State Pension Reform

Debate between Steve Webb and Cathy Jamieson

Monday 14th January 2013 Commons Chamber

[Steve Webb]

It will indeed. To give a flavour of the scale, at the moment nearly half of all pensioners are entitled to some sort of means-tested benefit. That is an extraordinary and absurd situation. If I tell the hon. Gentleman that by the time the system is fully implemented, we will be down to one in 20 pensioners being entitled to pension credit, that provides an example of the scale of the change we are bringing in.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

In his statement, the Minister made much of the need for plain language, so will he confirm that under the proposals a significant number of women will not receive the new higher-rate single-tier pension in 2017, even though men born on the same date would receive it? Will he also confirm that that potentially affects some 430,000 women across the UK, including 39,000 in Scotland?

[Steve Webb]

I think I have already dealt with that point. Pension ages are changing, and they will not be the same for men and women until 2018. If we have a system based on pension age, it will be different for men and women by definition until they are equalised. It seems to me that the only way to run a system is to base it on people’s actual state pension age—rather than have an actual state pension age and then bring single tier in on a different day for a set of people born in different periods. That would introduce extra complexity, which we are trying to stop.

Pensioners and Winter Fuel Payments

Debate between Steve Webb and Cathy Jamieson

Tuesday 22nd November 2011 Commons Chamber

[Cathy Jamieson]

On one or two things, and on this point the Government do seem to have moved on from the days when some people who are now in prominent Government positions thought that winter fuel payments were “gimmicks”. To be fair again to the Pensions Minister, back in May he answered a written parliamentary question by stating:

“The winter fuel payment provides a significant contribution to an older person’s winter fuel costs and provides vital reassurance that people can afford to turn up their heating.”—[Official Report, 23 May 2011; Vol. 528, c. 493W.]

Today, he seemed to suggest that he still agrees with that in principle, and I am glad to hear it, although I disagree with him on whether the amount of money going into pensioners’ pockets has been cut.

The coalition agreement, which has been referred to, states:

“We will protect key benefits for older people such as the winter fuel allowance”.

Most reasonable people reading that statement or hearing those words coming from the mouths of Ministers might reasonably have expected the coalition to have protected all winter fuel payments. They were certainly the words that people heard in the run-up to the election, but as we know the winter fuel payment will be £50 lower this year than it was in each of the last three years for eligible households aged 60 or over, and £100 lower for those aged 80 or over. The Department for Work and Pensions estimates that 9 million households benefit from the winter fuel payment, so 9 million households will be worse off this winter.

People will no doubt seek to make the usual criticisms of the former Labour Government at this point, but when Labour left office no decision had been taken, and it was absolutely in the Chancellor’s power to continue with the extra payment, as Labour Chancellors had in previous years. It is therefore absolutely wrong for any Government Member to say that the decision was taken by the previous Government; the decision to axe the additional payment was taken by this coalition Government —no one else.

[Steve Webb]

Leaving aside the fact that the shadow Work and Pensions Secretary was the man who left the note saying, “There’s no money left,” I must ask, if the previous Government planned to keep the winter fuel payment at £250, why did they not set the money aside in their Budget plans?

[Cathy Jamieson]

The decision was taken year on year, and it would have been entirely open to a new Government —indeed, if a Labour Government had been elected, there would have been the option—to look at the measure year on year, so no matter how many times Ministers raise the issue, they cannot get away from the fact that the very people who decided not to go ahead with the payment are the coalition Government.

I am astonished to hear the Minister seemingly suggest that this Government had to follow everything that the previous, Labour Government did. If that had been the case, we would still have had a future jobs fund, and perhaps youth unemployment would not be rocketing. No one wants to intervene on that point, so perhaps we will hear more from the Under-Secretary in her winding-up speech. Rather than harking back to the past, it is time that this out-of-touch Government came back to reality and dealt with the real-life issues facing today’s pensioners.

Let me give the last word on this to the voice of pensioners. Speaking about the Chancellor’s decision to axe the additional payments, Dot Gibson from the National Pensioners Convention has said:

“It’s a shabby way to treat Britain’s older generation. If we really are all in this together, why is he going to take £100 off the winter fuel allowance for the oldest members of society at a time when fuel bills are rising and winter deaths amongst older people are a national scandal? He should be ashamed of his behaviour”.

Oral Answers to Questions

Debate between Steve Webb and Cathy Jamieson

Monday 13th June 2011 Commons Chamber

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

17. What recent representations he has received on his policy on the date at which the state pension age for women will start to rise.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Several stakeholder groups, as well as individuals, have expressed concern about the changes we propose, although the majority of commentators agree that we need to increase the state pension age more quickly.

