Postal Services Bill

Baroness Kramer Excerpts

Wednesday 16th March 2011 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, the purpose of this amendment is to require the Secretary of State to give full consideration of how more use can be made of Post Office card accounts and to extend the services available in respect of them. The Post Office card account was launched in April 2003 as an alternative for those who could not or did not want to open a basic bank account when the direct payment of benefits was introduced. The contract for that account is extremely important to the post office network, being worth around £1 billion to post offices between 2003 and 2010.

There were, it is fair to say, some issues around the Post Office card account contract. Suffice it to say that the matter was resolved in November 2008, not least because of the intervention by my noble friend Lord Mandelson. He was able to announce then that the Post Office card account had been saved for the Post Office. On 13 November 2008, Richard Bates, head of community services at Consumer Focus, said:

“Post Office card account users will be delighted that they can continue to access their money in an environment they trust and that is within easy reach. The decision is good news for consumers and provides a bedrock for the viability of the post office network”.

He went on to say:

“Consumer Focus thinks the Post Office Limited is in a strong position to play a much more expanded role in financial services. … Today's decision is a good step in the right direction. People tell us they need the option to deposit money, pay bills and make savings in their Post Office card account. The Government must now provide and promote these services”.

It is interesting, given some of our recent debates, that there was a particular cheer at the news in Northern Ireland, where 190,000 people have their pensions and benefits paid into a Post Office card account using nearly 500 Post Office outlets.

In many ways, the Post Office card account has been a major success. Around 4.3 million people now receive benefits via such accounts, of whom approximately 40 per cent are pensioners. The account plays a central role in service provision in a whole host of areas, providing great benefit to communities across the country. Each week, 6.5 million visits are made to the post office network with a view to withdrawing funds from the Post Office card account, and it has been calculated that those under 65 who hold such an account are 28 times more likely to be “unbanked”. These same people—those in receipt of state benefits and tax credits—are also the most likely to use high-cost credit, while those without bank accounts are the least likely to hold any other financial product.

We have heard already today that the Government are looking for ways to extend appropriate, inclusive and functional services to Post Office customers. We welcome that commitment. The National Federation of Sub-Postmasters, in its Six Steps to a Sustainable Post Office Network, emphasised that:

“The Post Office card account … reminds vital for the post office network and”—

I stress these words—

“its functionality should be increased”.

That is what this amendment is about.

Post Office card account customers are some of the least well served by financial services in society. They make up 20 per cent of visits to Post Office branches each week and spend as much as £2 billion in the network each year. It should be a priority for the Government, in seeking to protect and grow the network, to find ways to develop that account. A robust Post Office card account must be an essential part of the portfolio of financial services that the Government are now proposing for the Post Office, not least because it will provide valuable bridges to financial inclusion and much needed committee support. Before the Government transfer the Post Office to a mutual, we think it sensible to require the Secretary of State to give full consideration to how more use can be made of the Post Office card accounts and to extend the services available in respect of them. I beg to move.

[Baroness Kramer]

My Lords, I shall speak briefly on my very short Amendment 23A, which I put before this House partly to have the excuse to name and shame and, perhaps more importantly, to give the Secretary of State in his annual report to Parliament the opportunity to name and shame. My decision to put forward this amendment came through a conversation with Age UK, which was careful to point out to me that in 2006, when it did its survey of older people,

“44% … used the post office to collect their pension, 43% for access to cash and 56% used it to pay their bills”.

That demonstrates what an important role the Post Office played in the financial life of older people.

Age UK welcomed the Government’s announcement, as did I, last November that their ambition is for all UK current accounts to be accessible through the post office network. Of course, the significant majority of high street banks are now going along with providing that service, but there are two major exceptions. Here is my opportunity to name them: HSBC and Santander. They do not make their standard current accounts accessible at post offices. Age UK has pointed out that older people could say, “This is very inconvenient”. Perhaps they are in deprived areas or in rural communities where there are no easily accessible bank branches. They could transfer their accounts to one of the banks that use the Post Office, but the reality is that switching accounts is complex and difficult. There are endless forms to fill out and I know from experience that it frequently goes wrong. To put that additional burden on older people is unacceptable.

