Government backs down on some retesting for sickness benefits

Government backdown won’t apply to all but is an opening

The Work Capability Assessment (WCA) is highly damaging to those of us who have to go through it. Despite this, both main parties have consistently denied that there is any problem, and claimed that the WCA is necessary to weed out scroungers. That might be about to change.

Firstly, Labour announced at their conference that they would scrap the WCA altogether. This doesn’t mean much right now since they are not in power, but it is a major turnaround for a party that introduced the WCA in the first place and has refused to even oppose most benefit cuts in the last few years. Jeremy Corbyn called the WCA degrading. Debbie Abrahams acknowledged that it makes people feel worthless and dehumanised.

It’s not all good, since they still refuse to oppose benefit sanctions, and used the same old language about work being the goal for everyone, but it is a start.

Secondly, Damian Green, Tory Secretary of Work and Pensions, has told the media that the government will stop repeatedly retesting people who aren’t going to improve.

“If someone has a disease which can only get worse then it doesn’t make sense to ask them to turn up for repeated appointments. If their condition is not going to improve, it is not right to ask them to be tested time after time. So we will stop it.”

This is a huge reversal of policy. Continuous retesting was always the point of Employment Support Allowance (ESA) although there have never been enough resources to apply that to everyone.

Many people are celebrating this. However, there are big questions as the government haven’t specified any details. I’m not sure they even know yet. Reports imply that the exemption from retesting will apply to people with specific illnesses that are known to only deteriorate. If that is the case, then many people who have illnesses that are just as bad as those on the list but are not recognised as such, will miss out. So will people who have not yet been diagnosed, and that can mean people who are sick for years – or decades – before they find out the cause.

The more logical policy would be to apply this exemption to everyone who is in the Support Group, since this category is meant to contain people who have no prospect of improvement. In practice the Support Group doesn’t work like that, and people who will never improve are frequently placed in the Work Related Activity Group instead, thanks to DWP efforts to deny them support in order to keep costs down. If the exemption were to apply to the Support Group only then it would still be unfair to all those improperly placed in the WRAG.

Whether the Government decides who qualifies based on diagnosis, or based on support group, it will still be unfair. However, I do see this announcement as a big win. A Tory government minister said “constant reassessment is pointless” and “does increase their stress and anxiety levels” “causes financial insecurity” to describe repeated work capability assessments. That is a huge admission for the Tories, or even for Labour.

We can use this. We can attack the inconsistencies in the government’s argument. We can point out that the Work Capability Assessment is damaging to everyone. We can show that their descriptions apply to Personal Independence Payments too, even though they’ve spent six years attacking PIP’s predecessor, DLA as “abandoning” people so as to justify welfare reform and repeated reassessments. This isn’t an unqualified victory and won’t necessarily improve things for that many people (perhaps including myself) but this is a major event in the struggle against welfare cuts of the last few years.

Guest post: What the benefit reforms will mean to us

This is a guest post by @chmasu.

In 1992 my husband, Kevin, was working as a self-employed plumber and heating engineer. We were living in a private sector rented house with our three children aged 14, 9 and 6; and I was pregnant with our fourth child. When I was in my sixth month of pregnancy Kevin sustained a severe back injury, which left him unable to walk or stand up. After a six month wait Kevin was operated on, after which he could walk upright. However it became apparent that his back was not completely healed and it transpired that there was considerable scar tissue on the nerve, causing severe pain and limiting the distance he could walk and the amount of time he could stand. This scarring and pain was, we were told, permanent.

Following a face-to-face medical examination Kevin was awarded Disability Living Allowance (DLA), initially for a year and then, after another face-to-face medical examination by a Doctor, he was given what was then called a lifetime award. This enabled him to lease a car from Motability (I am not able to drive so our previous old banger of a car had gone). He was also awarded Incapacity Benefit, also with a face-to-face medical assessment. We claimed Housing benefit to help with the rent.

