber

[Maria Miller]

I thank the hon. Lady for her question. She will be aware that last May we published the assessment criteria, that we have been testing those through the summer with 900 disabled people, and that we are working with more than 50 disability organisations. I hope that that assures her that we will ensure that it is very much fit for purpose.

[Sarah Newton (Truro and Falmouth) (Con)]

I very much welcome the Government’s plans to streamline advice and information and advocacy services, with the big possibility of a much enhanced citizens advice service. Will the Minister assure me that benefits advice and advocacy will be very much at the heart of the new service?

[Mr Duncan Smith]

Yes, I can.

Pensions Bill [Lords]

Sarah Newton Excerpts

Tuesday 18th October 2011 Commons Chamber

[Sarah Newton (Truro and Falmouth) (Con)]

The hon. Lady is being very generous in giving way.

Age UK led the campaign that generated so much awareness of the issue among women and prompted them to raise their concerns, rightly, with their Members of Parliament. Age UK has welcomed what the Government have done, and has acknowledged that 90% of women will now work for only one extra year. I know that the fact that 10% may have to work for an extra 18 months is a challenge for them, but this is a solution for that 90%, and campaigners have welcomed it.

[Dame Anne Begg]

It is not a solution for the 90%, because they will still have to work for an extra year, on top of the extra years for which they were already having to wait for their state pensions. I believe that Age UK made that comment at the time of the Government’s announcement. Of course all Members agree that the position is better than it was before, but it is still not good enough. If my inbox is anything to go by, women who thought that their problems would be solved when they first heard the announcement have now made their calculations and discovered that for a large number the goalposts have not been moved at all, and that they have been moved by only a small amount for others.

In my view, it is a pity that the Government ever went down this route. They could have begun the accelerated rise in the pension age to 66 after the completion of the equalisation, between 2020 and 2022, rather than in the period before 2020. Obviously some wonk at the Treasury thought “What a good idea this is—it will save billions of pounds”, without recognising the anomaly that it would create and the difficulty that it would cause for this group of women. If Conservative Members want to know why their stock among women is falling rapidly, I will tell them. The fact that the Tories do not understand that decisions such as this suggest that they imagine women can somehow cope with reductions in their income has made women realise that many of them simply do not understand their lives or appreciate their problems.

The Government’s proposal may be better than what was in the original Bill, but if we vote for it tonight our decision will be final, because that will then be the timetable for the acceleration of women’s pension age to 66. Labour Members believe that certainty is necessary when it comes to pensions and that we must allow people to plan in advance, but whoever wins the next election, the last thing that any Government will be in a position to do is start fiddling with the system. What is fundamental to our argument is that a group of women have had no chance to plan, and I see no way in which any Government will be able to deal with that.

Benefits (EU Nationals)

Sarah Newton Excerpts

Tuesday 12th July 2011 Westminster Hall

[Mrs Main]

There are undoubtedly benefits, but we are talking about countries with different levels of affluence. Although we benefit from some hardworking migrants, we also have to open up our benefit pot. It is no good expecting our country to withstand massive cuts in benefits and services to try to tackle a budget deficit while, at the same time, handing out largesse elsewhere. I want to examine those failures and learn from them, especially as Romania and Bulgaria will soon enjoy full accession rights.

There is no point in any of us wringing our hands, berating the shortcomings of the previous Government and moaning that our hard-earned taxes are being sent abroad if we are not prepared to tackle this. I urge the Minister to take note and, hopefully, take action.

Child benefit is a notable example that has caught the eye of hon. Members in all parts of the House. I pay particular tribute to my hon. Friend the Member for Witham (Priti Patel) for her sterling work in uncovering recent data that show how our child benefit is being transferred by EU migrants and their families.

In 2007, the Secretary of State for Transport, my right hon. Friend the Member for Runnymede and Weybridge (Mr Hammond), who was then shadow Treasury spokesperson, said:

“There are 200,000 more British children living in poverty than a year ago. Child benefit is a vital weapon in the fight against child poverty. So why is Gordon Brown sending thousands of pounds of benefits every week to children who do not live here and who may never have even visited the UK.”

I totally agree, so why are we still doing it and why will we keep on doing it in ever greater amounts when the new A2 countries will equally want a slice of our benefit pie? We cannot just hope that other countries may not know about the apparent advantages of seeking benefits in our country.

At the time my right hon. Friend made his comments, the biggest Polish newspaper in Britain, The Polish Express, ran a story headlined “Benefit Hunters”, which claimed:

“The longer we are in Britain, the more rights to social security we are given and the better we are taking advantage of them.”

It gave advice on how to claim and described the case of one Polish migrant who was given a two-bedroom house shortly after applying to a housing association without any need to join a waiting list. The paper said:

“The formalities concerning an application for social security are extremely simple. Do not delay in submitting an application.”

[Sarah Newton (Truro and Falmouth) (Con)]

Does my hon. Friend agree that the NHS should also do more to reclaim the costs of treating EU nationals? Those costs can be a very great burden on hospitals such as mine in Treliske.

[Mrs Main]

My hon. Friend makes a valid point. I will touch only on some of the benefits, but the actual list is almost endless. We cannot delude ourselves and think that people will not know about the loopholes or the benefit pots. According to Martin Beckford and Matthew Day, writing in The Daily Telegraph in November 2008, jobcentre staff in Poland encouraged returning migrants in Poland to continue to claim jobseeker's allowance from Britain, rather than sign on for Polish unemployment benefit, which pays much lower amounts. A quick trawl on the internet shows how EU migrants can get a myriad of advice on how to claim a range of our benefits. We must be under no illusions. We are seen as a soft touch, and we will be exploited by those who have the full might of EU law behind them.

