The role of Jobcentre Plus in the reformed welfare system - Work and Pensions Committee Contents

4  Enforcing the responsibilities of claimants

Benefit conditionality and sanctioning

76. Conditions have always been applied to the payment of unemployment benefits. The concept of a conditionality regime enforced by financial sanctions—i.e. stopping benefit payments for a limited period—for claimants who fail to comply with the rules dates from the 1980s. The system has been strengthened a number of times in recent decades and broadened to apply to a greater proportion of the workless population—there are now requirements on some claimants with ill-health and disabilities and lone parents with young children to at least prepare for a return to work, for example.[70]

77. For a typical claimant the conditions for continued entitlement to JSA include: signing a JSAG; actively seeking employment; being available for at least 40 hours work per week; attending the Jobcentre as required (as noted in chapter 3, most JSA claimants are currently required to attend fortnightly); applying for any job notified to them by a Jobcentre Adviser; and completing any relevant job-search activity as directed. Exceptions and flexibilities apply to claimants with ill-health or disabilities which limit their capacity to work and to people with caring responsibilities.[71]

78. Under Universal Credit the conditions are broadly similar but with reduced powers for Jobcentre staff to apply discretion.[72] As noted in the previous chapter, the Claimant Commitment potentially adds a layer of conditionality in that it enables Jobcentre staff to require claimants to spend 35 hours per week looking for work.

79. In our Report on Universal Credit implementation we concluded that conditionality has an important role to play but that the strict conditionality inherent in the Claimant Commitment should be balanced by meaningful employment support for claimants. We noted that there is little evidence that sanctions strengthen work incentives on their own; our view was that sanctions should therefore be used primarily as a deterrent and a last resort.[73]

80. We reiterate our view that conditionality is a necessary part of the benefits system and that sanctioning, if used appropriately, can be a useful tool for encouraging engagement with employment support. Sanctions should be used primarily for this purpose and as a last resort. Strict conditionality regimes should be balanced by meaningful and in-depth advice and support from JCP for those who need it.

Welfare Reform Act 2012: tougher sanctions

81. Prior to the Welfare Reform Act 2012 coming into force, the maximum period for which a claimant's benefit could be stopped for a breach of the rules was six months. New rules which came into force following the Act increased the maximum period of a JSA benefit sanction to three years. Sanctions are applied according to the seriousness of the infraction as follows:

  •   Low level failures, including failure to complete a specific action as directed by a Jobcentre Adviser, can result in a one month sanction or three month sanction for a repeat offence;
  •   Intermediate failures include a more general failure to actively seek work or failure to be available for work and can result in disentitlement to benefit. If claimants re-apply, no benefit is payable for one month after a first failure and three months for a second or subsequent failure; and
  •   High level failures, including failure to accept a reasonable job offer or leaving a job voluntarily, can result in the longest "sanction", which is effectively disentitlement to benefit for three years.[74]

82. The Act also strengthened ESA sanctions. Under the previous system ESA WRAG claimants who failed to attend a Jobcentre appointment, or who failed to carry out agreed work-related activity, could be subject to an open-ended sanction. The sanction amount was 50% of the work-related activity component of their benefit (i.e. around £14 per week), increasing to 100% (£28.15 per week) of the component after four weeks. Under this regime full benefit was reinstated as soon as the claimant recommenced compliance with the conditions.

83. Under the new rules, ESA WRAG claimants who fail to comply can receive the same open-ended sanction of their work-related activity component while they fail to comply, followed by a fixed period sanction once they start to comply again. The fixed period sanction is one week for a first failure, two weeks for a second failure and four weeks for third and subsequent failures in a 52 week period. The fixed period sanction is loss of the claimant's entire ESA basic component (£71 per week). The claimant's work-related activity component is unaffected under the new rules.[75]

84. For both JSA and ESA, Jobcentre Advisers are responsible for referring claimants for a sanction where they believe the claimant has failed to meet the conditions of benefit—known as "raising a doubt". The decision about whether a sanction should be applied rests with a DWP Labour Market Decision Maker, who is independent of the employment support process, following the rules as set out in legislation and several internal staff guidance documents.[76]

Increasing prevalence of sanctioning

85. Research by Dr David Webster of the University of Glasgow shows that the prevalence of sanctions increased in the period 2008-2012. Dr Webster highlighted the "common misconception" that sanctions only affect a very small minority of claimants—his research found that around one fifth (19%) of all JSA claimants in the period April 2008 to March 2012 were sanctioned (1.4 million people). He also noted that, as there are around twice as many sanction referrals as there are "adverse decisions" resulting in a claimant's benefit actually being stopped, around 3 million people were "threatened" with a sanction in the same period. Sanctioning rates in the year to October 2012 were 4.2% of all JSA claimants per month. For JSA claimants aged 18-24 the rate was 8% per month.[77]

