UK MPs warned 'Benefit changeover could bring chaos'

The changeover to paying state benefits direct into bank accounts from next April could result in chaos because not enough has been done to train postmasters or educate benefit claimants, MPs were warned yesterday.

Post Office executives told the Commons Trade and Industry Select Committee that there was a muddle over which government department should take the lead and that preparations for the changeover were behind schedule.

The phasing out of giro books and the move to pay benefits through automatic credit transfer direct into bank accounts threatens to rob the Royal Mail of pounds 400m worth of business.

David Mills, head of the Royal Mail’s Post Office division, told MPs: “Postmasters don’t feel they have had enough information from us in a timely manner and they don’t feel they have had enough training. We have not done a good enough job.”

However, he also indicated that part of the blame lay with ministers because the policy was being co-ordinated in Whitehall and it was for the Government to approve any information that the Post Office sent out.

The Post Office dispenses benefits to 15 million claimants of whom three million have no bank account. From next April, they will have the option of opening a full bank account, starting a basic bank account or applying for a Post Office card which will enable them to withdraw benefit.

Mr Mills told the incredulous MPs that anyone who opted for a Post Office card would have to telephone a “customer conversion centre” and apply for a “personal invitation document” which they must then fill in and return to their nearest Post Office with proof of identity.

Earlier, the Royal Mail chairman Allan Leighton, returned to his attack on the postal regulator over its “flawed and disastrous” price controls which Royal Mail claims would rob it of pounds 460m in revenues and derail the organisation’s recovery plan.

Mr Leighton told MPs that he was “regulated out” and that time was running short. In a bid to avert a referral to the Competition Commission, Royal Mail has submitted a “simple, practical plan” to Postcomm to raise basic postage prices by a penny, he said.

“I cannot understand after nine months and thousands of documents why we can’t put up prices by a penny. That’s a decision which would normally take seven hours,” he added.

Mr Leighton complained bitterly about people outside the company who they could run it better than he could but denied it was a resignation issue.

He told MPs that a new chief executive would be announced within the next fortnight. There are four candidates although the front runner is thought to be the ex-Football Association chief executive Adam Crozier.