Kevin was not able to return to the plumbing work for which he was qualified so it was necessary to re-train. He studied part-time at our local F.E. College and obtained a BTEC National Diploma in Computing and Electronics. Despite his severe dyslexia he passed with distinctions in all subjects and was given the prize for best student on his course. He then obtained a Diploma of Higher Education in Computing. With these quantifications he chose to stop the Incapacity Benefit, despite it having just been renewed, and return to work part-time, eventually increasing to full time. Incapacity Benefit was replaced by Disability Working Allowance (DWA). None of the study or work would have been possible without the Motability car.

Over the years the DWA was replaced by Working Tax Credit (WTC) with a Disability premium. After 10 years working as a computer repair engineer for one of Britain’s leading small computer manufacturers he was made redundant when the company folded. There followed a year of JSA interspersed with very low-paid contract work.

Eventually he was encouraged by the Jobcentre to go self-employed. He started a computer repair business in partnership with our eldest child, who was also chronically ill, and who unfortunately became too ill to work, so Kevin continues as a sole trader, working from home. There is a steady trickle of work, but not enough to provide more than a very meagre income. It was not possible to get any finance from the bank so we put into the business all the money we could muster from the redundancy payment and a small inheritance from my parents. (Incidentally this inheritance put us just over the savings limit for Housing Benefit and they deducted an amount from our payment for two years,until we could prove that we had used up all the money.) It has taken 3 years to show a very small profit, rather than a loss. We are sustained by WTC, DLA and Housing Benefit. The computer business involves driving to customers and so is dependent on the Motability car. I have the same chronic genetic illness as my children and am not able to work, but I do not claim any benefits in my own right. We have become experts at living frugally and making economies.

The future
The Benefit changes that will be affecting us in the near future are Universal Credit to replace WTC and Housing Benefit, and PIP to replace DLA. As we now live in a housing association flat we will also be affected by the ‘Bedroom Tax’ when our student daughter leaves home.

Universal Credit will be paid monthly and will be calculated according to the claimant’s weekly reporting to the DWP of hours worked and income received. According to the government website self-employed people will be assumed to have reached a ‘minimum income floor’. This figure will be used to calculate the amount of UC awarded.

“If there are no limitations on the number of hours you can work, the minimum income floor is likely to be the equivalent of you working 35 hours per week at the National Minimum Wage for your age group.”
Universal Credit and self-employment

As Kevin does not have 35 hours of work per week, and certainly does not pay himself anywhere near the national minimum wage, his self-employment will become unviable.

Kevin will eventually be migrated from DLA to PIP. With the arbitrary reduction of the walking distance which qualifies for the higher rate mobility component from 50 metres to 20 metres it is extremely likely that Kevin will lose the Motability car. This will also render his self-employment unviable as he will not be able to drive to customers. It is my dread that he will lose the benefit altogether, which will remove the ‘passport’ to disability-related premiums and possibly the Blue Badge for parking.

It is extremely unlikely that Kevin, as a 62 year-old man with dyslexia and restricted movement, will be able to find a job

So where will this leave us? Kevin may be able to qualify for ESA, probably in the work-related group. If not, he will have to claim JSA. In either case, trips to the Jobcentre will be necessary. He has no means of getting there other than by using a wheelchair. He is not able to self-propel, so I will be pushing him there. My illness restricts my walking so the wheelchair will be fulfilling the function of a Zimmer frame – there will be pain. Work-related activity is unlikely to accommodate Kevin’s disability, which may well lead to benefit sanctions. The bedroom tax will eventually be applied. Shopping will have to be by home delivery, assuming we can still afford an internet connection. Food will become more expensive when I am not able to continue my daily forays to the reduced produce shelf in the supermarket or shop around for the cheapest deals. We will not be able to afford heating. We will not be able to go anywhere without help. Holidays, visiting our grandchild, church, any kind of excursion will be unattainable. We would no longer have a life if it were not for our close family and good friends.

This is just one story of a family affected by the Government’s austerity measures; there are many more and, as in the recent protest at the House of Commons about the removal of the Independent Living Fund, we need to make our voices heard before it is too late.

This is a guest post by @chmasu.

