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New benefits smartcards to protect claimants from ‘destructive habits’

Benefits will be paid onto smartcards that will stop claimants using them to pay for cigarettes, alcohol, drugs or gambling, the work and pensions secretary has announced.

Speaking at the Conservative party conference, Ian Duncan Smith said that benefits should help support families rather than feed “destructive habits”.

Instead of receiving cash benefits would be paid onto cards that could only be used in certain shops to buy food and other essentials approved by the Department for Work and Pensions. They would not be usable in off licenses or betting shops.

Duncan Smith said: “I have long believed that where parents have fallen into a damaging spiral – drug or alcohol addiction, even problem debt, or more – we need to find ways to safeguard them – and more importantly, their families, their children, ensuring their basic needs are met.

“That means benefits paid, I always believe, should go to support the wellbeing of their families not to feed their destructive habits.

“To that end, conference, today I can stand here and announce to you that I am going to start testing prepaid cards onto which we will make benefit payments so that the money they receive is spent on the needs of the family, finally helping I believe to break the cycle of poverty for families on the margins.”

In England an estimated one in 15 working-age benefit claimants suffer from drug addiction. An estimated one in 25 working-age benefit claimants suffers alcohol dependency.

The proposals are similar to systems already in use in other countries. In Australia the government puts money electronically on ‘Basics cards’ which can only be used to purchase items such as food, housing, clothing, education and healthcare.

The scheme is to be trialled on a voluntary basis with 250 families and will be fully piloted if the Tories win the election.

However a Liberal Democrat source speaking to the Evening Standard suggested that the policy does not have support across the Coalition, saying they had blocked the proposal on at least two previous occasions.

“We are not persuaded of its merits, alongside the principled objection that you should not be stigmatising people and reducing their freedom to spend money as they wish just because they spend some time out of work,” the source said. “There are also serious practical issues that don’t stand up.”

The single parents’ charity, Gingerbread, have also spoken out against the idea. Chief executive Fiona Weir said: “The pre-paid benefit cards announcement capitalises on and reinforces negative stereotypes of people who need support from benefits. Single parents, both in and out of work, tell us they are struggling financially, but budgeting isn’t the problem – low wages, benefit cuts and rising costs of essentials are. 

“If the government is serious about helping struggling families, it must focus on helping more parents into stable jobs that pay a decent wage, and must not bring forward its newly proposed freeze on working age benefits.”

Claudia Wood, chief executive of the cross party think tank Demos, said the policy was “ethically questionable and practically and technologically challenging”.

In his speech to the conference Duncan Smith also announced plans to send Jobcentre staff into schools to target children as young as 15 who are at risk of falling out of education, work or training to work with them to improve their prospects.

He also said that he plans to accelerate the delivery of the controversial Universal Credit (UC) scheme, which has been blighted by delays and cost overruns.

The nationwide rollout from early next year will ensure that claims using the old system will be closed from 2016 with full migration to UC to “follow after”, according to the Department for Work and Pensions.

Duncan Smith told the conference: “I can announce that we are going to accelerate the delivery of universal credit from the new year, bringing forward the national roll-out through 2015-16 to every single community across Great Britain.

“Secure national delivery, yet at the same time, delivering that life change at a local level – strengthening community partnerships, helping vulnerable households, getting people into a job quicker and staying in work longer, not just helping the economy but reducing child poverty as well, bringing up to £35bn in economic benefits to Britain over the next decade.”

(Image: c. Isabel Infantes/EMPICS Entertainment)

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