Food stamps: the goverment quietly robs its citizens of the power to spend their own money

An unacceptable infringement of freedom.

This week, the government quietly and fundamentally shifted its treatment of benefit claimants. I’m not talking about yet another cut, but instead the decision that from next month individuals seeking cash loans from their council for a short-term financial crisis will now be issued with food vouchers instead of money.

Vulnerable people who have had money stolen or have had their benefits delayed can currently apply to their council for a short-term loan of up to £50, but 150 councils have now indicated that they will soon be issuing payment cards instead, and these will prevent the holder using the money for alcohol, cigarettes and gambling.

At first glance, this might seem sensible enough. Why should the state be lending money to someone who will drink or gamble that cash away? The reason this short-term lending system exists is to prevent citizens from going hungry when the social safety net fails — and under the new system, that won’t change.

But, the first problem is that if the government’s intention is to nanny benefit claimants and to bar them from spending their money on fags and booze, it won’t work. Anyone with a little determination and half a brain cell will simply swap their food vouchers with a friend in exchange for their contraband. Everyone needs food, after all, and at worst it will simply make drinking and smoking a little more expensive — if your entrepreneurial friend demands £10 of food vouchers for their £8 packet of cigarettes, say.

The second problem is that robbing an individual of the power to spend money as they wish is an unacceptable infringement on a person’s freedom, and it illustrates the contempt with which the government, and many voters, holds benefit claimants. The same could be said of asylum seekers, who are already subjected to a cruel, degrading and restrictive voucher regime.

I’ve found the book Poor Economics one of the most intelligent development books in recent years, and one of its insights is this: faced with limited funds, few humans are 100 per cent strategic in the way they spend their funds. Interfering civil servants (or development economists) might hope that the poor will prioritise their basic nutritional needs above all else, spending only on luxuries once they’re satisfied their family is eating three well-balanced meals a day. But, like anyone else, someone on a restricted income is likely to sacrifice some of their food budget to spend it on such ‘fripperies’ as a TV, a mobile phone, or a bottle of vodka. And frankly, I know I’d rather eat dry toast and sometimes watch the telly than go without entertainment but plenty of hearty stews.

Increase someone’s salary a little, and they are unlikely to spend that extra stipend on high-quality protein and vitamin supplements, and much more likely to treat themselves to a chocolate bar, or a beer, or a lottery ticket.

This might seem like an alien concept to the average Spear’s reader, who is fortunate enough not to have to choose between goods in this way, but most will fondly recall their university years and if these were anything like mine, weeks could go by on a basic diet of beans on toast and pasta when money had been frittered away on bad wine and party dresses. And what student, when slipped a few quid by a kindly relative, would rush out to buy the brazil nuts and Berocca so needed to improve concentration and increase essay-productivity, thus improving future earning potential? 

The point of this is, some people when given an emergency £50 loan will carefully spend it on their food shop, and will try their hardest to buy as sensible a basket of goods as they can to tide them over while they wait for their money to come through. Others will go out, get drunk, and find themselves pestering their friends for food for food, or going hungry, until finally they get their hands on the next cheque. More of us probably fall in the latter camp than the former. 

Far more importantly, it is wrong to rob fully able adults of the ability to make wrong choices, and allowing any government to rob its citizens of autonomy in this way is very dangerous indeed.

This article first appeared on Spears magazine

Photograph: Getty Images

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

Photo: Getty Images
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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 70p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits. It's not easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.