Tories benefits spending limit targets alcohol and cigarettes

Tories benefits spending limit plans would stop the long-term unemployed from using welfare payments to buy alcohol, cigarettes or gambling products, under a proposal the party says is about getting people back to work and cutting the welfare bill.

What the Conservatives are promising

The Conservatives have made a pledge. Anyone out of work for more than six months, and judged capable of working, would see their Universal Credit cut by 30 per cent if they have not paid enough into the system, which is a claim they're standing behind. That reduced rate isn't paid into a normal bank account. It's loaded onto a "Back to Work" card instead. And the card would not permit cash withdrawals, while it would block spending on alcohol, cigarettes and gambling.

The party estimates around 350,000 claimants would move onto the lower rate, saving roughly £538m a year.

It's six months on full benefits. Under the plan, anyone fit to work would get that time to find a job, a straightforward window that the architects of the policy insist gives people a real chance to land something before the money changes. And after that? Every two years a claimant has previously worked would buy an extra year on the full rate, a formula that rewards contribution and stretches the safety net for those with a longer employment history behind them. But those who haven't contributed enough don't get that cushion. They'd drop to what the party calls a "subsistence allowance," worth 70 per cent of the full rate.

Who would be spared

The Tories say the design protects people with a strong employment record. Simple as that. A 58-year-old who has worked since leaving school but has been made redundant would keep the full allowance up to state pension age, because it's the record that counts, not the timing of the job loss. Claimants who are sick, disabled or already in work would also be exempt. And only those judged capable of work would be affected.

Shadow welfare secretary Helen Whately called the card "a version" of the pre-paid Aspen card. That card goes to asylum seekers. They live in government-funded accommodation. Those cards can't be used for contactless, telephone or internet payments, and asylum seekers whose applications have failed can't withdraw cash. But the Home Office confirmed last year it had tightened the list of permitted retailers after reports that some asylum seekers had used the cards to gamble in venues such as slot machine arcades.

Whately added that the party would look to learn from Australia, where certain claimants are issued with debit cards that restrict purchases at shops selling alcohol, tobacco products or pornography.

Badenoch: welfare is not a lifestyle choice

Kemi Badenoch calls it fairness. The Conservative leader framed the policy as a matter of fairness, arguing that the current system, where someone who can work chooses not to and earns more benefits than someone in a job, is simply unfair. And she's not wrong to say it. That system, she says, rewards the wrong choice.

"The best welfare is a well-paid job. So, we will be tough on those who exploit the system because the current system is unfair to workers, taxpayers and those who truly need support," she said. "Welfare must be a safety net for those who genuinely need it, not a lifestyle choice for those who can't be bothered."

Labour wasted little time in pushing back. A party spokesperson said the Conservatives had 14 years to fix the welfare system but "completely failed to make meaningful reforms".

"Now they are proposing an unworkable new card scheme, which does nothing to tackle the numbers of people their system left signed off and written off."

The charity backlash

Helen Barnard is the director of policy and research at Trussell. It's an anti-poverty charity. She called the proposals "deeply misguided." And she argued that Universal Credit already falls well short of what people need to afford essentials like food and heating, forcing people across the UK to the doors of food banks. That's the reality.

"We see people's health being damaged and their ability to find and maintain work undermined by the severe hardship so many are facing," she said.

Reform UK's economy spokesman, Robert Jenrick, said the Tories had left record numbers on long-term benefits and the proposals "won't even put a dent" in the welfare bill.

The Conservatives have already pledged to scrap Personal Independence Payment, the main disability benefit in England, Wales and Northern Ireland, for "low-level" mental health conditions. They want it gone. The party also wants to make it harder to claim sickness benefits, which it says would mean more people are required to look for work. And it's all part of a bigger squeeze. The Back to Work card is one piece of a much broader squeeze, a squeeze that reaches into sickness benefits, disability payments and the everyday lives of people who, according to the party, don't need the support they've been given.

The numbers behind the fight

Spending on benefits has ballooned in recent years. Department for Work and Pensions figures forecast it will rise to £408.6bn in 2030/31.

Prime Minister Andy Burnham has insisted he will get the welfare bill down, for example by tackling the number of young people not in education, employment or training, but not through "crude cuts".

The Tories' benefits spending limit idea now faces a harder question. Delivery. The party hasn't detailed how the card scheme would actually work, and the comparison to the Aspen card raises its own complications. That system restricts contactless and online payments, draws on a limited retailer list, and critics say it can leave users unable to buy basic goods, which is a problem you can't wave away.

• Six months on full Universal Credit for anyone fit to work
• Two years of prior work buys an extra year at the full rate
• Those without enough contributions drop to 70 per cent of the full rate
• The reduced payment goes onto a card with no cash withdrawals and no alcohol, cigarette or gambling purchases
• Sick, disabled and in-work claimants are exempt

The plan might never become law. That's the blunt truth. Opposition parties rarely get to implement welfare overhauls from the back benches, and it's even harder when they're fighting from a minority position, so Labour has already labelled the scheme unworkable, which doesn't help its chances. For now, the Tories benefits spending limit proposal stands as a statement of intent. And it will be tested against the reality of a benefits system already under enormous strain.