Crackdown on crisis loans is simultaneously dystopian and Victorian

Tesco-only crisis loans, and paternalism for the poor. Marvellous.

The Guardian reports on the expected deluge in demand for crisis help, which is leading a number of councils to invest unconventional measures for helping those most at need.

Patrick Butler writes:

Cuts next year to the social fund, which provides emergency aid to vulnerable people, mean that from April 2013 many councils will no longer be able to provide cash help to applicants. Instead they will offer "in kind" support such as referring clients to food banks and issuing electronic food vouchers.

Crisis loans – short-term financial aid for people in dire need – cost £230m in 2009-2010, but the coalition has devolved responsibility for the loans in England to councils, while simultaneously cutting the pot back to 2005 levels.

This means that the days of simply being handed the money you need to make it to the next pay day are over.

Instead, poor people should look forward to being treated as though they can't be trusted with money.

Butler writes:

Conservative-run Kensington and Chelsea council in London is proposing to issue credit-card style vouchers – or "gift cards" – in lieu of crisis loans, enabling recipients to buy items at certain shops, likely to be big retailers such as Tesco, Argos and Sainsbury's. Some councils will put blocks on the cards preventing the purchase of alcohol and cigarettes. . .

Households who would previously have been eligible for a community care cash grant will be instead offered vouchers for reconditioned beds, cookers and fridges redeemable at furniture recycling charities.

But it is the plans to refer crisis loan applicants to food banks that will cause most controversy.

Crisis loans distributed in the form of gift cards which can only be redeemed in Tesco is the stuff of dystopian sci-fi, and giving poor people money while preventing them from spending it on alcohol and cigarettes is straight out of the Victorian age.

If you can help it, probably best to try and not be poor for a while.

A food bank in upstate New York. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.