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.

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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.