The UK government should negotiate free access to Faster Payments to speed up COVID-19 payments

15 April 2020

The thing about infrastructure is that it fades into the background to the point where people stop questioning how it works. So when the US government announced plans to make payments to citizens, the focus has been on delays needed to change the printing process to include the president’s signature, rather than the fact that cheques are being printed at all.

Similarly, when the UK Chancellor was asked yesterday about the dates for Job Retention Scheme payments to companies, he cited the need to include the delay required by the BACS electronic transfer system (which typically takes three working days). BACS is the same system that contributes to the five week wait for Universal Credit payments.

Since 2009, the UK has had a system for immediate bank transfers called Faster Payments. Despite this, the vast majority of UK government payments to the public and companies are done via the older BACS system (although DWP does use Faster Payments for advance Universal Credit payments).

This probably comes down to cost. While banks do not charge the public for Faster Payments, this does not appear to be the case for government. Data about costs are not easy to come by, but based on an answer to a written question from an MP in 2014, the costs to DWP of a BACS transfer was £0.004, compared to £0.16 per transaction for Faster Payments.

In much the same way that the government has successfully secured the removal of data charges for NHS websites, it should secure free payments for government services to access the Faster Payments system to speed up payments to those in need. This should apply to all benefit payments for the duration of the crisis as well as exceptional payments such as the Job Retention Scheme.