Willott, Stunell, Moore, Williams, Bruce, Reid and Webb quiz Purnell over the Post Office card account

6.54.36pm GMT Fri 14th Nov 2008

• [Nov 13]: Jennifer Willott (Shadow Secretary of State for Work and Pensions, Work & Pensions: Cardiff Central, Liberal Democrat): . . I WISH to make it clear from the outset that the Liberal Democrats are delighted at today's decision.

It is good to see that the Department for Work and Pensions has listened to the vociferous opposition to the possible loss of the Post Office card account that has come from all parts of the House and from outside it. I understand that 2 million people signed a petition requesting that the POCA remained with the Post Office. Today's decision could also be seen as a response to the Liberal Democrat Opposition day debate on Monday.

Today's statement is a strange way of going about the decision. Cancelling the procurement exercise raises huge questions, some of which have been asked by Alan Duncan. I should be grateful if the Secretary of State clarified why the Department decided to cancel the contracting exercise rather than award the contract to the Post Office. Does it mean that the terms of the tender would not have allowed the Department to award the contract to the Post Office? To enable us to make our own decision on that, will he release the specifications, the invitation to tender or negotiate, and the descriptive documents, which the Government have refused to release up to this point-indeed, on Monday, he again said that he would not be able to release them. I would be grateful if he made them public now.

The Secretary of State said that he has decided to award a contract for the continuation of the POCA within the terms of the relevant EC regulations. If he can do that now, why could he not have done it before or why did he choose not to do so? I would be grateful if he clarified that point. The reasons that he gave for the decision relate to the current economic climate. What is it about that climate that means that the Government can now reconsider? This situation leads to the suspicion that as 1,500 jobs are being lost every day in the UK, he knew that the Government could not afford to close a further 3,000 post offices-at least-with all the accompanying job losses. Will he tell us exactly what has changed?

The Secretary of State also said that he believes that it is not the time to do anything to put the network at risk, particularly as post offices are often the only provider in rural and deprived urban areas-that is what the Liberal Democrats have been saying for the past two years, as have a number of Labour Members. As that was the case when the Government decided to put this out to tender-it remains the case-what has brought him around to our way of thinking and to deciding that now the Post Office does need to be saved? Why did he think last week that it was okay to risk the only providers in those deprived areas, but that now it is not okay to do so?

As Kate Hoey said, the DWP has behaved appallingly so far on this matter: there has been delay after delay. This has been going on for nearly three years and the decision was 11 months overdue. That has caused huge stress for POCA customers, sub-postmasters and all who are concerned for their community facilities. Why has there been such a delay? It also raises issues about the cost of the process and the waste of money involved. Legal questions have already been posed about changing the competition rules halfway through the process, but this has been a waste of money not only for the bidders that did not receive the contract, but for the post offices and the Government. The Secretary of State has said that he will be providing compensation, but will he finally give us an estimate as to how much money has been wasted? Why is the amount of compensation considered to be commercially confidential? Nevertheless, I welcome today's announcement and the saving of post offices.

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): I think that that was the sound of "Focus" leaflets being pulped in their thousands. This is the right decision, and I am glad that, at the very end of her questions, the hon. Lady acknowledged that. We all know that the Liberal Democrats will want to take credit for this. She says it is their way of thinking, but the truth is that they were so confident of their way of thinking that they tabled a motion that was written by my hon. Friend Mr. Hoyle. It was not their way of thinking at all, but that of Labour Members. We were glad to see the Liberal Democrats voting in support of his motion this week, but as we know, it had been overtaken by the changes that we had made in response to the lobbying and campaigning on behalf of their constituents carried out by my Labour colleagues.

The hon. Lady asked me what has changed. What has changed is that there has been a significant reduction in confidence about financial transactions, and people have turned to the Post Office because of its trusted brand. The Post Office provides a service that is not only a banking service, but a social service, and that becomes even more important when people are worried about financial circumstances. In the light of that, we commissioned legal advice, which has said that this is the right way for us to proceed. The truth is that for all the heat and bluster, everyone in this Chamber agrees that this is the right way forward.

The hon. Lady asked whether we would release the information about the tender, but as the tender has not been completed, it would be inappropriate to do so. As she knows, the advert in the Official Journal of the European Union has been placed in the Library, and she is welcome to look at that. I am sure that she will enjoy reading it. As I said to the hon. Member for Rutland and Melton, this is value for money, and it is the right decision for our customers, for taxpayers and for post offices. It gives them certainty to plan up until 2015 and allows Labour Members to concentrate on building a viable post office network.

