Draft Universal Credit (Work-related requirements) In Work Pilot Scheme and Amendment Regulations 2015

The Committee consisted of the following Members:

Chair: Mr Adrian Sanders 

Ali, Rushanara (Bethnal Green and Bow) (Lab) 

Blenkinsop, Tom (Middlesbrough South and East Cleveland) (Lab) 

Burley, Mr Aidan (Cannock Chase) (Con) 

Crockart, Mike (Edinburgh West) (LD) 

Hemming, John (Birmingham, Yardley) (LD) 

Lammy, Mr David (Tottenham) (Lab) 

McVey, Esther (Minister for Employment)  

Mills, Nigel (Amber Valley) (Con) 

Morris, James (Halesowen and Rowley Regis) (Con) 

Munn, Meg (Sheffield, Heeley) (Lab/Co-op) 

Nuttall, Mr David (Bury North) (Con) 

Paisley, Ian (North Antrim) (DUP) 

Smith, Mr Andrew (Oxford East) (Lab) 

Stephenson, Andrew (Pendle) (Con) 

Stride, Mel (Central Devon) (Con) 

Timms, Stephen (East Ham) (Lab) 

Whittaker, Craig (Calder Valley) (Con) 

Wright, David (Telford) (Lab) 

Danielle Nash, Katya Simms, Committee Clerks

† attended the Committee

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Second Delegated Legislation Committee 

Wednesday 14 January 2015  

[Mr Adrian Sanders in the Chair] 

Draft Universal Credit (Work-Related Requirements) in Work Pilot Scheme and Amendment Regulations 2015

8.55 am 

The Minister for Employment (Esther McVey):  I beg to move, 

That the Committee has considered the draft Universal Credit (Work-Related Requirements) in Work Pilot Scheme and Amendment Regulations 2015. 

It is a pleasure to serve under your chairmanship, Mr Sanders. The regulations before the Committee today introduce powers to test a range of approaches to establish how we can best support working universal credit claimants who are on low earnings to progress and earn more, which is core to universal credit delivery. 

As colleagues know, through universal credit, we are introducing a new single and simplified system of means-tested support for working-age people who are in or out of work, reducing poverty by making work pay. We are abolishing the system of means-tested out-of-work benefits, tax credits and support for housing in favour of a new system that improves work incentives by allowing individuals to keep more of their income as they move into work, and introduces a smoother and more transparent reduction of benefits as their earnings increase. 

We have already made good progress on fulfilling our commitment to introduce universal credit, with nearly 100 jobcentres now delivering universal credit, and from next month universal credit will be rolled out nationally across Great Britain. One of the key reforms that we are now looking to explore in universal credit is how we will support working claimants in some of the lowest-income households who could reasonably be expected to earn more. 

Our objective is simple: we want to help influence and support low-paid claimants to progress in work and increase their pay so that they are earning above the level of a full-time job at the national minimum wage, where they are able to do so. That ambition has the potential to deliver a huge impact. The individual will be working and earning more and living more independently of benefits. Employers will benefit from a more engaged and motivated work force and the state will continue to reduce the benefit bill. The ambition is clear and the benefits will be huge. 

It is important to be clear about what we will be actively supporting through the future in-work service. It is about supporting individuals on universal credit who earn less than £12,000 per year on average and who can earn more. These were traditionally low-earning tax credit claimants—those who do not routinely get support to earn more and who do not have any real expectations placed on them now. This is the first time any nation has attempted to work with claimants to increase earnings.

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It is a truly transformational change for Government and is one of the key labour market reforms that we will realise. 

We know that delivering in-work support through universal credit will present challenges, which we are addressing. By the time universal credit is fully rolled out, we will be working actively with 1 million more claimants who are in work—that is 1 million working claimants who have not been supported to date. That substantial and broad group will have many different attitudes to earning progression. Many will be willing and open to the idea of progression but unsure about what to do, and others will feel they are not capable of earning more; we will also be dealing with people who are simply resistant to change. The trials that the regulations support are essential to ensure that we develop an effective approach to those groups. 