86. The latest release of official data, covering the period from the introduction of the tougher regimes in late 2012 to June 2013, shows that sanctioning rates have increased further. The proportion of all JSA claimants being sanctioned each month increased to around 5%. In total there were 553,000 JSA sanctions applied, an increase of nearly 11% on the same period in 2011-12. There were 11,400 ESA sanctions applied in the period from the introduction of the tougher ESA regime in December 2012 to June 2013. This is nearly double the number in the same period in 2011-12.[78] Dr Webster pointed out that the number of sanctions in the year to 30 June 2013 was around 860,000, the highest number in any 12-month period since statistics began to be published in their present form in April 2000.[79]

Reported inappropriate sanction referrals

87. Most witnesses accepted that conditionality regimes were necessary and that sanctioning of benefits was the most practicable method of enforcing a conditionality regime—a notable exception was the PCS union, representing Jobcentre staff, which was of the view that sanctioning "does not work in terms of getting people into work".[80]

88. However, witnesses also believed that Jobcentre staff were too quick to raise doubts and make sanction referrals without applying due discretion. We were provided with a number of real life examples of referrals which appeared to be inappropriate. These included referrals made for missing Jobcentre appointments despite claimants having good cause and informing the Jobcentre of the reason.[81] Citizens Advice reported an example of a claimant referred for a sanction for not actively seeking work in the period between finding a job and starting that job.[82]

89. The PCS union reported that Jobcentre staff were being put under pressure by management to increase sanctioning rates. DWP has strongly denied the existence of any national or local targets for sanctioning—following an investigation and report to the Secretary of State on the issue carried out by Neil Couling. However, PCS believed that the Department had "expectations" about the appropriate level of sanctioning and that these were "targets by another name". The PCS also highlighted that Jobcentre staff whose sanctioning rates were not meeting expectations were subject to an "improvement plan"—formal performance management proceedings.[83] The Minister for Employment recently confirmed that the number of sanction referrals made by Jobcentre Advisers is part of a "variety of performance data" used to monitor Advisers' performance.[84]

90. Neil Couling told us that he and the Department had an expectation that people would be sanctioned, "because that is the law" and "public servants are meant to follow the law." DWP monitored sanctioning rates to highlight and investigate anomalies with a view to ensuring that sanctions were being properly and consistently applied across the Jobcentre network. In the course of his investigation into the alleged existence of sanctioning targets, he had found variations in sanctioning rates between different Jobcentres which he was seeking to address.[85]

91. Under the new rules introduced in late 2012, the number of sanctions has increased to the extent that some 5% of all Jobseekers Allowance claimants are sanctioned every month. Some 860,000 Jobseekers Allowance claimants were sanctioned in the year to June 2013, the highest number in any 12-month period since at least April 2000. Our evidence suggests that many claimants have been referred for a sanction inappropriately or in circumstances in which common sense would suggest that discretion should have been applied by Jobcentre staff.

The link between sanctioning and benefit off-flow

92. Several witnesses noted the risk that Jobcentre staff might see sanctions as positive outcomes in themselves, particularly as JCP performance is measured primarily against the proportion of claimants coming off benefit by specific points in claims (known as benefit off-flow, see chapter 5). The concern was that Jobcentre staff might see sanctioning, and other actions which discourage people from claiming benefits, as a route to achieving off-flow performance targets. Inclusion believed that such behaviour was unlikely to be widespread but noted that it had occurred when similar targets were in place in the 1980s.[86]

93. The Minister implied that the risk was minimal because, when you are under a sanction, "So long as you continue signing on, you are not taken off the claimant count." [87] We asked DWP to clarify whether in fact a claimant could be required to continue to sign on if they were not receiving benefit because of a sanction. We also asked DWP to provide data on the number and proportion of sanctioned claimants who do not continue to sign on during the period of the sanction or for longer periods. The response we received merely confirmed that sanctioned claimants come off the claimant count only if they become disentitled to benefit because they choose not to sign on during a sanction period. DWP was unable to provide any information on the number or proportion of sanctioned claimants who choose this course of action. [88] The impact of sanctioning on benefit off-flow therefore remains unclear.

