Moral disgust, financial discipline and efficiency: Smartcards and 21st century welfare

During late 2012 a debate began on the discussion board of a group I belong to. It focused on developing local currencies and promoting local businesses through Smartcard technologies. What concerned me wasn’t the technology, but the attitudes that seeped casually around the edges of the discussion about the necessity and inevitability of smartcard use for welfare recipients, alongside a morally ambiguous justification for the control of other people’s expenditure via smartcard technology. I felt angry at this liberal iteration of the disciplining of the ‘out-of-work poor’, but also painfully ignorant about the background to the broader issues. This prompted me to do some research into the genesis of Smartcards. This first post summarises some of the policy background and current uses that I’ve discovered; subsequent posts will explore other aspects of the prepay landscape.

Smartcards

Smart Cards entered our collective consciousness during autumn 2012, as Iain Duncan Smith (IDS), Work and Pensions Secretary, unleashed his attempts to discipline Britain’s ‘troubled’ families. In unveiling his proposals at the Conservative Conference October 2012, IDS framed them as ‘better value for taxpayers’ money’, but, in his rhetoric, cast doubt on the lifestyle of all benefit claimants: I am looking […] at ways in which we could ensure that money we give [benefit claimants] to support their lives is not used to support a certain lifestyle. [Telegraph 13.10.2013]

MP Alex Shelbrooke, in his (rejected) private member’s bill, December 2012, provided a glimpse into the underlying moral and punitive attitudes towards benefit recipients amongst the Tory heartlands, when he argued for a ‘welfare cash card’ to limit spending to absolute basics. UKIP then jumped on the benefit bandwagon, reiterating the demonising narrative that benefit recipients are financially reckless and spending ‘your’ hard-earned taxes irresponsibly.

Policy landscape

IDS’s welfare crusade, although framed by his own distinctive brand of rhetoric and moral disgust, sits firmly within an international landscape of neo-liberal welfare policy and global profits. In the UK, use of Smart Cards to control welfare payments rests on two key assumptions at its core:

- The current use of smartcards is considered benign if administered efficiently, and their use should be extended to provide ‘better value’ for taxpayers;

- There is a ‘rightness’ about monitoring and controlling welfare recipients’ spending patterns and ‘lifestyle choices’: people like ‘them’, not ‘us’, need monitoring for society’s benefit and their moral improvement.

Prepay systems in Britain

In Britain, ‘prepaid’ card systems have already quietly spread, and are in current use by 25% of local authorities, with 35% planning to introduce systems sometime in 2013. Used principally as a way of distributing and auditing social care direct payments, also in statutory safeguarding situations with vulnerable adults considered to be at risk of financial exploitation, and to facilitate their independent living. With personalised care budgets, local authorities have a statutory duty to audit how funds are spent, but this can be very resource intensive; paper-based audit trails can take months to construct, with financial abuse and safeguarding issues often identified and dealt with months or years after they’ve occurred.

Local authorities view prepay cards as a way to make auditing more ‘real time’, and to reduce costs. Demos ‘Power of Prepaid’ references Brent’s estimate of a 10% reduction in personal budget costs through the use of prepay cards; Bury reported a major paperwork backlog, which is now coming under control since the introduction of a prepay system. However, the potential for prepay systems to save costs is based on their use with specific and targeted, small population groups where the cost of implementation is simple and their usage supports statutory auditing regimes. Claudia Wood, deputy Director of Demos, in discussing the use of prepay,  argued that, in an era of ‘unprecedented budgetary reductions’ back office efficiencies could help protect frontline funding’. The problem with this is the conflation directly to payment of Universal Credit, and of Local Authorities and the Department for Work and Pensions (DWP) seeing prepayment cards as a means of cutting costs without a proper debate about the ethical issues involved in monitoring usage.

The recent devolution of the Social Fund from national to local government at reduced funding levels, and other major shifts in benefit levels and entitlements, are drastically impacting on people’s lives across Britain. Where the centrally-administered Social Fund gave small zero interest loans in severe emergencies, with an almost 100% repayment rate, over time through deductions from future benefits, Local Authorities will have to meet the local costs from a restricted budget. The social fund spent £230m in 2009-10, but central government has only allocated £178m to local authorities for 2013-14, with greatly increased demand. Social Fund loans were given for essential household goods, equipment or services (eg a burst boiler), not food, yet Local Authorities look set to issue emergency welfare payments via smartcard, potentially only redeemable in supermarkets, or refer people to food banks and household recycling projects, alongside drastically restricted eligibility. Birmingham City Council, for example, are issuing pre-payment cards restricted to use in Asda. A report in the Guardian by Shiv Malik quoted a council spokesman who explained that ‘the supermarket had been “the only main supermarket in the city willing to work with the council”, but that the council hoped the scheme would be extended to other stores after a period of evaluation.’ Lack of food seems to be the only urgent need Local Authorities recognise, with no obvious provision evident to deal with broken fridges & cookers, or other (non-food) emergencies.

There will be 150 welfare schemes organised across the country that are likely to issue payments through e-cards with blocked or monitored use of funds for alcohol/cigarette or gambling, so making payments via Smartcard an almost ubiquitous part of a new landscape of poverty. Alison Garnham, CPAG, stated that the use of smartcards without ‘any access to cash […] to meet essential needs’ offers support in ways that ‘stigmatises those who need it’…. Echoing the criticisms of similar payment systems used with asylum seekers for over a decade.

However, such schemes are not without advantages. Several Local Authorities, including the Welsh Government, have outsourced their payment schemes to private contractors; the cost of administering the new welfare assistance schemes, probably including the costs of outsourcing services, is typically 20% of the value of the whole of the local fund, money not then available to meet people’s urgent needs. 21^st Century poverty in the UK clearly provides profits for some, while entrenching punitive regimes of control and ever more restricted life choices for the rest.

Courtesy of Teresa Cairns