Councils could cut back-office costs by more than a third if they give ‘chip and pin’ style prepaid cards to people with personal care budgets, according to think-tank Demos.
A quarter of local authorities in England and Wales are already using or piloting prepaid schemes, with a further 30% planning to start in the next 12 months, Demos’s report said.
Those already using the scheme had reported improved efficiency and Demos estimated back-office costs could be reduced by 36% if all people receiving direct payments were transferred to prepaid schemes.
The system allows spending by recipients of pre-paid cards to be easily monitored, saving them the trouble of keeping receipts. It also means any underspend can be easily recovered by the council.
Demos is calling on local authorities to think ‘more creatively’ about using prepaid systems in other service areas, such as asylum seeker and care leaver payments, and crisis loans.
It also suggested that prepaid cards could be used to bring together other benefit payments and help people to budget more effectively.
Claudia Wood, deputy director of Demos and author of the report, The power of prepaid, said: ‘At a time when local authorities are facing unprecedented budgetary reduction targets, using prepay cards to reduce the huge administrative costs of auditing personal budgets seems a no-brainer. These sorts of approaches need to be fully explored before councils start considering tougher choices – like service closures.
‘The technology is fairly new, and wrinkles need to be ironed out. But many local authorities are making it work – not just to cut back on masses of paperwork, but also to empower care users who might otherwise never get a chance to manage their own money.’