Key facts
- Universal credit payments could be cut by a third for those with insufficient National Insurance contributions.
- Reduced payments would be issued via a debit card blocking purchases of alcohol, tobacco, and gambling.
- The plan aims to push claimants into work and save £538 million annually.
- Approximately 350,000 people in England, Scotland, and Wales would be affected.
- Claimants with limited capability for work due to health conditions or disabilities would be excluded.
Conservative lawmakers are proposing a significant overhaul of universal credit (UC) payments, which would reduce benefits by a third for claimants who have not paid sufficient National Insurance contributions. This reduction would apply after an initial six-month period of full entitlement. The plan also includes issuing these reduced payments via a dedicated debit card, designed to prevent purchases of alcohol, tobacco, and gambling, and to block cash withdrawals. This measure is reportedly based on an Australian system that was later scrapped due to limited evidence of its effectiveness in changing behavior.
The proposals, which the Conservatives frame as a way to encourage work, would exclude individuals already in employment (approximately one-third of UC claimants) and those assessed as having limited capability for work due to health conditions or disabilities. Payments related to housing and dependent children would remain unaffected. The plan is estimated to affect around 350,000 people across England, Scotland, and Wales and is projected to save £538 million annually.
Kemi Badenoch, the Conservative leader, stated the aim is to be "tough on those who exploit the system," asserting that welfare should serve as a safety net, not a lifestyle choice. The party points to unemployment payment systems in Germany and the Netherlands, which are contingent on contributions and can be time-limited, as precedents. However, these systems are noted to be more generous, often covering 60% to 70% of previous monthly wages, with separate support available for those with insufficient contributions.
Charities have strongly criticized the proposals. Sara Ogilvie, director of policy at Child Poverty Action Group, argued that the cuts would exacerbate poverty, especially amid rising living costs, making it harder for people to find and maintain employment. Helen Barnard, head of policy at the Trussell Trust, described the idea as "deeply misguided," suggesting that existing UC conditions already encourage work-seeking and that reducing support would hinder, not help, individuals trying to secure jobs.