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Benefits cheques to stop by 2010
By Paul Lewis
BBC Radio 4's Money Box
James Plaskitt is responsible for modernising benefit payments
Benefits and pension payments made by cheque will stop by 2010, the government says.
It is writing to 155,000 pensioners who get weekly cheques suggesting direct payments to a bank account instead.
A further 250,000 benefits customers will be contacted shortly to ask them to switch as well.
Those who refuse will get their money on a pre-paid plastic card but campaign groups are worried it will not be as flexible or simple as a cheque.
Fraud
The Government says it must end cheque payments as they are expensive and liable to fraud.
Having the giro gives people flexibility to decide if they need help to collect their money 
Dot Gibson, National Pensioners Convention
The Minister responsible for the change at the Department for Work and Pensions is James Plaskitt.
He told BBC Radio 4's Money Box programme: "It is the most expensive way we have of paying benefits. Just 1% of our customers [are] paid by cheque. But it's costing the taxpayer £30 million to make those payments.
"Tens of thousands [of cheques] go missing or they turn up very late. And there is organised criminal activity which intercepts them. We are suffering about £8mn of fraud."
Flexibility
But campaigners are concerned that the end of the cheque will cause problems for many elderly and vulnerable pensioners. Dot Gibson, Vice President of the National Pensioners Convention and herself one of the 150,000, is forthright.
"Some people don't want a bank account. Some can't get a bank account. Having the giro gives people flexibility to decide if they need help to collect their money.
"They don't understand how ordinary people live. They want to organise it with their family or with their neighbour. We say cheques must be an option for people."
HISTORY OF THE GIRO CHEQUE
1968: State owned Girobank opened to challenge High Street banks
1969: Girocheques first replace cash payments for unemployment benefit.
1978: Weekly girocheque payments changed to fortnightly to save £8m
1990: Girobank sold to Alliance & Leicester
2003: Alliance & Leicester drops the Girobank brand.
2003: Pension order books phased out. Those without bank accounts get cheques.
2008: Cheques still used to pay 400,000 pensioners, disabled and unemployed people.
2010: Government replaces all benefit cheques with pre-paid plastic cards.
Source: Department for Work and Pensions, The Times.
But James Plaskitt says that will not happen.
"Cheques must go. Over half of our cheque customers already have a bank account. But for customers who do not we're going to introduce a new payment method to replace the cheque.
"It will be a card based system where the amount will be loaded onto the card and they will be able to cash it over the counter in just the same way as a cheque."
He stressed that the new system would still allow carers and relatives to collect pensions for those who could not do it themselves.
"We are saying to companies we are in discussion with, design us a system that will have precisely the flexibility that the cheque's got. But it will be securer and safer."
And he gave this promise:
"We will not remove the final cheque until we are satisfied we have moved everyone onto a system and it is working for them."
The Department for Work and Pensions confirmed that by 2010 it will end all benefit payments by cheque including those to people who are disabled or unemployed or claiming income support.
Emergency payments will also be paid by card or bank transfer.
By Paul Lewis
BBC Radio 4's Money Box
James Plaskitt is responsible for modernising benefit paymentsBenefits and pension payments made by cheque will stop by 2010, the government says.
It is writing to 155,000 pensioners who get weekly cheques suggesting direct payments to a bank account instead.
A further 250,000 benefits customers will be contacted shortly to ask them to switch as well.
Those who refuse will get their money on a pre-paid plastic card but campaign groups are worried it will not be as flexible or simple as a cheque.
Fraud
The Government says it must end cheque payments as they are expensive and liable to fraud.
Having the giro gives people flexibility to decide if they need help to collect their money Dot Gibson, National Pensioners Convention
The Minister responsible for the change at the Department for Work and Pensions is James Plaskitt.
He told BBC Radio 4's Money Box programme: "It is the most expensive way we have of paying benefits. Just 1% of our customers [are] paid by cheque. But it's costing the taxpayer £30 million to make those payments.
"Tens of thousands [of cheques] go missing or they turn up very late. And there is organised criminal activity which intercepts them. We are suffering about £8mn of fraud."
Flexibility
But campaigners are concerned that the end of the cheque will cause problems for many elderly and vulnerable pensioners. Dot Gibson, Vice President of the National Pensioners Convention and herself one of the 150,000, is forthright.
"Some people don't want a bank account. Some can't get a bank account. Having the giro gives people flexibility to decide if they need help to collect their money.
"They don't understand how ordinary people live. They want to organise it with their family or with their neighbour. We say cheques must be an option for people."
HISTORY OF THE GIRO CHEQUE 1968: State owned Girobank opened to challenge High Street banks
1969: Girocheques first replace cash payments for unemployment benefit.
1978: Weekly girocheque payments changed to fortnightly to save £8m
1990: Girobank sold to Alliance & Leicester
2003: Alliance & Leicester drops the Girobank brand.
2003: Pension order books phased out. Those without bank accounts get cheques.
2008: Cheques still used to pay 400,000 pensioners, disabled and unemployed people.
2010: Government replaces all benefit cheques with pre-paid plastic cards.
Source: Department for Work and Pensions, The Times.
But James Plaskitt says that will not happen.
"Cheques must go. Over half of our cheque customers already have a bank account. But for customers who do not we're going to introduce a new payment method to replace the cheque.
"It will be a card based system where the amount will be loaded onto the card and they will be able to cash it over the counter in just the same way as a cheque."
He stressed that the new system would still allow carers and relatives to collect pensions for those who could not do it themselves.
"We are saying to companies we are in discussion with, design us a system that will have precisely the flexibility that the cheque's got. But it will be securer and safer."
And he gave this promise:
"We will not remove the final cheque until we are satisfied we have moved everyone onto a system and it is working for them."
The Department for Work and Pensions confirmed that by 2010 it will end all benefit payments by cheque including those to people who are disabled or unemployed or claiming income support.
Emergency payments will also be paid by card or bank transfer.
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