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The Rt Hon Stephen Byers MP PRIVATE AND CONFIDENTIAL ade p
Secretary of State for Trade and Industry Pe
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Simon irley Es: phe Pleads (¢ Department of
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Private Secretary to mati
the Prime Minister Com gem proniete coeney I Victoria Street
10D ing Street & cite bow plrom? London SW1H OET
Londen “ Nv wah Direct line
SWIA 2AA
e-mail
TLO.Byerst
26 February 2001
Dow J (iow I
POST OFFICE
Your letter of 15 February recorded the Prime Minister’s concern at the continuing
high rate of Post Office closures. This letter responds to your requests: an update
on progress in implementing the recommendations of the PIU Report on the Post
Office; an assessment of the potential impact of our measures on the rate of
closures; advice on eligibility for the Card Account in Universal Banking; and a
detailed report on the range of services in the Government General Practitioner
pilot.
The key to reducing the current high rate of post office closures is the successful
implementation of the PIU recommendations and we are driving this forward
vigorously. [ attach a progress report on this at Annex I.
As my letter of 9 February said, net closures for the nine months April to December
2000 were 434. We now have the January figure which is 47 (still subject to
verification). If February and March were at the monthly average for the year as a
whole, the total net closures for the full year would be 577. The final figure could
exceed this, particularly if the completion of the introduction of Horizon (the new
IT platform) continues to “bunch up” retirements and resignations which might
have otherwise taken place over a longer period (as those who don’t want to train
to use computers decide to call it a day). The previous record year was 1991-92
when 478 offices closed.
dts
Department of Trade and Industry
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PRIVATE AND CONFIDENTIAL ce
It is difficult to predict future levels of closures. There are three significant factors
which should lead to a reduction in the rate of closures after April. The first is that
with the completion of the main Horizon installation programme by early April, the
“bunching” effect on retirements and resignations (perhaps constituting 100 net
closures for the current year) should end. The second factor is the ending of the
25% introductory payment by new subpostmasters, as reported in my letter of 9
February, and the new £2 million fund to pay the capital costs for community
groups who have identified new premises in the village but currently have to pay
for conversion themselves. These measures help address the root of the closure
problem, which is that not enough new postmasters are coming forward to take on
post offices (rather than an increase in retirements and resignations) and, in
providing new premises, could lead to well over a hundred of the 434 “closures”
being restored as functioning post offices. The third factor is our ability to deliver
all that the PIU report promised — in particular, post office based Universal
Banking - which will turn around the existing crisis confidence in the network.
We will need to keep the situation closely under review but the package of
measures announced by Alan Johnson recently (which includes the new £2 million
fund) should provide additional significant help in this area. However, we should
not rule out further action and we are continuing to look at further innovative
measures that could be employed.
In the longer term, there is likely to be an increase in urban closures as the Post
Office implements the PIU recommendation on urban renewal - merging post
offices to form bigger, brighter, more customer oriented urban post offices.
On the question of eligibility for "Clear" Accounts (now to be called Post Office
Card Accounts), I attach a paper by officials setting out the arguments. My
Secretary of State is clear that a decision now that we should restrict eligibility to
those who do not have bank accounts would be politically very damaging.
Finally, on GGP, I attach (at Annex 3) the detailed report on content which you
have requested. The Government General Practitioner (GGP) pilot is making
progress and the enthusiasm from content provider organisations across all sectors
and citizen and sub-postmaster focus groups is strong. There can be no doubt that
the project is ambitious, but the unique combination of traditional trusted service
provided by post offices combined with technology-enabled information and
transactions has the potential to transform the delivery of Government service and
provide real value for all, particularly to the vulnerable sections of society
including the older, poorer, more isolated and the unwired.
Department of Trade and Industry
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PRIVATE AND CONFIDENTIAL
To drive this project forward it will now be important to ensure that Departments’
high level enthusiasm is turned into working level commitment. An
interdepartmental group has been set up to assist Alan Johnson in his role as
champion Minister for the project. You asked about the interface with the
Pensioner's Organisation. A key issue discussed at its first meeting was the extent
to which pensions advice and services could be included in the pilot, given DSS’s
concerns about resource implications. You will see from the more detailed
information at Annex 3 that such services are an important part of the Post Office’s
proposed offering to older people. We have asked DSS Pensions to provide further
details of their needs so that we can find a way around this problem.
The pilot project also needs to be properly resourced if the Post Office are to be
allowed to make a real go of it. Mr Johnson has written to the Chief Secretary to
seek his agreement to increasing the proportion of overall funding made available
for the main pilot this year (but keeping within the overall amount budgeted for the
three year settlement) to ensure its success.
Iam copying this letter to Lucy Makinson (HMT), Heidi Popperwell (HMT), Neil
Couling (DSS), David Prout (DETR) and Richard Abel and Geoff Mulgan (Cabinet
Office).