We had a good discussion not long ago when in every part of this House there was real concern for the post office network, but even more for the communities to see more financial services available through the Post Office with its trusted name and accessibility and to keep people out of the hands of loan sharks. There were endless reasons, and it is important to provide the Secretary of State with the little reminder that there is a mechanism that can be used to name and shame. I hope that it will not be needed and that the banks will have fallen into line, but if they have not they ought to hear themselves declared on at least one of the Floors of Parliament.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, for clarity I confirm that when we have said that we will write to noble Lords, we will of course put copies of these letters in the Library.

I thank noble Lords for tabling the amendments. As I said earlier, the Government are clear that the wide range of financial services offered by the Post Office—for example, personal loans, credit cards and savings products—are an important part of its total product suite.

I shall begin with Amendment 22D, and attempt to ease the noble Lord’s concerns about access to and use of Post Office accounts such as the Post Office card account, which can be used by people to collect their benefits through the Post Office. The Government are absolutely serious about protecting the post office network, and we fully support the Post Office as it seeks to develop the services that it offers. The Post Office card account is currently available across the network and will remain accessible at all post offices, including the new post office local model. The Post Office is a valued partner of the Department for Work and Pensions to deliver benefits through this account. One of the things that people most like about the Post Office card account is its simplicity. The Post Office card account remains a simple product, aimed at those who are unable or unwilling to open a basic bank account. Those who want additional features have a very wide choice of basic bank accounts, and many current accounts, which are readily accessible at post office counters.

That brings us to Amendment 23A in the name of my noble friend Lady Kramer. I know that my noble friend has a great deal of experience in the banking industry and I always value her contribution to our debates. The Government have been absolutely clear in their ambition for all UK current accounts to be accessible through the post office network, making post offices the convenient place for everyone to access their cash. In November last year the Royal Bank of Scotland reached agreement with the Post Office to allow RBS customers, including NatWest customers, access to their current and business accounts at post offices. As I mentioned in the debate on Amendment 21B in the name of the noble Lord, Lord Young, this will mean that almost 80 per cent of all UK current account holders will be able to withdraw money free of charge at post offices, and many can also pay money in and check their balances.

Of course, this is excellent progress, but I agree with my noble friend that we must continue to strive to ensure that all the UK’s major banks provide access to their current accounts through post offices. All the UK’s major banks, as well as the Nationwide Building Society, provide at least one basic bank account that is accessible at post offices, but we would encourage HSBC and Santander also to offer access to their current accounts through the Post Office. With a network larger than all of the high street banks combined, and 20 million customer visits each week, the Post Office offers unparalleled access to their customers.

We therefore continue to support the Post Office’s ambition to ensure access to 100 per cent of UK current accounts. However, it is not necessary to include that stipulation in the Bill. Clause 11(2)(b) already requires the Post Office to provide details of the services provided at post offices, and we would fully expect that to encompass the financial services that it sells over its counters. Although the decision to allow customers access at the post office is ultimately a commercial one for the banks to make, the Government have made clear our commitment to encourage those arrangements to be put in place.

Amendment 24, in the name of the noble Lord, Lord Kennedy, who is not here, is about credit unions. Let us remember that co-operation between the Post Office and credit unions is already strong, and the Government support it becoming even stronger. The Department for Work and Pensions recently announced a significant package of support for the credit union sector, which includes funding set aside for a shared credit union and banking platform, subject to a feasibility study. That would open up opportunities for the Post Office to provide credit union services such as banking transactions, bill payments and low-cost credit services to many more people.

We made clear in our policy statement, published last November, that we support an even stronger link between the Post Office and credit unions, and we have demonstrated clear progress against that aim. I fully recognise the worthy intentions behind the amendments, and I hope that noble Lords and the noble Baroness will be reassured about the good work that is already under way in those areas. Placing those obligations or reporting requirements in legislation would simply increase bureaucracy. We will continue to encourage co-operation between credit unions and Post Office Ltd, and to support the Post Office in its provision of financial services. I hope that the noble Lord will feel able to withdraw his amendment tonight.