[Cathy Jamieson]

I wonder whether the Minister knows that some 1,200 women in my constituency will lose out. Does he understand that they are angry and feel cheated that pension payments, which they had every reason to believe they had paid for and were due will now not be paid to them? What does he say to those 1,200 women?

[Steve Webb]

Perhaps a generation ago, those very women would have expected to draw a state pension for about six years less—that is a significant change that they have seen in their working life. They will still get the state pension for exactly the same time as someone a generation ago would have expected. We are trying to be fair between the generations and not load all the cost on the next generation.

Post Office Card Account

Debate between Steve Webb and Cathy Jamieson

Tuesday 24th May 2011 Westminster Hall

[Steve Webb]

The reasons for the decline of the post office network are many and varied. When I go to my local village post office, I am told that eBay is keeping it going. The fact that people buy postage for parcels and so on brings a whole range of different customers into the post office network. One of the biggest trends, which was accelerated by the previous Government through direct payments, was people being paid via their bank accounts, rather than by traditional giros at post offices. That was one of the single biggest changes that accelerated the demise of the post office network. Opposition Members ought to take just a tiny bit of responsibility for the trends that we have seen.

On the Post Office card account specifically, the perspective of POCA users has been missing from the debate. The Post Office has recently published some startling research that it undertook on what POCA holders wanted from the account. The Post Office talked to 930 people and asked the following about the POCA:

“is there anything you would change about it, for instance any additional services you would like it to provide?”

Some 80% of respondents said “nothing.” I will return to that significant point. Some 80% of respondents did not want any changes to the account and they valued POCA for its particular characteristics, which we should think carefully about changing. The next most popular answer to that question had a 4% response rate. I shall read down the list of things people would change about POCA, which have a response rate of between 4% to 2%:

“deposit/cash cheques into it; more cashpoints; use any ATM; comments relating to PO service in general; more flexible like a debit card; interest on account balance; online account access.”

Hon. Members will have noticed that direct debit is not on that list. Some of these issues are counter-intuitive. I will not say that I like nothing better than to go online to use my bank account—which, I should just add, I access at the post office—but the folk who use POCA value it for what it is. As a number of hon. Members have said, we need to ensure that the people who have POCAs can benefit from things such as direct debit. However, that may not imply sticking things on to POCA.

Why might it be a good thing to provide access to those services but not to do so through changing the POCA? It is striking that many hon. Members have said that 30% of people with a POCA do not have another bank account. However, I tend to think of it the other way around. Some 70% of people with a POCA have a bank account or some other sort of account. So why do they have two? If they have a bank account with direct debits and all the rest of it, why do they bother having a POCA? Because people like to budget in different ways and they like a simple account that cannot go overdrawn.

Some of the evidence on charges is startling and worth repeating. I have been known occasionally to go overdrawn without planning to and I am shocked when I see the charges. The evidence of what happens shows that most people do not simply face one charge in a year. Once things have gone wrong, the charge is debited. People are then more overdrawn, they perhaps do not notice it and so another charge goes on. Just to give a feel of the situation, in 2008, out of 12.6 million active bank accounts, about a quarter incurred at least one penalty charge and the average charge was £205. Of that 2008 sample, a quarter of people had one charge, 15% had two charges and 39% had at least six charges.

Hon. Members can start to see why such an overdraft facility—there might also be a situation where someone had a POCA that could not go overdrawn but a direct debit bounced and somebody somewhere had to pay a charge for that—is not necessarily what people are asking for. People do not want to pay more because they are on a low income, so we need to find ways of giving them access to the best prices. However, grafting the ability to use direct debit on to an account that people like because of its simplicity may not necessarily be the best answer.

I absolutely stand by our coalition agreement commitment. The coalition programme for Government includes a pledge to give POCA holders the chance to benefit from direct debit discounts, but that should not necessarily be done by grafting direct debit on to POCA. We have listened to what the account holders are saying to us and our impression is, yes, people want the best prices they can have, but not necessarily by taking a product they value and turning it into something else.

That brings me on to the point my hon. Friend the Member for Truro and Falmouth made about the fully transactional account. One of the problems with the fully transactional POCA is that it would be so different from the product that was originally tendered, we would have to retender. The postcards will probably go to the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), but I have a feeling we might be going through it all over again. The comment rightly made by the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) was that there is uncertainty about the future. There always is. If we said that we need a full transactional POCA, so we are going to retender for it, I suspect that there would be riots on the streets of Kilmarnock.

