Róisín Shortall (Dublin North West, Independent)
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191. To ask the Minister for Social Protection if it is the case that new welfare claimants are being requested to supply bank details; the implications of such a policy change for the An Post contract with her Department; and if she will make a statement on the matter. [10660/14]

Joan Burton (Dublin West, Labour)
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The potential risk to An Post business into the future has been the subject of in-depth discussion over the past week. I think this is only right, given the importance of the network to the social fabric of our society.

In this regard, I am very happy to provide my own support for the post office network and the valuable work being delivered by postmasters throughout the country. On the 20th December last year, I was very pleased to be able to sign a new contract with An Post for over-the-counter cash services for welfare clients following an EU-wide procurement competition. The contract, which is for a minimum period of 2 years with the option to extend to a maximum of 6 years, is very substantial in terms of its reach, value and impact. Therefore I am happy to be able to confirm that these services will continue for large numbers of welfare clients into the future, as provided for under the terms of the contract.

The continuation of over-the-counter cash payment services supports some nine hundred thousand (900,000) customers currently. These services are provided through a network of over 1,300 post offices and agencies around the country, the larger number of which are run as vibrant commercial retail outlets and operations by individual postmasters and their staff.

Last year approximately €9.5 billion was paid in cash to our clients at post offices. This accounted for 43.7 million transactions and cost the Department just under €75 million (including internal processing costs). By comparison, some 37 million payments were issued directly into accounts in financial institutions by electronic funds transfer (EFT) and this costs the Department under €9 million. In short, cash payments are an inherently more expensive means of paying clients. The differential reflects to a large part the additional costs incurred for securely packing, processing, transporting, delivering and issuing cash to clients. The Department must address such a significant variation in costs in the interests of the economy, taxpayers and welfare clients.

Mindful of the scope, scale and impact of these payments, the Department undertook a root and branch examination of its payment processes, methods and approaches. This resulted in the preparation of a payment strategy which was approved by the Government last year. The strategy has the goal of reducing significantly the level at which welfare payments are made in cash and thereby minimising the associated expensive fees. Furthermore, cash limits the options for customers to make onward transactions. It limits the scope for customers to avail of cheaper prices online and curtails financial inclusion of customers. It is also at odds with trends in consumer behaviour generally as they migrate towards electronic payment channels.

As to whether new welfare customers are now being requested to provide bank account details, the only change in operational arrangements recently stem from the new options being provided to older job-seeking clients who are transitioning from employment.

Up until Budget 2014, older jobseekers were required, as part of their entitlement to a Jobseeker’s payment, to be available for full-time employment and genuinely seeking work. In addition, they like other jobseekers were required to comply, when requested to so do, with the Department’s activation measures. Legislation provided that non-compliance with such activation measures, without good cause, would give rise to the imposition of penalties in the form of payment reductions. Revised conditions were announced as part of Budget 2014 to apply to older persons who seek the support of jobseekers schemes in advance of reaching pension age. The measures provide for these clients to continue to avail of Departmental supports on a voluntary basis should they wish to return to work, training or education. In addition, provision is made for these clients to receive their payments directly into an account in a financial institution if they so wish. Letters have been sent to existing clients in this cohort advising them of these budgetary changes. Those letters also reference the option of being paid electronically. New job-seeking clients in this cohort are being offered the option to be paid into an account in a financial institution for their own convenience. If and when An Post can provide a mechanism for direct payments into a post office account as available in bank and a large number of credit unions around the country, the Department will happily facilitate clients’ instructions to pay funds directly into such an account.

Clearly the trend is towards electronic payments as a matter of choice. This choice is supported by wider Government policies and objectives on better public services and more effective electronic payments as set out in the public service reform plan and the eGovernment strategy 2012-2015. These goals are shared by the national payments plan and the roll-out of the standard bank account. These initiatives have made the case quite strongly for a move to electronic payments which will contribute to improved national competitiveness. The Department’s clients are displaying a clear disposition towards electronic payments as a matter of choice without intervention by the Department. The recent letters to clients alerting them to an easing of conditions during their transitional period from employment reflect these realities and offer wider options to these clients.