Call for ‘revolutionary’ welfare payments move
Published by 24publishing for allpay Limited in Housing and also in Bill Payments, Care and Support, Communities, Universal Credit
Prepaid, adult social care, allpay
Would combining welfare payments and personal budgets empower financially vulnerable people?
The Government should explore combining personal budgets and welfare payments on to prepaid cards for financially vulnerable people, offering them choice and control over the resources they are entitled to.
That call has come from think tank Demos, which has found that around a quarter of local authorities in England are already using prepaid cards – with 30% more planning to use them in the next 12 months.
Its report case studies those councils currently using them in the distribution of direct payments in adult social care where care users have their personal budgets loaded on to a card, which they use like a debit card to purchase the services and items outlined in their care plan.
As the spend can be monitored in real time, local authorities are reporting savings in monitoring and audit functions, which is a statutory duty, but can be hugely resource intensive.
Previously, paper-based systems required the end users to send in stacks of receipts which needed to be processed manually. Brent Council, for example, spends £5 million a year on direct payments and expects to reduce that by 10% with prepaid cards. Another council, Bury, reported backlogs in its paperwork of several years before it began using prepaid cards. From a user perspective, the main benefits identified were that they don't need to send in paperwork and receipts for all of their spending and their carers are paid more quickly.
Now Demos is urging the Government to go a step further and explore the possibility of using the cards to distribute Universal Credit or other benefits to financially vulnerable groups, possibly integrated with direct payments in health or care.
It wants the Government to adopt a “fully functional” card (chip and pin, direct debit, online/telephone banking and support) to help people develop the money management skills required for monthly Universal Credit payments.
Prepaid cards are similar to normal debit cards. Funds are loaded on to the cards but they can’t go overdrawn.
Demos says the cards could be used for distributing Universal Credit for the unbanked and underbanked and as a tool to encourage financial inclusion among some of the hardest to reach and those learning to live independently. It cites research showing people without direct debit facilities now pay an extra £70 a year for their energy bills.
Payment specialists allpay, which were highlighted in the report, are committed to financial inclusion and already supplies prepaid cards to a number of local authorities and housing associations.
It is also in discussions to deliver 'instant issue' cards local authorities can use to pay out parts of the devolved Social Fund from April. Once money is loaded on to the cards, the local authority can monitor the spend in real time through a web-based system. This has supported desires by local authorities to operate grant-based 'cashless schemes' based on vouchers, prepaid cards and arrangements with local companies.
On combining personal budgets and welfare payments into a single payment, the report said: “Some care users (such as those with learning disabilities, mental health needs or older people vulnerable to financial abuse) might find prepaid cards a beneficial way to spend both their health or care personal budgets and their disability-related benefits."
Such a move, it admits, would be “revolutionary”, but would make the vision of individual budgets – being tested in the Right to Control Pilots – a reality.
The Right to Control pilots were launched back in 2010 and have tested how six funding streams (spanning benefits and direct payments) can be brought together for disabled people – the group most likely to rely on both.
It warns the practical application would have to be carefully considered, however – for example, exploring how cards could “co-house controlled and non-controlled pots of funding”.
It added: "...Monetising several services and benefit payments for which a person is eligible and distributing it in a single payment could be the gold standard of an empowering state placing choice and control over the resources individual citizens are entitled to into their hands. The advent of Universal Credit makes a more ambitious level of co-ordination possible, as half the battle (bringing together disparate groups of welfare payments) has already been won."