Ingeus recruiting “Health Advisors” for DWP forced “bio-psychosocial health assessments”

Ingeus advert

Welfare-to-work provider Ingeus are recruiting Occupational Therapists to become “Health Advisors” as part of a pilot scheme to help people on ESA (sickness benefits) to return to work. As I wrote yesterday, people receiving ESA in the Work Related Activity Group will be forced to see these Health Advisors and will lose their benefits if they do not. This is a huge problem for all kinds of reasons which you can read about in my previous blog postAn advert placed by Ingeus on the website of the Vocational Rehabilitation Association reveals more details of how the scheme will work.

“From 25th November 2013 Ingeus will be delivering a new Department for Work & Pensions (DWP) Health Professional led contract for customers claiming Employment and Support Allowance (ESA) with an 18-24 month prognosis post Work Capability Assessment (WCA). The 2 year pilot programme will ensure clients have access to suitably trained Health Professionals to support the management of their health and wellbeing. We are looking to recruit Occupational Therapists to deliver the ESA pilot across the Central Region.”

It gets worse though. Perhaps unsurprisingly, the words “Bio-psychosocial model” make an appearance.

Delivering bio-psychosocial initial health assessments to identify clients health related concerns and barriers to returning to work, usually taking place via face to face 1:1 appointments but may also require telephone based interventions as well as on occasions a home/community visit.”

The Bio-Psychosocial model of disability is what the government have adopted after decades of being advised by insurance company UNUM. The model basically says that disability is all in the mind of the disabled person and they only need to adopt a better attitude to overcome barriers to work and other activities. It places blame for being ill on the patient and insists that they can just think their way better, as though thinking can eradicate viruses or fix broken genes or regrow broken or missing body parts.

I think access to an extra doctor, nurse, OT or some one else could really be a great help to a lot of sick and disabled people but not through this scheme. Any extra healthcare needs to be consensual and voluntary, this is not. The money spent on this scheme would be far more useful given to the NHS. And as for this scheme using the bio-psychosocial model, you might as well just tell sick and disabled people to “snap out of it”.

Where’s The Benefit: Models of Disability

Vocational Rehabilitation Association: Ingeus advert

Sick people to be forced to talk to the DWP’s own “healthcare professionals”

Being accused of DLA fraud may force you to apply for PIP

The Benefits and Work website claims that people will lose their Disability Living Allowance permanently if someone accuses them of fraud. There is some truth behind this claim but the headline is a wild speculation from the information that they actually have.

The facts behind the story are this:

People who currently receive DLA will all be “invited” to apply for Personal Independence Payments over the next few years. A large number of people who receive DLA are not expected to qualify for the same level of support from PIP and so this move is rightly feared by many. People can apply for PIP before their DLA runs out if they wish – these are “self selectors” in DWP speak. Anyone whose care or mobility needs change will have to apply for PIP rather than alter their DLA claim. As long as nothing changes, most people can remain on DLA until 2015 or the end of their award.

The scary part of this story comes from a quote that Benefits and Work found on Rightsnet.

“At our local JC+/customer/representative forum meeting last week a DWP partner support manager brought the following change of wording to the attention of the meeting (second bullet point on page one of link)

In his words anyone who was ‘bubbled’ (shopped) would be taken as if they were a ‘self selector’ in the DLA/PIP reassessments.

Nothing appears to have been changed in the PIP trans regs to allow this but it is worrying when the PIP/DWP ‘thinking’ changes the words ‘those claimants where we receive information…’ from the actual legislation.”

The source claims that anyone who is reported to the DWP for fraud will be treated as if they have reported a change and therefore have to apply for PIP.

This is a fairly tenuous link, but a worrying one all the same. The overwhelming majority of reports to the benefit fraud hotline are either malicious or wrong and the fraud rate for DLA is incredibly low. If all that is required to trigger the move to PIP is a false report then a lot of people are going to be badly affected. However, we do not know whether this second-hand claim is true, or whether the practice will be widespread or just confined to one or two areas, and we do not know if a person will have to be found guilty of benefit fraud or just reported – the wording could mean either. Given the history of the DWP’s approach to sanctions I wouldn’t say it is out of the question for this to happen against the rules, but we will have to wait and see about that.

I find the way that Benefits and Work have reported this to be irresponsible and misleading. In their email they stated that “The DWP have ruled that…” when there is no such ruling, only a second-hand report. They also missed out the third sentence from their quote, which stated that nothing has changed in the PIP regulations.