GRO
BERNADETTE. KELLY I
Principal Private Secretary
dts
Department of Trade and Industry
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ANNEXES
Annex 1 Progress Report on PIU Implementation
Annex 2 Universal Banking Services
Annex 2A Government commitments
Annex 2B Costs and numbers
Annex 3 Government General Practitioner
Annex 3A Pilot Propositions
Annex 3B Pilot Services
Annex 3C 30 Key stakeholders
Annex 3D Inclusive delivery
Annex 3E How the retirement offers and services will be delivered
Annex 3F How work related offers and services will be delivered
Annex 3G Community: what the customer will be able to do and through
which channels
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Annex 1
Progress report on PIU implementation
Paper by DTI officials
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Annex 1
Progress report on PIU implementation
Protecting the rural network
Alan Johnson wrote to the Post Office last autumn to place on them a formal
requirement to avoid all "avoidable closures" of sub post offices in rural
locations. The Post Office has taken a number of initiatives since then to
build up confidence in the network, minimise the rate at which sub-post
masters resign and maximise the prospects for finding new sub-postmasters
to take these businesses over.
With effect from 1 April it has removed the introductory payment that has
historically been charges to new sub-postmasters. This will increase the
income of new sub-postmasters by 25% in their first year. The Post Office
is confident that this bold measure will result in a real improvement in the
prospects for finding new sub-postmasters.
The Code of Practice followed by the Post Office to ensure that all possible
steps are taken to find replacement sub-postmasters to keep open rural
offices has been strengthened to engage the local community more in finding
replacement arrangements, and the National Federation of Sub-Postmasters
has reintroduced the "Counters Club" previously run by the Post Office
which allows sub-postmasters to benefit from the combined buying power of
the network.
Alan Johnson announced in the House last Thursday a new Government
fund to help with the costs of relocating and refurbishing rural post offices.
The scheme is aimed particularly at initiatives by volunteer or community
groups seeking to maintain or reopen post office facilities where the
traditional post office is closing. The £2 million initiative could help in
establishing up to 200 such community post offices in the UK.
The post office ran a nationwide roadshow in January setting out its future
vision for the network to all 18,000 sub-postmasters. The aim was to re-
build sub-postmaster’s confidence that their post office businesses would be
economically viable beyond 2003 when traditional income from benefit
payment work will be lost. Although it was too early for the Post Office to
be able to give clear indications about the levels of income from universal
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banking services or the GGP project, the roadshow served a valuable
purpose in communicating to sub-postmasters face to face the bullish vision
set out in the network's business plan.
The work to establish a mechanism for rural network payments post 2003 is
under way. We are considering the Post Office's proposals, and the Postal
Services Commission has begun the work on payment mechanisms that will
culminate with its recommendations to Government in the Autumn.
Reinventing the urban network
Preparations within the Post Office for its urban reinvention programme are
progressing in line with the PIU report, but we have advised caution in
carrying forward this element of reform over the next few months. The
reform package offers the prospect of bigger, brighter, more customer
oriented urban post offices, but it also involves significant numbers of office
mergers (and therefore closures). This part of the package, although
essential for the long term future of the network, may be contentious with
the CWU and the NFSP and has the potential to lead to some negative press
coverage. We have asked the Post Office not to place further strains on
confidence in the network by pushing forward with this programme until
later in the year (by which time we hope that any negative reaction can be
countered with more concrete and positive news on universal banking
services and the GGP initiative).
DETR is working leading the work to establish a £15 million programme of
assistance targeted at the special needs of sub-post offices in some 300 urban
deprived locations.
Universal banking services
Following constructive negotiations with the banking industry, the Secretary
of State announced on 20" December that agreement in principle had been
reached with Barclays, Lloyds TSB, RBS/NatWest, HSBC, Abbey National
and the Halifax that they will contribute towards Universal Banking Services
at the Post Office. Since then we have been working with these banks with a
view to signing a Memorandum of Understanding (MoU), and with other
key banks and the Nationwide Building Society to bring them on board.
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We are making good progress with getting other institutions to agree in
principle to supporting the project. The Alliance and Leicester, Nationwide
Bank of Scotland and National Australia Group have now committed to the
project. We are also discussing with the Co-op what contribution they can
make and I am optimistic we will be able to bring them on side in time to
sign the MoU.
Progress on the MoU has been much slower than I had hoped. The banks are
dragging their feet and have repeatedly failed to meet their deadlines for
comments. The key question is resolving the detailed points banks will have
on what in practical terms is meant by opening PAT 14 accounts at post
offices. We know from discussions that the banks are likely to raise
significant points about our aim in this respect (which is fundamental to
maximising financial and to minimising the costs of the Post Office Card
Account). A particular challenge will be to overcome the Halifax’s apparent
objection to this in principle, which we believe is now shared by Barclays.
This will not be easy but we need to find a way through that will enable us to
sign an MoU within the next few weeks.
Government General Practitioner (GGP)
Progress on GGP is set out in the separate paper (at Annex 3).
Maximising the commercial potential of the network
The Post Office has made considerable progress in this area. We have
secured a firm commitment from the Chairman that the network should
evolve into a separate business during this year. This will give it clearer
direction and a more commercial focus, as well as overcoming some of the
longstanding tensions that have lead to the network being treated as a second
class citizen within the Post Office Group.
The Post Office is close to selecting a new Non Executive Director who will
have special responsibilities in relation to the network. It has already
strengthened its executive management team for the network and has further
plans in the pipeline.
The business is showing signs of achieving some important early successes.
It has entered into an agreement with Standard Life to make stakeholder
pensions available at Post Offices from April, it has signed a deal with
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VIP.com to sell its internet prepayment cards and telephone cards in 1000
post office outlets, and it is trialling new home shopping services coupled
with more convenient opening hours in the South West. We will maintain
the pressure on the Post Office to build on these early successes and to
ensure that such news is well publicised in the expectation that a "virtuous
circle" of confidence-building good news will be established.
