With an eye toward boosting security and efficiency, as well as toward managing an aging population, U.K. officials are considering Blockchain technology for social security and welfare payments. 

They also want to make sure the checks get there on time.

“I’m keen for us to consider how we can harness the payment innovations” that are occurring in the industry, writes Richard Laycock, who is deputy director in charge of digital payments and banking at the Department of Work and Pensions. The department is keeping an eye on Blockchain and distributed ledger technologies, Laycock wrote on the DWP blog.

At present, 20 million people receive pensions, unemployment, disability and other payments through a central system that consolidates accounting functions like control and reconciliation. Distributed ledger technology would provide a permanent and immutable record of transactions with a greater level of trust and certainty about which transactions were actually carried out.

  • “Other important influencers include socio-economic changes, such as an aging population increasing demand on our services.” 
  • In 2016, a tiny trial was conducted working with a company called GovCoin, that saw between 20 and 30 participants who lack bank accounts use the system to make utility payments. At the time it received criticism for handing the government too much control over how recipients spend their money, and even the government minister overseeing the trial later admitted in Parliament that it was “not viable” due to the “limited take up potential” and expense it would incur.
  • In recent years, the department has faced persistent criticism over the rollout of Universal Credit, an ongoing overhaul  of the existing UK welfare system that has faced cost overruns and IT failures (in 2019, 90% of staff involved in Universal Credit found the IT systems inadequate according to a poll).  The rollout of the new system has been paused as ministers scramble to avoid political fallout from its failings. 
  • Laycock said the government is aware that any changes to the department’s system must ensure that payments aren’t interrupted. “We need to protect the core services that our users rely on,” he wrote on the blog.
  • Karma Takeaway: Governments are keen to harness technologies private sector financial firm are increasingly relying upon to cut public costs and maintain trust.