As guns in the Middle East continued to fire and the New Labour spin machine continued to work, one of the most significant stealth-privatisations of our era slipped through the net.
In 2006 J.P. Morgan acquired the contract to provide the Department for Work and Pension’s (DWP) electronic benefit transfers system (EBT) for card accounts of the Post Office. The deal was valued at $380,000,000.
The deal, essentially ignored by the British mainstream media, is proving to be a hugely important component in the neoliberal model of the welfare state. Today, it is a system that distributes financial benefits to 2.8 million British claimants, and, unbeknownst to British tax payers, it is a massive moneymaker for J.P. Morgan.
Unsurprisingly, the deal took place under the watch of Tony Blair. The former UK premier was responsible for the facilitation of countless deals for the corporation, becoming a millionaire in the process.
The company cut its welfare teeth on home turf, with contracts for twenty five States and two other territories in the USA. Since the digitisation of the American service in 1996, and the issuing of electronic cards, J.P. Morgan have transformed welfare into an industry.
No one can blame J.P. Morgan for philanthropy, or wanting to bring welfare into the 21st century, but according to a 2012 report by the Washington-based Government Accountability Institute, since 2004 J.P. Morgan have made over half a billion dollars from the US welfare deal alone.
These are, however, only approximate figures – and the sum is likely to be much higher as data for only 18 out of 24 States could be acquired.
The contracts are transactional with fees paid to the provider for every EBT made to a recipient, and with over 41 million Americans on food stamps, the possibilities for profit are huge, and there is clearly an incentive for unemployment.
Last year, British claimants were issued an aggressive letter from the government, telling them to switch from Post Office accounts to bank accounts.
This is likely due to the high fees involved in processing payments to Post Office cardholders, conflicting with the Tories commitment to austerity.
However, many on the poverty line are unable to open a bank account, and for pensioners it is a more manageable and easier system.
Post Office cardholders should know that they do NOT have to change over, despite the tone of the letter.
The DWP and Post Office failed to provide the cost of individual transactions, both referring the journalist to each other for the information. A Freedom of Information request will be lodged early next week.
However, we can still speculate. In a leaked DWP document from 2004, reported on in The Telegraph, headed ‘Payment Modernisation Project’:
We . . . need to pay most of these customers [sic] into bank accounts, which costs 1p, rather than into Post Office card accounts, which costs 30 times more.”
If it cost 30p thirteen years ago, and the Post Office has since been privatised, it’s anyone’s guess how much it could be. Just going by inflation alone, leaving out a corporations obsession with the bottom line — it more than doubles.
Now that The Post Office is in private hands, let’s say that fee has risen beyond inflation to a quid, and — for arguments sake — let’s say that there are only 2.5 million Post Office Card Account holders, and claimants receive their benefits every two weeks.
Yep, that’s £2.5 million that J.P. Morgan could charge the DWP fortnightly – £65 million a year. Capitalism has finally incentivised poverty.
Whilst J.P. Morgan continue to see “the UK public sector [as] a major focus”, and the Tories put more of us in poverty — the neoliberal project creates a never-ending supply of profit for this corporations public ventures, and we pay the price.
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