I do not think anyone should worry about being moved because of a malicious fraud report, at least until we have more evidence.

Benefits and Work: Claimants to lose DLA permanently if falsely accused of fraud, DWP decides

Victory! DWP to launch PIP mobility consultation

The Department of Work and Pensions have today announced that they will hold a “further consultation on the mobility component of Personal Independence Payment (PIP)”.

This follows the outcry after the threshold to be eligible for the most help with moving around was tightened from fifty metres to twenty metres with no indication during the consultation that this would be the case. Myself and two others had initiated a Judicial Review against the DWP to declare the consultation invalid and force a rethink. The Judicial Review would have taken place at the end of July.

The DWP would very much like you to believe that it is holding this new consultation because it is a kind and listening department and their announcement does not mention the court proceedings at all.

“However, the department has received significant feedback from disabled people and their organisations that they want a further opportunity to comment on the finalised assessment criteria rules around the mobility component. That is why it is now giving notice of a further consultation to be launched late June.”

However the emails sent out to my solicitor and to members of the stakeholder consultation forum had a subject line of “Re: Judicial Review” so make of that what you will.

While this new consultation is very good news it is not an admission that the twenty metre eligibility is wrong or an indication that the DWP will change their minds. We will have six weeks to make sure that the DWP has no choice but to admit that the twenty metre limit will cause serious harm to a great deal of people, withdrawing support from people that desperately need it. I will publish details of how to contribute to the consultation once they are available.

A lot of credit is due to Jane Young and We Are Spartacus for getting legal action organised to bring about this new consultation.

I will be discussing with my solicitor and other people involved what step to take next.

Press release: DWP to launch Personal Independence Payment mobility consultation

Why I am suing the government

We Are Spartacus

 

Do I really have to say why workfare is wrong?

Workfare Times cartoon

Workfare replaces paid jobs with unpaid labour

“Did you know we could offer you free, temporary staff for four weeks?”

– Previous advertising material from JHP Employability.

“After the 6 weeks were up the manager asked him if he would like to stay on for some extra weeks, my friend asked ‘with pay’? The manager said why would he pay him when he can pick the phone up and get more unemployed people who have to work for nothing”

Comment on Guardian CIF about a work placement with Tesco

“Stores such as Argos, Asda, Superdrug and Shoezone made use of the government’s workfare schemes to meet their seasonal demand, instead of hiring extra staff or offering overtime.”

red pepper: Workfare: a policy on the brink

Workfare keeps wages down for those still in jobs.

“It’s obvious that workfare workers are replacing paid jobs – pushing our low-wage economy down towards a no-wage economy.”

– Natalie Bennett – Leader of the Green Party

Workfare is literally worse than useless

“5 per cent of long-term unemployed can be expected to find jobs for six months if left alone to do so.

Successful six month employment rate during the first year of the Work Programme was just 2.3 per cent, significantly below the target of 5.5 per cent.”

– Telegraph: Iain Duncan Smith’s Work Programme ‘worse than doing nothing’ (The Work Programme includes work placements.)

Workfare subsidises big business

Instead of paying wages that contribute taxes and spending back into the economy, big companies like Tesco and Poundland benefit from free labour while continuing to keep the workers reliant on benefits at our expense. That money goes straight into shareholder’s profits.

Workfare does not provide the training that it is meant to

Work experience schemes are meant to provide training for future jobs. Instead we have people with extensive education toward a chosen career being sent to stack shelves and sweep floors which does not further them in the career they have trained for at all. Even when a person expects to find work in retail, four weeks experience in shelf stacking is hardly a necessity to do the job in future. In most cases little or no training is being given and the work placement consists only of manual labour.

Workfare exploits sick and disabled people

People who receive Employment Support Allowance and are placed in the Work Related Activity Group can be sent on The Work Programme or Mandatory Work Activity. Charities such as Sue Ryder, The Conservation Volunteers and The Salvation Army are fully aware of that, even enthusiastic, although TCV has now announced it will not force people on ESA to volunteer(!) and Sue Ryder has pulled out altogether.

“How can we morally take sick and disabled people and force them to work?

