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Welfare Cash Card

Volume 555: debated on Tuesday 18 December 2012

Motion for leave to bring in a Bill (Standing Order No. 23)

I beg to move,

That leave be given to bring in a Bill to provide for the introduction of a welfare cash card; and for connected purposes.

The principle of the Bill is to encourage responsible spending by welfare claimants, ensuring that taxpayers’ money is spent wisely and for the purpose it is intended. It will alter the spending habits of a minority who for far too long have taken advantage of the system, getting something for nothing. Consequently, I believe that it will change the perception of benefits in this country for the better. Politicians, the media and those from varied walks of life have been complicit in tarring as idle all 5.88 million recipients of one or more benefits from the Department for Work and Pensions. In fact, however, the time someone finds themselves on benefits is the time strivers and low-paid workers most need a supportive society where they are given the respect most deserve in trying to make work pay.

It is 70 years this month since the Beveridge report identified the five giant evils that plagued society: disease, want, ignorance, squalor, and idleness. Members on all sides of the House will want to praise successive Governments for their advances in eradicating these evils, but one remains prevalent today. The “something for nothing” culture encouraged by the previous Labour Government created a two-tier benefits system in which the strivers and low paid-workers were penalised for the idleness of the shirkers.

The Bill seeks to work alongside the Government’s welfare reforms to support those hard-working families who strive to be self-supporting by ending the “something for nothing” stigma of the welfare system. The introduction of a welfare cash card on which benefits would be paid would enable claimants to make only priority purchases such as food, clothing, energy, travel and housing. The purchase of luxury goods such as cigarettes, alcohol, Sky television and gambling would be prohibited. When hard-working families up and down the country are forced to cut back on such non-essential, desirable and often damaging items—NEDD items, as I call them—it is right that taxpayer-funded benefits should be used to fund only essential purchases.

No doubt, Opposition Members will say that people would be too ashamed to carry a welfare cash card, but I want to discount that argument immediately. If people did not want to be recognised as being unemployed, jobcentres would cease to exist as people would not visit them for fear of being seen in them.

Owing to the differing circumstances involved, this measure would not affect the basic state pension or disability benefits. For all other claimants, however, this move towards responsible spending would support the introduction of universal credit and the change from fortnightly to monthly welfare payments. It would place a focus on the financial planning that will be crucial in ensuring that out-of-work families take charge of their monthly spending. The welfare cash card would encourage that by prohibiting the purchase of NEDD items, thereby increasing the funds available for purchasing food and other essential commodities. It would mould financial responsibility for all claimants and provide an opportunity for out-of-work families to take charge of their finances just as they would need to when they got back into employment.

A stigma around those on benefits is commonplace, but that is neither accurate nor fair to low-paid workers who rely on the extra support that the welfare system offers. We need to stop the damaging perception that all benefit recipients are financially reckless. If taxpayers can be safe in the knowledge that claimants can no longer purchase NEDD items at the taxpayer’s expense, the concept of welfare will be viewed once again as a responsible way for people to get back on their feet. That is what the welfare state was intended to be: a safety net in times of need; a hand up, not a hand-out.

Beveridge had such a high opinion of society that he thought nobody would want to choose not to work. The last decade has proved otherwise, however, with the previous Government allowing an epidemic to fester. It is now time to modify the system so that this socially destructive state-funded way of living is no longer an option. Surely we should aim to introduce measures to enable society to be supportive and respectful of those struggling to succeed, which is what this form of financial monitoring could achieve.

Furthermore, the welfare cash card has the potential for more social good, not least by assisting efforts to eradicate child poverty. Statistics show that over 1.26 million claimants have children. Prohibiting the purchases of NEDD items such as cigarettes and alcohol would leave more money for priority purchases for children, who should not be the ones to suffer as a result of their parents’ irresponsible spending. To put this in monetary terms, the Office for National Statistics has calculated that the average household spends £48 a month on cigarettes, alcohol and narcotics. If the Bill created even the slightest chance of raising those children out of poverty, or of reducing the chance of them going to school hungry or being subjected to secondary inhalation of smoke, I would argue that it was worth while.

A ban on cigarette and alcohol purchases would also inevitably impact on NHS costs. This is not to suggest that welfare claimants are purposely taking advantage of the NHS, but a reduction in smoking-related and alcohol-related admissions would be a natural by-product of the welfare cash card. Smoking-related illnesses are estimated to cost the NHS at least £2.7 billion a year in England alone, with the same cost attached to alcohol-related harm. With that figure expected to rise to £3.7 billion by 2015, it is simply wrong that the state is inadvertently fuelling the problem by allowing the use of welfare payments for the purchase of NEDDs.

The Bill is about safeguarding the use of taxpayers’ money and supporting claimants in managing their own incomes. In the 21st century, it is right that we should maximise the benefits of technology for increased efficiency and reduced bureaucracy. In doing so, we would join Australia and the USA in leading the way in which welfare payments are made to claimants. In Australia, a five-year pilot of the Basics card is under way, and in America, the 47 million recipients on the food stamp programme receive their credits on an electronic benefit transfer card.

A welfare cash card would be a sensible step forward as we move towards universal credit. The cash card would operate like any other bank card utilising the chip and PIN payment method. There is also scope to use the cash card to increase the use of public transport, through an integrated travel pass, to assist travel needs.

This is about benefit distribution and spending, not about benefit allocation. Whatever the amount that is received on welfare, it is paramount that we are sure that it is being used in the best way to benefit society. The Beveridge report modelled a welfare state using the insurance contributions an individual pays to support them when they fall on hard times. At a time when it is not uncommon for families to have third-generation benefit claimants, who have never made these insurance contributions, this model is becoming increasingly unviable and the need for reform is urgent.

This Bill would promote financial planning and spending by those in society who have fallen on hard times and require support from the state. It backs those hard-working families who feel penalised for going to work, such as the single mum in my constituency—a low-paid shop worker on income support, juggling child care but going to work because she believes it is better to work than spend a life on benefits.

We must change this vision of the benefits system. We must change this perception to support those in society who need the benefit system to help them get on and work hard in life. The welfare cash card does just that: it is not about dividing to rule, but ending Labour’s divisive two-tier benefit system and the damaging perception that accompanied it. It backs the low-paid workers and supports all jobseekers to spend responsibly, take control of their finances and get back on their feet. The welfare state can no longer be seen as getting something for nothing: it must deliver on Beveridge’s vision of a temporary security net by using benefits to create a striving society.

Question put and agreed to.


That Alec Shelbrooke, Jessica Lee, Nigel Adams, Gareth Johnson and Kris Hopkins present the Bill.

Alec Shelbrooke accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 25 January 2013, and to be printed (Bill 112).