Conservative Party leader Kemi Badenoch is due to propose strict rules on how criminals and offenders can spend state benefits, as welfare reforms are positioned as a key topic for the next UK general election.

This weekend, taking on a round of media briefings, Shadow Home Secretary Chris Philp outlined party plans of a “smart and sustainable welfare policy”, centred on getting more recipients back into employment and ensuring greater accountability over how taxpayer-funded benefits are attributed. 

Speaking to the BBC and GB News, Philp revealed plans to prohibit offenders/criminals on licence and those serving community sentences from using benefits to purchase alcohol, cigarettes or gamble online.

“Hardworking families are taxed to the hilt to fund a welfare system that criminals are gaming,” Philp stated. 

“Conservatives say enough and have a clear plan to put an end to this farce by putting an end to criminals and offenders spending tax payer money on gambling and alcohol.”

Conservatives campaign on toughest reforms

Under the proposal, eligible offenders would receive benefits via a “restricted payment card” rather than cash. The card would block transactions relating to gambling, alcohol and tobacco products, while preventing cash withdrawals and transfers to third parties.

Philp said the restrictions would apply throughout an offender’s licence or community sentence and remain in place for at least one year afterwards. 

The shadow minister further suggested that the application of similar restrictions to other welfare recipients was “worth considering, and could form part of a broader overhaul of the welfare system”, that is pledged by the Conservatives.

The measures align with Badenoch’s ambition to make “Get Britain Working Again” –  pitched as the headline mandate of the Conservative Party’s next election campaign. Party ranks argue the UK welfare system has become unsustainable due to rising economic inactivity. The Labour government is also accused of a lack of due diligence on checks of growing sickness claims and expanded benefits granted.

The next UK election must be held on or before 15 August 2029. However, the government can call election anytime before this date, and speculation is mounting that Andy Burnham, Mayor of Greater Manchester, may do so if he is able to oust Keir Starmer as party leader and Prime Minister.

Whilst the full scope of the Conservatives reforms is yet to be published, the Tories will likely zone-in on the mechanisms and eligibility criteria underpinned by the Universal Credit scheme. 

Official figures show that 9.2 million working-age people in England and Wales currently receive benefits, a trend Conservatives cite as evidence of increasing welfare dependency. Conservative analysis estimates that approximately 500,000 Universal Credit claimants are former offenders, representing around 6% of the claimant population.

The party claims it has identified up to £23bn in potential savings through welfare reform, including tighter eligibility requirements for sickness and disability benefits, alongside an overhaul of Universal Credit focused on stronger work incentives and rewarding claimants who move into employment rather than remain dependent on long-term state support.

Conservatives have also linked welfare reform to wider priorities including tax reduction, economic growth and increased defence spending. Badenoch and her shadow cabinet argue that reducing welfare dependency would create fiscal headroom to lower taxes and fund strategic national priorities without borrowing.

Critics, however, argue that Universal Credit is already applied on a selective basis, operating under strict eligibility assessments, thresholds and conditionality criterias. Opposition contends that the Conservatives are reviving “austerity-era policies” to cruelly reduce support for the poorest of British households.

Universal Credit currently provides a standard allowance of approximately £85 per week for a single adult aged over 25 and around £317 per week for a household with children, before housing and other support elements are added. Critics argue that these payments are already modest and that further restrictions would penalise those most in need, in which Badenoch and the Conservative have no plan to address the structural causes of economic inactivity.

Labour: Youth unemployment tops welfare concerns

Welfare reform has become a pressing issue across Westminster following the publication of an independent review by former Labour minister Alan Milburn, which warned that Britain faces a “generational fault line” in youth employment.

The review found that more than one million people aged 16 to 24 are now classified as NEET (Not in education, employment or training), the highest figure recorded since 2008. The British media has branded this demographic as a “lost generation”. 

Milburn warned that young people are increasingly becoming economically inactive rather than unemployed, with approximately 613,000 neither working nor seeking employment, compared to around 400,000 actively looking for work.

Young men were identified as the group most affected by economic inactivity, while the review also highlighted concerns over worsening mental health outcomes and the long-term consequences of disengagement from education and employment.

In the midst of debates at Commons, British bank Nationwide issued its World Cup 2026 warning taken from its own research that “one in 4 young Brits gamble to pay bills as World Cup fuels betting surge”.

Milburn warned that, if left unaddressed, the youth workforce crisis could cost the UK economy up to £125bn in lost economic activity that could become a reality for the government. 

In response, Prime Minister Keir Starmer pledged immediate action, with the Labour government establishing a dedicated taskforce within the Department for Work and Pensions (DWP). 

The directive will be led by Marc Bolland, the former chief executive of Marks & Spencer, who has been appointed to drive efforts to reconnect young people with employment and training opportunities.

In the interim of 2026, welfare reform becomes another intertwined element of the UK’s gambling policy debate. 

It joins other outstanding disputes over affordability checks, the structure of the Gambling Harms Levy, advertising restrictions and the rights of local constituencies to impose their own gambling controls. 

Political outcomes are prolonged as UK gambling still has no clear view on its generational settlements.