UK government is trialing the use of virtual food voucher-styled currency as social security payments


Smart Cards entered our collective consciousness during autumn 2012, as Iain Duncan Smith declared his intention to discipline Britain’s “troubled” families. In unveiling his proposals at the Conservative Conference back in October 2012, Duncan Smith attempted to frame the cards as better value for taxpayers’ money, implying that poor people don’t pay taxes, (when the poorest actually pay proportionally more) and his rhetoric was extremely stigmatising.

He said: I am looking […] at ways in which we could ensure that money we give [benefit claimants] to support their lives is not used to support a certain lifestyle.”  [Boldings mine.]

Then MP Alex Shelbrooke presented his private member’s bill in December 2012, providing us with yet another shuddering glimpse into the underlying Tory moral outrage, prejudice and punitive attitudes towards people claiming benefits. He argued for a “welfare cash card” to limit spending to absolute basics. Isn’t welfare provision as it is just enough to cover the absolute basics for survival? It’s calculated to meet the cost of food, fuel and shelter only.

Despite his scapegoating narrative about addressing “idleness”, Shelbrooke’s proposal  was intended to apply to those in work, who claim benefits such as tax credits and housing benefit, penalising and outgrouping those on a minimum or low wage, also. The plan was to restrict the goods that people claiming benefits could buy with their cards. Not so much offering a “nudge” or “incentive”, but rather, a bludgeoning enforcement. 

Government proposals: virtual food vouchers and automated nudge

Earlier this year, the government set out proposals in a report regarding how Blockchain Technologies’ distributed ledger technology which provides “efficient and transparent” digital records of cryptocurrency transactions, could be used for public services. In their report called Distributed Ledger Technology: Beyond block chain, the government’s scientific advisor says:

“Distributed ledger technology (DLTs) offer significant challenges to established orthodoxy and assumptions of best practice, far beyond the recording of transactions and ledgers. These potentially revolutionary organisational structures and practices should be experimentally trialed — perhaps in the form of technical and non-technical demonstrator projects — so that practical, legal and policy implications can be explored.”

“Areas where we believe work could be taken forward include the protection of national infrastructure, reducing market friction for SMEs [Small and medium-sized enterprises] and the distribution of funds from Department for Work and Pensions and other government departments.” [Boldings mine.]

A distributed ledger is a database that can record financial, physical or electronic assets for sharing across a network through what is claimed to be entirely transparent updates of information.

Its first incarnation was Blockchain in 2008, which underpinned digital cash systems such as Bitcoin. The technology has now evolved into a variety of models that may be applied to different business problems.

Speaking at Payments Innovation Conference earlier this month, Lord Freud, one of the main architects of the welfare “reforms” said:

“Claimants are using an app on their phones through which they are receiving and spending their benefit payments. With their consent, their transactions are being recorded on a distributed ledger to support their financial management.”

The Department for Work and Pensions (DWP) has been working withBarclays, Npower, University College London and a UK-based distributed ledger platform startup called GovCoin to create an app which tracks people’s benefit spending

The ongoing trial which, is designed to demonstrate “the practical applications of the technology,” began in June. It’s another Conservative experiment on people claiming social security.

Jeremy Wilson, the vice chairman of corporate banking at Barclays, said: “This initiative focuses on adding an additional layer of richer data and identity onto payments, so that a deeper and more effective relationship can be established between the government and claimants.”

I wonder exactly what that “effective relationship” will entail? I bet it’s not one based on mutual respect and democratic dialogue. I also wonder if the Department for Work and Pensions will be issuing people who have no income with Smart phones. 

How will the collected information on spending be used? Are we going to see people claiming social security being named and shamed for buying Mars bars, a bottle of wine or a book? Or birthday and Christmas presents for their children? Will the state be sanctioning people that make purchases which the government deems “unnecessary”? 

He added: “We are keen to see how the positive potential of this service develops and adds to our wider efforts to explore the uses of distributed ledger technology.”

Distributed ledger technology was identified as a way of potentially “saving billions of pounds a year from welfare fraud and overpayment errors.“

Oh, that whoppingly over-inflated  0.7% of claimants again. Just imagine how many trillions we would save if we used technology to get a grip of tax avoidance. 