Andrew Stunell (Hazel Grove, Liberal Democrat): On Monday, the Secretary of State spoke strongly in favour of a Government amendment that said that all Government Departments should give publicity to how their services could be accessed at post offices. Will he give an undertaking that what he has said today applies to other Government Departments and agencies, particularly the Driver and Vehicle Licensing Agency, which has a conflict between its internal target of getting people to use its electronic system and the need to support the Post Office?

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): Of course, people can renew their tax discs through 4,000 post offices. That approach applies to the whole Government.

Michael Moore (Shadow Secretary of State for International Development, International Development: Berwickshire, Roxburgh & Selkirk, Liberal Democrat): I hope that the Secretary of State will join me in paying tribute to Mervyn Jones, who is a constituent of mine-indeed, my next-door neighbour-and also president of the National Federation of SubPostmasters. He and his colleagues around the country deserve a great deal of recognition for their work in briefing Members of the House on this matter, and I welcome the decision that the right hon. Gentleman has taken.

However, notwithstanding the Secretary of State's answers to previous questions, all the sub-postmasters and sub-postmistresses who are grateful for today's announcement will now be worrying about how much they will get per transaction. Will he come clean about that, and put their minds at rest?

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): We have yet to award the contract to the Post Office. Clearly, we will be in discussions and negotiations about that, and that is the right way to proceed. We have made it clear that we will be awarding the contract, which will give people certainty between now and 2015, but the hon. Gentleman is right to say that we should recognise the work that sub-postmasters and sub-postmistresses do. I am sure that he will join me in congratulating George Thomson on the work that he has done as general secretary of the National Federation of SubPostmasters, along with all of his members.

Roger Williams (Shadow Secretary of State for Wales, Welsh Affairs: Brecon & Radnorshire, Liberal Democrat): I welcome the Secretary of State's commitment to supporting POCA in the future, but one criticism of the scheme is that it is very difficult to open an account. Can the right hon. Gentleman give us a commitment that in future the POCA will be the easiest option rather than the last resort? If he can, there may be substance to his announcement today.

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): The hon. Gentleman is right that we need to make opening an account as easy as possible. It is already easier than opening a bank account, but the new contract will make it even easier. Both the Post Office and the Government are committed to that, and will work together on it over the next few weeks and months.

Alan Reid (Shadow Minister, Scottish and Northern Ireland Affairs: Argyll & Bute, Liberal Democrat): I welcome the Secretary of State's statement and his commitment to ensuring that it will be easier to open an account, but I hope that we will not have a repeat of what happened in 2003 with the complicated migration process. Will pensioners who have an account at present keep it automatically without having to go through a migration process? Also, will the right hon. Gentleman make a commitment that he will write to those pensioners who applied for an account in recent months but who were refused and told that, unless they supplied their bank account details, they would not get their pension? Will he write to them and offer them the opportunity to open a POCA?

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): We did not write to pensioners saying what the hon. Gentleman claims, and we have not asked any POCA holders for bank account details. One isolated letter was sent out by mistake, and we have apologised for that. However, I can give a commitment that we will ensure that people do not have to change their accounts. One of the virtues of this decision is that people already know how to use their POCA and are used to going to their post offices to do so. That is one of the reasons why we have taken this decision.

Malcolm Bruce (Gordon, Liberal Democrat): This is clearly the right decision, although I suspect that Lord Mandelson has cast a long shadow over it-assuming that he casts a shadow. Is it not time to end the attrition against the Post Office network and to start building it up with new services? May I suggest that the Government start by using their impending shareholding in the Royal Bank of Scotland to instruct that bank to use the Post Office network and to allow its customers to do so as well?

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): The right hon. Gentleman made the same claim earlier this week, but actually the RBS already offers that through its accounts. [Interruption.] It does: I will happily write to him about it. One is a basic account, and the other is a current account. I am afraid that he was not in the Chamber when I wanted to make that point earlier this week. I am happy to be able to give him that information.

Steve Webb (Shadow Secretary of State for Energy and Climate Change, Energy and Climate Change: Northavon, Liberal Democrat): Will the Secretary of State clarify something about his statement? He said: "On the basis of the legal advice that we received at the time"-that is, in 2006-"we put the contract out to tender." He has now decided that he can cancel the tendering process. Either the advice that he received was wrong, or the legal position has changed. Will he clarify which it is?

James Purnell (Secretary of State, Department for Work and Pensions: Stalybridge & Hyde, Labour): If I may dare to paraphrase Keynes, when the facts change, the legal advice becomes different. The facts have changed, as I explained in my statement. There has been a major change in people's attitudes to financial services. There has been a significant increase in people's concern about them. Given the vital social and financial importance of the Post Office, the legal advice is that we are taking the appropriate, legal way of proceeding. I am glad that the hon. Gentleman welcomes the decision that we are taking.