UK Welfare Reform and Its Impact on Gambling Sector | Ep. 785

Charlie Horner (00:02.204) Both Labour and Conservative camps are in agreement that the UK's welfare system requires significant reform. The Conservative Party is set to unveil tougher spending restrictions on offenders and criminals receiving state benefits, including limits on gambling expenditure, including limits on gambling expenditure. as leader Kemi Badenoch makes welfare reform a headline campaign issue. Meanwhile, the Labour government has been challenged by an independent review warning that welfare policy must adapt to a new reality of youth economic inactivity, with more than one million young people not in work, education or training. That's the highest level since the financial crisis of 2008. So, how has gambling been tied into welfare policy and what does it mean for our sector? Ted (01:00.266) you Charlie Horner (01:01.048) Welcome back to iGaming Daily, by Optimum, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and today I'm joined by SBC News Editor, Ted Orme Clay, and SBC Media's Editor-at-Large, Ted Menmure. Ted OC, how's things? Ted Orme-Claye (01:21.56) Pretty good, thank you Charlie, yeah not bad mate, how about yourself? Charlie Horner (01:24.902) Yeah, very good, thanks, very good. Glad to be back on the pod after a week away. Ted Orme-Claye (01:29.474) Yeah, you were in Malta weren't you? was that? Good trip? Ted (01:30.696) Mm-hmm. Charlie Horner (01:32.058) Yeah, good trip. Nice to see some industry friends and see some new people as well. Ted how are you? Ted (01:39.679) Very well, Charlie. Well, mixed weekend, but yeah, got over the ass of defeat. yeah, just getting used to life as a mere humble Premier League champion. Terrible. Charlie Horner (01:58.364) It's a tough life. It's a tough life. Anyway, let's dive into things because the last time I checked this was iGaming Daily and not Welfare Daily. But welfare reform is on the Westminster agenda and it could impact gambling. First of all... Ted (02:01.727) Hahahaha! Charlie Horner (02:22.669) Ted why is welfare a major battleground in UK politics at the moment? Ted (02:28.81) Okay, I'm going to kind of separate this out from gambling. That's going to be kind of explained later. from Westminster, this is definitely kind of the new fault line of UK politics. And it's a very complex issue and one that is very, very hard to fix with multiple intricacies. Look, put simply... know, for the kind of two weeks of review, work and pensions recognises that there's deep, deep deficiencies in the current welfare system. And this is one that spends 300 to 320 billion a year. It is not fixing kind of, it's not improving its economy, its economies of scale, but it's not improving opportunities to return people back to work. So you mentioned that in terms, you know, in terms of a battleground, you're right. This is turning into kind of a new point of attack on the Labour government, especially from the Conservatives and the right wing of Now look, concerns and spending are not helped by stagnant economy. However, the real seismic elements that have to be contended with, especially when we're welfare reforms, is just the reality of the UK state. It's facing an ageing population with increasing pension costs, rapid growth in disabilities. and health related claims, especially in PPI. And also kind of in the mix is expanding housing costs and as always, inflation. To our audiences, there is just no, I don't think any government can just offer a simple solution. It goes way, way beyond that. Charlie Horner (04:05.433) Yeah, it's an issue that the Labour Party have tried to intervene on a couple of times over the last two years since the government was elected, but has struggled to do so, given the left-wing nature of some of its backbench MPs. Ted O.C., this is probably why the Conservative Party has intervened on this issue, to try and make some political headway. Ted (04:12.554) Mm-hmm. Charlie Horner (04:31.503) But was an interesting clip doing the rounds over the weekend, and we've written about it on SBC News. What has the Conservative Party proposed following an announcement made by Chris Philp, someone who we're familiar with on the show from his time in government? What has he said? Ted Orme-Claye (04:51.627) Yeah, you're not wrong. We are familiar with Chris Philp. He was, as a reminder to some of our listeners, Chris Philp was one of the, I think about 10 different under secretaries of state, junior ministers, whatever the various positions were, who was in charge of the Gambon Act review between 2000 and 2020 and 2023. Obviously he wasn't in charge of that full three years, but he was one of the people involved in that at some point at Carlin Rail, how long he oversaw it for. But yeah, he's got a different job now in the Conservative shadow cabinet. And yeah, he's been making a bit of noise over the weekend regarding welfare reform, as you've said, Charlie. It seemed that the main proposal that the Conservatives have is that they want to replace the current system. where people get their weekly allowance paid into an account and you go and withdraw it with your gyro or whatever with a prepayment card sort of thing. may be getting this slightly wrong Ted, I think there's a focus on people with criminal convictions or something. Yeah, so he's made a few different statements. Yeah, they want to replace the system with this one where you've got a prepaid card that's