Perversely, we are expecting our own citizens to bite the bullet on cuts in order to help slash the massive budget deficit, yet at the same time we are widening the pool of foreign EU families who are eligible to make a claim from the UK benefit pot. What we save in one corner we pay out in another. Benefit payments to newcomers from eastern Europe and other parts of the EU are not specifically recorded by the Department for Work and Pensions, but unofficial estimates put the bill at a very conservative £200 million a year—that probably does not include the NHS—and growing. Teasing out firm data on this has been difficult. In a series of questions, I have been told by the DWP that the data are not recorded or are not available due to cost. However, I was pleased to be assured by the Secretary of State for Work and Pensions on 20 June that he has commissioned his officials to look at alternative ways of making the information available.

The child benefit bombshell has been widely covered in the media from The Daily Telegraph to the tabloids. I find it hard to look ordinary middle-class families in the eye, particularly families with a mum who stays at home, and say, “Apparently, you are so wealthy with one of you earning just more than £44,000, you must give up your child benefit so that a family in Poland, and ultimately Bulgaria, Romania or wherever within the EU, can claim it for children who do not even live here.” They are furious and so am I. It is estimated that 1.2 million British families will lose out under the new benefit rules. I am not happy that we are looking at this issue in this way.

Although in theory there is reciprocation, other EU countries have far lower benefit rates, and many EU countries also have tougher qualification rules. All those EU countries have some form of family allowance. If children qualify for benefits in their own country, why should our taxpayers be expected to support them? If we could afford it, I would rather that every family in Britain had child benefit as a right that was not means-tested—as used to be the case—instead of rationing it, especially since it now appears that any money that is saved is then swallowed up in our burgeoning welfare bill, which must include payments for EU children and families who do not even live here. If we are expected to make cuts, I want to cut back on this scam, which takes the UK taxpayer for a fool.

Welfare Reform Bill

Sarah Newton Excerpts

Wednesday 15th June 2011 Commons Chamber

[Mr Duncan Smith]

I beg to move, That the Bill be now read the Third time.

I am conscious that we have only half an hour, so I will try to make some progress. A great deal has been debated, but I am happy to take a couple of interventions. I recognise that some others on the Back Benches would like to say something because they did not get in earlier, and I think we ought to leave them some time.

The Bill allows us to start dealing once and for all with the welfare dependency we inherited. Just the other week we learned from the Office for National Statistics that there are now nearly twice as many households in the UK where no one has ever worked as there were in 1997, and today there are nearly 2 million children growing up in workless households—children with no positive role models who can teach them the benefits of work. This entrenched worklessness is the issue, and is the product of a broken welfare system that takes away up to 96p in every pound earned as people increase their hours in work. It is a system that shunts people from employment programme to employment programme, never looking at them as individuals but as collective groups. It is a system that provides disabled people with outdated and complex support that often fails them when they most need it. By the end of Labour’s term in office, that system left us with income inequality at its highest level since records began, despite the billions Labour spent. The backdrop to this social breakdown was the inheritance of an economy that was absolutely on its knees when we came into government.

[Sarah Newton (Truro and Falmouth) (Con)]

Given the shameless scaremongering in the Chamber today at Prime Minister’s Question Time and during this debate, can the Secretary of State assure us that people recovering from cancer will not have their benefits taken away from them?

[Mr Duncan Smith]

I was not going to pick up on that, but given that my hon. Friend has asked me, I will say that the reality, which is clear, is that the Government inherited the employment and support allowance reform from the previous Government. It was this Government who exempted cancer patients on chemotherapy in hospitals; they were not exempted by the previous Government. Our record on this is therefore quite good. As for the exchange at Prime Minister’s Question Time, it is also important to say that if somebody cannot take work, they will remain on the support group or be moved to the support group, where they will continue to receive full support indefinitely—and it will not be income-related.

Welfare Reform Bill

Sarah Newton Excerpts

Monday 13th June 2011 Commons Chamber

[Chris Grayling]

My hon. Friend makes an important point. Some of my colleagues and I have been in the House for longer than he has—and when the Labour party was in government, I do not recall once being called in to discuss the policy-making process for one part of a piece of primary legislation. I was not asked to go in and discuss education or health options; the decisions were always just made. What is different is that we have extended the hand of involvement to the Opposition and said, “Please come and be part of the decision-making process.”

[Sarah Newton (Truro and Falmouth) (Con)]

As another new Member, I ask my right hon. Friend to cast his mind back and consider whether the right hon. Member for East Ham (Stephen Timms), when he was a Minister, ever consulted quite so extensively as this Government have with third sector organisations, charitable organisations and other organisations to inform their work in developing the benefits system.

--- Later in debate ---

[Sheila Gilmore]

I cannot accept the hon. Lady’s premise. People were able to work as a result of the measures introduced by the Labour Government, such as the minimum wage, but we did not manage to take all families out of poverty because of the type of jobs that many of those people were doing and the levels of income that they received. It is wrong to suggest that a system allowing people to work for fewer hours will in itself deliver them from poverty.

[Sarah Newton]

How on earth does the hon. Lady think someone who has not had a job can obtain a better job?

