Conservatives propose 30% Universal Credit cut after six months for some claimants

The Conservatives have proposed cutting Universal Credit for some long-term unemployed claimants after six months and placing the remaining payment on a card that cannot be used for alcohol, cigarettes, gambling or cash withdrawals.

Under the plan, set out by Shadow Work and Pensions Secretary Helen Whately, claimants would receive Universal Credit as normal for the first six months while they look for work. After six months, anyone who has not moved into work and has not paid enough into the system would see their payment fall by about a third, or 30 per cent, and move onto a back-to-work card. People who have already worked and contributed would keep the full rate for longer. The party says the policy is about fairness to taxpayers and about making the welfare system a safety net, not a lifestyle choice.

The cut would apply to the Universal Credit standard allowance. The Joseph Rowntree Foundation said the payment is currently £98 a week after housing costs and would fall to about £69, well below what it calculates as the £120 a week needed for basic essentials. Other figures cited put the payment at about £400 a month for claimants with a contribution history. The affected group is people who can work but have not built up enough National Insurance contributions, including younger claimants. People who are out of work because of sickness or disability would be exempt. Children and housing costs are covered by separate policies, the Conservatives say.

The back-to-work card would be a digital payment card without cash withdrawals or spending on alcohol, cigarettes or gambling. A similar card has been used in Australia, though the current Australian Labour government ended it after criticism that it stigmatised users. Kemi Badenoch claimed the policy would save more than £500 million a year. Helen Whately said the costing was cautious and put the figure at about £530 million. Supporters noted that this is a small share of the roughly £80 billion Universal Credit bill and the wider £315 billion welfare bill. The Conservatives have already announced about £30 billion in separate welfare savings.

Labour called the card unworkable and said the benefits bill rose significantly while the Conservatives were in government. Reform UK said the proposals do not go far enough to cut welfare spending, with one representative saying they would not make a dent. The Joseph Rowntree Foundation argued the cut would be a false economy because people who cannot afford transport or basic essentials find it harder to look for work, and it warned that pushing people into poor quality jobs would not help. Baroness Helena Kennedy described the approach as punitive.

The policy has also provoked a wider argument about stigma and opportunity. A studio audience raised concerns that a separate card would mark claimants out as a different class of citizen. Young people said they might never get the chance to pay enough into the system to qualify for the full rate. Critics said the plan repeats talking points from the 1980s, does not address a hidden needs crisis among young people not in employment, education or training, and risks increasing child poverty and in-work poverty. Some voters interviewed supported the principle that benefits should not pay for alcohol or cigarettes, while others said the state should not control how people spend their money.

The proposals remain a Conservative policy announcement, not government policy. They also underline a political divide. Labour ministers and the Prime Minister have stressed training, education and opening up opportunities as the route off benefits, while the Conservatives are more willing to argue for financial compulsion and for making life on benefits less attractive than work. The debate is likely to continue as both main parties face pressure to reduce the welfare bill.