At The Salvation Army, we have a history of believing in emancipation through employment. People who come for work experience with us are fully supported throughout their placements with help tailored support to their needs.”

The Salvation Army, in a comment on Facebook

“Arbeit Mach Frei”

The Nazis

Workfare is costing poor people money they don’t have

People sent on work schemes are having to pay for transport to get there without any extra income. Sick and disabled people are often being hit particularly hard by transport costs as they are too sick to use the bus or train and end up paying for taxis to avoid having their benefits cut.

Workfare is damaging the health of sick and disabled people

People in the Work Related Activity Group on Employment Support Allowance are not fit for work, they are considered to potentially be fit for work at some unknown point in the next few years. And yet they can be sent to work nearly full time (30 hours) for several weeks. Of course it’s going to damage their health.

Workfare doesn’t create new jobs, only changes who might be in a job.

If there aren’t any jobs being created then all workfare does is give the employer weeks of free labour from one or more people before they employ someone, if they even need to.

Workfare doesn’t pay wages

“A fair day’s wages for a fair day’s work”

the least that an employee should demand.

Basic Income will solve unemployment

Make Poverty History poster - Basic Income
Credit: Photo by Russell Higgs

syzygysue writes over at Think Left that the UK needs eight million new jobs to provide full employment. I believe this is true, but I also believe that it cannot and will not happen. There will be less and less jobs per head of population as manufacturing and logistics become more and more automated. Even in China it is proving cheaper to put thousands of robots in factories than to employ people with all of their foibles and demands, such as being paid a fair wage.

Working conditions in Amazon’s warehouses are abysmal, driving people past their breaking point and Tesco isn’t a whole lot better. People take these jobs because they are desperate to work but they shouldn’t have to accept such conditions. Humans are being used as mere cogs in a vast and uncaring machine and frankly, cogs do a better job of being cogs than humans do. We should accept automation wherever possible even as it puts people out of work.

But if people are put out of work by machines, how will they survive? To quote union leader Walter Reuther when Henry Ford asked how he would get robots to pay union fees, “How will you get them [robots] to buy your cars?”

The answer is that everyone put out of work by machines must receive an income from the general pool of wealth. A share in the profits of the machines as it were. In fact I will go further and suggest that everyone, regardless of other means, should receive this income. It goes by the name of Basic Income, Citizen’s Income, Minimum Income, Mincome, Guaranteed Income and probably some others. It is a salary paid by the government to every citizen, regardless of means, without asking anything of them in return. They are not required to look for work, or to volunteer for a charity, or to do community service, or anything else. It must be unconditional.

A little-known experiment took place in Canada in the seventies and put the principles of basic income to the test. It wasn’t quite the same thing – it was effectively a tax credit which was means tested and paid to those without any other income however it placed no requirements on the recipient and so it is a reasonable comparison to basic income. The trial was known as Mincome and it topped up the income of everyone in the town to at least the minimum level. The experiment was wildly successful in reducing poverty and bringing health benefits such as an 8.5% reduction in hospital visits. The trial was abandoned when a change of government brought new priorities but one of the people involved recently did a radio interview about it and it is worth a listen.

A Town Without Poverty (Note, video is black to start with.)

So how would basic income be paid for? It would replace the tax allowance for a start. If everyone received a few thousand pounds a year then they wouldn’t need tax relief on the first ten thousand pounds a year of their income. It would replace pensions, which are a vast chunk of the welfare budget. It would replace nearly all benefits, in one stroke removing means testing, the work capability assessment, and the stress and stigma of the current system. The rate of taxes would be adjusted to make up any remaining shortfall.

But wouldn’t people stop work if they didn’t have to earn a living? No, actually. Few people want to live on an income that allows for no luxuries or extras. People aspire to get more, and they are prepared to work for that. What is likely to happen is a rise in jobshares and part time work to top up the basic income, thus solving the problem of there not being any jobs for people who are unemployed at the moment. Actually, some people would stop paid employment but on the whole it is people should stop because they have other roles outside of the workplace that are just as valuable. Carers, parents, those in education, those who volunteer to help others. All are valuable roles that are losing out because people are required to work so much to get by. Writers, artists, entrepreneurs and more could all go and focus on creating what they want to create and we all benefit from that.