The impacts of sanctioning on claimants

94. Some witnesses were concerned that sanctions were leading to severe financial hardship for some claimants. Most notably, Church Action on Poverty (CAOP) and Oxfam reported that financial hardship due to sanctioning was a significant factor in a recent rise in referrals to food banks. A joint CAOP/Oxfam report published in May 2013 estimated that 500,000 people in the UK were "reliant on food aid". The report estimates that "up to half" of people who turn to food banks do so "as a direct result of having benefit payments delayed, reduced, or withdrawn altogether."[89]

95. The Trussell Trust, a charitable organisation which runs the largest chain of food banks in the UK, reported in October 2013 that it had received 350,000 referrals to its food aid in April to September 2013, a threefold increase on the same period in 2012. It has previously published statistics which show that changes to benefit payments, including sanctions, are the third most commonly reported reason for referral to food aid, accounting for 15% of referrals in 2011-12.[90]

96. DWP has stated that Jobcentres "signpost" claimants to food aid where appropriate. However, there are no official data on referrals to food aid or on how many referrals are related to financial hardship caused by benefit sanctions. Ministers have also stated that the Department does not currently collect or collate data on the number of claimants signposted to food aid by Jobcentres.[91] However, in oral evidence, the Minister reported that she believed that DWP was "doing a lot of information gathering into why people present themselves at food banks".[92]

97. We recommend that DWP take urgent steps to monitor the extent of financial hardship caused by benefit sanctions, including by collecting, collating and publishing data on the number of claimants "signposted" to food aid by Jobcentres and the reasons for claimants' need for assistance in these cases.

Monitoring the conditionality regimes

98. On 15 May 2013, DWP set out terms of reference for an independent review of the JSA conditionality and sanctions process. An independent review of the operation of the sanctions regime is required by the Jobseekers (Back to Work Schemes) Act 2013. The independent review's report will be presented to the Secretary of State as soon as reasonably practicable after 26 March 2014. The terms of reference for the review include:

  •   The clarity of information on conditionality provided to JSA claimants;
  •   The options available to claimants who are sanctioned, including the availability of hardship payments; and
  •   The clarity of the review and appeals process.[93]

99. In oral evidence the Minster told us that she was committed to establishing a further independent review to investigate whether sanctions were being applied proportionately.[94]

100. It is important that JCP makes fair and proportionate sanction referrals and that the process is transparent. We welcome the current independent review which will focus on the clarity of communications between JCP and claimants in relation to the conditionality and sanctioning process; the availability of hardship payments for sanctioned claimants; and the clarity of the review and appeals process. We strongly believe that a further review is necessary and welcome the Minister's commitment to launch a second and separate review into the broader operation of the sanctioning process.

101. We recommend that the second review of sanctions investigate: whether sanction referrals are being made appropriately, fairly and proportionately, in accordance with the relevant Regulations and guidance, across the Jobcentre network; and the link between sanctioning and benefit off-flow, including whether benefit off-flow targets have an influence on sanctioning rates. We also recommend that this review consider whether, and to what extent, the use of sanctions is having the desired effect of encouraging claimants to engage more actively in job-seeking. We further recommend that this review is launched as a matter of urgency and reports before the end of 2014.

70   Dr David Webster, Ev w91 Back

71   DWP, Ev 141 Back

72   Centre for Economic and Social Inclusion, Ev 117  Back

73   Committee's Universal Credit Report, paras 182-183 Back

74   "Choosing a life on benefits is no longer an option", DWP press release, 22 October 2012 Back

75 [accessed 5 December 2013] Back

76   DWP, Ev 141; See also, HC Deb 18 November 2014, col 674W Back

77   Ev w90 Back

78   DWP, Jobseeker's Allowance and Employment and Support Allowance Sanctions-decisions made to June 2013, GB, 6 November 2013 Back

79   Ev w111 Back

80   Q 205 [Charles Law] Back

81   Church Action on Poverty, Ev 123; Citizens Advice Scotland, Ev w8 Back

82   See Citizens Advice, Punishing Poverty? A review of benefit sanctions and their impacts on claimants and clients, October 2013 Back

83   Ev 175 Back

84   HC Deb, 15 October 2013, col 674W Back

85   Q 577; See also, DWP, Conditionality and sanctions: Report to the Secretary of State by Neil Couling, May 2013 Back

86   Ev 115 Back

87   Q 566 Back

88   Ev 146 Back

89   Church Action on Poverty/Oxfam, Walking the breadline: the scandal of food poverty in 21st Century Britain, May 2013 Back

90   "Tripling in foodbank usage sparks Trussell Trust to call for an inquiry", Trussell Trust press release, 16 October 2013; See also, Back

91   HC Deb, 5 June 2013, col 1204W; HC Deb, 14 October 2013, col 490W Back

92   Q 572 Back

93   "Independent reviewer of benefit sanctions announced", DWP press release, 19 September 2013 Back

94   Q 574 Back

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Prepared 28 January 2014