350,000 face 30% Universal Credit cut under Tory 'Back to Work' card

The Conservatives have set out plans to cut Universal Credit by 30 per cent for people who have been out of work for more than six months and have not paid enough into the system, with the reduced payment loaded onto a pre-paid card that cannot be used to buy alcohol, cigarettes or gambling products and does not allow cash withdrawals.

The rule would only apply to claimants judged capable of working. Under the proposals, anyone fit for work would keep the full rate of Universal Credit for six months while they look for a job. After that point, how much they keep would depend on their past employment record rather than their current circumstances.

The test works on a sliding scale. Every two years a claimant has previously worked would buy them an extra year on the full rate. Those who cannot show enough years would drop onto a new payment the party calls a Subsistence Allowance, worth 70 per cent of the standard rate. The Conservatives say the design protects people with what they describe as a strong employment record, giving the example of a 58-year-old made redundant after working since leaving school, who would keep the full allowance up to state pension age.

Claimants who are sick, disabled or already in work would be exempt, according to the party, along with anyone not assessed as able to work. The party said putting the lower payment onto a restricted card would make sure the money goes on essentials such as food.

The Conservatives estimate around 350,000 claimants would be moved onto the lower rate, saving roughly £538m a year. That sits against a benefits bill forecast to reach £408.6bn in 2030/31, according to Department for Work and Pensions figures, so the saving would cover a small fraction of total spending.

Conservative leader Kemi Badenoch said a system in which someone who can work chooses not to and ends up better off than someone in a job is unfair to workers and taxpayers. She said the best welfare is a well paid job and that welfare should be a safety net rather than a lifestyle choice.

The plan drew criticism from several directions. A Labour spokesperson called the card scheme unworkable and said the Conservatives had 14 years to reform welfare and failed. Helen Barnard of the anti-poverty charity Trussell called the proposals deeply misguided, saying Universal Credit already falls short of what people need for food and heating and is pushing people to food banks. Reform UK's Robert Jenrick said the measures would not put a dent in the bill.

None of this is law. It is a party proposal, and it sits alongside earlier Conservative pledges to scrap Personal Independence Payment for low level mental health conditions and to make sickness benefits harder to claim. Prime Minister Andy Burnham has said he wants the welfare bill down, partly by tackling the number of young people not in education, employment or training, but not through crude cuts.

For households, the practical question is what a 30 per cent cut actually leaves. Universal Credit is already tight, and a payment that cannot be withdrawn as cash makes everyday life harder in ways that have nothing to do with drink or betting, from paying a neighbour for a lift to buying second hand. Anyone with a patchy work record, and that includes carers, people who have moved in and out of insecure jobs and those on short contracts, should watch closely to see whether their years actually count.