Progress monitoring
Progress monitoring and co-ordination arrangements are in place within DTI
to keep Ministers fully appraised of progress and to give early warning of
any difficulties as the work is driven forward. The ad-hoc Ministerial group
on the Post Office is meeting regularly to review progress and to ensure that
all relevant Departments, including the devolved administrations, are fully
engaged.
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Annex 2
Universal Banking Services: Accessing Benefits and Tax Credits In
Cash Through Post Offices
Agreed paper by officials from DTI, Tsy, DSS and IR
23 February 2001
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UNIVERSAL BANKING SERVICES:
ACCESSING BENEFITS AND TAX CREDITS IN CASH AT POST
OFFICES
Headlines
1. Over one third of benefit customers and direct tax credit
recipients are already paid by direct credit into bank accounts
(“Automated Credit Transfer” or ACT), and the number is rising every
year. Between 2003 and 2005 virtually all remaining customers will
move to being paid this way, doing away with order books and giros,
and releasing savings of over £500m a year. And from 2003 Inland
Revenue will make all direct new tax credits payments by ACT.
2. The Government has said that benefit recipients should still be
able to draw their cash at post offices if they wish. This will be achieved
through three main routes:
e the Post Office will extend its network banking arrangements so that
many existing bank accounts will be accessible at post offices;
e many of the banks’ new basic accounts, aimed at those without a
current account now, will be available through post offices;
e anew “Post Office Card Account” (previously labelled “Clear
Account”) will be available as a last resort for those who are unable
to manage a basic account or as discussed in this paper are unwilling
to.
In addition there will be a limited exceptions mechanism for payments
where ACT is not suitable.
3. This Post Office Card Account will require Government funding.
The issue is how to achieve value for money (and HMT believe work
within the allocated expenditure limit envisaged by them at the time of
the PIU report) by keeping the number of Card Account customers, and
therefore the cost to Government, to a minimum. Should there be
eligibility restrictions? This paper sets out the arguments and the
options available.
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Background
4. In May 1999, Ministers took the decision to move to ACT as the
normal way of paying benefits. This was aimed at achieving a number of
objectives:
e Reducing administrative costs — the savings are around £500m a year
e Tackling fraud — order books and giros are very insecure methods of
payment, and over £100m annually is lost through related fraud and theft
e Modernising Government — order books date from 1948 and the days of
ration books: payment into bank accounts contributes towards the
Government’s targets for doing business electronically
e Financial Inclusion — those who draw all their income in cash, and
operate without a bank account, pay more for their gas and electricity
(because they cannot sign up for direct debit) and are more vulnerable to
being mugged
¢ Modernising the Post Office — installing “Horizon” terminals brings
much needed automation to post office counters and opens up
possibilities for new business, including banking — not just for benefit
recipients but (through network banking arrangements) for a much wider
group of customers. The start date for the move to ACT was set at 2003
to give Post Office time to develop new business.
DSS has a published target (in its public service agreement) to pay 85% of
customers by ACT by 2005.
5. The Inland Revenue will introduce two new tax credits in 2003. It is
estimated that around 6 million families could qualify for the new credits
and the vast majority will receive the new child credit which will be paid
direct to the member of the family who acts as main carer for the children.
All direct payments will be made via ACT from the introduction of new
credits. Ensuring that all the potential recipients have easy and speedy
access to some form of account is an essential part of making 2003 a
success.
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6. The Government has said that benefit recipients should be able to
draw their cash at post offices if they wish (text of Prime Minister’s
statement at annex 2A).
Universal Banking
7. In June 2000 the Performance and Innovation Unit recommended that
the Post Office should develop the concepts of a Universal Bank,
Government General Practitioner and Internet Learning and Access points.
In working up proposals since then the “Universal Bank” concept has
evolved into “Universal Banking Services at post offices”, and now consists
of two strands:
¢ The banks will make their basic bank accounts (developed in response to
the PAT 14 Report on financial exclusion) widely available through post
offices. People who do not already have a suitable account to receive
benefit and tax credit payments would be able to open a PAT 14 account
for this purpose. The account would be free of charges for normal
transactions, but would provide a range of banking services including
direct debit. These accounts will not let people go more than a few
pounds overdrawn. Cash could be withdrawn at post office counters —
including the exact amount of pension, benefit or tax credit paid in, if that
is what the customer wants. But they would have other options, including
using cash machines, or getting “cashback” at the supermarket.
e For those who cannot or are not yet ready to open even a basic bank
account in one go, the Post Office are developing a product with the bare
minimum features needed to pay benefits and tax credits. Formerly
referred to as “Clear Account” this is now known as the Post Office
Card Account. The only transactions allowed will be payments in of
benefits and tax credits by DSS, Inland Revenue and the Northern Ireland
Social Security Agency, and taking cash out at post office counters. This
account in itself does little for financial exclusion, but does make sense
as a stepping stone towards a basic bank account. It will need
Government funding to cover its costs, and while the major banks have
agreed in principle to make a financial contribution, the lion’s share will
fall on the Government. Government funding will be channelled through
DSS, IR and NISSA as the Departments making use of the service to get
cash to their customers.
