Financial Inclusion
Speaking in a debate on Financial Inclusion, Philip Dunne MP emphasised the vital importance of the Post Office network in providing access to financial services, especially to the elderly and vulnerable and those in rural areas with limited if any alternatives.
He called on the Government to put in place a durable, clear policy to ensure a viable post office network offering a wide range of Government and local authority benefit and payment services, especially in rural areas.
3.48 pm
Mr. Philip Dunne (Ludlow) (Con): I come to the debate as a new member of the Treasury Committee and I was not present for the evidence-taking sittings from which the reports were compiled. I have therefore read them cold, as it were, but I have found aspects of what the Committee deliberations brought out to be revealing. I approach the issue from the perspective of the rural constituency that I represent. I am chairman of the rural services all-party group, which has looked at the impact of the closure of post offices on the provision of financial services in rural areas. I have also taken on the role of secretary of the post offices all-party group, and I shall focus on financial inclusion in rural areas wearing those hats.
Contrary to popular belief, many rural areas, including Ludlow, have substantial pockets of deprivation. Average incomes are significantly lower than average incomes nationwide. Many people have limited access to financial products or services, not only because of the geography-there is a relatively small number of bank branches or post offices within an accessible distance-but because technology, which is the focus of the delivery of services in both the private and public sector, is, to a large extent, not as readily available in remote rural areas as in towns. For example, broadband is more or less universally accessible now in towns, but in remote areas the topography and the distance are such that the BT lines that deliver broadband are not equipped to deliver it to households, so it is not good enough to say that individuals can access services online, because they do not have an online service that will receive the technological feed.
That brings me to my first point. The Government are increasingly looking to technology to solve many of the problems of financial exclusion. I accept that they need to put the technology in place, but for the most vulnerable in our community, many of whom are of an age at which there is no realistic prospect of their being able to access technology to receive services or product delivery-[Interruption.] I apologise, Mr. Bercow; I thought that I had turned my mobile phone off.
Kitty Ussher: Problems with technology.
Mr. Dunne: Indeed. It takes longer to turn the phone off than to turn it on. I apologise again, Mr. Bercow.
John Bercow (in the Chair): We are all grateful, Mr. Dunne.
Mr. Dunne: The Government's programme for service transformation led by Sir David Varney has undertaken a lot of work bringing together technological advances to deliver services, but the track record in the most simple stage of using contemporary technology-it is really the technology of the 20th century, because it uses telephone contact centres to deliver services, which was piloted initially by the financial services industry-has been poor, to put it charitably.
Let us consider the experience of the Inland Revenue. It has taken the Inland Revenue some 10 years to get its call centres into a condition whereby there is a better-than-evens chance of getting through if someone is seeking to contact Her Majesty's Revenue and Customs. That happened only last year. Before then, 75 per cent. of callers did not get through when they tried to place a call. The relevance of that is that it is unrealistic to assume, as the Government are finding out, that access to financial services products in the private sector, which has been far more efficient than the public sector in introducing that new technology, can be achieved simply through the use of technology. There has to be physical capacity for individuals, particularly the elderly, but also the more vulnerable groups in society, to gain access to basic financial services and products. We must recognise that when we consider the infrastructure in this country that is in place to support the delivery of financial services products, and the most logical aspect of the infrastructure that the Government have influence over is clearly the Post Office, which I shall come to in a few moments.
I should like to touch on some of the points raised by other hon. Members which I think are entirely appropriate in this context. The first is financial education. I agree with the comments made by the hon. Member for South-East Cornwall (Mr. Breed) that the content of financial awareness education in the curriculum needs to be beefed up. In this country, someone needs a GCSE in maths to be able to complete a self-assessment tax return. I regret to say that less than half of school leavers today achieve that level of financial sophistication, and those are the people who are concentrating on maths. A large swathe of the population does not take maths to that level, and one assumes that they will be the vulnerable groups of tomorrow. They need some form of basic financial education to get on in contemporary society-not just to be able to read a spreadsheet, as the hon. Gentleman mentioned, but to be able to cope with the increasing delivery of services through technology. A combination of information technology skills and basic financial education is required.
The second issue is advice given through citizens advice bureaux. Until there is better education in our system and our citizens are educated to be able to carry out their own self-assessment, for example, there is a very significant role for the voluntary sector in providing advice to those who need it most. The squeeze on the budgets of local authorities, to which the hon. Gentleman also referred, is very evident in my area, where they are the primary providers of funding to citizens advice bureaux. They are increasingly looking to that as an area of saving, placing citizens advice bureaux in a much more precarious financial situation. I urge the Minister to give some indication of whether any help will be available for citizens advice bureaux to keep those services going.
On the detail of the report, it covers access to the range of financial products. In relation to banking services, the era of the building societies and the banks competing to have an expanded presence on our high streets is clearly long gone. The proliferation of banks and building societies that we saw on local high streets over recent decades is now a thing of the past. There are fewer and fewer building societies left functioning in this country, and following the Northern Rock debacle of the summer, I suspect that that trend will go in one direction only.
Banks are looking at combining branches as a means of cutting down on their cost base. The anecdotal evidence in my area, where that has been tried, is that there is considerable suspicion about it, particularly on the part of some of the more elderly people in our society. If someone goes into a bank and provides their information to the clerk, they establish a relationship with that bank. If the branch is providing services for another bank, there is a natural suspicion that somehow the information about one's own circumstances could be more widely disseminated. I think that that is a completely misplaced conception, but I have been told by bank managers who have tried to co-locate within individual branches that it has a significant deterrent effect on customers. There is a fear that in some way other banks, and therefore potentially even other bank customers, might gain access to their information. That view is clearly misguided, but that has been the experience, as I understand it, along the Welsh borders, so it has not proved a particularly successful model. If banks decide that they cannot co-locate and operate effectively, they will decide to close their branches once they cease to be economically viable because of the decreasing frequency of face-to-face contact within their customer base. That is resulting in an increasing reliance on the post office as the only remaining alternative place for individuals to gain access to financial services.
Access to insurance is another issue touched on in the report. The Government response to the insurance with rent schemes was pretty feeble. It is on page 18 of the Government response under the heading
