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Benefits on pre-paid cards?

A Demos report launched today argues that, for certain groups, benefits should be distributed using pre-paid cards to increase financial inclusion, encourage responsible money management and reward savings behaviour.

The changes would mean families could apply a weekly cap on their spending or ring-fence a portion for rent and people could voluntarily impose restrictions on their own cards to stop them buying alcohol or gambling, for example.

Conservative MP Alec Shelbrook has tabled a 10 minute rule motion that would impose a ban on benefits being used to purchase items including cigarettes, alcohol, subscription television services and gambling. "It's trying to help the poorest in society be able to manage their money better," he told BBC Radio 4's Today programme."

We need to make sure we can put faith back in the system, support people at their time of greatest need, and make sure that the public - and everybody knows - that this is a national insurance system and not a government charity," he continued.

But Claudia Wood, deputy director of Demos and co-author of the report, believes it's important not to infantilise people. "Using cards voluntarily to help you budget and for people with alcohol and substance misuse these cards would actually be really useful," she argued.

First broadcast on BBC Radio 4's Today programme on 30th January 2013.

  • 30 Jan 2013