Details are being made available as to how the Department for
Work and Pensions (DWP) intends to ditch giro-cheques and order
books by 2005, a process that has already begun. The aim is to have
almost all benefit and tax credit payments made by automated credit
transfer straight into bank accounts. At present, only 40 per cent
of payments are made that way. Given that 20 per cent of benefit
claimants do not have a bank account, there is a long way to go in
a relatively short time.
It is planned that claimants will be able to use the Post Office to
access their own bank accounts. However, this will possibly be
limited to basic "starter" bank accounts, rather than normal
current accounts. If the claimant doesn't want to have or can't get
a bank account, they can open a Post Office card account. But this
will only accept payments from government agencies.
Claimants will go to the Post Office and hand over their card at
the counter, which will then be swiped. The claimant will then type
in their PIN on a keypad on the counter - more than 4,000 keypads
are currently being installed. Each Post Office will carry spare
cards so a lost card should be instantly replaceable. However,
forgotten PINs will take up to three days to replace.
Other concerns include:
- Access and security for people with sensory impairment, mental
health problems or learning difficulties.
- Security of third-party encashment: for example, relatives or
home carers who cash clients' benefits.
- Benefit books are often used as a "passport" or evidence for
free or subsidised services such as leisure cards, educational
awards, local authority charges, and so on.
The DWP has said no clients will be compelled to open an account
- but the Inland Revenue can't give a similar guarantee, as the
legislation governing the new tax credits is specific. Any income
support claimant, for example, caring for a child, will be
effectively compelled to open an account within eight weeks of
child tax credit beginning in April 2003. If they don't, the child
tax credit won't be paid. The same applies for working people who
claim working tax credit from April 2003.
A DWP document, Customer FAQs and Generic Messages,
states: "If the customer shows they are truly unable to open any
kind of account, including a card account at the Post Office, the
Inland Revenue will consider, on a case-by-case basis, whether
their tax credit will be paid via giro-cheque." It will be
interesting to see if the Inland Revenue abides by this limited
For those getting social security benefits and who are unable to
open any kind of account, the DWP is looking into some kind of
"exceptions service". No other information on this has been
The task of converting from giro-cheques and order books to bank
accounts has been given to two companies - Schlumberger Sema and
Vertex - although the DWP will be responsible for the scripts used
by staff when a claimant calls for information. Veterans Agency
(war pensions) mailing started in mid-October, and mailing to the
first batch of 128,000 child benefit recipients started soon
afterwards. Pensioners are being dealt with in groups - beginning
with younger pensioners, who the DWP feels may more easily deal
with the change than older ones.
Gary Vaux is head of money advice, Hertfordshire Council.
He is unable to answer queries by post or telephone. If you have a
question to be answered please write to him c/o Community