The technology is hoped to provide a cheap and easy way of getting welfare claimants without bank accounts into the system as well as verifying their identities, and would also provide a “transparent account of how public money was spent, transform the delivery of public services and boost productivity,” the government’s chief science adviser, Sir Mark Walport, said in a report last January. Those same words are used every time vulture capitalists are circling a public service.

Walport said: “Distributed ledger technology has the potential to transform the delivery of public and private services.” More words from the vulture capitalist crib sheet of glittering generalities.

“It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust and make a leading contribution to the government’s digital transformation plan.”

The government distributes £3.8bn in payments every day. However, there are some concerns over how protection of data and privacy with the technology will be “managed.”

The Open Data Institute welcomed the findings on the whole. However, it warned that the government must be wary of the challenges involved in blockchain technology and apply it in an effective way. They say: “We agree that blockchains could be used to build confidence in government services, through public auditability, and could also be used for widely distributed data collection and publishing, such as supply chain information. Smart contracts also hold great potential; what if your train tickets were smart contracts that meant you paid less for delayed trains?” 

Smart cards and smart contracts, the more things change, the more the Tories stay the same.

Further: “However, in our research we have seen cases where people are trying to bolt old, failed or impossible policy and business ideas onto the new technology or to unnecessarily reinvent things that work perfectly well.”

The institute also warned of the privacy issues raised by incorporating private data and suggested the government better develop and solve these challenges by focusing on industry specific groups such as the finance or healthcare sectors.

Having failed in introducing the punitive smart card more than once, the Conservatives are now resorting to a stealthy introduction of a variation to curtail the freedom of poor people claiming social security, using cryptocurrency, state regulation and an unprecedented, Orwellian level of state monitoring and control of what people who are struggling to make ends meet are buying. 

Some further thoughts

Conservatives claim to endorse personal responsibility, limited government, free markets, individual liberty, and deregulation, amongst other things. They believe the role of government should be to provide people the freedom necessary to pursue their own goals. Conservatives claim their policies generally emphasise “empowerment of the individual to solve problems”. So how does any of this tally with harsh welfare cuts, public service cuts, restrictions on the right to by certain goods, the removal of access to legal aid, limiting housing options for the poorest, bedroom tax, numerous human rights contraventions, psychocompulsion through increasingly stringent welfare “conditionality” and  the draconian sanction regime, for example?

Limiting “consumer choice” and spending flies in the face of the Tories’ own free market dogma. Furthermore, as it stands legally, the government cannot currently stipulate how people claiming benefits spend their money.

The Tory definition of “troubled family” conflates poverty, ill health, unemployment and criminality. Iain Duncan Smith claims to be targeting substance abusers (“drug addicts” and “alcoholics”) but it’s clear that the government’s definition means he’s referring largely to the poor and disabled people. His proposal to deal with people who don’t buy their children food because they’re “drug addicted” would actually target people who don’t buy food because they can’t afford it.



This was taken from a longer article: State-regulated cryptocurrency and micro-managing people claiming welfare


This post was written for Welfare Weekly, which is a socially responsible and ethical news provider, specialising in social welfare related news and opinion.




11 thoughts on “UK government is trialing the use of virtual food voucher-styled currency as social security payments

  1. Reblogged this on Worldtruth and commented:

    Ian Duncan Smith attempted to frame the cards as better value for taxpayers’ money, implying that poor people don’t pay taxes, (when the poorest actually pay proportionally more) ”
    Progressive(PAYE)and regressive(VAT) taxes mean that the wealthiest only pay 24% tax proportionately while the poorest pay 38% tax, ultimately the poorest end up paying more. This, therefore, makes a total lie out of IDS implied criticism. The Community Tax is another example of regressive taxes whereby the wealthiest like Tony Blair and his 8 million pound mansion pays a fraction of the percentage other householders pay with cheaper properties.

    Liked by 2 people

  2. Ahem, Sue, Government + Massive IT Project = Fail! They’ll try it, waste untold 10’s or 100’s of millions, make people suffer along the way – and then be forced to revert to something more sensible.
    Isn’t that sort of like madness, trying the same thing over and over (albeit using various disguises) and expecting a different result?
    Wish they’d just stop trying to use technology until their mentality catches up! That would be never of course…

    Liked by 1 person

    1. They won’t revert to something more sensible, it’s a symptom of vulture capitalism and all about profits for the oligarchs, ultimately. Wonky technocracy like “nudge” to maintain the imposition of neoliberalism on citizens, regardless of the consequences

      Liked by 1 person

      1. To be honest it is their increased reliance on technologies that they have been “sold” by the various big IT companies that gives me the most hope for the future and the return of democracy. The more they try to control and micro-manage people’s lives with technology they genuinely do not have a true understanding of, far less full control over, the closer they come to discovering just what a double-edged sword they wield!