I believe that basic income is inevitable. If it doesn’t happen then society will collapse completely under the weight of poverty as our production becomes automated and people are treated like machines. That is not good enough though, and I believe we should introduce Basic Income today so that we can be a caring and civilised society.

 

Further Reading

The Dominion: A Town Without Poverty?

A Latent Existence: Why does everyone have to work?

Think Left: The UK needs 8 million New Jobs

Mother Jones: I Was a Warehouse Wage Slave

Independent.ie: Tesco staff forced to wear arm monitors that track work rate

Ars Technica: Androids are going to take our jobs, and that’s great!

FT: Obama must face the rise of the robots (Free registration required.)

FT: Foxconn looks to a robotic future (Free registration required)

Basic income guarantee [Wikipedia]

Basic Income Earth Network

Citizen’s Income Trust

A Universal Basic Income

Global Basic Income Foundation

Confusion over the Bedroom Tax

There appears to be some confusion over a possible rethink of the Bedroom Tax. It seems that Iain Duncan Smith has told BBC News home editor one thing, while his department SPADs are claiming another. It shows just how bad things are in government. It seems to be chaos, with policies announced on the fly and ministers and departments contradicting each other.

https://twitter.com/BBCMarkEaston/status/304637207417847808

https://twitter.com/BBCMarkEaston/status/304639950433943552

https://twitter.com/BBCMarkEaston/status/304642876183285760

https://twitter.com/dwppressoffice/status/304664240483090434

 

BBC News: ‘Bedroom tax’ rules re-examined

What is the bedroom tax?

Iain Duncan Smith: “There is no bedroom tax”

Telling the full story of benefit changes

Mainstream media has shown very little interest in covering the coming changes to benefits and the impact that this will have. There is an occasional segment on TV news and a few more newspaper articles but even after two years of campaigning few people realise what is actually happening. The common reaction is disbelief and accusations of scaremongering and exaggeration.

My idea is to create an hour long documentary film using all the professional tricks to make it compelling and informative so that it conveys the full impact of the changes hitting people who live on benefits, whether unemployed, disabled or low-income. It would use personal stories, graphics, commentary, interviews and music to tell the story. The film does not have to convey a political message, only the reality of the changes. Any positive changes that can be found should be included too. I believe that even if made as unbiased as possible the film will be devastating in its message.

To get mainstream appeal the film could be narrated by and feature interviews with celebrities, with well-known paralympians potentially being the best choice but others too.

While a spot on television would be the ideal, these days a film on YouTube can get millions of views – potentially more than would see on TV. An online campaign using very short clips and hashtags could attract viewers. To raise the chances of it being seen on TV a ten minute version could be made using materials from the full version and sent to TV stations everywhere.

I’ve noted some of the steps that I think will be required. They’re not necessarily in any particular order.

  • Find a suitable name and some introductory branding
  • Create a website for the film
  • Crowdsource a list of all benefit cuts, eligibility reductions, care and service cuts and the impact of all this.
  • Start an awareness campaign on social media to get people involved.
  • Ask people to submit short clips through Vine and YouTube telling their stories and what they expect to happen. Clips can be recorded with smartphones or webcams. Gather these clips under a hashtag on twitter.
  • Raise funds through donations  for travelling to record interviews.
  • Interested parties meet to discuss content. Further meetings where appropriate in later steps.
  • Record interviews with celebs.
  • Follow up personal stories for better recordings.
  • Create graphics and animations to explain the changes.
  • Edit together a draft version of the film.
  • Record narration of the changes.
  • Create transcripts and subtitles.
  • Meet up physically and make a final version of the film.

This is all very much at the ideas stage, please comment with your views, suggestions, offers of help etc. Lets make this happen!

Concerns about prepaid benefit cards

The use of prepaid cash cards for benefit payments surfaced a few months ago. The Telegraph published a story that Iain Duncan Smith had asked his advisers to look at paying benefits to “problem families” on smart cards to limit their spending so that they could not buy alcohol or drugs. I wrote at that time about why the scheme is an awful idea including the imposition of the “nanny state” into people’s lives, inability to spend money locally where cards are not accepted and the impact of depriving people of entertainment and pleasure.