[Sheila Gilmore]

Of course people have to work, and of course they have to be able to work in real, proper jobs. The hon. Members for St Albans (Mrs Main) and for Truro and Falmouth (Sarah Newton) should think, at times, about the type of jobs that they are talking about, and the kind of experiences that people will have. I want to be sure that those who go into work undergo a proper job progression rather than becoming stuck in a sideline meaning that a box can be ticked because they are now working and have some work experience.

--- Later in debate ---

[Harriett Baldwin]

My hon. Friend highlights the complexity of this area, not just because of the formulae and the mathematics but because of the financial behaviours of individuals who are making the choice between working and not working. This is an important behavioural area for people who are not in the benefits system. We all know people who have left work, had a baby and taken time out of the workplace. They make the trade-off and ask whether it makes sense for them to go back to work and pay for child care or not. That happens outside universal credit, in the world of people who are not touched by the benefit system in any way. This is a complex area.

[Sarah Newton]

My hon. Friend is making an excellent case. In addition to the financial considerations for women who are returning to work, there are great psychological concerns. Women ask whether the necessary quality of child care will be available, whether their family will adapt and whether they will cope with the separation from their child. Enabling people to be supported to take those first steps into work, even for a few hours, would help families overcome that barrier and, I hope, go on to increase their hours and ultimately go back into work full-time.

[Harriett Baldwin]

I vividly remember going back into full-time work after maternity leave—and on that first day back, frankly, one is amazed that one’s child is still alive at the end of the day for which they have been left with someone else. The psychological transition is very important, and taking it in smaller incremental steps—perhaps with more generous support—is extremely important, because it builds up trust in the alternative child care while also allowing the child to get used to it in small steps. I urge the Minister to suggest that the Department consider some other iterations along those lines.

My other point concerns the review of the consultation put forward by the Secretary of State.

--- Later in debate ---

[Guto Bebb]

It is a great privilege to be called to speak in the debate. Having been here all afternoon, I feel as though I am back in the Bill Committee. My hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) must again send my apologies to Downing street, because I have decided not to attend a party there in order to be here this evening.

I wish to speak about four specific issues and to new clauses 3 and 4 and amendments 23, 24, 27, 28 and 29. Before doing so, it is important to set today’s good and wide-ranging discussions in context. It is a privilege to follow the hon. Member for Stretford and Urmston (Kate Green), who spoke with great knowledge and understanding on these matters in Committee and in her contribution to the House today, but an important point that we must bear in mind is this: the reason we need to look at changing the current welfare system is that it has not worked.

I challenged the hon. Member for Edinburgh East (Sheila Gilmore) on the figures for the number of people in the United Kingdom who have never worked, which worsened from 2000 to 2010, and the figures I quoted for Scotland were supplied by the Office for National Statistics. The figures for the United Kingdom are absolutely deplorable. The number of people who have never worked increased from 572,000 in 2000 to 841,000 in 2010, when the previous Government left office. As a Member who represents a Welsh constituency, it is disappointing to state that the figures in Wales also show a deterioration. The context for the welfare reform package, therefore, is the fact that the current system is not working.

[Sarah Newton]

Does my hon. Friend share my utter frustration that over the past 10 years, under the Labour Administration, so many of the new jobs that were created in the economy went to people immigrating into this country, rather than to those who were abandoned by Labour in long-term unemployment without the skills and support to get back into work?

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[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

I listened with interest to the hon. Member for Aberconwy (Guto Bebb), who said that this debate reminded him of the Committee stage of the Bill. I feel a bit like an intruder, because I did not serve on that Committee. I am not sure whether he meant that he was enjoying the experience or enduring it.

I want to make a few remarks about new clause 6. I am not sure whether it comes into the category of superfluous detail to which the Minister referred—or blessed detail, as one of his hon. Friends described it—or deals with something that was considered in Committee. Last week, I had a discussion with people at Rutherglen and Cambuslang housing association in my constituency, who are concerned about the payment of the housing element of universal credit and the changes that are being made to the current arrangements on direct payments. As someone who is not an expert in these matters, the new clause seems to me to draw a good balance between the desire to try to ensure that universal credit gives people responsibility for the money that they receive and protecting the interests of tenants of social landlords and the effectiveness of social landlords such as the housing association I mentioned and, I am sure, many others around the country. The new clause would allow the housing element of universal credit to be paid directly to the landlord if the person in receipt of universal credit requests it or if the tenant is in considerable arrears.

Social landlords are worried that income streams might be significantly reduced because households facing financial constraints as a result of rising food and fuel prices and other calls on their budgets which may be greater in future choose to spend the money received from universal credit on items other than rent, for which the housing component of universal credit is primarily designed.

[Sarah Newton]

The hon. Gentleman is making a good point. Is he assured, as I am, by what the Minister has said—that the vulnerable types of household that the hon. Gentleman is so well describing can make those payments directly to landlords at the moment, and that because the Government do not want to disadvantage anyone in the transition to universal credit, that mechanism will be allowed to continue?

[Tom Greatrex]

I am seeking an assurance from the Government that that system will be able to continue.

