Several people have asked what I make of Alec Shelbrooke’s idea for a Welfare Cash Card. The Tory MP introduced a 10 minute rule bill to the House of Commons on Tuesday, which suggested that a cash card could be designed such that welfare recipients could not spend their state transfers on “NEDD” goods – Non-Essential, Desirable and often Damaging (i.e. cigarettes, alcohol and gambling). This would apply to all benefits, excluding only the state pension and disability benefits.
The rationale for this seems obvious to Mr Shelbrooke: many people on benefits have children in poverty, and by introducing restrictions on what people can buy with their benefits, it might make it more likely that parents will spend the money on ‘good’ things for their children. His speech implied that much of the public is losing faith in our benefits system because they see benefits spent on ‘luxury’ goods.
The Government is doing some good things on welfare: I broadly support the Universal Credit proposals which will aim to streamline many benefits and make sure that work always pays. The cap on overall benefits, whilst crude, will help restore trust in the system. More still needs to be done to lower marginal deduction rates for those in-work, which will entail a review of the tax credits system (we have previously suggested moving to an earned income tax credit system). But Mr Shelbrooke’s proposals are not something which I could support.
Conservatives should believe that individuals and families are better at knowing what is good for them than the state. More than that, we should believe that leaving people to make free choices is empowering to them, helping to foster a sense of individual responsibility. And previous analysis of child benefit suggests that most families do what is best for their children. An IFS study of the benefit found that the vast majority was spent on adult goods such as alcohol and adult clothes. Why? Not because parents were irresponsible. In fact, because most parents fully insure the necessities for their children as a first priority. Any debate about benefits therefore should be about their generosity, not what they are spent on.
There will no doubt be some parents who do not always act in the best interests of their children, but the vast majority do. Indeed, Mr Shelbrooke admitted on the Stephen Nolan show that only a minority of people would behave irresponsibly. So we have the idea of a fairly authoritarian policy being introduced for the actions of a few (a type of policy formation usually reserved for the left).
I have no doubt that were this introduced, the conditions for what sorts of things could be bought on the card wouldn’t just stop at restrictions on NEDD goods. Before too long it would be it would become more and more about restricting the benefit spending to items the Government considered good things. We’d see ‘bad foods’ banned. We’d see ‘fizzy drinks’ off the table. The potential for nanny statism is vast. And would it always be right? Would restricting spending to non-luxury items really help someone out of work? Would a situation where someone can't use their incomes from the state to put towards a new suit for a job interview, or for an hour's tutoring for their child to help them pass the 11+ in a grammar school area really be in the best interests of the family? It really is a huge leap of faith to presume the state knows best.
Finally, it’s unclear to me that if the principle of the welfare cash card is accepted, why it should be restricted to working age benefits. If we’re going to hypothecate anything as a ‘safety net’ spending, then surely the aptly named ‘winter fuel payment’ should be hypothecated to be spent on, you know, winter fuel.
So by all means let’s debate the future of the welfare system: let’s debate the generosity or stinginess of certain benefits, the effects they have on incentives, or even the eligibility requirements. But, please, let’s not have government determine what they are spent on.