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Duncan Smith borrows North Tyneside's payment card

29/09/14

The government has thrown its weight behind one local authority's plan for benefits to be delivered on prepaid cards, instead of in cash. North Tyneside Council has begun a scheme where payments go into an account, from which purchases can be made in shops and online and essential bills paid.

Crucially, there is an option to block the card from being used in certain shops such as off-licences and casinos - with the claimant's agreement.

The 250 people expected to take part in the North Tyneside scheme are also promised support with budget planning, banking - including setting up direct debits and ensuring bills are paid - and shopping advice.

Now Iain Duncan Smith, the Work and Pensions Secretary, has told the Conservative Party conference that he will evaluate the prepaid card scheme, with the first findings expected next spring.

The idea is to tackle "destructive habits", making it clear that benefits should support families rather than feed drug and alcohol addiction, or debt problems.

Duncan Smith told the conference: "Where parents have fallen into a damaging spiral, drug or alcohol addiction, even problem debt, or more, we need to find ways to safeguard them - and more importantly, their families, their children. That means benefits paid, I always believe, should go to support the well-being of their families, not to feed their destructive habits.

"Today, I can stand here and announce to you that I am going to start testing prepaid cards, onto which we will make benefit payments so that the money they receive is spent on the needs of the family - finally helping I believe to break the cycle of poverty for families on the margins.
"This is a change for those families that we as a Conservative government will be proud of."

One in 15 working-age benefit claimants suffer from addiction to opiates, such as crack-cocaine and heroin, and one in 25 from alcohol dependency, party aides said.

Duncan Smith also said he was going to finish what he started with Universal Credit (UC), a scheme so far blighted by cost overruns and IT worries. The reform combines six different benefits and tax credits into one payment and is currently operating in the North West.

The nationwide roll out, from early next year, will ensure claims using the old system will be closed from 2016 with full migration to UC to "follow after", according to the Department for Work and Pensions.

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