The proposed change has potential difficulties for the social landlord as well as for the tenant. On several occasions over the past year, I have heard the Government express determination to try to ensure that organisations in receipt of public money are as efficient and effective as possible. That is also important for social landlords and housing associations. If we move to a new arrangement whereby direct payment is not possible, there is a risk that they will end up spending a disproportionate amount of their time, resources and effort on attempting to get arrears from tenants instead of trying to be as effective and efficient as possible in prioritising and concentrating on improving their stock and dealing with the other issues that they face. That could constrain their ability to repay private finance that they have borrowed to finance new building. If housing associations are seen as higher risks, they may face even stricter conditions on their borrowing, which would affect their ongoing business.

There is also the question of whether tenants may resort to doorstep lenders or other loan sharks. I am sure that I am not the only Member present who has seen examples in their constituency of people being driven into that sector. I know that Members on both sides of the House have addressed that issue in debates on other measures. In seeking to ensure that people are responsible for the benefit that they receive, we must not put ourselves in a worse position by removing that direct payment.

As I said at the start of my remarks, I am new to this area of debate. I was not on the Committee and have not dealt with it in the same detail as others. However, it is important to protect a system of direct payments, particularly for social landlords. I hope that the Minister reflects on that, even if he thinks that the new clause is superfluous.

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[Charlie Elphicke]

I do not make my money out of campaigning, and I never have. Anyone who has done that will know that maximum fear is the way to get the most subscriptions, the largest membership and the highest amount in grants. I make my money out of my only job, which is serving my 71,000 or so constituents and trying to do what is best.

Perhaps I am old-fashioned, but I occasionally open the Budget Red Book and look at the detailed figures. Table A2 on page 80 makes it clear that a lone parent with one child working 35 hours a week would have £105 without universal credit, and more or less the same with it. However, when parents work 10 hours, things change. A lone parent working 10 hours rises receives £20 without universal credit, and £53 with it. If we move to universal credit, those people will end up, broadly, with more money. That mini-job is massively incentivised by universal credit, which makes part-time working much easier.

Why does part-time working matter, and why should we give greater incentives for it? To answer that, we must look at the proportion of parents with child care responsibilities who are in work. Some 61% of lone parents who have children aged between five and six, who would find things difficult under new clause 2(5), work part-time, as do 64% of partnered mothers of children of that age: 64% of all mothers work part-time. The statistics are pretty clear that we have had a joint working revolution: there is much more sharing of economic power in couples, and more pooling of income. To a great extent, universal credit recognises that in the system.

There has also been a revolution involving women in the workplace. Often they work part-time, because even now there is a bias towards women having primary responsibility for child care. Finances might be shared, but the responsibility for child care tends to fall to women. That is what comes out pretty clearly from the figures. For that reason, we should allow women maximum flexibility. Why have a 16-hour cut-off, as new clause 2(5) proposes? I, for one, cannot agree with that. It is not the right way to go; it is a retrograde step.

[Sarah Newton]

My hon. Friend makes an extremely good case. Does he agree that the letter referred to by the hon. Member for Westminster North (Ms Buck) was a response to a consultation, the whole point of which was to receive critical feedback to help the Government to develop appropriate policy?

[Charlie Elphicke]

I completely agree. That is the whole idea of consultations. The Government have reached out to all those groups. I am disappointed that the Opposition have used this opportunity just to throw rocks, when the Government have reached out to all parties in the House in designing the fine detail of the Bill, and truly sought to engage.

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[Sarah Newton]

Surely the hon. Lady is going to acknowledge that all this is because of a very important step that this new Government have taken. We are honestly collecting the data on the number of homeless people. It was shameful that under the previous Government the whole system of counting homeless people was so rigged. It is no wonder we have seen this rapid rise, because we now have an honest appraisal of the situation and we can start to tackle the appalling legacy that we have inherited.

[Ms Buck]

I will be very interested to see the evidence for the hon. Lady’s assertion. Although I know that our two parties have differed in the past on their interpretation of “rough sleeping”—on street homelessness—and that there is a genuine debate to be had about how that is measured, I was not aware, and I stand to be corrected, that there has been a shift in the data set for the measurement of the number of people approaching local authorities as homeless and being accepted as such. Nothing on the DCLG website indicates that, so I dispute her definition and it seems to me that we are facing a genuine problem.

Even more worryingly, rent arrears and mortgage default were to blame for a growing share of the number of people who were approaching local authorities as homeless; although not the main cause, that is a growing cause of those applications. It gives me no satisfaction to see that; I do not want people to be made homeless. As we discussed in Committee, homelessness is one of the greatest traumas that any household can possibly face. The hon. Member for Truro and Falmouth (Sarah Newton) and other Government Members must face up to the fact that the statistics show a growing trend just as the cuts in housing benefit begin to be flagged up and as people react to the changes in the incoming benefits.

The second set of data to come out in the past week of which we need to be cognisant was a survey released on Friday by the National Landlords Association. It found that 58% of all private residential landlords plan to reduce the number of properties they let to tenants on local housing allowance. Some 80% of landlords expressed concern about the reduction in local housing allowance rates from the average market rents of the bottom 30% and the same number were worried, as I shall discuss in the context of the relevant amendment, about the future local housing allowance increases being linked to the consumer prices index rather than true market rents. The survey also found that 90% of landlords stated they cannot afford to reduce their rents to absorb changes to the local housing allowance as the large majority are faced with mortgage repayments and rising running costs.

The worrying picture is that our discussions are put in context by the cuts in housing benefit that have already been through the House and were opposed by the Opposition, which are feeding through into the concerns of landlords. One point of concern is that when the Government assert that 30% of properties will remain available to tenants on local housing allowance, they ignore the fact that not all the properties in that threshold will be available to tenants because it will not necessarily be the landlords within that cohort who are prepared to let in the first place.