got your weekly allowance on it, your job seeker's allowance or... Ted (05:50.292) Mm-hmm. No, no, you're right, you're right. Yeah. Ted Orme-Claye (06:07.309) whatever welfare you receive and that will be blocked from paying for certain things. So I think it was the, you know, the big three would usually be alcohol, tobacco and gambling. So that's the idea that this is this idea that they want to make sure that state money, taxpayer money that is going into welfare is not being spent on non-essential items like, yeah, like beer or betting shops. Obviously, the Conservative Party is always going to be one that's going to be quite anti-welfare, guess. At its heart, it's always about low government spending, theoretically. And not wanting a nanny state and all this sort of stuff. I'm sure it's a lot of the terminology that they'd use. And as Ted wrote about this morning, I think they've already been faced with some criticism for this. It's kind of harking back to the deeply unpopular austerity era. We saw in the years when they first got elected back in 2010 after the financial crisis and so on. And yeah, it does seem to be harking back to that a bit. And kind of anti-welfare is not really anything particularly new for the Conservatives. Charlie Horner (07:19.979) No. Anti-welfare, small estate, and the party of law and order are core principles of the Conservative Party going back 100 plus years. Ted how do you react to what Philp was saying over the weekend? Do you think there's wider concerns or maybe some unintended consequences of bringing in a measure like this? Ted (07:45.917) So look, I think that too, this is very much a play for the base of the party and they're kind of framing this as taxpayer, a taxpayer fairness policy. And I think they kind of tried making a march on, well, the new competition of the right, that being reform. In terms of like the critique and the concerns is that once again, yes, it's a populist policy, but how does that become a reality? And... It's very kind of obscured from the actual reality of running a welfare scheme for a nation as big as the UK. pointing back is that, the spend is 330 billion per year, right? But all these costs are intertwined. mean, looking at this as you've got working age, sorry, disability claims of 77 billion, where are you going to cut in that? Universal credit, which I think the Tories... have always kind of pinpointed that starts at 80 billion. But again, where are they going to cut in that scheme? Housing support, which is now critical is another 40 billion. Chris Philp stated that and apparently, Kemmy Bailinok will present a plan in which they target 28 to 30 billion pounds in savings. And again, where are you going to get these deep cuts? This was also a government that was accused by the Labour camp of misspending 30 billion when it took over its first budget. know, trust is going to be a key issue here. Charlie Horner (09:20.849) Yeah, I think you're right there. I think in terms of unintended consequences, Ted O.C., you mentioned earlier that the nanny state, this to me seems like a measure that's completely rooted in a nanny state whereby the government is telling people, you know, whether they're offenders or criminals or not, that they can or cannot buy what they want. Do you think there are sort of unintended consequences of that? Ted Orme-Claye (09:51.561) God man. Yeah, mean I guess so. I guess yeah, you could say is nanny stating that you're trying to tell people what they can and can't do with their finances, which is something that the more right leaning element of British politics, conservative and reform, that's something that they'd probably, they'd inherently argue is wrong. Charlie Horner (09:53.37) Perhaps bring it back to the gambling sector if you like. Ted Orme-Claye (10:21.668) I guess, the thing that, the big factor here though, that kind of gets in the way of that is that they're on about public money, aren't they? They're on about taxpayer money, public money that goes into welfare. That's where they draw the line with this, I think. In terms of unintended consequences, on the, what are you implying, like on the industry, on like the financial impact on the industry? Ted (10:28.841) Yeah. Charlie Horner (10:44.898) Well, let's take the common tropes of the industry. If there are restrictions in place, people will go to a black market. If people can't spend their money on what they want, will they go and try and earn money in nefarious ways? Ted (10:57.002) you Ted (11:01.62) truth. Ted Orme-Claye (11:02.428) Yeah, yeah, but then is that what is this idea that Phil has of there being a card that you've got the restrictions on? How would you spend it? How would you spend that on black market gambling? Like I guess maybe you could argue people will find websites that aren't signed up to it Maybe it's only regulated companies or something like that But yeah, I don't I just think at this point this whole it's just all a proposal They've got I don't really I think we're being very speculative here for saying I all could have do this could it do that? and I don't know, like, sorry I was thinking of something and my mind's just gone, Ted go on, save me. Ted (11:34.794) . Charlie Horner (11:39.544) Not sure... Ted, bring you in. Ted (11:40.555) Okay, look, I think from the Conservative Party, it's that, we go back to this is a thought line and it's currently on the hands of the Labour government. I think that if you're