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Pensioners without cash after system failure

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Pensioners,
Cash

Kable

Published: 25 Aug 2004 16:45 BST

The government is in talks with the Post Office to discover the cause of a computer crash which prevented thousands of pensioners collecting benefits payments.

Pensioners were unable to withdraw cash on one of the busiest days of the year after the £500m Electronic Benefits Transfer system, which automates their payments, went down from 10.30 am to 3.30 pm on Monday 23 August. The service had been placed under increased demand due to the forthcoming August bank holiday.

It is not yet known what caused the crash but the government, the Post Office and its suppliers have mounted an investigation, Government Computing News was told on 25 August, 2004.

Pensions minister Malcolm Wicks said the IT failure was "unacceptable" and wants an explanation from the Post Office, which is in charge of the technology. "The Post Office have told us they will be writing to me to apologise, but we want to see them face to face so they can explain in detail what happened and what action they have taken to ensure it does not happen again," he said.

"This computer problem caused considerable inconvenience to pensioners and we must ensure that the Post Office and their contractors have robust arrangements in place to ensure pensioners are not affected again in the future."

The government launched the automated payments system in 2003. Known as the universal banking system, the £1bn project provides users with a swipe card and PIN number replacing paper benefits books. The books are to be phased out fully by March 2005.

The latest failure is particularly worrying given the government's record over automated benefits projects. The current scheme is the successor of a failed initiative called Pathway, which also aimed to create a Post Office benefits card. That project collapsed in 1999 and has since been recognised as Whitehall's most expensive single IT catastrophe.

It is not yet known how many of the 1.7 million pensioners and other claimants holding the new electronic benefits accounts have been effected. Supplier EDS is also looking into the problem.

"We're working with the post office to identify what were the causes of the system going down on Monday and I don't want to pre-empt the inquiry. We've got to get to the root cause," an EDS spokesperson said.

Opposition parties have condemned the computer failure. Liberal Democrat work and pensions spokesperson Steve Webb called for the pension books not to be phased out and cast doubts on the IT systems. He also questioned the effectiveness of an emergency hotline number.

"A stay of execution for pension books would certainly be welcome," he said. "You have to wonder whether the computer will ever be reliable enough to get pensioners the right amount of money at the right time.

"Many pensioners want to hang on to their pension books for this very reason. It is a system they trust and it is a system that works.

"When the new system goes wrong, it seems the government doesn't have a Plan B. Pensioners who were given an emergency payment hotline number found the lines were jammed, leaving them high and dry."

The Conservative shadow work and pensions secretary David Willetts has written to his opposite number Andrew Smith demanding an explanation. He also called on the government to suspend its plans to scrap the pension books.