We do not want more disruption and uncertainty. What we want—and as a Government what we are trying to do—is to work in partnership with the Post Office far more. Rather than those involved with running post offices being people to whom we do something, they should be in here as people we do something with. That is a profoundly different approach. The hon. Member for Leeds West (Rachel Reeves) talked about joined-up government and different Departments not damaging the Post Office. The Department that springs to mind is the Department for Transport. I renew my car tax each year at my village post office because, having talked to the sub-postmistress, I know it is one of the biggest transaction charges it gets. The Department for Transport would rather I did not do so. It sends me letters that say, “Do it online—you don’t have to go to your post office.” One year, it had a prize draw—or a raffle or lottery—in which I could win a free car.

The fact that Departments are not working in a co-ordinated way on the Post Office is not new. I work closely with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton, and the Financial Secretary to the Treasury. The three of us have discussed financial inclusion issues, particularly credit unions. The post office network and credit unions could work together. There are exciting possibilities on that. One of the challenges is that, although credit unions are often very good and strong in a localised way, there are some very small credit unions and, in large parts of the country, if we asked someone on the high street where their nearest credit union is, they would not know what we were talking about. The potential for linking post offices and credit unions and access is very exciting, but it is also very expensive. That is the trade-off and the challenge.

We do not want credit union accounts with hefty charges because that would defeat the object of the exercise. We are wrestling with how to bring those two things together, but there are real opportunities for the post office network to build closer links with credit unions. In recent years, credit unions have made great progress in bringing affordable, financial services to people who would not otherwise be able to access them. I want credit unions, in partnership with the Post Office, to provide more services more efficiently to more people. That is what we want to see.

I was asked about the Post Office as the front office for Government. A number of Government Departments are looking at ways to do that, and I want to share briefly with the Chamber some measures that the DWP is taking. The hon. Member for Llanelli (Nia Griffith) mentioned George Thomson at the National Federation of Sub-Postmasters, who wrote to the Secretary of State. I am delighted to say that, in response to that letter, the Secretary of State had a face-to-face meeting with George Thomson. Several points that she read out, and which were on his list, are now being piloted in Government.

For example, a pilot for document verification started last week. The Pension Service, for which I am responsible, is piloting a check-and-send style service. That is for applicants who claim state pension or pension credit, and who are required to submit additional documents in support of their claims, such as birth or marriage certificates. Many people do not like sending their marriage or birth certificate in the post, so why not go into a post office and let post office staff check the documents, as they do when people renew their car tax? Post office staff could say, “Yes, that is fine; I have seen it. I am authorised to say that.” That would be quicker, and would give the Post Office revenue and footfall—everybody would be happy. That is not a—I do not think the word “piddling” is parliamentary—little pilot. Some 106 post office branches in the north-east of England are involved—a big pilot. It started last week and will run for three months in the Seaham pension centre catchment area. It will include a mix of Crown branches in urban, urban deprived and rural locations.

That is one concrete example; let me give the Chamber another. Later this year, we will be looking at a national insurance number pilot, which will investigate whether applications from what we call low-risk groups—EU citizens in states that are already members of the EU, not including the accession countries—could be directed to the Post Office for the evidence-gathering interview to get a national insurance number. Although the Post Office currently carries out document checking for the Driver and Vehicle Licensing Agency and the Identity and Passport Service, the DWP requires something qualitatively different. We are working closely with the Post Office to see if we can have an efficient but secure service, and hope to go live with the project later this year.

We want business in post offices, but we do not want dirty great queues. In other words, if I am queuing up to buy a stamp, I do not want someone in front of me trying to verify a national insurance number. We have to try to think of what post offices are good and efficient at, and harness that without disrupting the core business of the post office. That is why we are conducting these pilots.

The hon. Member for Llanelli mentioned signing on. In rural areas, getting to a jobcentre can be quite a trek, so why not sign on at the post office? At the moment, I was surprised to learn that customers in rural areas, intriguingly, sign on by post. The pilot will test whether there are benefits in requiring customers to attend and sign on in a local post office instead. We will evaluate that approach across a wide geographical spread and range of labour markets. We have identified test locations in Essex and in the highlands and islands—a range of areas.

[Cathy Jamieson]

That is very positive. Does the Minister agree that there are potential lessons for local authorities? Will he undertake to ensure that the outcomes of pilots are conveyed directly to local authorities, including in Scotland, as they may wish to look at doing something similar, particularly the check-and-send style service?

[Steve Webb]

I am very happy to undertake to do that. Those are some examples of what the DWP is doing. Other Government Departments are also looking at things, including our friends in the Department for Communities and Local Government and in the devolved Assemblies and Parliament. We want to see everybody working together, alongside and with the Post Office, rather than simply taking bits of business away.