in the Conservative camp... you have to kind of quickly pinpoint that this is on their watch and at least we have a solution. regardless of how opaque it is, like we're gonna ban criminals from doing it, at least you're moving forward with that. And that's what it's kind of perceived. There are so many kind of points to pick at the welfare scheme, just in the money it spends and who gets the benefits too. And it's also... It's kind of ambiguous because you can blame all sides of society, can blame the poor, can blame immigrants, and this is exactly what the party's doing. It knows that if you get your attacking first, you're going to come out of it, regardless of what you're saying, regardless of how technically hard it is to impose these safeguards on this. This is just pure political play, and pure political theatre too. Charlie Horner (12:45.199) Mm-hmm. Sure, absolutely will. Ted Orme-Claye (12:48.512) think political theatre is a good term to use. Like we've just already talked about, the Conservative Party is having a pretty dire time in the polls, aren't they? I guess you could argue Labour might be the one losing more votes to reform, perhaps they're the ones who lose their traditional seats to them, guess, but the Conservatives are lagging pretty far behind as well. They've taken note of how much of an impact populist rhetoric can have. Ted (12:59.018) Mm-hmm. Ted Orme-Claye (13:18.036) And yeah, I guess this is just sort of an, it's just a nice easy policy of a way of winning people back, isn't it? I do you want your tax payer money getting used so that criminals can gamble while unemployed? You know what mean? It's got a Daily Mail headline written all over it, hasn't it? Ted (13:23.283) Yeah. Charlie Horner (13:34.938) Indeed, Well, Ted, Ted will take a short break and we'll come back and we'll talk about the response of the government and yeah, how this might all tie into the gambling sector. AD BREAK Charlie Horner (14:13.217) Welcome back to iGamingDaily. look, the Labour government has to do something about the welfare bill. Ted, I can't imagine they'll follow along with Philp's proposals and the Conservatives' proposals, but... The Milburn Review came out last week and this is big report on the economic inactivity of young people. Why is this such a significant indictment of the UK's welfare and employment policies? Ted (14:32.926) Mm-hmm. Ted (14:39.754) Mmm. Ted (14:45.706) Yeah, look, the Bookworm Review came in, it's an independent report and it's damaging because it says that the system is simply, it's system failure at securing young people in the labour market and giving them kind of an equal, not even just a platform to, sorry, sorry, let me start again. The Buba report came out, an independent report that states that there is just a system-wide failure at securing economic opportunities for young people in Britain, under 24s, to secure employment or training or to kind of amplify kind of their credentials for work. And it argues that this is not just a case of welfare, but that it is argued across... education, health and employment support that is not functioning to get a new generation into work. And there are too many people who are now inactive, unsupported and disconnected from any kind of form of labour and of economic opportunity. And I think what was very important about the framing of the Northern Review is that It said that, look, you might not see the consequences now, but come kind of the next general election, you know, this might be a whole of a hundred billion on the UK economy. Charlie Horner (16:17.229) Now, we should probably say that Alan Milburn is the guy who worked on the report, and as it is an independent report, we should make clear that Alan Milburn was Health Secretary for a Labour government back in the 90s and early 2000s, so how independent it is, considering that, we'll see. But, Ted OC, It does say that over a million people aged 16 to 24 are economically inactive. Firstly, in a political point of view, how damaging do think that is? But as an industry, we're always talking about how we need to get the next generation of consumers in, not 16 and 17 year olds, but certainly that 18 to 24 cohort is a significant target. If they're not economically active, they don't have disposable income, that could be detrimental to the industry as well, right? Ted Orme-Claye (17:12.777) Yeah, mean, hypothetically, mean, it's going to be detrimental for all sorts of industries because, the next generation are the people who are going to have, they're the consumers of the future, they're the customers of the future, they've got the economic spending power of the future. And if so many of them are currently unemployed or not in any educational training that is going to lead to some sort of long-term meaningful employment and getting them, you building wealth and set themselves up financially. Yeah, it's not good for any industry, is it? And it's not great for the UK economy in general. It's a big, big challenge for the government to sort this out. But you this is something that, you the term NEETS, what is it? in employment educational training, isn't it? That's the abbreviation. This is not the first time I've seen this be a talking point. I remember this being a talking point back when I was doing my A levels. Ted (17:59.936) Yeah. Ted Orme-Claye (18:08.039) I remember this getting mentioned in A-level sociology classes when I was 17. This is a problem that the