Improving the payments system for citizens, business and government
DWP is the biggest single user of the payments system. Every year we distribute around £167 billion to 22 million people.
Thank you Maurice and Gerard for inviting me here this evening.
Despite all the changes we have seen in recent weeks, it is important that our work goes on, and that we continue to deliver change in the payments system.
Government is looking at this work very closely, on a unified basis. We are preparing a coherent position paper that sets out how we can improve our service to citizens, based on proposed changes to the payments system. And we are aiming to publish this shortly.
Despite a few personnel changes – although, I am pleased to report that I am the longest serving minister since 2010 – do not underestimate that this is right at the top of the government’s agenda.
That is why I am glad to be here tonight, following on from the Payments Innovation Conference and the developments that have been happening in this sphere.
Payment Strategy Forum consultation
Last week the Payments Strategy Forum (PSF) published their draft strategy for consultation. I have heard that this has been received positively by those in the payments community.
I congratulate Ruth Evans, those at the Payments System Regulator and all those involved in the forum – I know some of you are here this evening – on producing such a clear draft strategy.
My department, the Department for Work and Pensions, is the biggest single user of the payments system. Every year we distribute around £167 billion to 22 million people.
Representing payments on this scale, I welcome the document’s overall approach of being responsive to user needs, and basing the solutions on the available evidence. I also welcome that a wide range of stakeholders, including government, had input into this document.
I particularly welcome the PSF’s conclusion that – at the heart of many of the improvements that can be made to payments systems – sits the enhancement of data, that can be associated with transactions as and when they are made.
The government’s needs
While the forum has been producing this work, my own and other departments have also been looking at how we could make use of enhanced data capability – to improve the way we provide services, and to make the lives of our citizens better.
This work has identified a number of processes involving our use of financial data that could be significantly improved, if we had data in real time which was verified by the payments system.
Many of these situations not only align very closely with the solutions set out in the forum’s document, but also match cases for individual and business users of the payments system.
To take an example, when insurance companies have to pay back overpaid health charges, currently they have to make a single payment. But separately they also have to submit a schedule of all the individuals to whom the payment relates.
Then we, of course, have to do the reverse, allocating proportions of the payments to the relevant individuals and their claims.
I want to see a system where there is the ability to send payments and schedules together. This will make reconciliation at both ends easier. And it would have clear efficiency and cost saving benefits.
Looking at examples across government, businesses, and the small and medium-sized enterprise (SME) sector, I believe the possibilities of enhanced payment data have the potential to bring about very significant reductions in cost.
While the work the PSF and the government have been doing has focused on improvements that could and should be made, there is still a lot of work to be done – which I am sure the forum would be the first to acknowledge.
Strategies and identifiable user cases are all very well, but none of them means much without there being a clear plan for how they will be delivered.
The consultation questions posed in the PSF draft strategy ask for contributions from the industry on just that point. And I would, as I did at the Payments Innovation Conference last week, urge all of you to respond as constructively and comprehensively as you can.
I understand the consultation period is relatively short, but we are not starting from scratch.
I know a lot of work has been going on across the payments landscape. For example:
Payments UK’s work on the World Class Payments System
work to comply with the Competition and Market Authority’s requirements on APIs on Open Banking Data
As the PSF have set out in its document, all this activity and the government’s needs are, in principle, capable of being aligned and built into a strategic framework.
I would like to see you – the payments industry – take advantage of this alignment and this framework. So that we can move smoothly after the strategy is finalised to planning and delivery.
That would enable all users of the payments industry to build changes and improvements in the UK’s payments systems into their longer term plans.
I have been involved in work with payments systems for some 5 years. It is worth reminding ourselves of the reasons that my department and my ministerial colleagues have been interested in this.
The UK’s payments system is not just the financial lifeblood of our country. It is also a secure, reliable, resilient and ubiquitous data carriage network. Currently the data carried by that system performs one specific task.
Throughout the 5 years I have been involved, our driver has been to see what else this system could do with an enhancement of its essential data carriage function.
For my part, I am committed to improving the experience of welfare for those who rely on welfare payments – especially for those who are the most vulnerable in our society.
Any changes that are made to the payments system must ensure that security and privacy are paramount. And that we protect our core national infrastructure, which has the potential to transform functions across all sectors.
As I said last week, the work that we in government – and you the industry – have been doing, has brought a large degree of alignment and consensus.
I would like to think that with the regulators working to align their position, the identification of user situations, and investment by the industry – we are set to ensure real change in the UK’s payment system, to the benefit of citizens, businesses and government.
I look forward to a constructive consultation period, a quick transition into planning and delivery phase, and real change soon.