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The problem
8. While the Post Office Card Account is aimed at people who do not
already have — and cannot readily open — a bank account, it may prove
attractive to a wider audience. Some benefit and tax credit customers may
see it as a convenient way of keeping their benefits/tax credits separate from
the rest of the household budgets. Subpostmasters may encourage their
customers to use the account because it guarantees that they will keep
coming to the post office to draw cash (whereas other bank customers,
including PAT 14 account holders, could drift away to cash machines and
“cashback”). And the banks themselves will have an incentive to encourage
unprofitable customers to use the Post Office Account, where Government
will pick up most of the cost, rather than using a PAT 14 account where any
cost is met in full by the banks.
9. All involved in the development of universal banking — Treasury,
DTI, the paying Departments and the Post Office — are agreed that it is
critical to the success of the project to keep Card Account customer numbers
and costs down to deliver value for money. This means, at the least: strongly
marketing PAT 14 (and existing) accounts with Post Office access; and
downplaying the Card Account as a last resort; and also getting the financial
incentives right for Subpostmasters — and possibly for customers too.
10. Even with all this, however, there is a real risk that the number of
customers for the Card Account could rise to 6 million, or even beyond.
DTI’s advisors have estimated that in a "tight" scenario, i.e. that with the
fewest number of clear accounts, the number of Clear Accounts could be 5
million in 2005. With the money from the banks, this could leave a potential
funding gap of £220m a year. For every additional 1 million users of the
Card Account, the cost would be approximately another £50m a year. The
cost could plausibly be as high as £300m a year (for 8 million Clear
Accounts), At the time of the PIU Report, the contribution to the Universal
Bank had been envisaged at £60m per annum. The paying Departments (IR,
DSS, NISSA) cannot — on value for money grounds - justify subsidising
accounts for people who already have bank accounts — or could easily open
them. Their estimate is that they have around 3.5 million customers who do
not currently have an account capable of accepting payments by ACT, and
this gives an absolute upper limit on the number of accounts they feel they
could support (and defend against, e.g., NAO scrutiny). Although there is
some uncertainty over the precise numbers (further details are in Annex 2B),
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the PO’s advisers and DTI’s advisers agree that getting numbers below 3.5m
would not be a realistic scenario for numbers of Card Account customers,
even with incentive regimes.
11. Work is going on between the paying Departments and the Post
Office and their advisers to pin down exactly where the differences between
the estimates lie. While the outcome of this work may help understanding of
the factors involved, it is unlikely to alter the fact that there is real risk of a
difference of several million customers, and a funding gap of at least £200m,
between plausible outturns and what the paying Departments believe they
can justify.
Restricting Eligibility
12. It is in this context that the possibility of restricting eligibility for the
Post Office account needs to be considered. The Government is already
planning to restrict eligibility to people who are receiving — or in the process
of claiming — benefits or tax credits. The Chief Secretary’s letter of 20
December stated that, as a condition of accepting the offer from the banks,
the policy could not proceed unless anyone who already had a suitable bank
account would not be allowed to open a Post Office account. (They will, of
course, still be able to come under the universal banking umbrella by
opening a PAT 14 account and using it to access their benefit cash at the
post office — indeed they could be positively encouraged down this route.) In
practice, this might mean asking applicants for the Post Office account to
sign a declaration that they did not already have a bank account. This would
be difficult to police and the Inland Revenue believe that there is a danger
that insistence on restrictions could make the smooth introduction of
flagship policies such as Integrated Child Credit (ICC) more difficult to
introduce. If someone refused outright to do so, the Inland Revenue and
DSS would still be under an obligation to find a way of paying the tax credit
or benefit. However, the regulations governing this could be changed. This
may mean opening a PO Card Account in really difficult cases or it could be
through the mechanism they will need to develop anyway to deal with (very
limited) exceptions to the ACT norm.
The arguments
In favour
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13. The argument in favour of restricting eligibility is that it enables
universal banking to proceed in a way that offers value for money to
Government, thereby supporting the ACT decision taken in May 1999.
Restrictions would set a firm cap on the Government’s exposure to the costs,
and would limit numbers to a level that funding Departments could support.
14. It is intended that actual costs would then be reduced below the cap by
keeping Card Account numbers to a minimum through appropriate
incentives, limited functionality of the account, and ensuring that it is easy
and attractive to open and use PAT 14 accounts.
15. Without restricting eligibility, the aim of keeping Card Account
numbers to a minimum will need to be met by reliance on incentives (and
the other measures described in paragraph 9) alone. At this stage it is not
clear how successful this would be, so there is a significant risk that total
Card Account numbers may exceed 6 million, well above the 3.5 m that the
funding Departments could support on value for money terms.
16. Without such restrictions, therefore, the cost of giving benefit
recipients with bank accounts the choice of having a Card Account could
amount to an additional £300m, or more, per annum (for 8 million users, and
with the potential for numbers to escalate towards 16 million). Such an
approach would bring into question the whole approach to migrating benefit
recipients to ACT. It might also require directions to Accounting Officers.
All of which would be very difficult given the scrutiny paid to the Benefit
Payment Card project.
17. The Treasury believe that the key to handling the Federation of Sub-
postmasters’ opposition to eligibility restrictions would lie in devising an
effective incentive regime so that it could be clearly demonstrated that
subpostmasters’ remuneration from a basic bank account would be much
greater than that from a Card Account. The details of such an incentive
regime would need to be developed quickly, and a communications strategy
would need to be developed with the Post Office. These would need to be
developed before any announcements were made on eligibility restrictions.
