Banks foil DSS accounts plan

The Department for Social Security has backed down over proposals to automatically pay all state benefits to recipients through personal bank accounts.

The climbdown comes as major banks privately admit they are unwilling to grant accounts to many state-benefit recipients, as they look to cut costs by shedding unprofitable low-income customers.

About two-thirds of 27 million state-benefit recipients use payment books, which they cash in at post offices. The rest receive payments through their bank account, under the automatic credit transfer (ACT) system.

In May, the DSS proposed a full-scale switch to ACT, to occur between 2003 and 2005, when all recipients would receive payments through personal bank accounts.

But, the Government’s White Paper on the future of the Post Office, published last Thursday, concedes: “All benefit recipients who wish to collect benefits at post offices will still be able to, both before and after the change (to ACT).” A DSS spokeswoman also says that ACT will not become compulsory.

Colin Baker is a member of a ministerial working group set up by the Government to implement the ACT initiative, and also general secretary of the National Federation of Sub-Postmasters.

Baker says: “The decision (to allow the continued use of payment books) indicates that the Government has a problem it hasn’t thought through.

“The banks have indicated that they don’t want many of the state-benefit recipients and the Government has realised if it wants to make ACT compulsory, it’s probably going to have to operate the bank accounts itself, perhaps through a social bank.”

About 4.7 million, or ten per cent, of the UK adult population are without bank accounts, including many of the 1.6 million unemployed, according to Datamonitor.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here