UK has had I think, has had bubbling away to some extent for quite a while. And the recent reports have really pushed that to the centre of what this problem could be and how big it has got, especially in the years since COVID. But yeah, it's... It's something that we've been having to contend with for a while, has definitely got worse and could have a, well, could and will have a pretty big significant economic impact on this industry that we're talking about right now, that we're within and on others, yeah, if it's not addressed. Charlie Horner (18:50.497) Yeah, think COVID, AI, two massive drivers of this. But Ted, what do we know about Labour's plans for welfare and benefits reform off the back of the Milburn review? do you think those proposals might have an impact on gambling policy itself? Ted Orme-Claye (18:55.335) Mmm, yeah, 100%. Ted (19:11.176) So for now, Labour says that it is completely focused on improving employment opportunities, youth guarantees, and also supporting those under 24s with skills, but also mental health and better access to public welfare. In terms of, know, Keir Starmer came out this weekend and he said that he employed ex-Marx & Spencer CEO Mark Boland to actually come up with a, to lead a task force and look at exactly what are kind of the liabilities in the current kind of schemes, why aren't opportunities being offered by UK business to this segment and they want to come up with kind of a wider strategy for the UK economy. In terms of gambling and where I see kind of a fallout is that if you don't see any improvements, it again comes back to the government kind of fixating on how, at what point do you kind of intervene or what it could classify as an at-risk segment of... consumers, those being under 24s. And we've seen this kind of play out in the governments of the Netherlands and Spain now with this kind of central registry. In the Netherlands, they've got kind of unique restrictions for customers under the age of 24. This is because the government kind of classifies these, this segment as first time earners, people that should be saving, saving their spend, and that they're more at risk of gambling than other segments. Charlie Horner (20:53.527) under 24s, also in the same camp as criminals. it's good to see. Ted, Ted OC, how do you see this story developing sort of in the context of the UK gambling sector if this continues to be a political sort of battleground, I guess, because the sector's facing quite a few challenges, affordability checks being probably the headline one, the gambling harms levy. Ted (20:57.802) Hmm. Ted Orme-Claye (21:04.299) Excuse me. Charlie Horner (21:23.321) If you add more consumer protection reforms and young people measures or youth protection measure, do you think that's just going to add another big fallout into a sector that's got enough on its plate? Ted Orme-Claye (21:38.493) It certainly adds another layer to it, I don't think it's quite as big of a layer as the, obviously last year, the taxation topic, which we talked about extremely extensively, the affordability check one that you've noted. Advertising and sponsorship as well. know that we mentioned I mentioned this on a podcast of Joe and Fernando last week We're talking about the man United better way deal. That's one that's going to continue being a political battleground I think that's just inevitable and I think that is one that potentially could be more damaging for the industry just because of How much more widely discussed it is? I don't think this welfare element is going to be quite as big as those three But it is it will it will add to it will pile further on Ted (22:05.627) Mm-hmm. Ted Orme-Claye (22:23.562) In terms of like, let's say hypothetically this policy was rolled out and people who were on benefits or seeking employment are given these cards at the blocks from Gambit. The other thing we know about is what percentage of the industry's customers actually come from that demographic? For example, the financial impact there. And does the industry even want to be having these people as customers anyway? Because it's not a sustainable customer. And it's the ethical consideration there as well. I guess, yeah, the bigger one that we're talking about is young people and their ability to be spenders and be active in the economy. That's the one that not only this industry, but all industries has got to worry about going forward. Then yeah, like I said, I think it does just add another layer to the various political conversations this industry finds itself embroiled in just constantly. Ted (23:15.498) you Yeah, we talk about another layer, but I just think in 2026, politics and gambling are ever more intertwined. And we see one fault line happening and gaming is kind of involved in that. I think back now... We have to just be aware of all political sensitivities related to our sector. And no matter how much you think it's just headline grabbing or people playing politics, it can come back to bite the industry. Charlie Horner (24:03.096) Yeah, think if we've learned anything over the last 18 months is that gambling is a somewhat easy target for politicians to go after, so we should be vigilant on that front. Ted, Ted, thanks ever so much for joining me today and sharing your expertise on this one. Thanks to Optimoo for supporting the show as always, and to our listeners. Thank you ever so much for tuning into today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.