The government has quietly been testing blockchain technology for benefits payments

 
Lynsey Barber
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Welfare payments with blockchain technology are being tested out (Source: Getty)

The government has quietly been testing out blockchain technology to make benefit payments, it has been revealed.

The department of work and pensions (DWP) has worked with Barclays, Npower, University College London and a UK-based distributed ledger platform startup called GovCoin to create an app which tracks spending.

"Claimants are using an app on their phones through which they are receiving and spending their benefit payments. With their consent, their transactions are being recorded on a distributed ledger to support their financial management," said welfare reform minister Lord Freud at a payments conference earlier this week.

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The ongoing small trial which could demonstrate the practical applications of the technology began in June.

“This initiative focuses on adding an additional layer of richer data and identity onto payments, so that a deeper and more effective relationship can be established between the government and claimants," said vice chairman of corporate banking at Barclays, Jeremy Wilson.

"We are keen to see how the positive potential of this service develops and adds to our wider efforts to explore the uses of distributed ledger technology.”

The government set out proposals at the start of the year as to how the technology, which provides efficient and transparent digital records of transactions, could be used for public services.

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Distributed ledger technology was identified as a way of potentially saving billions of pounds a year from welfare fraud and overpayment errors.

“Distributed ledger technology has the potential to transform the delivery of public and private services," said the government's chief science adviser Sir Mark Walport in the major report on the technology in January.

"It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust and make a leading contribution to the government’s digital transformation plan."

The government distributes £3.8bn in payments every day, however, there are some concerns over how protection of data and privacy with the technology will be managed.

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