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| Should councils stop paying benefits in cash? | Should councils stop paying benefits in cash? |
| (4 months later) | |
| Cassandra Charles, 47, is wheelchair bound and needs 24-hour care in order to live independently. Until recently, she received direct payments into a bank account from Brent council to cover her care package. | Cassandra Charles, 47, is wheelchair bound and needs 24-hour care in order to live independently. Until recently, she received direct payments into a bank account from Brent council to cover her care package. |
| This system mostly worked fine, she explains, but reconciling her invoices and receipts with her account and sending all the paperwork to the council at the end of every month was an onerous job, and one she never looked forward to.All that changed when the council issued her with a prepaid card, with all the money for her care package loaded on every month. Now, she says, she uses it as a debit card to pay for any out of the ordinary care needs that aren’t on direct debit. And there’s no more form filling in either. | This system mostly worked fine, she explains, but reconciling her invoices and receipts with her account and sending all the paperwork to the council at the end of every month was an onerous job, and one she never looked forward to.All that changed when the council issued her with a prepaid card, with all the money for her care package loaded on every month. Now, she says, she uses it as a debit card to pay for any out of the ordinary care needs that aren’t on direct debit. And there’s no more form filling in either. |
| The poverty gap between people able to transact their business online and those who can’t is 15% | The poverty gap between people able to transact their business online and those who can’t is 15% |
| Putting direct payments on to prepaid cards which are linked to an online account managed by the council is just one of the ways that Brent is making the move to becoming a “cashless” local authority. | Putting direct payments on to prepaid cards which are linked to an online account managed by the council is just one of the ways that Brent is making the move to becoming a “cashless” local authority. |
| Around 90 councils are now, to varying degrees, disbursing money to service users on prepaid cards and through online accounts, but Brent is going one step further: implementing a system where all money going out of the council and all money coming in – except for small library fines of a few pence – is received on a cashless basis. | Around 90 councils are now, to varying degrees, disbursing money to service users on prepaid cards and through online accounts, but Brent is going one step further: implementing a system where all money going out of the council and all money coming in – except for small library fines of a few pence – is received on a cashless basis. |
| The case for cashless councils | The case for cashless councils |
| There are plenty of good reasons for local authorities to get rid of cash altogether, explains Colin Whitehouse, chair of the National Prepaid Cards Network. A prepaid card with a pin is fundamentally more secure than cash, and individuals unable to access a bank account have no option but to travel to a place where they can collect cash, and buying goods and services when you only have cash to pay with makes life far more expensive. “The poverty gap between people able to transact their business online and those who can’t is 15%,” says Whitehouse. | There are plenty of good reasons for local authorities to get rid of cash altogether, explains Colin Whitehouse, chair of the National Prepaid Cards Network. A prepaid card with a pin is fundamentally more secure than cash, and individuals unable to access a bank account have no option but to travel to a place where they can collect cash, and buying goods and services when you only have cash to pay with makes life far more expensive. “The poverty gap between people able to transact their business online and those who can’t is 15%,” says Whitehouse. |
| For security reasons, cash cannot simply be handed out on the streets, and so when people are facing immediate hardship, such as in the aftermath of the floods in York before Christmas, cashless options offer flexibility. | For security reasons, cash cannot simply be handed out on the streets, and so when people are facing immediate hardship, such as in the aftermath of the floods in York before Christmas, cashless options offer flexibility. |
| Emergency payments were loaded on to cards and given out by York council to people without bank accounts. Cards are a safe way to offer some financial independence to user groups who may not be accustomed to having money in their pockets: in Camden, young people in the care system, those on free school meals and children with learning disabilities were recently given a monthly allowance on a prepaid card to allow them access to leisure activities of their choice. | Emergency payments were loaded on to cards and given out by York council to people without bank accounts. Cards are a safe way to offer some financial independence to user groups who may not be accustomed to having money in their pockets: in Camden, young people in the care system, those on free school meals and children with learning disabilities were recently given a monthly allowance on a prepaid card to allow them access to leisure activities of their choice. |
| Councils can track service users wellbeing by being alerted to exceptional use, or indeed non-use, of funds. If someone suddenly stops spending money when previous experience shows that they pay to attend a day centre twice a week, that could be picked up on as a safeguarding issue, explains Whitehouse. | Councils can track service users wellbeing by being alerted to exceptional use, or indeed non-use, of funds. If someone suddenly stops spending money when previous experience shows that they pay to attend a day centre twice a week, that could be picked up on as a safeguarding issue, explains Whitehouse. |