The DTI’s assessment is that it is unrealistic to expect that any
presentational or incentive strategy can be successful in avoiding a major
public row with the Federation, given their strong feelings on the issue.
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18. Many families prefer to keep their tax credit and benefit payments
separate from their general family income and therefore would prefer
payments to be made to a separate account. For many families this is just a
matter of preference but for others there are good practical reasons why this
separation is essential. For example, where the only account is a joint one,
paying a child credit direct into that account may mean that the carer has
little control over how the money is spent. PAT14 accounts should solve
such a problem, particularly since people could open one or more PAT14
accounts, but only if there are standards imposed that provide certain key
features are available in all the accounts. In particular there is a real risk that
customers will not open PAT14 accounts unless they can actually open them
at Post Offices.
Against
19. There are three main arguments against restricting eligibility for Card
Accounts:
(i) I The DTI is concerned that eligibility restrictions would be
vigorously resisted by the Federation of Sub-postmasters.
Colin Baker has told DTI Ministers point blank that is not
acceptable. DTI Ministers are concerned that the Government
would be faced with a high profile campaign by the Federation,
both against the proposals for universal banking — which the
Federation will claim are no longer Post Office based — and
against the move to ACT. This will precipitate a further
collapse in confidence in the post office network, increasing the
likely level of closures. There is also a risk that sub-postmasters
not to co-operate in encouraging customers to go for PAT 14
accounts, leaving the Government more reliant on eligibility
restrictions alone, rather than making most effective use of
incentives and other measures. At present, although the
Federation have concerns about how the proposals are
developing, they have not come out against them.
(ii) It could cause difficulty with the banks at a very sensitive time
in the negotiations over their role in universal banking. The
fewer Card Account holders there are, the greater the cost to the
banks in running PAT 14 accounts. Announcing a clear policy
to restrict eligibility is likely to strengthen the banks resolve to
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resist the Government’s demands that it should be easy and
straightforward to open PAT 14 accounts at post offices.
Treasury believe these risks would be reduced significantly if
banks had signed a Memorandum of Understanding — due in the
next few weeks - before a decision to restrict eligibility was
announced. In addition, they have some doubt as to whether
banks would want to be seen to actively lobby against a
measure that would help to meet the Government’s, and banks’,
financial exclusion objectives. The DTI remains concerned that
since a Memorandum is a broad statement of intent, rather than
a binding agreement, the banks will remain able to raise
practical barriers to easy opening of PAT 14 Accounts.
(iii) It would be politically controversial. 16 million people still
choose to collect their benefits weekly at post offices, despite
the alternatives available to them. Many more support the Post
Office network and instinctively agree that benefit and pension
recipients should be given a choice and not forced to use banks
rather than Post Offices. Adopting eligibility restrictions would
risk undermining the work that has been done to defuse a
difficult political issue.
The options
20. In the light of these considerations, there are four options for
Ministers to consider:
Option 1: Rule out eligibility restrictions, publicly, now, and
commission urgent work on how to bridge the funding gap between
the paying Departments and the Post Office.
Option 2: Take the decision now that eligibility will be restricted to
benefit and tax credit recipients who do not have a suitable bank
account. We would say that it was important that the Card Account
offered value for money and that eligibility restrictions would be
needed to ensure that it was targeted on those benefit recipients who
really need it. The Treasury would want subpostmasters’
remuneration from a basic bank account to be much greater than that
from a Card Account.
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Option 3: Make it clear that our policy is to put in place incentives
and other measures to ensure that Card Account numbers are kept to
acceptable levels that deliver value for money, and that we are
confident that this should lead to a cost effective and attractive
outcome. But keep in reserve, as a last resort, restrictions on
eligibility if it becomes clear in the coming months - when we have
worked up the detailed arrangements - that it will not be possible to
ensure that the numbers of Card Account holders can be kept to
reasonable levels. This option would enable us to maintain a public
line in the coming months that no decision has been taken to restrict
eligibility. But it would mean that Ministers could not say that
eligibility restrictions for Card Account had been ruled out.
Option 4: Abandon the Post Office Card Account. Instead, the prime
focus would be on Network Banking at Post Offices, and PAT 14
accounts. The Inland Revenue, DSS and NISSA would go out to
competitive tender (for which the Post Office could bid) for the
service of getting money to their unbanked customers — this is exactly
what they were planning to do from the May 1999 announcement
until the PIU recommendation in June 2000. However, Inland
Revenue’s cut-off point for going out to tender for an alternative
service to UB has already passed and reverting to that course of action
could also cause severe problems. The contingency option that Inland
Revenue currently has involves the issue of girocheques to tax credit
customers. But this is a costly option (circa £80m per annum).
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ANNEX 2A
Government commitments
(i) commitment to access to cash at Post Offices
1. On 12 April 2000 the Prime Minister said in Parliament: “More
people will want to draw their pensions, child benefits and other benefits via
their bank accounts. However, let me make one thing absolutely clear,
again: no one will be prevented from continuing to receive benefits in cash
at the post office if he or she wants to, and not onlv monthly but weekly.”
2. Although referring to a Post Office Universal Bank, rather than to
banking services now envisaged, the PIU report on the Post Office network
in June 2000 said: “A major advantage of this approach is that it would
meet the Government’s assurance to benefit recipients that they will
continue to be able to access benefits in cash at post offices after the change
in the method of paying benefits. Benefit recipients who had a bank account
but wished to use a post office to collect their benefits would not be required
to have their benefits sent to their present bank account. Instead, they could
open a post office based account which they could use for benefits only.”
