House of Lords told small-scale trial using blockchain technology to help benefits claimants manage spending had yielded ‘encouraging results’

The government is considering whether to extend a controversial trial that used blockchain technology for benefits payment, as a DWP minister moved to assure opponents that any such work would not allow the government to control claimants’ spending.

The trial, which was carried out by company GovCoin – now called Disc – during 2016, saw 20 to 30 participants being paid their benefits through an app using the distributed ledger technology behind Bitcoin. 

The idea was to help benefits recipients without bank accounts manage their money electronically, and they could then spend their benefits payments with the trial’s partners RWE npower and Barclays.

At the time, the trial came under fire from opposition MPs and technology experts, who warned that the technology would immutably store sensitive data and questioned whether it would give the government excess control over where people spent their money.

However, Conservative peer Lord Henley, the parliamentary under-secretary for the Department of Work and Pensions, said yesterday (27 March) that the government would not have access to the data or control over where claimants spent their money.

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In response to a questioned posed by Conservative peer Chris Holmes about future plans for the work, Henley said that “the initial independent assessment of the small-scale trial has been positive”.

Speaking in the House of Lords, Henley said that there had been “encouraging results”, with some of the participants finding it “very useful”, and that the government was considering the next stage.

“We have not yet decided to move on to a fuller and larger trial,” he said, adding that if the government did so, it would ensure that there were “the appropriate checks and balances” in place.

In response to a question from Labour peer Margot Lister about concerns that the technology could be used to monitor or control benefit spending, Henley said that the DWP “has absolutely no access” to claimant information.

“[We] will have no access to it in any further trials we look at. We want to continue to keep it like that,” he said. “Obviously, information will be able to Disc—which is GovCoin, referred to in the Question—but that will be protected by data protection principles.”

Holmes, who posed the question, said in an interview with PublicTechnology ahead of the debate that the use of blockchain “provides an opportunity for the individual to have far more control and empowerment through the data and information that’s right there, in their hand”.

But he also emphasised that the government needed a “clear, well thought through and evidenced pathway for moving from pilot to scale”, which would required changed attitudes and behaviours across government.

During the Lords debate, Holmes also asked Henley whether he would like to see the technology used more broadly across government, to which the minister replied that he “would not want to speak for the rest of government”.

Later on in the discussion, Conservative peer Matt Ridley asked a similar question on whether the government was “studying the phenomenon to check where it might be useful”, to which Henley replied that he did not want “to expand further” on it during that debate.