When an idea to get tough on benefit claimants is considered a touch too draconian by Iain Duncan Smith, one might hope that would mark an end to it. Tory backbencher Alec Shelbrooke's parliamentary bill to replace benefits payments with a welfare card was ignominiously kicked into touch before Christmas. Such a scheme would have restricted the use of benefits payments to prevent purchase of luxuries such as alcohol, tobacco or TV subscriptions. The work and pensions secretary has since distanced himself from suggestions that the idea could reappear with official approval, with the exception perhaps of registered addicts.

So it is depressing to find ourselves confronting the idea again, just a few weeks later, thanks to the allegedly left-of-centre thinktank Demos. To be fair to the authors, their new report does not echo Shelbrooke's vision. It acknowledges that direct payment cards are already issued by many local authorities to manage personal budgets for those with care and support needs; recognises the inexorable transformation of society into one of plastic personal finance; and notes that the imminent arrival of universal credit and the expected introduction of personal health budgets are likely to accelerate moves towards digital payments in a country where an estimated 1.8 million adults still do not have their own bank accounts.

The report points out, fairly, that there are many potential benefits for both claimants and providers to integrating payments into one debit card. It also acknowledges that the technology could easily be used to Shelbrooke's design, as already happens to a large extent in the US, but notes extensive practical and ethical objections from experts and public focus groups alike. Of course some payments, such as personal care budgets, are rightly restricted to their intended use. Demos cautions against routinely restricting use of other benefits, while calling for a full public debate as to when and how any such restrictions should be drawn.

I fear Demos may be right that payment cards of some description are inevitable; they offer too many advantages and administrative savings to squeezed budgets to be resisted or wished away for long. But I would propose two safeguards before they should even be considered.

The first is the voluntary principle. If someone is getting all their benefits paid on to one card at the start of each month, it makes perfect sense that they might want to set up standing orders for their utility bills, for example. If someone has a drink or gambling problem, he or she might choose to limit how much of their monthly income can be easily spent in cash. Saving a few pounds per week to prepare for Christmas is healthy. That is entirely constructive usage of technology. What would be utterly unacceptable is the state making those decisions for us.

As Wail Qasim rightly argued, such a step would be hugely oppressive to benefits claimants at a time when they are being assailed from all sides. Worse, it would sound a death knell for our culture of shared social security. As a nation state, we have long and rightly held to the principles of collective interest. We pay into the kitty when we can, and call upon support when we need it. Social security benefits are not handouts, but rights implicit in our common wealth. Restricted payments clearly imply that when we receive money it is not ours but theirs, and is shared only on sufferance and condition. That is a profoundly dangerous shift.

Demos notes that one motivation behind the introduction of universal credit was to increase personal responsibility over budgeting, with a monthly payment to be managed like a wage. Mandatory restrictions do the precise opposite of this, infantilising claimants and removing their own self-control and autonomy. The implication that benefits claimants will withdraw their monthly income in cash and blow it all on the 3.15 at Chepstow is deeply patronising and, in attempting to chaperone a minority, treats the responsible majority as idiots.

The second essential safeguard is privacy. The technology that allows money to go on and come off a single debit card would also allow anyone with access to our files to inspect our purchases. Is it unthinkable that a bureaucrat might negotiate repayment on a debt by going through the list and saying "do you really need to spend £1.68 on Poptarts?" I would suggest it is distressingly plausible. The introduction of any payment card must be accompanied by legislation that strictly forbids access to personal expenditure without a court order.

Demos is right to raise these questions at this time. If payment cards are to be introduced, it should be under a bright glare of debate and not quietly, piecemeal and by default. If it can be done in a way that respects the privacy and personal liberty of claimants, they may not be a bad thing. Any proposals that do not have such guarantees nailed firmly at their core should be resisted and fought with urgent fury.