        That is not to say I don’t find myself driven to the verge of insanity by the way they are failing to use technology of types in a way that could have an immediate and positive effect on people’s lives. This is mainly due the reasons you give above.

        It is even more frustrating that it is also partly due to fact that a majority of those who do</em) oppose this (insane) ideology driving us into a very stark and uncomfortable future equally lack a good understanding of the potentials and pitfalls of many of the newer technologies. Some even oppose the technologies.

        The good news is that this is far less true of the younger generation, amongst whom many have seen what their future would hold if things continue as they are. They may appear easily distracted by things like instagram, vine and hunting pokemons down dark alleys, but with it comes a more connected, shared world – and most importantly, a far greater understanding of how things can be re-engineered to work for them!

        Liked by 2 people

      2. The Tories are never creative, they always want to exercise control over the public, and manipulate, foisting their ideas on us that come from their own miserable Hobbesian perspective. But we ARE creative. And because we are, ultimately, we can’t be controlled.

        Liked by 2 people

  3. I think even Hobbes, would view the current state of things in the UK with distaste, even horror. After all he was arguing for a State Authority in order to prevent life from being lacking in some decent standard: “… no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.”

    All of which sounds like something that could easily become the lot of the majority, starting from the “bottom” (financially) and slowly creeping upward to leave just a minority to enjoy the spoils of gluttony if current Government plans are able to be implemented unchallenged.

    Perhaps the works of Ayn Rand may be closer to the current Tory ideals. Of course any good democratic socialist can take, not pleasure, but comfort in the way life turned out for her – relying on the very Social Security and Medicare that she would have seen stamped out. A good example perhaps that a caring socialist system is for all, whilst the Neoliberal, Minimal-State policies currently being so ruthlessly pursued by the Government do not lead to happy outcomes, even for the most devout of their supporters. That’s before even taking into account the total misery inflicted on the weakest in Society and the outright vandalism wreaked upon the environment and all socially worthwhile activity.

    Liked by 1 person

    1. Yes, Rand creeps up occasionally in my writings, as a key influence on the neoliberal mess we’re in – economic Darwinist social vandalism. And yes, she smoked herself silly, got cancer, then needed the social security system and healthcare she’d spent all her life disparaging and scorning. After a lifetime of promoting self interest, she finally learned the value of altruism and mutual aid. Really, it’s all we have going for us, as a species.

      Social freedoms can only happen when people are liberated from poverty and greed. The two are intimately connected. Poor people are poor because a few people are very very powerful and ridiculously wealthy, they own everything.

      Liked by 1 person

  4. I want to address something expense-cossetted politicians and those who believe what they read in the mainstream media tell them, and I want to do it by way of a couple of practical illustrations. It’s what we have to do to make the money we get actually do what it’s theoretically there for. I get support group ESA and DLA (HRC & LRM). People wince at how much money I get. But then I point out that my £100/week or so DLA would pay for fewer than 3 weeks in a psych unit, and if I had a psych team looking after me, the cost would wipe it out in outpatient treatment before I got anywhere near an inpatient unit. So care in the community is cheaper. But now consider this – round here, a carer costs £15/hr. So my DLA equates to fewer than 7 hours help a week (using LRM for a person not a taxi). That doesn’t go far, does it? But with a bit of haggling and kindness, it goes further. And one thing I can do with some of it is to buy things for friends and neighbours who help me. Scandal! Spending benefits on bottles of wine and meals out for other people! Yet those same politicians who would quite knowingly swap favours for rather more expensive meals on expenses wouldn’t consider saying thank you to the friends who take me into their homes when I’m in crisis a proper use of DLA. A different example. Fuel. Bung it on a card. Where’s the problem? And if I want extra hot water bottles, blankets, halogen heaters, warm socks etc? That won’t go on a fuel card. But it’s essential heating, and heating is, surely, one of the main things fuel is for. And what shames me? That I’m scared to put it to politicians openly in writing in case someone uses it as an excuse to say I don’t need so much care or that I’m fit for work and stop my benefits.

    Liked by 1 person

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