We will have to wait and see, but it is entirely reasonable for alarm bells to ring on the impact on homelessness when we look at those two sets of statistics. If we find either that households are in an affordability crisis or that landlords simply pull out of the housing benefit sector, particularly in those areas where the demand for private rented accommodation is greatest—that is, London, the south-east and some of our cities—we will have a severe problem and many the assumptions being made by the Government about savings are unlikely to be realised. Homelessness is an expensive process and places considerable pressure on local government.

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[Ms Buck]

I am not going to be drawn into debating the advantages and disadvantages of an argument that has just been thrown into the air by the Minister. In some circumstances, the idea may work. Some individuals of working age will actively want to downsize and will say, “We are in a three-bedroom property and it is too big for us. We have been waiting for years to get into a one-bedroom property.” In the real world, we all deal as constituency MPs with people with a huge number of different needs. There are people in all different circumstances, and these different options will work for some people.

The point, surely, in discussing this amendment is that there are 101,000 to 108,000 households in properties that are specifically adapted for their needs who, despite the slightly more sympathetic noises coming from the Minister, in just over 18 months will lose up to 23% of their housing benefit. I am not sure that the vague and general ideas being thrown out by the ministerial team are doing anything to help us deal with that reality.

[Sarah Newton]

Does the hon. Lady agree that what we are talking about is treating people like people? All people have their individual circumstances and the decision makers are best placed to use their discretion to tackle these issues. Within housing benefit, there is discretionary funding so that people can be treated like humans. Finally, to reassure the hon. Member for Hampstead and Kilburn (Glenda Jackson), pensioners are of course excluded from the concerns that she raised.

[Ms Buck]

Pensioners are excluded. As I have argued, the attempt to move people of working age in order to avoid the disability penalty is likely to stop registered social landlords from moving pensioners who want to downsize voluntarily, because there simply is not enough flexibility in the social rented sector to allow that to happen. The hon. Lady is making my point for me: there is no discretion. The 670,000 social housing tenants who will be subject to the housing benefit cut, and the 101,000 to 108,000 people in specifically adapted properties, will be subject to a benefit cap. There will not be any discretion. All that the Government can say, apart from mentioning the possibility of people taking in a lodger or moving to an alternative property in a few cases, is that the discretionary housing payment will sort it all out.

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[Ms Buck]

There is the remotest chance of the property that such a person is leaving being occupied by someone who requires the same level of adaptation. It is like playing three-dimensional chess—it will be almost impossible to fit all the people into the properties that exist. At the moment there is supposed to be a flood of people who will leave under-occupied properties in the north-west of England and swap with people in London and the south-east. Then when all the individuals who need adapted properties are considered, it becomes a literal impossibility to ensure that properties match people’s needs properly.

[Sarah Newton]

The hon. Lady is being very generous in giving way to me.

I imagine that there are a great number of vulnerable people who are sitting at home listening to this debate, or who will read Hansard. For the sake of clarity, I think it is incredibly important to go back to something that was said earlier and remind the whole House that people who are disabled are not subject to the benefits cap.

[Ms Buck]

To be absolutely clear to the hon. Lady, I am not talking about the overall benefit cap. [Interruption.] No, it is a benefit cap. It is a benefit cut.

Post Office Card Account

Sarah Newton Excerpts

Tuesday 24th May 2011 Westminster Hall

[Sarah Newton (Truro and Falmouth) (Con)]

It is a privilege to serve under your chairmanship, Mr Hollobone, and to introduce the debate this morning. I requested the topic as a subject for debate as I was concerned by the apparent lack of progress on an important part of the coalition agreement. I am delighted that the coalition Government have been so publicly supportive of both the need to provide an enhanced Post Office card account and the need to enable more income streams into the post office network to ensure the sustainability of our much trusted and widely respected local post offices.

The additional Government plans for the post office network have received a warm welcome. They include no further closures of our post offices; an extra £1.34 billion in funding for the network between now and 2015; and post offices becoming a front office for Government and offering an expanded range of financial services, including credit unions and existing high street banks giving access to personal and business accounts at post offices. Currently, an estimated 60% of accounts can be accessed through post offices. The Government aim for that to be increased to 80% of all current accounts, and they will seriously consider enabling the Post Office to become a co-operative or mutual.

I understand that, for a variety of good reasons, the Government are exploring the possibility of enhancing POCA while at the same time developing a new account that could replace it. For the purposes of this debate and brevity, I will refer to POCA covering both possibilities. Although I very much appreciate the considerable economic challenges the Government face, as well as the pressure on Ministers’ time, I hope that there is a lack only of visible progress and that the Minister today will take the opportunity to update hon. Members on the behind the scenes progress being made. That would allay the concerns in post offices and the communities that they serve around the country. Although they very much support the direction and words of the Government, they want to see action. There is significant potential for POCA to be developed into a fully transactional account aimed at low-income consumers. The account is also vital to the financial viability of post offices, which play an important role in rural areas, where the local post office is often the only access to cash for people, small businesses and voluntary groups.

