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Moving Money 2025

15 September 2015

Moving Money 2025

Deborah Souter,
Head of Content,

Digitising ‘The State’

The UK's payments systems plays a significant role in keeping the wheels of civil society turning. A significant proportion of the interaction between citizen and state involves a transaction of some sort. Unsurprisingly, HM Government is the single largest user of the UK’s payments system, including payments to the DVLA, through to HMRC, with virtually all state benefits being paid electronically through VocaLink’s infrastructure.

Clearly, an efficient and reliable payments system is critical to ensuring that money reaches its destination on time. As citizens’ expectations of immediacy of service are driven by their interactions in other areas of life, so will their expectations rise in their dealings with government.

When the Department for Work and Pensions moved from paying benefits by cheque to electronic payments straight into recipients’ bank accounts, it was essentially a case of taking advantage of an infrastructure that already existed. The government itself saw huge savings, with the cost of a transaction falling from a pound, to just a few pence. Significantly some of the most vulnerable in society benefitted and did not have to rely first upon the UK’s postal service, and then the cheque clearing cycle for payments that would support them and their dependents.

However, a significant proportion of transactions between citizen and state (both ways) relies upon cheques and cash. This is both inefficient from the perspective of a government that is applying further pressures across the public sector for efficiency savings, but also for the citizens and small businesses that will be increasingly benefitting from immediacy in their non-state transactions.

The Government Digital Service has recognised the potential for the payments system to provide value for the delivery of public services, in line with the digitisation of the role of the State. Ten years from now, it is likely that the GDS’ work and the pressure of citizens’ expectations, will mean both the citizen and the State will have benefitted from a true digitisation of transactions in both directions.

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