1.39 Following the cancellation of the Card system, the Department have adopted a two-stage Payment Modernisation Programme to provide "a secure and fully accountable route for benefit payments" and to form part of a wider government strategy to modernise government services:
■ Up to 2005, the Department will extend the use of bar codes on order books. This has now been installed in all the 7,000 post offices automated to date, as an interim measure to reduce encashment fraud; and
■ from 2003 to 2005 the Department will migrate from using order books to using transfers to claimants' bank accounts as the normal way of making benefits payments. The change will further improve accounting and is expected to make very significant administration and fraud savings of some £500 million a year.
1.40 It is planned that Post Office Counters Ltd will extend its relationships with commercial banks so that benefit recipients will be able to access their benefit money at post offices, and bank customers generally will have improved access to cash. An alternative payment mechanism available at post offices will also be established for those benefit recipients who are unable to open a bank account. These measures will help to generate income for the company and sub-postmasters, whilst automation will help Post Office Counters Ltd to retain existing business and attract new clients and types of business.
1.41 The strategy is intended to balance Social Security and Post Office objectives, and to take into account wider issues including:
■ overall value to the taxpayer;
■ the wider policy objectives of Government, particularly around combating financial exclusion; and management issues around the planning and implementation of large business change projects involving Information Technology.
1.42 The Government's current plans are designed to achieve substantial and increased savings from 2005 that will be available for redeployment elsewhere, and a new benefits payment service that:
■ takes account of benefit recipients' increasing preference to have payments made into their bank accounts: the provision of encashment facilities in post offices will enable customers to collect their cash there if they so choose;
■ has regard to the future commercial viability of Post Office Counters Ltd and the vulnerability of some offices in rural or deprived urban areas, by ensuring the Post Office can continue to have a role in benefit payment arrangements;
■ protects the security of paper-based payments in the interim through extending the electronic control of Order Books; ensuring that the future change programme is broken down into manageable components; and
■ so far as possible, builds on generic Information Technology systems rather than having to invest in a new one, thus minimising the risk of failure and maintaining the ability to keep abreast with the developments in modern technology.
1.43 In June 2000 the Secretary of State for Trade and Industry announced a package of measures designed to modernise the Post Office network by:
■ ensuring that benefits and pensions can still be paid in full, in cash at the local post office;
■ setting up a special fund to improve local offices in deprived urban areas;
■ providing help for those on low incomes;
■ providing people with new opportunities to use the internet;
■ encouraging post offices to act as Government one-stop shops;
■ maintaining the rural network by placing a formal requirement on the Post Office to prevent any avoidable closures of rural post offices; and
■ supporting the development of the proposed "Universal Bank", giving banking facilities for up to 3-5 million extra people, and allowing customers, including pensioners, to get cash out of the post office and set up direct debit arrangements.