That was not an announcement of government policy, and indeed would go against Iain Duncan Smith’s stated aim that Universal Credit will teach financial responsibility and budgeting by unifying many benefits into one monthly payment. However in December Alec Shelbrooke MP introduced a ten minute rule bill to pay most benefits through such a scheme. Shelbrooke specifically intended the welfare cash card as a means to restrict spending by people who receive benefits, including housing benefit paid to people who work. The Telegraph wrote:

The Bill for Welfare Cash Card is designed to stop welfare claimants buying what Shelbrooke deems “NEDD” goods – Non-Essential, Desirable and often Damaging – which include cigarettes, alcohol and gambling. It would not affect those who cannot work and receive disability-related payments or those on the state pension, but it would apply to all other in-work or out-of-work benefits.

The Welfare Cash Card Bill 2012-13 is due for a second reading in March. A ten minute rule bill does not have the backing of government and is unlikely to become law but it may well influence debate and opinion in parliament and could pave the way for a government-backed bill.

I had hoped that this was the end of it, but today thinktank Demos has published a report advocating the use of prepaid debit cards for benefits. The report is backed by MasterCard, although Claudia Wood, the main author of the report has said that they had no input over the content.

https://twitter.com/WoodClaudia/status/296576264767160320

Prepayment cards for social care

Recommendation 1
In the face of unprecedented budget cuts, local authorities should explore the possibility of using prepaid cards for the distribution of personal budgets, as a tool to reduce administrative costs and reduce the budgetary cuts passed to front-line services. From Demos report The Power of Prepaid

Wood has written an article in The Guardian (With little to indicate that she is the author of the Demos report) explaining that Demos does not advocate using the cards to restrict spending, but as a tool for local authorities to allow better auditing and reduce paperwork. She writes:

“Brent council in north London estimates it was receiving 25,000 pieces of paper a year from care users. It expects a 10% reduction in its personal budget costs by using prepay cards.”

Ally Fogg has written a piece for Comment is Free about the potential savings for councils and the drawbacks – The dubious benefits of welfare payment cards. It seems that councils agree that there are savings to be made. According to Wood,

“About 25% of local authorities are using prepay cards and another 30% plan on doing so this year, mainly to distribute direct payments in social care.”

However while I can see a point here – that councils must audit spending of social care funding and direct payments, that doing so it expensive, that checking transactions from a prepaid card account is easier – I am not happy with the privacy implications. In order to audit the use of social care funding, councils will have to monitor the use of the card. At the moment recipients of Direct Payments have to send in paperwork every so often. One person told me theirs is checked annually. Monitoring of a payment card account, on the other hand, would be continuous or frequent. It may cause stress or fear of mistakes especially if a person chooses to juggle their finances and delay a payment.

Then there is the issue of how money is actually moved to pay for goods and services. Prepayment cards can usually pay through VISA or Mastercard services and so can be used in shops and online. The kind of payment card account that Demos advocate (and it is really a kind of bank account) could allow cash withdrawal, direct debits and bank transfers, which would allow payment to Personal Assistants and carers directly employed by a disabled person.

Prepayment card for Universal Credit

Recommendation 4
Prepaid cards should be used as a secure way to distribute Universal Credit for the unbanked.

From Demos report The Power of Prepaid

Prepaid cards might be a reasonable option for people who do not have bank accounts, but that should be entirely their choice. The Demos report mentions those who fear or do not want a bank account as potential candidates, but frankly if they don’t want a bank account then they won’t want a prepaid card which is basically a bank account with more limits. They especially will not want one which is selected and pushed on them by local or national government. If benefits must be paid into an electronic account then I think that the only acceptable solution here is to allow the recipient to select one. Basic bank accounts are available to most people barring some with particular criminal records and those without any form of ID, and I can’t see prepaid cards being available without ID. If someone who is actually unable to get a bank account wants a prepaid card instead then the choice of which one should be theirs alone.

Recommendation 5
In the longer term, the Government should explore the possibility of using prepaid cards to distribute Universal Credit or other benefits to financially vulnerable groups, possibly integrated with direct payments in health or care.

