“Personalisation and integration across welfare and public services is the ‘gold standard’ of an empowering state...”

Local authorities, health bodies and service providers are entering a brave new world of public service commissioning and delivery, combined with a radical transformation of the current welfare system.

Underpinning these changes are two central themes – personalisation, seen in the Government’s commitment to rolling out personal budgets, not only in social care, but in health, children’s services and supported housing; and integration, with local Health and Wellbeing Boards being charged with coordinating a range of services for different need groups, and the Universal Credit merging six separate benefits into a single payment. 

These two parallel transformations will mean that service budgets and benefits are increasingly being paid directly to the user – with inevitable overlap between those receiving different payments. Some people have suggested that a single pot of money paid to an individual – rolling up all of the various benefits and different service budgets – will be the ‘gold standard’ of a personalised, integrated, empowering state. 

This research by Demos is exploring the potential of prepaid card technology to achieve this ‘gold standard’. Prepaid cards are a cross between a debit card and a top-up card. The local authority – or the card user – is able to transfer money onto the card, which the user then spends until the balance reaches zero. Prepaid cards are widely used in the US for the payment of social security benefits, and some UK local authorities have adopted the cards - mainly for social care direct payments, but also for staff expenses, children’s services and other areas where the local authority would otherwise issue cash payments.


Demos will be exploring how lessons from this first generation of prepaid cards – where cards are used in individual service areas – can be used to shape the next generation – integrating service and benefits payments into a single lump sum. In doing this, we will seek to answer the following key questions:

  • How could local authorities use prepaid cards more ambitiously, across different payments and service areas?
  • What can we learn from the first generation of prepaid cards about the potential benefits and challenges of the prepaid system – for commissioners, providers and different groups of service users?
  • What are some of the additional benefits and challenges of integrating personal budgets from a range of service areas, as well as Universal Credit payments, using a prepaid card?
  • How can these practical challenges and concerns be overcome in the future?



 Our multi-stranded research design will combine:

  • A review of existing uses of prepaid cards in the UK, and international evidence from the US and Canada.
  • In-depth case studies of local areas in the UK where prepaid cards are already being implemented, highlighting benefits and difficulties of the current prepaid system.
  • Focus groups with potential prepaid card users, exploring their views of the benefits and risks of using a prepaid card, both for individual payments, and for integrated payments.
  • A series of expert roundtables exploring the potential implementation of prepaid cards in a wider range of service areas in the future – including addressing practical issues and identifying new policy opportunities.

This report has now been published, and is available here.



For more information, or to be kept updated about the project, please contact Jo Salter.


This research is supported by MasterCard.


Related projects

Demos has carried out extensive market intelligence research with local authorities, helping them to predict how the rollout of personal budgets could impact on local heath and social care markets. Our most recent wave of findings, from across 10 local authorities, was published in Personal Best.

See also our report Tailor Made, exploring the future of personalisation, beyond personal budgets.

The Power of Prepaid
Claudia Wood, Jo Salter
Publication Date
Publication Type

This report looks at prepaid cards - how they are currently being used by local authorities, and their potential future uses.

Mar 28

A foolish proposal

Claudia Wood on the news that councils might restrict what the Social Fund can be spent on.

Mar 15

A predictable problem

It was inevitable that the changes to Housing Benefit would lead to rent arrears, says Claudia Wood.

Jan 29

The power of prepaid

Claudia Wood argues we musn't lose sight of the potential benefits of prepaid to the financially excluded.

Sep 17

Does the Universal Credit fit with the reality of low income family life?

Claudia Wood discusses the stumbling blocks to introducing the Universal Credit.

Aug 13

Personal budgets and paternalism

Claudia Wood argues that the government's regulation of personal budgets harms individual responsibility.

Apr 7

Food not fags

The Daily Mail reports on Demos's recommedation that benefit claimants should be supplied with prepaid cards for essential purchases.

Jan 30

'People should look beyond the headlines at what Demos actually says on cash cards'

Carl Packman tackles the Power of Prepaid on Left Foot Forward saying the report is 'more than the sum of its reactions'.

Jan 30

Benefits on pre-paid cards?

Claudia Wood discusses the advantages and limitations of prepaid cards alongside Alec Shelbrooke MP on the Today Programme.

Jan 29

Prepaid benefits cards should be examined 'under a bright glare of debate'

On Comment is Free, Ally Fogg weighes the advantages and dangers of adopting prepaid benefits cards.

Jan 29

Demos recommends issuing benefit cash on 'prepay' cards

Demos analysis of 'cashless' welfare payments fuels a necessary moral and political debate.

Jan 29

'Welfare cash cards' are much more than a tool of state control

The debate about whether the state should control benefits should not mask the many positive aspects of prepaid, writes Claudia Wood in Society Guardian.

Aug 14

Personal budgets: wrong kind of spending?

Claudia Wood argues that regulating personal budgets encourages paternalism in Public Finance.