To help our debate, I will provide some background information on POCA, starting with some history. The direct payment scheme was the Government programme that replaced traditional payments of state pensions and benefits by order book or girocheque over the post office counter with electronic payments made directly into an account. The programme began in 2003 and was completed in 2005. The loss of the payments of pensions and benefits cost post offices about 40% of their traditional income. The Government claimed that direct payment would help to tackle financial exclusion and provide a cheaper method of paying pensions and benefits.

Under direct payment, there were three main options for the receipt of state pensions and benefits: a current or savings account at any bank or building society; a basic bank account; or a POCA, which was introduced in April 2003. A small number of pensioners and benefit claimants were able to sign up to the exceptions service to have their payments continue to be made by the green giro.

At its peak, there were about 4.3 million POCA customers, and that was despite well documented efforts by the Department for Work and Pensions at the time to promote other payment methods and to discourage customers from opening a POCA. The account has unique features that are important to people on low incomes. In particular, there are no restrictions on who can open an account, as long as they are in receipt of a state pension or benefit, and it is impossible to get into debt. It is a straightforward product that enables benefits to be paid into accounts. In March 2010, POCA was enhanced to allow access to cash withdrawals, balance inquiries and other PIN services at post office ATMs and over post office counters.

POCAs have a great deal of public support. When in 2006 the Government announced that they would cease by 2010, the National Federation of Sub-Postmasters campaigned rigorously to overturn the decision, which led to more then 4 million people signing a petition that was submitted to Downing street. As a result, in December 2006, the Government decided to continue the accounts. Another effective campaign by the NFSP led to more than 3 million postcards being sent to MPs, which called for POCAs to be retained exclusively by the Post Office.

Both successful campaigns highlighted the importance of POCAs to sub-postmasters’ income. According to the NFSP’s most recent research, from June 2009, on sub-postmasters’ income, on average, sub-postmasters earned £220 a month—7% of net income—from POCA transactions. However, that average does not highlight the heavy dependence of certain post offices on POCA income, typically those in deprived urban or rural areas. The 2009 survey showed that 15% of sub-postmasters earned £400 or more a month from POCA transactions. When customers withdraw at a post office, they also spend money through other Post Office services, such as bill payments or mobile phone top-ups, or in the attached shop. That footfall is a key factor in maintaining the viability of thousands of post offices.

The NFSP estimates that the value of the POCA contract for Post Office Ltd has fallen from an estimated annual £195 million to £131 million in the period ending in the spring of this year.

[Jim Shannon (Strangford) (DUP)]

Further to the hon. Lady’s last point, which was very valid, there are a great many postmasters and postmistresses who have actively engaged with their local communities to ensure that POCAs are available. They have done all the hard work and are now looking at the possibility of those accounts being removed through the running-down of rural post offices. Does she agree that it would be detrimental, not only to rural communities, but to small towns, for the Government to pursue that policy?

[Sarah Newton]

I absolutely agree. It would be detrimental to the post office network if POCAs were removed, but I do not believe that that is the Government’s intention.

The reduction in the worth of the contract will be felt in the income of sub-postmasters and postmistresses. It is understandable that the DWP wants to drive down the transaction costs of benefits payments and so sees that reduction as a saving—costs have come down to about 50p from about 70p to 75p per transaction—and I understand why the Government want to look at efficiencies in that way, but there are significant implications for incomes, livelihoods and the sustainability of the network. That underlines why it is so important that the future of POCA and banking services more generally is secured. Existing and new customers would very much welcome enhanced services.

Research on POCA customers by Consumer Focus demonstrates that customers want additional transactional features and want to carry on using post office branches, which they know and trust, to access their payments. A fully transactional account could deliver significant benefits in terms of financial inclusion. Consumer Focus research shows that up to 1.75 million people are “unbanked” and could access a transactional account. By not having a bank account, vulnerable consumers can lose out time and again. Not being able to use the internet to buy goods and services or direct debit for household bills means that they pay more. They miss out on safer money management and convenient access to cash through ATMs. They find it difficult to access mainstream credit or insurance, or to save effectively, unless they are fortunate enough to have local access to a credit union or community bank. They will find it increasingly difficult to be paid for work; Consumer Focus estimates that by 2018 only 2% of employees will be paid in cash.

[Richard Graham (Gloucester) (Con)]

I congratulate my hon. Friend on securing this debate, on a subject that is important to millions of people. Is she aware of the report recently published by the Association of British Credit Unions, which highlighted the opportunities for co-operation between the Post Office and credit unions? Although it is a difficult area and is connected with the mutualisation of post offices, which is taking time, does she agree that it could signify a huge step forward for the millions that do not have access to bank accounts, and will she join me in encouraging the Government to make progress on the matter as soon as possible?

[Sarah Newton]

I thank my hon. Friend for that interesting contribution. I support the work of credit unions. We have an excellent credit union in Cornwall: Cornish Community Banking provides good services for people on low incomes. As the Government consider the future of the post office network, given its reach into our communities, it is important that they fully consider the positive benefits of post offices working with credit unions and community banks, and how that might work with co-operatives or mutuals. Indeed, credit unions and community banks might work alongside post offices and offer their products through the branches. I hope that the Minister will update us on that.

I return to the benefits of an enhanced Post Office card account. It could also offer a genuine alternative for consumers who are dissatisfied with their basic bank account. Figures provided by the Financial Inclusion Taskforce last year suggest that up to 40% of basic account holders either have dormant accounts or, because of the associated penalty charges, opt not to use the full range of transactional features, including direct debit.