As I mentioned, we are one of the first nations ever to attempt this on a large scale, so there is very little evidence nationally and internationally about the impact that labour market policies will have in helping people to earn more. We have therefore developed a comprehensive test-and-learn strategy to test a range of different interventions, how they are delivered and when they are provided. The draft regulations will give us the opportunity to test a range of things. The interventions will cover a number of established different levers and our strategy focuses on four key areas: the support we can provide claimants to progress in work; how we test and use conditionality to drive the behaviours we want to build; and how we can engage with and work with employers to come up with solutions. 

Nigel Mills (Amber Valley) (Con):  The Minister just mentioned how Government can test and use conditionality. Is she expecting any sanctions on people who do not engage in the process and do not try to increase their hours or wage rate? 

Esther McVey:  As my hon. Friend will know, I will answer all questions as I get through to what we seek to learn through our trials. It is key to understand the behaviours and the support, but it is also key that we look at helping people to progress in work. We talk about wanting people to have not just a job but a career—wanting people to have more money to help them and their families to come out of poverty and to understand how they can progress. Top executives get this kind of support; we want everyone to have support so that they know where they can go in life. If we are talking about social mobility, this is a key factor in helping people to progress in their lives. 

John Hemming (Birmingham, Yardley) (LD):  Will the Minister give way? 

Esther McVey:  Not just yet, because there is plenty of time to talk afterwards. I will come back to the hon. Gentleman a bit later on. 

Another key area is what we might do to change or test new financial incentives that could drive more people to want to work and earn more. The regulations provide a framework to build on this evidence, supporting randomised control trials to test a number of approaches and to track behaviours. The first of the randomised

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controlled trials that we plan to deliver under the regulations will begin in April 2015. It will centre on providing work coaching and support to low-earning claimants in order to set relevant goals and aspirations and help individuals to consider what they could do to increase their earnings and what activities they should undertake. As part of the trial, some of those activities could be mandatory, specifically where they offer claimants a strong opportunity to increase their salaries. 

In the first trial, we will also test the impact on progress of different frequencies of conversation with claimants, comparing fortnightly discussions and every few months. Many trial participants will be expected and required to do more to increase their earnings, but only where reasonable. We recognise that individual circumstances mean that that approach is not appropriate for everyone. For that reason, some groups such as recent victims of domestic violence will be specifically excluded from the trials, as will self-employed claimants. Universal credit already fully supports people on low earnings in self-employment to establish their businesses; that group needs a different and more specific kind of support for their circumstances. 

John Hemming:  A concern raised by my constituents is people on zero-hours contracts, who at times get no pay at all. I have constituents raising that with me at the moment. Is this sort of assistance an increase in payment? That is more of an issue with the employer rather than the employee, because the employer is not giving the hours. Is the idea that this should be used as a mechanism to assist those people to get more hours and work out how to deal with that? 

Esther McVey:  As my hon. Friend will know, universal credit is a bed of support and is able to deal with fluctuating hours and conditions. Under jobseeker’s allowance, a person would not be mandated to take a zero-hours contract at all. Under universal credit, we will do this where it could help someone. Obviously, they will still be on benefits and we could support the extra hours. However, where it is an exclusive zero-hours contract, this will not be allowed and we will not do it. It will be where it works and where it could support people because there is an underlying benefit entitlement. Using real-time information, we will be able to support the benefit either way. It is about progression—getting a job, getting work experience and getting paid more. Where it works, we should enable people. 

John Hemming:  The question is about where someone is in work but not getting any hours, even though it is not an exclusive zero-hours contract. Is there any objective to try to deal with that, or do people just need to get a job with a better employer? 

Esther McVey:  We are not discussing zero hours today. We know that the Government are tackling the issue of zero hours, which came about in 2000, and we are ensuring that exclusive contracts are not zero-hours contracts. Universal credit is a liberator: it enables people to take work or work experience because there will be underlying benefits supporting them with their fluctuating wage. Where it is right and it is a job progression where they will learn things, we will support people to take that job. Where it is not, we will not. 

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Even within the trials, we will provide protection for those who could not reasonably be expected to do more to progress. People who work part-time because of health conditions or caring responsibilities will not usually be expected to do more. Furthermore, no in-work pilot participants in any in-work trials would ever be expected or required to do more than claimants who are out of work and expected to find work. We believe that that is the best approach to obtain the learning we need to effectively promote the in-work earnings progression of universal credit claimants. 