3. Because the UB concept has been divided into two components (with
the Post Office no longer offering its own basic bank account), it has
arguably become more important to maximise the use of PAT14 bank
accounts to achieve the original intentions of the PIU Report: “/t would
involve the Post Office setting up a jointly owned, new company to provide
banking services to this group of people”
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ANNEX 2B
Costs and numbers
1. At this stage there is considerable uncertainty over the likely outturn,
and this is reflected both in the different figures produced by different
sources, and in the ranges of estimates.
2. Based on their own research, the Post Office’s advisers have
suggested that there could be between 3.5 million and 6 million Card
Accounts. Their view is that around 7 million benefit recipients are without
a full current account. Of these 2.5 million have no account of any kind at
all. The remaining 4.5 million have some sort of account (e.g. a savings
account) some of which may accept payment by ACT. Given the level of
antipathy to the banks the Post Office’s advisers have suggested that it is
most likely that the numbers opting for Card Accounts would be at the
higher end of this range - 6 million in 2005 (costing £305m per annum).
3. Further work by DTI’s advisers based on these research figures and
those provided by the DSS have suggested a plausible “base case scenario”
for Card Account numbers would be 6.8m (costing around £350m per
annum). The “tight” scenario — assuming incentives etc - suggested that the
minimum number would be 5.1m accounts and the “loose” scenario —
assuming no incentives - suggested 9.7m Card Accounts. The number could
be much higher than these scenarios, with a theoretical maximum of 16m
Card Accounts at a cost of around £800m per annum.
4. The paying Departments (IR, DSS, NISSA) cannot — on value for
money grounds - justify subsidising accounts for people who already have
bank accounts ~ or could easily open them. Their own research indicates
that they have around 3.5 million customers who do not currently have an
account capable of accepting payments by ACT, and this gives the absolute
upper limit on the number of accounts they feel they could support (and
defend against, e.g., NAO scrutiny).
5. Of these 3.5 million, many could fairly readily open a bank account —
they are just the people the PAT 14 account are designed for. Some may
already have some sort of savings account, which means they already have
an established relationship with a building society or other institution — they
should have no difficulty opening another account with the same society. So
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the paying Departments and the Treasury believe the total need for Post
Office accounts should be no more than 2 to 2.5 million, and reducing over
time — at a cost to Government of less than £100m a year.
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Annex 3
Government General Practitioner
Paper by DTI officials
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Annex 3
Government General Practitioner
The GGP initiative will assist in the achievement of key policy aims
including Modernising Government and social and technological inclusion.
Public, voluntary and private sector services will be joined up and delivered
by means of a combination of personal and electronic channels through a
network of physical outlets which is already highly trusted and easily
accessible. This will improve service to citizens and reduce the future costs
of delivery for Government while at the same time improving the viability of
the nation-wide network of post offices. The Post Office estimate that, fully
rolled out, GGP will deliver frontline delivery cost savings of over £500m a
year for central and local Government and will earn the Post Office over
£350m a year, replacing almost all of the potential losses caused by the
decision to pay benefits via ACT.
The GGP pilot will run for at least 6 months from mid July 2001. Inevitably
it will test the concept, including citizen demand, Post Office capability and
financial viability, rather than provide a full scale service. It will therefore be
limited to a selected range of key services for targeted customers via a
selected network of post offices (almost 300 in Leicestershire and Rutland).
The main propositions to be delivered are: retirement, work, community and
internet learning and access (Annexes 3A and 3B). Nevertheless, the pilot
will include information and services on behalf of over 50 different
organisations (Annex 3C) delivered via a choice of channels including face
to face, leaflets, telephone hot lines and interactive kiosks, supported by the
Horizon automation platform which will be fully rolled out by April 2001
(Annex 3D).
The Post Office is working closely with the DSS Pensions Directorate, Age
Concern and Citizens Advice Bureaux to provide a range of services for
people wanting to get the best out of retirement. These services include
awareness of benefits and grants, form printing and assistance with
completion and advice on debt, legal issues, housing and energy efficiency.
Similarly jobseekers will be able to use the Post Office kiosk and hotline to
understand the assistance available under New Deal, get online access to
Employment Services’ ES Direct and ES Work bank databases and, having
made an appointment for interview print out online maps and local public
transport concessions and timetables. All citizens will be able to access a
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range of local information and services including local authority and health
facilities, libraries, schools/colleges, leisure facilities, childminders/and
MEP/MP/Councillor details. In addition an ‘electronic notice board’ will
allow individuals to interact with their community for such things as local
events, lost and found, trades/services etc. (Fuller details of the individual
propositions are at Annexes 3E, 3F and 3G).
A number of Government Departments are already looking forward to
national roll-out. In addition to including information and advice on tax
credits which relate to work — notably the working Families Tax credit — in
the pilot, Inland Revenue are looking at using post offices to provide more
general advice and information and to carry out basic validation of
completed forms as well as to using post offices as possible venues for
Mobile Enquiry Centres. MAFF and Lord Chancellors Department are also
engaged in discussions with the Post Office.
