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Benefits: Cheque Replacement

My right honourable friend the Minister for Employment (Chris Grayling) has made the following Written Ministerial Statement. Since coming into office the coalition Government have been working to reform the welfare system, providing a fairer deal for customers and taxpayers alike. Well over 98 per cent of all benefit customers are now paid directly into an account. But there is a relatively small number who cannot be paid into an account of any kind or who choose not to be. These customers currently receive their welfare payments by cheque and in total this amounts to fewer than 250,000 people in the UK. Welfare cheques have become outdated, costly and too open to fraud. As a result, and in light of wider changes in the financial world, the previous Government set the terms of and invited bids on a procurement for a product to replace this payment method. Following a competitive bidding process I can announce today that Citibank, working in partnership with PayPoint, will be awarded a seven-year contract to provide the new service that will replace the current girocheque service. The contract value is estimated to be a total of £20 million per year, shared between the two providers. This new service will be free of charge to customers and accessible over the counter at PayPoint outlets. PayPoint outlets are already serving many of our customers and can be found in newsagents, community stores, and other local outlets. The DWP will ensure customers are moved across to the new payment method as seamlessly as possible. Information and advice will be made available so that customers know what will happen and when the change will take place. Customers will still be able to collect their cash from the Post Office if this is important to them, either by switching to the Post Office card account or by using one of the many commercial bank accounts that are accessible at Post Office branches. This department values its relationship with the Post Office and we are working closely with it as we design the delivery of our future services. In particular we are setting up three pilots in partnership with the Post Office: verifying identity as part of the national insurance application process; support for those jobseekers who live in more rural areas; and verification of supporting documents such as birth and marriage certificates for customers of the pension service. In addition, this department will continue to work with the Post Office to explore further opportunities for it to support new ways of delivering welfare, including playing an important role in supporting the delivery of universal credit—building on the work on pilots already under way.