Some care users (such as those with learning disabilities, mental health needs or older people vulnerable to financial abuse) might find prepaid cards a beneficial way to spend both their health or care personal budgets and their disability related benefits. Those seeking to live with greater independence and develop life and budgeting skills, but who may need the safety net of oversight a prepaid card can offer, would find this particularly beneficial – the alternative at the moment is usually apointeeships and managed budgets, where people have little or no financial responsibility and cannot try to take on more.

From Demos report The Power of Prepaid

Demos also recommend that prepayment cards be considered for the payment of Universal Credit for those considered financially vulnerable. The main reason for this is to monitor their spending and prevent financial abuse through carers and relatives stealing money. Again there are privacy implications depending on who carries out the monitoring, violating a person’s right to a private life. I worry that the range of people considered to be vulnerable will be far too wide, such that people who are old or have mental health problems might be forced to have a prepaid card whether it would help prevent financial abuse or not.

Should the group receiving Universal Credit overlap with the group receiving social care funding then there are serious privacy implications regarding the release of their other spending data to the people monitoring the social care spending.

Concerns

I can see that there are benefits to using prepaid cards where local government has a duty to audit spending. I can see that there would be a saving. I am concerned, all the same, that such monitoring goes beyond what they are required to do and turns something that might be fairly unintrusive and infrequent into a continuous process that will infringe on a person’s right to a private life and will cause stress.

I am concerned that splitting income into separate financial systems – bank account and prepaid card – will allow less flexibility to juggle expenses in the face of the poverty which many disabled people face. It will also cause an increase in administration. [Claudia Wood has pointed out to me that a separate bank account is already legally required for a personal budget. I do think that requiring it to be with a separate financial provider instead of the same bank is a drawback though.]

I am concerned that the prepaid card provider is chosen by government and not the individual. I do not believe that a particular bank or financial service should be forced on someone. If payments must be made electronically then the choice of bank or prepaid card provider must be up to the individual.

I am concerned that these cards will be pushed out of profit motive. Prepaid card provider allpay has already jumped to capitalise on the report from Demos to sell their prepaid cards to councils for the payment of social care funding. An article which is more or less an advertisement for allpay appeared yesterday. (Call for ‘revolutionary’ welfare payments move) The allpay website dedicates a section of its front page to talking about “Welfare reform: how we’re supporting housing associations and councils”. Payment card providers such as allpay will receive a fee every time their card is used, just as with a debit card or credit card so of course it is in their interest to see that benefits are paid through their service.

I am concerned that the use of prepaid cards will be normalised through the requirement for monitoring some payments and will then spread further to all people in receipt of benefits before being used to restrict spending. This report is a subtle shift in argument away from preventing “waste” of benefits on alcohol and cigarettes and Sky TV, and onto responsibility and independence but other politicians and groups still want the ability to dictate what benefits can be spend on. In fact Radio 4 spoke to Alec Shelbrook MP at length this morning and Shelbrook heavily pushed the idea, with Claudia Wood arguing against him. While The Guardian recognised the point that Demos were making in their coverage, The Telegraph has also covered it from the point of view of restricting spending, claiming the card would “help them stop spending taxpayer cash on gambling, cigarettes and alcohol”.

I think when considering the points raised by Demos we should keep individual freedom and privacy foremost in mind and we should realise that there are a lot of things that could be done to save money that we don’t consider acceptable compromises.

Further Reading

Thinktank recommends issuing benefit cash on ‘prepay’ cards – The Guardian

‘Welfare cash cards’ are much more than a tool of state control – article in The Guardian by the author of the Demos report

Benefits on pre-paid cards? – This Morning, Radio 4

Ministers should consider paying benefits via ‘Oyster-style’ cards – The Telegraph

Call for ‘revolutionary’ welfare payments move – an article promoting prepaid cards to councils

The Power of Prepaid – The report from Demos

‘Welfare cash cards’ can help reduce the benefits bill and stop people buying booze and fags with taxpayer’s money – Telegraph

Welfare Cash Card Bill 2012-13 – parliament.uk

The dubious benefits of welfare payment cards – Comment is free

Welfare cash cards and spying: the Tory approach to unemployment – Comment is free