As well as the 1.75 million unbanked people in the UK, there are just under 4 million POCA customers, and benefit payments of about £1.2 billion per annum flow through those accounts. Many people on low incomes are reluctant to open basic bank accounts or current accounts because they fear high charges if they go overdrawn. Treasury research shows that, for low-income households operating a conventional direct debit facility, savings are offset by the loss of an average of £140 per annum in penalty charges. The cost is borne disproportionately by low-income households, who have to juggle daily or weekly income and/or benefits payments.

Consumer Focus recently undertook research on a transactional POCA. The account that it tested offered post office counter withdrawals, LINK-ATM access, the ability to receive inward payments and a debit card. Crucially, it also offered a bill payment facility that allowed customers to benefit from cheaper utility rates. Equally crucial is the fact that, unlike other direct debit facilities, it would be for the consumer to determine the frequency and the amount of payments to be made—and the consumer would not be liable for penalty charges if a payment were missed. A level of control that prevents them becoming overdrawn and incurring penalty charges is important to low-income households, as they have to be careful to live within their means.

I understand that the Treasury has recently finished a feasibility study into accounts that have the additional and useful feature of weekly budgeting. Measures that help people on low incomes to obtain the best prices for essentials such as energy, and enable them carefully to budget incomes and expenditure, are to be welcomed. Many low-income families are susceptible to doorstep lending, with its exorbitant interest rates, which can quickly get them into unmanageable debt.

I hope that a new product can be developed before the POCA contract ends in March 2015, and that existing account holders will be migrated on to the new account. Such an account would have much broader appeal to post office customers. It could lead to a customer base large enough to give economies of scale, which would make the operation of such an account cost-effective. The introduction of a transactional POCA with a budgeting facility will be particularly important in helping to secure the migration to universal credit.

I have been an MP for a limited time. I can see that, despite their good intentions, Governments can find it challenging to work across Departments on joined-up policy. The delivery of an updated POCA or similar new product is one such policy. It needs to be given thoughtful consideration by the Department for Business, Innovation and Skills, the Treasury and the Department for Work and Pensions. However, I understand that, as in so many policy areas, there are conflicting priorities. I realise that the DWP will want to reduce transaction costs for benefit payments. The Department also has the key aim of lifting as many people as possible out of poverty, and the improved POCA could help with that.

I realise that 2015 seems a long time away. However, sub-postmasters, the vast majority of whom are self-employed small business owners who work long hours for low returns, need to know that the Government are committed to introducing an enhanced POCA or a replacement, and that they are on track to deliver a product that will not only benefit customers but give them certainty of income. The recent decision to award the green giro payment contract to PayPoint, with savings going to the DWP but with losses going to the post offices, is a concern to many sub-postmasters.

The post office network has reached a critical point. The previous Government’s closure programme, the withdrawal of Government services and major social and economic changes have resulted in 7,000 post office closures over the past decade. However, the remaining 11,500 post offices and 500 outreach services still provide a much bigger network than all the banks and building societies combined. Every week, 20 million people visit a post office, and for every £1 transacted, 14p is handled through the post office network.

Post offices are a vital resource for rural communities such as those in Cornwall. Only 4% of villages have a bank, compared to the 60% that have a post office. Between 2000 and 2010, rural areas experienced the loss of nearly 60% of their banks and building societies According to the Campaign for Community Banking Services, Barclays closed 22 banks during the last quarter, 12 of which were the last, or the last bank but one, in the town. HSBC and Lloyds each closed nine branches. That lack of services and competition for small businesses has been recognised by the Treasury Committee and the Banking Commission in reports in April. This could be a real opportunity for new services to be delivered by post offices, as 47% of small businesses already use the post office more than once a week, especially for stamps, mailing and cash.

Although many post offices run alongside shops—in small villages, they are often the only shop—sub-post office income is worryingly low. New work urgently needs to be brought into the post office network to increase income for the remaining post offices and to ensure that they can continue to serve local communities.

Having outlined some of the challenges that face the post office network and the real opportunity of developing POCA in the war against poverty and the delivery of the universal credit, I look forward to being reassured by the Minister that the coalition Government are taking action to deliver the important legacy of a sustainable post office network.

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[Mr Alan Reid (Argyll and Bute) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Truro and Falmouth (Sarah Newton) on securing this debate on the important issue of the Post Office card account and on presenting a good case on behalf of our communities. After spending nine years in opposition to a Government who were clearly urban based, it is a pleasure to be part of a Government who understand rural communities.

The coalition agreement includes a commitment to post offices and to making them the front office of government. For that to happen, they have to be financially underpinned so that they can provide a large number of basic services, including the Post Office card account. The importance of POCA to post offices derives not only from the income that sub-postmasters and sub-postmistresses get from it, but from the fact that customers collect their money from the post office and then spend it in the shop. In rural villages in a constituency such as mine, there is often just the one shop and the post office is an important part of that shop. Without the post office, the shop would not be sustainable.

My hon. Friend talked about the need for joined-up government and for all Departments to support the post office. Given the structure of government in this country, there is clearly a temptation for Ministers to engage in silo thinking and to be concerned only about their own Department. Although the Government inherited a terrible financial mess from their predecessors and the pressure is on Ministers to make savings in their own Departments, it is important that our Ministers do not pat themselves on the back for making savings in their own Department at the expense of other Government Departments. The Post Office is a case in point. We need all Government Departments to support the Post Office.

