MastercardAP Photo/Mark Lennihan

Support is growing for benefits payments to be issued on pre-paid cards, which are easier to administer than cash, and useful for people who need help budgeting their spending. However, a new study has revealed that most people think that the government should use them to control how benefits are spent too.

So will we see new draconian rules on benefits spending?


Cards

The pre-paid cards are already taking off, with a quarter of all councils using them in some capacity, the majority of the rest considering it, and those who use the cards are considering rolling them out on a wider basis.

They work in much the same way as a debit card, but the benefits would be loaded onto the card, and when the money runs out the card would not work again until the next benefit payment.

They have the advantage of being cheap to administer, and allowing people to use them in instances where cash is not accepted. They can also be set up so that money is put on every month, but that there's a weekly limit - so people cannot over-spend.

Marion King, President of MasterCard UK and Ireland, says: "The roll out of direct payments and the introduction of Universal Credit have the potential to increase financial inclusion, especially if the combined payment is loaded onto a pre-paid card. This is because the card will give access to more ways to pay for goods and services while simultaneously enabling individuals to budget and save."

However, they also raise the possibility of the council limiting the things people can buy with the card - which has opened a huge debate.

Control

A new study has revealed that 59% of people think the government should be able to use them to control how benefits are spent. The research, conducted by the think tank Demos for Mastercard, found widespread support for pre-paid cards.

King adds: "Prepaid cards can also provide local authorities with the ability to monitor and control spending where appropriate." The research found that overall 59% supported the idea of controlling how the universal credit is spent. However, there was even more support for keeping tabs on specific groups and particular sorts of spending.

Some 87% of people said that at least one group of welfare recipients should have their benefits controlled. It included 77% who said yes to monitoring people with a substance or gambling addiction and 69% for those with a criminal or anti-social history. These figures rose to 82% and 75% respectively among respondents aged over 65.

Certain types of spending were particularly frowned upon. Over two-thirds of respondents (68%) agreed the government should stop all recipients from spending their benefits on gambling.

Over half (54%) agreed with the government stopping people spending their benefits on unhealthy items such as cigarettes or alcohol. Just under half (46%) opposed benefits being spent on expensive branded goods, 38% backed a ban on buying junk food and 35% believed it shouldn't be spent on holidays.

Debate

Demos's Deputy Director Claudia Wood said: "These findings paint a worrying picture of a nation divided between welfare claimants and the rest. It suggests that many now view the welfare state as a form of charity towards the poor rather than social insurance for all. If the majority still saw the welfare state as an insurance scheme - a contract of protection in return for contribution - then people would be more supportive of autonomy for benefit claimants."

She added: "The government's rhetoric around 'problem families' and 'scroungers' is clearly shaking people's faith in the welfare state. Those wishing to restore it will need to find a response that reassures a nervous public."

King highlights that this is no longer a hypothetical debate, as some local authorities are already using this technology in a limited fashion (with a quarter using them for personal budget payments for social care) so we need to consider the issue of control and autonomy.

The report found that when people were asked a straight 'yes' or 'no' question, they supported controls. However, when the issue was brought into focus groups, there was far less support for controlling spending. People were more likely to think that the spending of other people should be controlled - but did not like the idea of having controls imposed on themselves. It shows how vital it is for the issue to be considered in depth, before local decisions are made on gut instinct.

But what do you think? Should the cards be used? And should controls be brought in on how they are spent? Let us know in the comments.