MPs attack pensions change as confusing

MPs yesterday accused the government of pushing through the new system of direct payment of pensions and benefits into bank accounts simply to save money and without regard to the "anxiety and confusion" created among the vulnerable.

The Commons trade and industry committee urged ministers to allow people to carry on using the order book system if they wished. It emerged that the Department for Work and Pensions has given an estimated 400,000 claimants the right to use orders until 2005.

The MPs demanded that the government make it easier to open a new Post Office card account for receiving pensions and benefits. The Post Office said that of the 500,000 who had asked for their benefits to be paid into a new card account, only 41,000 had been able to open one. Liberal Democrat industry spokesman, Vince Cable, said the process was "utterly defeating people".

The MPs said the government had failed to provide a proper cost-benefit analysis of the new system, introduced in April. They said this made it impossible to verify ministers' claims that it represented value for money, such as cutting fraud by £80m.

Amid evidence that the cost of processing a benefits payment electronically is 1p compared with 68p in the old system, Martin O'Neill, committee chairman, said: "This was not the apogee of joined-up government thinking." He accused the DWP of acting as a "glove puppet" for the Treasury which wanted to cut spending.

The National Consumers' Council said: "We are playing with the all-important weekly cash that some of the poorest people rely on. The government must bend over backwards to get the new system right, or the backlash over failures on tax credits will look like a picnic."