ANNEX A
PILOT PROPOSITIONS
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Theme
Offer Areas
Services
Getting the best out of my
retirement
Providing support and
financial assistance
Looking after me and my
house
Helping me with my problems
e Awareness information on
relevant benefits
e Form provision/registration
e Form completeness check
e Signposting to other
agencies
e Housing options and
housing listings
© Repair schemes
e Application for energy
efficiency schemes
e Information on health
rights
e Signposting on keeping
busy
© Information and help with
managing debt
¢ Information and help with
legal issues
© Information and help with
other related problems
Getting the best out of work
Finding a job
Financial assistance
Training for work
¢ Nationwide & local job
search
e Employee rights and
employment service hotline
e COI/ Government
campaigns
© Work related benefit
entitlements (in and out of
work)
© Financial help with training
© Course and college details
e Learn Direct/ICT centre
locations
e Independent Learning
Account applications
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Theme Offer Areas Services
Getting the best out of my Finding out about local @ MP/MEP contact details
community government e Council A to Z of services
e Local authority feedback
Finding out about local © Local health services
facilities e Libraries
. © Local amenities
Getting around * Police, schools, colleges
. + e Sports centres
Electronic noticeboard © Childminders
e Integrated transport
information
¢ Bus and rail timetables
© Local community events
e Local announcements
e Local trades/services
e Other local services
GGP ICT Centre Entry level ICT learning Free tutorials
(ie gap-filling the Government ICT/UK Online centre
ICT network as required) Internet access information
Peripheral services
Commercial services
e Email account set up
¢ Independent Learning
Accounts information and
set-up
College information
LearnDirect information
Personal learning support
1 to 1 coaching
Internet facilities
ANNEX B PILOT SERVICES
Four propositions cover a range of services for testing in
the GGP pilot
Propositions
Offers
Services
GGP
services you need”
ur trusted gateway to the information and
I
Getting the best out Getting the best out Getting the best out of my GPP ICT Ce i
of my retirement of work community ie
Looking I Meteiname I I Fiogioga I I Financia! I I teainng tor Finding out I I Finding out Getting Eteetronie Entrytevet I] internet I I Peripnerat I Icommerciat
eee I ey job assistance about local shout focal around otice board lctiearningII access II services I I rervices,
imynouse I I problems overement facilities "
‘Awareness *Housing + Information Nationwide Work related + Course + sCouncilA-Z “Health services *intograted = E-board “Freetutorials “Browsers Printing Free access
information on options and —andhelpwith: jobsearch "benefit collage services showto get caiced and search ‘0
felevant benefits housing ano fentiements deta Libraries from AB SHeTIUKonline engines + piswoOMo commercial,
stings GUB"IIG employee in and out of supmer Locelevents "gente. okzales shopping
+ Form provision fights and work) Lean contact ‘+ olubs, bars Bus and train Ace information + Emait webstes
registration + Repaie Leos) Employment Direcutct eetais restaurants time tables 8 caranis + Photograp!
‘schemes, issues vice *Financiathelp centre a + Email ‘online “mage * Course
*Form voor ‘etline when looking locations Local + Accommodation Lost and found" accountset_ “helpiFAGs Searing "booking
Completeness + Applications OME" forwork authority —tradesisevice YP
ray *cor tA ‘eedback «Police : ‘Personal +Virus_—* Paymentor
cfficency Campaigns + Finaneiathelp applications assistance checking online
+ Signposting to schemes with training + Schools! Property information orders
other agencies alleges and setup «Trouble + Word
+ information “ shooting "processing * Additional
on health «Sports Centres + cotlege training
ont information + Ponta Learning
+ childminders interface "packs
+ Signpesting “n + Learndicect
onkeeping + shoppin information = Removal ot
busy shesoing Niauses
theatre! + Personal
ippert
+ Locat authority wtte1
Coaching
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Annex C
The propositions include over 30 key stakeholders - joining
up government and its partners for customers
“Your trusted gateway to the information and services I,
you need”
_ Getting the best out
of my retirement —
*Dss
* LA Housing:
Leicester City
—Rutland County
—7x Leicester County District
Councils
* Age Concern
*NACAB
* Elderly Accommodation
Council
*DoH
* Energy Assessment
Getting the best out
of work ©
es
DfEE
NACAB
Inland Revenue
col
DSS
LearnDirect
ICT Centres
Thesite.org/do-it
Getting the best out of
my community
* Infolinx
* Local authorities:
—Leicestershire County
Council
Leicester City Council
Rutland County Council
+ Upmystreet.co.uk
* Childcarelink.co.uk
* MultiMap
* Leicestershire
Tourist Information
GGP ICI Centre
* ICTIDFEE/UK
Online
* Outsource
Partners:
—BBC
—Intemet
Exchange
* Leicestershire
TEC
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Annex D
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. .. and will be delivered inclusively across a variety of
channels to reflect customer needs and capabilities
Over the counter
* Available in all pilot
outlets #
* Range of services
offered over-the-
counter including:
~Basic information
provision
—Form provision
~Form validation and
authentication
Behind the counter
printing (via Horizon)
Leaflets
Available in most
pilot outlets (subject
to space) #
Range of existing
leaflets, sourced
from stakeholders
Some leaflets only
available via ordering
service
Some leaflets printed
electronically via
kiosk and/or Horizon
GGP
Your trusted gateway to the information and
services you need
ff I
i
Kiosk
To be situated in
most pilot outlets
(subject to space) *
GGP branded, touch
screen kiosk offering
access to range of
GGP services
Simple, easy-to-use
navigation system
Simple content
Facility to print off
information/forms
Facility to complete
and submit
electronic forms
Note: a Exact requirements per outlet to be determined post outlet survey In mid-March,
Telephone Hotline
+ To be situated in
most pilot
outlets(subject to
space) *
* Offers access to
range of existing,
specialist advice lines
* Customers will be
directed to hotline via
sub PM, kiosk and
leaflets
hee
Surgeries
To be situated in
largest PO outlets
Run by
stakeholders/clients
Offer specialist
advicefinformation
Combination of drop-
in and pre-booked
appointment sessions
Sub PM responsible
for promoting and
taking bookings
Central co-ordinator
of programme and
bookings
Pilot to trial 1-2
surgeries per week,
per outlet
Helping me with my
problems
Hotline F2F F2F
Kiosk Phone (counter) (surgery)
+ Website + Age + Print + ttot
material” Concem I” featets tor
from I orderline I fromAge I complexy
NACAB) I gear I Senate
Age F ueries
Concem NACABin I (NACAB!
