Benefit smart-cards: an idea for reciprocity?

Written by: Daniel Sage on 19 October, 2012
Filed under Economy, Work and Welfare

Labour and Ed Miliband desperately need to carve out a position on social security. Boxed in by public popularity with the tough Tory stance, Labour has resorted to an unconvincing defensiveness on welfare reform: often accepting new policies ‘in principle’, but stating that Labour would do it just a bit differently. When you are losing ground to the opposition in a policy area, this strategy is doomed to fail. In accepting the boundaries of debate as set by the Tories, Labour looks weak and – as the Guardian’s John Harris exposed – relatively clueless.

This is why, aside from the economy, welfare should be Labour’s number one priority in fashioning out a new and popular policy agenda. As the Tories are increasingly accepting, their only hope for a 2015 majority lies in persuading ‘blue-collar voters’ that they are on their side. They have increasingly accepted that the voters they really need to target aren’t those concerned with socially liberal issues. Where they really need to focus is where Labour has traditionally been ahead: the health service, education and the welfare state.

This means that by consistently surrendering to Tory rhetoric on welfare, Labour risks alienating many of its core voters on an important policy issue. Yet the solution is not to keep on accepting the Conservative line on welfare. What Labour needs to do is tricky: to carve a new and distinctive line on welfare that chimes with current public concerns yet promotes a strong welfare state. It is this dual challenge: of working with public attitudes but in a distinctive, Labour way that will really test Ed Miliband up to 2015.

This is why Labour should look to new research by Demos with some intrigue. In a poll conducted by Populus, Demos found that nearly 90 per cent of people favour the idea that the state should have more control of what certain benefit claimants spend social security payments on. This would, in practice, most likely involve claimants being given a smart-card that could only be spent in certain shops on certain goods. A bit like the US food stamps scheme.

In an article that argued for smart-cards, Demos’ Max Wind-Cowie put the case that they should be rolled out for two groups of claimants: those with addiction problems and those he calls ‘non-disabled, non-contributors’. This latter group is made of people normally described as social assistance recipients: those who don’t have adequate insurance records to qualify for contributory-based benefits.

With 90 per cent of people purportedly on board with the smart-card idea, it is a potentially seductive idea for a Labour party lost on what to do with welfare. Yet there are at least four problems with the idea of smart-cards. First, for the case of addicts, denying them the means to pursue their addiction would likely have harmful consequences. Many addicts will find a way to feed their habit; smart-cards without extra support services would be doomed to fail for this target group.

Second, there are numerous practical problems that would surround the introduction of smart-cards. What shops would they be eligible at? What about benefit claimants in rural areas that don’t have access to national high street chains? How much would it cost to introduce the scheme? Smart-cards would need to be well thought through to avoid another policy ‘omnishambles’.

Thirdly, is there any evidence that what benefit claimants spend their money on is a cause for concern? Benefits are low; so the idea that claimants spend their money on non-essential, luxury goods is most likely a myth. And this leads on to problem four: does the smart-card idea simply feed negative public attitudes about the welfare state? Labour needs to start realising that it is the job of a political party to lead public attitudes, not follow them. Supporting smart-cards without any evidence for them would be failing in this task.

Yet still, it would be wrong to dismiss smart-cards straight out. As Max Wind-Cowie cleverly observes, smart-cards could introduce a new dimension to benefit sanctioning. Many on the left are rightly uncomfortable with using the threat of benefit removal as a ‘stick’ to promote finding work. Smart-cards could realistically be introduced to replace sanctions as a new ‘stick’. As a form of sanction, restricting the freedom to spend benefits is surely preferable to removing benefits outright.

So smart-cards could meet the challenge Ed Miliband faces on welfare reform: to support a strong welfare system but in a way that carries public support. To achieve this, Labour needs innovative policies: ones that recognise public concern with the welfare state by promoting contribution and reciprocity, yet do so without reducing the level of support available to claimants. Whilst problematic, smart-cards might – if well thought through – be just one way of achieving this.