The issue of the green giro was, properly, raised. I was intrigued by the hon. Member for Leeds West. Having quoted Billy Hayes, she then said that, having issued competitive tender for a second time, we should have ripped it up and just given it to the Post Office anyway. I do not think that that was the intention of the previous Government when they issued the tender. It would raise one or two issues about tendering if, every time the Government issued a tender with the Post Office in it, they panicked half way through and then just gave it to the Post Office anyway. That might undermine the concept of tendering, not just with the Post Office but across Government as a whole. Indeed, I have a suspicion that if we kept doing that we would probably end up subject to legal challenges too, which might cost a good deal more than the money we spent on the contract.

It is worth putting the issue in context. I take the point that there are variations between post offices, but the green giro, on average, delivers a fiver a week to the average sub-postmaster, just to give a sense of scale—a fiver a week, and falling. The number of people with these cheques and green giros is falling. It is therefore worth retaining a bit of scale. They are important, and my hon. Friend the Member for Argyll and Bute (Mr Reid) is right to mention the importance of rural access. I can assure him that, before the contract was awarded, I stood in my office with a map of the United Kingdom with dots on it, marking out the PayPoint network and the Post Office network. I was pleasantly surprised by the rural extent of the PayPoint network, but I take his point about north Argyll and the islands. I hope that PayPoint reads Hansard and does something about that. I can tell his constituents, through him, that my hon. Friend has been a pain in my side on this issue, and properly so. He has represented those concerns very strongly.

My hon. Friend asked specifically about disabled people. I stress that all the outlets that can be counted for the tender have to comply with the Disability Discrimination Act 1995. The new service, the replacement for the cheque, is specifically designed to be simple for that group of clients. There is no need to sign and there is no need for a PIN—it is only necessary to present a card. It is designed to be analogous. In a sense, it is converting a piece of paper to a plastic card. Beyond that, it is essentially the same process designed for the same people. Access was very important to us.

We covered a wide range of issues in the debate. I was interested to hear the hon. Member for Kilmarnock and Loudoun mention her visit to the Pollok credit union. That is a positive example of a credit union and post office working together.

I was interested in the point made by my hon. Friend the Member for Gloucester in an intervention. He pointed out the difference we now see with the post office network. The Post Office has had the promise of a subsidy to undertake to maintain the network at the 11,500 level, so when there is a closure of a post office, effort is now going in to replace it. Rather than the gradual attrition that has gone on, frankly, for decades, there is now a Government in place who are committed to protecting the network. That is a sea change in attitude, and one that post offices will very much welcome.

A question was asked about the tender process. Clearly, such processes are done under strict rules. We are required, under the EU, to be specific about what we are tendering for, and to include both cost and qualitative factors. We can take account of access—that was part of the consideration. I have no reason to think that that process was not properly undertaken, but if the hon. Member for Leeds West has further evidence on that she is welcome to send it to me.

My hon. Friend the Member for Argyll and Bute mentioned the issue of what happens when a village or a community does not have PayPoint access. One thing that the Post Office can do—I think that my hon. Friend the Member for Truro and Falmouth mentioned this—is to see this as an opportunity to offer customers a Post Office card account, or to remind them that there are approximately 30 different sorts of accounts that can be accessed at post offices. Hitherto, when people turned up with a green giro, there was no incentive to say, “Why not have a Post Office card account?” Now that there is, I hope that many of his constituents will do so.

We have heard about the excellent work of post office staff, with their friendly, familiar approach and knowledge of people. An interesting mix of people receive green giros. It is not necessarily overwhelmingly people who struggle with signatures or plastic. Often they are young unemployed people, whose financial situation is a bit chaotic. The mix is diverse. Many community post offices will be able to provide a facility for the people my hon. Friend is rightly concerned about, so that they can access their money at the post office through a POCA, with the help and support that post office staff so often give. I place on the record my appreciation, and the Government’s appreciation, of the sub-postmasters up and down the land, who are very often the heart and soul of our community.

What I want as a Government Minister, instead of warm words while presiding over a halving of the post office network, is to put the money in to ensure that post offices are there, and to give them that breathing space to modernise the network. Ultimately, that has to be the key. Rather than presiding over declining business, and Departments across Government withdrawing a bit here and a bit there to save some money, let us look forward. Let us look at new services of the sort being piloted by the DWP. Let us look at modernising the premises. There are some exciting ideas. I will not go into detail, but there is the idea of a “post office local”, whereby the rather intimidating screens will come down and post offices will be much more friendly and welcoming.

The post office network has huge potential. It is worth remembering that it is still the biggest retail network in the country, notwithstanding everything that has gone on. My commitment, as a member of this Government, is to ensure that we are not passive bystanders watching the network decline, but that we are active participants encouraging and supporting the Post Office, and making sure that it has the bright future that everyone in this House wants to see.