| The gains for councils | The gains for councils |
| But cashless is not all about benefits to service users, it’s also about gains for councils. Cash is impossible to track or recall if it’s been misused: going cashless means councils also keep control of the funds they’ve loaded on to a card or an online interface, Kevin McAdam, prepaid director for payments specialists allpay, points out. “Councils are not only having to manage their budgets very stringently, they are also having to be clear about how what their funds are spent on,” he says. | But cashless is not all about benefits to service users, it’s also about gains for councils. Cash is impossible to track or recall if it’s been misused: going cashless means councils also keep control of the funds they’ve loaded on to a card or an online interface, Kevin McAdam, prepaid director for payments specialists allpay, points out. “Councils are not only having to manage their budgets very stringently, they are also having to be clear about how what their funds are spent on,” he says. |
| “You will not get a single council to say this on the record, but councils report back to me that they are making savings of between 5% and 10% of their direct payments budget,” says Whitehouse. “That makes the system very attractive.” | “You will not get a single council to say this on the record, but councils report back to me that they are making savings of between 5% and 10% of their direct payments budget,” says Whitehouse. “That makes the system very attractive.” |
| But there are concerns that service users – often the poorest and most vulnerable people in society – will lose control, choice and also privacy as councils track their purchasing patterns online. It’s a dilemma acknowledged by McAdam. “You can block them from spending the money in a massage parlour. You can stop them spending it in an off-licence, and maybe even stop them going to a travel agent.” As he also points out, for certain categories of benefit payments, the money in law does in fact belong to the council until it is spent on pre-agreed services. | But there are concerns that service users – often the poorest and most vulnerable people in society – will lose control, choice and also privacy as councils track their purchasing patterns online. It’s a dilemma acknowledged by McAdam. “You can block them from spending the money in a massage parlour. You can stop them spending it in an off-licence, and maybe even stop them going to a travel agent.” As he also points out, for certain categories of benefit payments, the money in law does in fact belong to the council until it is spent on pre-agreed services. |
| The question is, however, where does monitoring stop? MasterCard’s public sector team leader Steve Shirley, who worked with Brent to design its cashless system, offers some reassurance. “We can’t drill down to item-by-item detail – despite the political interest from [ministers] who did want to,” he says. “We told [them] it couldn’t be done.” | The question is, however, where does monitoring stop? MasterCard’s public sector team leader Steve Shirley, who worked with Brent to design its cashless system, offers some reassurance. “We can’t drill down to item-by-item detail – despite the political interest from [ministers] who did want to,” he says. “We told [them] it couldn’t be done.” |
| However, there’s no point in setting up a cashless system and not investing in educating citizens in how to use it, warns Andrew Stenton, managing director of payments solutions at Civica. “For those who are less digitally savvy [it] requires a real shift in customer behaviour and any council that gets this wrong is likely to see a higher cost in the short-term through an increase in queries.” | However, there’s no point in setting up a cashless system and not investing in educating citizens in how to use it, warns Andrew Stenton, managing director of payments solutions at Civica. “For those who are less digitally savvy [it] requires a real shift in customer behaviour and any council that gets this wrong is likely to see a higher cost in the short-term through an increase in queries.” |
| With budgets slashed, high levels of customer service may be hard for councils to achieve. In Brent, Cassandra Charles says that the only downside she has faced is when trying to speak to an adviser on the advertised helpline. | With budgets slashed, high levels of customer service may be hard for councils to achieve. In Brent, Cassandra Charles says that the only downside she has faced is when trying to speak to an adviser on the advertised helpline. |
| “Prices [of services] are going up, so I have to ring up to check about it, and when I call the line it can be hard to get through to someone,” she says. “They’re making cuts, and nearly all the people who know my situation have left, so you have to explain everything again from the very beginning. Plus, I often have to leave a message on a machine.” | “Prices [of services] are going up, so I have to ring up to check about it, and when I call the line it can be hard to get through to someone,” she says. “They’re making cuts, and nearly all the people who know my situation have left, so you have to explain everything again from the very beginning. Plus, I often have to leave a message on a machine.” |
| Charles says that so far, she has always been called back. But councils that want to make the most of a cashless system will need to take note: vulnerable service users will still need the human touch. | Charles says that so far, she has always been called back. But councils that want to make the most of a cashless system will need to take note: vulnerable service users will still need the human touch. |
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