The Government’s goal is for everyone to be able to manage their money effectively and securely through a transactional bank account. Since the move to direct payment started in 2003, 98 per cent. of Department for Work and Pensions benefits are now paid into accounts, which is up from 28 per cent. in 1997. Of those paid into accounts, 79 per cent. are paid directly into a bank account, including a basic bank account and 19 per cent. into a Post Office card account—only 2 per cent. of payments are made by cheque.
I thank my hon. Friend for that reply. I have been contacted twice by a constituent whose benefits are paid directly into his account, but they have been paid late twice and he has been penalised by the bank for going overdrawn. Will my hon. Friend work with the Department for Work and Pensions to ensure that benefits are paid correctly and on time all the time? Does he share my abhorrence at the banks, which make millions in profits, skimming them off from the poorest members of our society when they go overdrawn, often through no fault of their own?
I know from our conversations that that is a particularly sad case and I am happy to take up the details with my hon. Friend and make contact with my DWP colleagues. Of the 680 million payments made by the DWP in 2006, only 21,000—0.0003 per cent.—were reported as either late or missing. In the minority of cases where that does happen, the DWP, if found to be in error, refunds in full any penalty charges that may result to the individual concerned. I also agree with my hon. Friend that when the banks are presented with the facts of this sort of case, they should act in a sensitive manner with respect to those individuals.
It seems clear that the big banks are not really interested in providing basic accounts. Is it therefore time to consider an enhanced role for the credit unions, or even the creation of a community banking network similar to that in the United States and in Europe, to provide that kind of banking service?
I do not think it fair to say that the banks are not interested. Since 2004, we have reduced the number of adults without a bank account from 2.8 million to 2 million. Part of the reason that we have been able to do that is the growth in the number of basic bank accounts being offered by the banks to lower income customers. The hon. Gentleman is absolutely right, however, that if we are to meet our goal of getting everybody a bank account, we need to do more, and to do it in new ways. That is why we are encouraging credit unions, in particular, to move into the current account banking market. There are now nine credit unions offering current accounts, including the White Rose credit union in Wakefield, the constituency of my hon. Friend the Member for Wakefield (Mary Creagh). We want to see more of that. We are also working with the banks to ensure that they help us to spread current account banking to more credit unions. That could be an effective way of spreading the habit of banking to the 2 million people in this country who still do not have a bank account.
One of the critical needs that everyone has is the ability to gain access to the money in their bank account free of charge. Following the initiative of the Treasury Committee in proposing an extension of free access cash machines to areas that currently lack them, I have proposed two in my constituency, in Midway and Hartshorne. Will the Minister tell us what progress has been made in extending the network of free access cash machines?
We are making really good progress. I would particularly like to pay tribute to the Chairman of the Treasury Committee, my right hon. Friend the Member for West Dunbartonshire (John McFall), for the personal leadership that he has shown in this area. I am hoping to be able to update the House next week on the progress that we have made. More than 400 new free ATMs in low-income areas have now been provided or are in the planning stage. That is two thirds of the way towards our goal, but there is still further to go. I urge Members on both sides of the House with low-income areas in their constituencies without a free ATM to contact either myself or my right hon. Friend the Member for West Dunbartonshire. We will contact the ATM organisers and the banks to try to ensure that we meet our goal of getting a free cash machine in every low-income community in the country.
In his opening response, the Economic Secretary to the Treasury said that he wanted everyone to have the facility to enable them properly to manage their money. Might it not help people to do that if Her Majesty’s Revenue and Customs managed its money properly, so that 300,000 people were not facing reclaims for child tax benefits?
It is important that we work with HMRC to extend the habit of financial literacy in our country. I commend to the hon. Gentleman the work that HMRC is doing on the child trust fund. There are now 2.6 million families with a child trust fund and, this September, the first tranche of schoolchildren to have such a fund will be starting school at the age of five. We are hoping to use that as an opportunity to expand financial literacy. We need to do everything that we can to help everyone who is challenged by money, including people who have difficulties with overpayments, and I am happy to work with HMRC to ensure that that can happen.
I agree with my hon. Friend. I recently met him and a group of other Welsh MPs to discuss the matter. At the moment, there are individual arrangements between credit unions and particular sub-postmasters, and we would like more of those arrangements to be established. As we discussed in our meeting, it is possible to access 25 different bank accounts at a post office, including 17 basic bank accounts, but if we can do more to get the credit unions to offer current accounts through the post office network, it would be a real step forward towards financial inclusion and genuine choice for the people in our country.