Wednesday, 19 December 2012

'Welfare Cash Cards' are wrong and will not work.

Yesterday, Alec Shelbrooke MP delivered a 10 minute rule bill to bring in Welfare Cash Cards, for those on benefits, the lovely and brilliant Alexandra Swann then blogged about it, supporting the idea. The problem is, not only do I think this is a roundly un-libertarian proposal (telling others what is best for them?), but I also don't think it will achieve the results set out.

I'll start off with the moral case against it, it doesn't really matter whether this is taxpayers money or not, if someone is given money by the state, and all the boxes are ticked, you don't have a right to say "I know how this person should spend their money, I pay tax". It is similar to the stereotypical middle class mum telling the policeman that she can't be prosecuted because her taxes pay his wages. Why does it matter what people spend their money on as long as they fulfil their end of the contract on benefits (i.e. looking for work)? You have a right to argue that people who break their contract should be sanctioned more strictly, and better checks should be put in place - but as something of a bleeding heart libertarian, I don't see why anyone should say "no enjoyment for you, you're on benefits".

Now, you might reasonably disagree with me on that, but I don't think anyone can refute the idea that this petty moralising of those on benefits just will not work. Being strict on those who lie, cheat or don't bother seems fair, and can be done effectively so as to make it work (though maybe not for as long as government is in charge of welfare - friendly societies were much better at this). Firstly, those addicted to drugs (including alcohol and tobacco) - the key things highlighted that this will prevent - will get their drugs another way. They might resort to some dealing to pay for their habit, they might resort to theft and other crimes, but you can almost guarantee that something else will happen. A black market will open up to transfer Welfare Card payments to ready cash, probably with those doing it taking a tidy sum to pay for their services (making those on benefits poorer in real terms). It's no good saying that the government will ensure this doesn't happen - one look at any government department will show you that this is fantasy. Taxpayer money might therefore, be funnelled directly into the hands of criminal gangs. Another unhappy, unintended consequence of government meddling and moralising. People who take too much in the way of recreational drugs need treatment and help, not sterner controls imposed by the state, forcing them further into the criminal world.

There's another point that is missed - most jobs are not advertised, roughly 70% are in the "hidden" jobs market, a huge number of these at all ends of the spectrum are gained through networking, often involving alcohol. Labourers find work chatting to others in the pub, perhaps people they've worked with before, perhaps not. Many self-employed people find work through this process as well. If they have a brief troubled patch, being forced onto income support, would you not want them to find work as soon as possible where they know to get it, or does moralising mean more than the result? The same for those at the top, meeting in a pub or bar might be what gets them the job, just the familiarity from a previous encounter might make the difference. If these people are prevented for engaging in the normal process of networking, or otherwise forced to find a way of trading their Cash Cards for actual cash (losing out some in the process), what has been achieved? There's bound to be many other goods deemed to be "unnecessary" that might well get people into work/to be come fit or whatever else in this system. How does the government know what is best in these circumstances? How can it?

There's another gaping hole in the practical considerations. What of going to the local corner shop to buy necessary goods? Does the corner shop need a licence to process the card? How much will this mass of bureaucracy cost the taxpayer? Small, local shops and businesses will likely be hit much harder applying for licences or whatever else, further damaging the private sector.

This is nothing other than government meddling, tackling a symptom of various problems instead of the diseases of drug prohibition, high taxes on tobacco and alcohol, a poor economic climate and an otherwise lax benefits system. This will fix nothing but it will cause an awful lot of hardship, both in increasing crime and general awkwardness put on those on benefits who want to get back into the economy. This will help nothing but the consciences of the right-wing self-righteous, whilst it will do real damage all over the country, likely doing hard in various parts of our economy. It is stupid and small minded, I sincerely hope it goes nowhere.


  1. As I said, I agree with the moral argument, but if you look at what Dfid is advocating in terms of aid, it is pushing for cash transfers as a way to lift people out of poverty, rather than food aid, which is shown to increase dependency. So I suspect the government proposal has more to do with fueling the divide between people on benefits and hard working families(which incidentally rely also on some benefits because of low earnings), and fostering the idea that because it is taxpayer's money, the taxpayer should have scrutiny over how the money is spent.
    One last argument: I worked in refugee camps, and there was the perception that food rations were not distributed evenly within a family. A survey showed that it happens in a very tiny number of cases, but that most parents, even in dire time, look properly after their children. The fact you are poor does not make you a bad parent.
    Anita Bellows

  2. A precedent:
    Anita Bellows

  3. Government is naturally bad at allocating resources, so Dfid's move makes sense. I don't think the backbencher in question is trying to create a divide though, I think he believes this will actually help.

    There's also the precedent set by food stamps in the US, which are riddled with the practical issues I outlined above, with corner shops often exchanging food stamps for cash, as well as unusual loopholes being discovered. The US government has to spend lots of money policing the system.

  4. I see this post is a few years old now, but just thought I'd mention that as far as liberty is concerned, I actually don't have an issue with is. This is not the recipient's earnings, it is other people's money. Therefore I see no issue with them being "told how to spend it". Once they are earning their own money, then yes, it is their business what it is spent on.