Our test-and-learn strategy has been shaped and endorsed by an external advisory group of experts and academics. The result is an approach that utilises randomised control trials to provide greater flexibility in testing a wide range of options. Building on the strategy, the wording of the regulations is intentionally broad and is intended to provide an essentially flexible vehicle for exploring the impact and role of each of the key levers for different claimant groups. That is critical if we are to optimise our learning and maximise the societal benefits of earnings progression. We recognise that that is a departure from the more static Department for Work and Pensions trials of the past, but we believe that the more dynamic approach provides the best opportunity to build the evidence that we need. I commend the regulations to the Committee. 

9.6 am 

Stephen Timms (East Ham) (Lab):  I, too, am delighted to serve under your chairmanship, Mr Sanders. I thank the Minister for her explanation. As she knows, we support the principle of universal credit. She is right that it provides an opportunity to support progression because people continue to be claimants of universal credit once they have gone into work in a way that has not been available in the past. That is one of its advantages. As I understand it, claimants of universal credit are not subject to any of the arrangements at the moment—there is no support for progression for those who are currently claiming universal credit, and no in-work conditionality. Will she confirm that that is the case? 

One reason that the universal credit project has got into great difficulty is that it has been shrouded in wholly unnecessary secrecy. The Minister, as Ministers always do, said that it was all going well. In fact, it is running about four years late. When we first considered universal credit in the Welfare Reform Bill Committee in 2011, we were told the transition to universal credit would be complete by 2017; we are now told it will be complete by 2021. It is running about four years behind and no doubt will slip some more. The original intention was to have 1 million people in receipt of universal credit by April last year. I think that the most recent figure is 20-something thousand; as many of us said would be the case, the project is running a long way behind what was originally envisaged. 

The problems could have been overcome much more readily if Ministers had been willing to be more open about what was really going on, instead of constantly telling us that everything was on track. From time to time there have been shafts of light about what is going on in the project, provided by the National Audit Office which has published two reports, including “Universal Credit: progress update”. Paragraph 2.22 of that report, which was published on 26 November, made the point that 

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“consultants recommended that the Department produce and publicise plans that include sufficient detail to confirm key activities and milestones”. 

That is an extremely good recommendation. We should have a published plan that tells us what the milestones are and what the activities for those milestones will be, so that we can all see what is going on. It might slip a bit and that might cause a little bit of embarrassment from time to time for Ministers, but the project would be going forward on a much sounder basis if there was openness about the intentions and the time scale. In the event of the Labour party being elected to Government at the election, it certainly would be our intention to produce, publish and update such a plan as an important element in rescuing the universal credit project. 

One of the things that is slightly peculiar about this project is that, according to Cabinet Office guidance, an outline business case should be signed off before procurement is undertaken. In this case, however, procurement happened getting on for four years ago, but we do not have an outline business case and we are told that we will not have one until the summer. The whole thing is topsy-turvy. There was a business case initially, but it had to be thrown away when it became clear that it was unrealistic. An earlier business case, which was described as a strategic business case or something like that, had less detail and was signed off in the autumn, but we do not yet have an outline business case. 

Given that we have been told there should be an outline business case by the summer of this year, does the Minister expect it to include a business case for in-work conditionality? Did the strategic business case that the Treasury signed off in the autumn include in-work conditionality? What does she understand or expect the resource implications of in-work conditionality to be? Will jobcentres have to recruit additional staff to do what will probably be quite a big job, with what she put at 1 million people to be supported and engaged with? They are not supported at the moment, so that is a significant additional task for jobcentres. Will it even be jobcentres? Perhaps others might do the work. Does she have an estimate for how much it will cost to provide such support? Does she have a view on how that cost will be met, whatever it turns out to be? 

The report from the National Audit Office gives us some useful information about the labour market trials that were undertaken by the Department and were set up to try out various approaches to in-work support. Paragraph 3.10 states: 

“While the Department has seen some early positive results in some of its trials, it is considering their cost-effectiveness as they are often based on face-to-face approaches which may increase costs in the long term. Its digital and remote trials have had limited success to date.” 

That does not sound like a promising summary. The face-to-face approach is promising, but expensive, according to the NAO, and the less expensive approaches have had “limited success”. Clearly, the trials have not gone well or not shown promise. 

