People claiming universal credit (UC) would have their payments cut by a third if they have not paid enough national insurance, under a Conservative plan condemned by one charity as “a fast track to increased poverty”.
Under the proposals, those who receive this “subsistence allowance” would have it paid into a dedicated debit card that would prevent from them buying alcohol or tobacco, based on an Australian system that was scrapped after trials found limited evidence it changed behaviour.
While the proposals are billed by the Conservatives as a way to push people into work, the poverty charity Trussell said trimming incomes so that people struggled with rent and transport was likely to make it even harder for them to find and keep a job.
Under the plan, UC claimants would receive the full amount to which they are entitled for six months, but after this point the sum would be tied to how long they have worked at a level that triggers national insurance payments.
This would have to happen for at least twice as long as the claimant period, meaning someone who has amassed two years of NI payments would qualify for another 12 months of full UC, before falling to the lower rate.
Set at 70% of the standard amount, this would leave a single claimant aged under 25 living on £237 a month, or just over £7.50 a day. For a couple aged 25 or over, under the plan they would lose £200 a month, falling to £466 in total.
Anyone placed on the reduced level would have their UC payments put on to a “back to work card”, which would block purchases of alcohol, tobacco and gambling, or cash withdrawals.
The plan would exclude those already in work – about a third of UC claimants have jobs – and those who are assessed as having what is called limited capability for work and work-related activity, because of a health condition or disability. Separate payments connected to housing or dependant children would be unaffected.
The Conservatives said the plan would affect about 350,000 people in England, Scotland and Wales and save £538m a year.
Kemi Badenoch, the Conservative leader, said the aim was to be “tough on those who exploit the system”, adding: “Welfare must be a safety net for those who genuinely need it, not a lifestyle choice for those who can’t be bothered.”
The party argues that in some countries such as Germany and the Netherlands, unemployment payments are contingent on sufficient contributions having been made and can be time-limited.
Those payments, however, are notably more generous and can be between 60% and 70% of someone’s previous monthly wage. There is also separate support for those who have not paid in sufficiently, with single people in Germany receiving about £480 a month.
Sara Ogilvie, the director of policy at Child Poverty Action Group, said: “The reality is that families are still paying the price of austerity cuts to our social security safety net. With living costs continuing to rise, these proposals are a fast track to increased poverty and are the last thing people need as they try to get back on their feet.”
Helen Barnard, the head of policy at Trussell, called the idea “deeply misguided”, saying UC already had strong conditions to ensure people seek work.
She said: “If you’re struggling to afford food and rent, childcare or the bus fare to an interview, then finding and keeping a job becomes harder not easier. Cutting support would only make things worse.”
