A Whitehall trial of the use of Blockchain technology for the payment and spending of benefits has raised concerns about data privacy and government control.

DWP is trialling the use of Bitcoin technology for benefits payments – Photo credit: Flickr, Antana

The Department for Work and Pensions trial, which began in May and will run for three to six months, currently involves eight benefits claimants but may increase to up to 24.

The trial, which is being conducted by fintech company GovCoin Systems, sees participants being paid their benefits through an app that uses the distributed ledger technology behind BitCoin. The participants can then spend their benefits payments with the trial’s partners RWE npower and Barclays.

The company is responsible for handling the data, and the DWP said that this data is stripped of personal information before it reached the department.

However, concerns have been raised about the opacity of the trial’s methodology around the trial, and the department did not respond to PublicTechnology’s request for further details of how the participants were recruited or how the trial would be evaluated. 

A spokesman from DWP said that it was for proof-of-concept only, and stressed that there were “no plans to replace any DWP payment systems”​.

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The Open Data Institute’s deputy chief executive Jenni Tennison said that openness was the only way to improve public trust in the use of data, and that the government had gained a good reputation for such transparency in recent years.

“Government has a standard for designing digital services – such as this one – and publishes regular updates as new services go through its service assessment process. It has developed ethical guidelines for use of data. It is building an open and digital culture in the civil service. DWP plays a big part in this [and] much of DWP’s source code is open,” she said. “This openness helps break the cycle of mistrust. Government should be applying this same standard of openness to this blockchain project.”

Meanwhile, Chi Onwurah, shadow minister for the digital economy, told PublicTechnology that although the technology itself was “fantastic” there were not yet enough checks and balances in place for it to be used securely.

She noted that a report on the use of distributed ledger technology in government by the government chief scientific adviser Mark Walport in January this year said there must be a regulatory or ethical framework. However, she said, this had not yet been established.

“I’m concerned that the government’s main objective with technology is to reduce costs and control people,” she said. “I want it to be about improving services and empowering people.”

This echoed comments on social media, with current and former leaders of the Government Digital Service – the body tasked with reforming Whitehall’s services – raising concerns about the reasons behind the trial.

GDS chief executive Stephen Foreshew-Cain questioned the use of blockchain technology – which permanently records information – and whether the scheme would be used to restrict where benefits could be spent.

“You can be sure that the user need wasn’t: [Please] record forever, immutably, details of my benefits & restrict how I spend them,” he wrote on Twitter. “It’s not the most vulnerable in our society being served here but divisive ideology of ruler and ruled.”

Meanwhile, Foreshew-Cain’s predecessor Tom Loosemore, who left the GDS unexpectedly last year, suggested that the plan was the reason for his departure.

In response to tweets from Stefan Czerniawski, design director in the DWP business transformation group – who does not appear to have insider knowledge of the trial – that said the aim seemed to be to support personal budgeting, rather than government access to data, Loosemore said:

“Was described in such terms by Nick Davies from UC [Universal Credit] at a Digital Catapult event on 10 Aug 2015. I quit same day.”

However, a DWP spokesman told PublicTechnology that the trial was “designed to explore how distributed ledger technology could help support financial inclusion and offer budgeting help, and it does not place any restrictions or limits on what a claimant can spend their welfare payments on, nor tracks how they spend them”.

In response to a question Onwurah posed in parliament earlier this week about the trial, work and pensions secretary Stephen Crabb also tried to allay any concerns about data security. He said: “When it comes to security of claimants’ data, we are absolutely committed to the very highest standards of protection.”

​However he did concede that he was “not an expert” in the technology because it was being driven by welfare minister Lord Freud.

This article was updated on 13 July with comment from the ODI.