Rt Hon Lord Lilley

    Peter Lilley, MP for Hitchin and Harpenden, said the government‘s attempt to save money by no longer paying sub post offices to deliver pensions will not only decimate the sub post office network but will even fail to save any money. Speaking in Parliament he demonstrated to ministers that the subsidy they have now been forced to introduce to stop the network collapsing entirely is equal to the savings they originally set out to make!

    Peter said, “I predicted when the government started forcing pensioners and others to receive their benefits via a bank account rather than through the post offices that this would a double whammy for the sub post offices‘ revenues. They lose the direct payment for administering benefits, and fewer people visit post offices and spend their money there.

    “As Secretary of State for Social Security, I started a programme to computerise the delivery of benefits through sub post offices. This would have cost the taxpayer less but still maintained the flow of customers using post offices. However, this programme was scrapped by the Labour government, which forced pensioners to receive their benefits direct to their bank accounts from 2003. Now the government has admitted that it will have to spend £1.7billion over five years to cover losses and restructuring. That is over £300 million a year which wipes out the planned savings. The Minister says that is not a subsidy but that is quibbling over words. It is still a major unnecessary cost to the taxpayer.

    “The government has, yet again, presided over a shambles.”



    1) The full text of Peter Lilley’s question and the Minister’s response is recorded below:

    “Mr. Peter Lilley (Hitchin and Harpenden) (Con): Does the Secretary of State recall that I warned him, when he began the policy of requiring pensioners and other recipients of Department for Work and Pensions’ benefits to receive their benefits in their bank accounts, that the savings that he hoped to make of some £300 million or more a year on the payment previously made by the Department of Social Security to post offices would largely be absorbed by the subsidy required to keep the post office system going? He has just confirmed that by saying that the annual subsidy will be more than £300 million? Does he consider it a good deal effectively to close down a network and make no net saving?

    Mr. Darling: The annual subsidy is actually £150 million. As I said earlier, that will continue. The £1.7 billion will go to the overall losses of the post office but also to restructuring. I am sure that the right hon. Gentleman remembers that when he was Secretary of State for Social Security, as I was, the policy was to provide people with a choice, which they increasingly exercised. I think that I am right that when he was Secretary of State many people started to use bank accounts simply because their working life had changed and they found it more convenient to do so. That is a fact of life, and we must deal with that, as many other businesses have had to do.”