When I came back to Parliament after the election, I was unpleasantly surprised to find that the previous Government had issued tenders to replace green giros, which brought in a lot of money to post offices. People in rural areas were particularly dependent on such a service because it meant that they had a place in their own community to cash their green giros. When the new Government came in to office, they had to deal with the fact that the tender had been drawn up by the previous Administration, which greatly restricted their room for manoeuvre. I was further disappointed when the contract was awarded to PayPoint. Although there are a lot of PayPoint outlets in my constituency, they are all in the towns, and large rural parts of my constituency have no PayPoint outlet. There is no PayPoint outlet in the rural parts of north Argyll. There are about half a dozen in shops in Oban, but nothing outside.

[Sarah Newton]

I can echo my hon. Friend on that point. We have the same problem with access to PayPoint in parts of Cornwall. However, does he not agree that we should take some reassurance from the fact that the Government have said that people who currently receive the green giros will be given advice on their options, including signing up for a Post Office card account? I will work with my rural post offices to put up posters in branches so that as people cash in their green giros for the last time, they are encouraged to apply for a Post Office card account.

[Mr Reid]

My hon. Friend makes an important point that customers who use the green giros must be given the option of using POCA and must be encouraged to do so. I hope that this Government’s attitude towards POCA will be very different from that of the previous Government. Those of us who were MPs in the 2001 Parliament were inundated with complaints from constituents who were badgered and bullied by the Department for Work and Pensions call centre to move away from POCA to the banks. As I say, I hope that this Government will have a completely different attitude to POCA and that its use will be marketed positively rather than actively discouraged, as was the case under the previous Government.

There is a lack of PayPoint outlets in the rural parts of north Argyll, and there are several islands in my constituency that do not have a PayPoint outlet. Every time I mention PayPoint in a debate, I am conscious of the fact that a few days later a letter comes in from PayPoint saying what a wonderful service it provides. I say now to the person from PayPoint who will read the Hansard report of this debate that PayPoint still does not have outlets in rural north Argyll or on several of the islands in my constituency.

As we are discussing green giros, it is important to remember that many people who use them are people who were unable to use POCA for disability reasons. When my hon. Friend the Minister responds to the debate, I hope that he can tell us what facilities will be made available to people with disabilities who were previously deemed unable to use POCA to make it easier for them to access POCA. For example, if they live on a small island without a PayPoint outlet, what are they to do?

One of the lessons to be learned from the green giro contract is the importance of Government consultation before contracts go out to tender. When some of my hon. Friends and I attempted to lobby Ministers to give the green giro contract to the Post Office network, we were told the standard line that all Ministers in any Government use—that once a contract is out to tender and a legal process is under way, Ministers cannot engage in discussions about it. It is therefore important that we consult before contracts are put out to tender rather than, as was the case with the green giro contract, only finding out after the contracts have been put out to tender.

Of course, my hon. Friend the Minister has a responsibility to run his Department as efficiently as possible and to save as much money as possible. However, any savings that are made should not be at the cost of making the problems of financial exclusion worse. I understand that one of his remits is to be the Minister with responsibility for financial inclusion. If the only place in a rural community where people can access cash is a village post office and that post office closes, we will see real financial exclusion. Although pensioners may have bus passes that allow them free bus travel, in a rural community in the highlands there are not that many buses. Even on the days on which the buses run, it is often the case that there is only one bus from a village to a town at 9 am and there is only one bus back at 5 pm. What is a pensioner on a low income to do if they go into a town on the 9 am bus to collect their pension from the post office and they have to wait until 5 pm for the bus back?

[Mr Reid]

Yes. The hon. Lady makes a very important point, because the post office has a certain privacy that, say, a PayPoint outlet—I might as well say “PayPoint”, because I will get a letter about it anyway—in a filling station rarely has. Also, the staff who work at the checkout in a supermarket or filling station do not have the training that the post office staff have. That is another very important point.

[Sarah Newton]

Does my hon. Friend accept that staff in local post offices, such as those in villages in my constituency, know the regulars who come in, particularly elderly or vulnerable people? They can help those people if they have forgotten their PIN numbers; I am sure that that goes against the regulations, but it is a vital thing that they can do. They also notice if Mrs Smith or Mrs Jones does not come along. That sets off an alarm, and they either go round themselves or they ask other people to check on them. That is a vital social service for elderly people and people with disabilities in many of our villages.

[Mr Reid]

My hon. Friend makes an important point. I hope that the Minister and other Ministers will bear it in mind when they consider the importance of post offices.

The Government have a commitment to the Post Office network, as set out in the coalition agreement:

“We will give Post Office card account holders the chance to benefit from direct debit discounts and ensure that social tariffs offer access to the best prices available.”

I hope that my hon. Friend the Minister can tell us what progress the Government have made towards achieving that objective in the coalition agreement.

In conclusion, post offices are very important to our rural communities. As I have said, the post office often underpins the only shop in a village and there will be all sorts of problems for villagers, particularly elderly people on low incomes, if post offices close. I hope that my hon. Friend the Minister will agree that it is worth the Government spending money or perhaps giving up the opportunity to make some savings to retain the Post Office network in such areas. That means supporting Government services through the Post Office network and, crucially, it means that when the present POCA contract runs out in 2015 its successor is a post office-based product, and hopefully one that offers even more services than POCA offers at the moment. The successor to POCA must be a post office-based product. Otherwise elderly people on low incomes in our rural communities will really suffer.