Teaponse’ I Age
foqueries I Concer)
Annex E
RETIREMENT
How the retirement offers and services will be delivered
Getting the best out of I
my retirement
Providing support and Looking after me and my
financial assistance house
a
7 Hotline F2F F2F Hotline F2F F2F
Kiosk Phone Leaflets counter) (surgery)I “8K Phone Leaflets (counter) (surgery)
3 I I I I
z I ace I a
I I
+ Website * RP claim I * Core * Proactive I* 1to1 * Website I* Age I * Proactive + 1to1
S 7 Gecvonic I mic BSL” I. Bary I Senstver I 8hcer, \* a epee I zane
3B —- (SSAW I. RP forecast) AI. forms from I complex I Energy I teaftetform I leaflets services
Chae ‘Concern DSSLAT I queries provider) I + DoH I tromage I (Age
& concen I * Age I Age I (SSL I. ac I I Concern, Concern
2 oNacaB) Sencern I COncem I NACAB/ I" database EAC energy
. I » ” . in wrovides
= * Gautators I. Uatinas I Asking ter! Concer Sionposting
S ~~ Women I * Form information
5 Aouner I I I checktist I
Se nacas I I” Gfewidonce I
‘ter flow I * SignpostingI
I I I” torelevane
I I tnvormation
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Annex F
Channel
Content and Provider
WORK
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How the work related offers and services will be delivered
Getting the best out of I
work I
Kiosk
Job ban!
{eSithe site)
Electronic
wDeal)
Recruitment I
‘campaigns I
(col) I
z
Hi
(NACAB)
I
Finding a job
Hotline
Phone Leaflets.
us T.
+ EShotiine I + Core
(ES Direct) I oped
+ ES heipti aia
(New Beal) I Dea)
F2F
(surgery)
Financial assistance
Hotline
i F2F
Kiosk Leaflets
Phone (surgery)
I I I
Bb hod
LF I
+ Electronic I * Helpline I + Core I
pamphlets I (DSS/ leaflets
(Dss/ I Inland I (OssAntar
Inland Revenue) I Revenue)
revenue) I. corre
Training for work
Kiosk
+ Career and
course bank I
(LearnDirect I
‘or Worktrain)
+ Location of
ICTs (ICTs)
1A
information
application
form
Hotline
Phone Leaflets
cg a7
7YS I
+ Course + Core
bank leaflets
(LeamDirect) (DfEE)
or * Location of
Worktrain) ICTs (ICTs)
A
information
pack and
application
Annex G
Community: what the customer will be able to do and
through which channels
Channel:
What the
consumer
can do:
Content and
Provider:
* View LA info at .
Cityicounty level
{also at Borough!
District evel?)
+ Search for infoe.g.:
“Deparment
courconmtoemers
* Print out details e.g.:
“Nameiecsress
+ Leicestershire County
ci
ster City Council
+ Rutland County Council
* District
Councils/Borough
councils?
Finding Out about Local
Government
Getting the Best Out of I
My Community
Leafiet Surgery
Az * Talk face to
Make a
complaint
department
Seniee shop
e-Form postal
+ Provide
feedback to the
LA ondine and
receive a postal
response
Channel:
What the
Consumer
Can Do:
Content and
Provider:
]
Finding Out about Local
Facilities
ff
Kiosk with
Printer
* Search for information on local
facilities
iew lists, locations (maps), contact
and where appropriate,
‘opening times and description, of:
Lira
“ears, clube and restaurant
* Print off information
+ Infolinx and static webpages from
County Councils
+ Upmystreet.com (if Councils cannot
provide comprehensive data)
+ Leicester Tourist Information Centre
(if we do not use upmystraet.com)
@
Leaflet
* Pick upa leaflet on
local facilities:
2 uices
+ County Councils.
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Community: what the customer will be able to do and
through which channels (cont.)
Channel:
What the
consumer
can do:
Content and
Provider:
Getting the Best Out of I
My Community
Getting Around
f j
Kiosk with
Printer
* Plan local bus and train
journeys and print
* View location of facilities on
map and print
* Infolinx / Local Authority Database
« Multimap
Channel:
What the
consumer
can do:
Content and
Provider:
Electronic Noticeboard
}
+ Possible initial population from
Kiosk with
Tally Roll
Printer
Browse notices by category
Print notice
Create notice
Amend/delete notice
User generated
local newspaper
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