There were 14 trials but, according to the NAO summary, only two sound at all promising, with the outcome of two more as yet unclear, with the report stating that it is 

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“too early to form judgment”. 

Up to four of the 14 might therefore prove to be promising. 

The NAO summarises the results of the 14 approaches and refers to 

“limited learning; challenges to engaging employers with this approach”— 

which does not sound promising— 

“positive early results but expensive to deliver…Challenges around identifying and engaging households…Trial ended due to limited impact…Positive results but trial ended due to low value for money…Refocused trial due to limited take up…Positively received by claimants but limited engagement and impact…Limited impact; trial ongoing…Limited impact and take up”. 

Nine of the 14 trials do not sound promising at all, but two sound a little more so. One provides 

“strong face-to-face adviser support to in-work JSA claimants”. 

The NAO sums up in its assessment: 

“Positive early results; trial ongoing”. 

Another trial, extending telephone support to people for up to 6 months after leaving jobseeker’s allowance, is given a 

“positive early assessment of activity”. 

Will the Minister tell us what lessons have been learned from those trials about how best to deliver such support in future, given that only two of the 14 are positive? Is it her intention that those approaches, or variations or developments, are to be applied in the trials made possible by the regulations? Can she tell us a little more about the models for in-work conditionality that are going to be pursued? The explanatory memorandum says in paragraph 7.12: 

“We have developed a strategy that looks to test a range of propositions.” 

What are the propositions that are going to be tested in that strategy? 

I know that this has been floated, but does the Minister envisage employers having a role in applying in-work conditionality? If so, what is that role likely to be? Does she envisage requiring people, in some circumstances, to change their job to increase their pay? Are we going to have some pilots where people might be required to change their job and some where they will not? Does she expect it to be possible in all the pilots for people to be required to change their job to increase their pay? Can she tell us a little more about that? Generally, given that the explanatory memorandum tells us that the aim is to trial the provision of a range of support, can she tell us some more about what that range is going to be? 

Will the evaluations of the pilots be published? How many pilots does the Minister envisage? Does she know where the first pilot will take place? It might well be somewhere in the north-west. If so, where will it be and when does she expect it to begin? Does she expect most of the trials to be in the north-west, with roll-out taking place there first, or does she expect some to be in other parts of the country? 

When does the Minster envisage making a decision about which of the piloted approaches would become part of the mainstream universal credit service? The powers that we are being asked to give Ministers today will last for only three years. Can we take it that in-work conditionality is not expected to be fully implemented

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for at least three years? Might it be a shorter period? Will it be possible to establish a successful approach in less than three years, in which case, could the successful approach be implemented in that shorter period? 

The hon. Member for Amber Valley asked a good question about the use of sanctions. I am not sure what he understood from the Minister’s answer, but it certainly did not sound to me as though the Minister was saying, “Yes, there will be sanctions,” but I think that is the answer. Sanctions will be applied to people who are regarded as not doing enough to increase their pay. Given that, can she tell us more about the circumstances in which she would expect people to be sanctioned? Can she give us some examples of failure that would lead to a sanction? Does she envisage—from reading what limited information has been provided to us, I think she does—using the full range of sanctions, including the three-year sanction, under which people would lose all of their universal credit for a full three years? In what circumstances would she envisage doing that? 

It is clear—the Select Committee on Work and Pensions is looking at this issue at the moment—that the current fixation with sanctions in jobcentres has done significant damage to the reputation of Jobcentre Plus among jobseekers. There is a worry that that could get a good deal worse if that rather punitive approach is taken to the 1 million additional people already in work who will have to engage with the system. 

The hon. Member for Birmingham, Yardley asked a good question, which I want to pursue a little further. One feature of the current arrangement for tax credits is that for someone to be eligible they have to work for at least 16 hours a week or, in the case of a couple, 24 hours a week. However, that hours threshold will not apply with universal credit, so people will be able to benefit from its support when doing jobs with very short hours. 

Has an estimate been made of the extent to which people are likely to reduce their hours—or have them reduced by their employers—to take advantage of the support provided by universal credit for jobs with shorter hours than those currently eligible for tax credits? We well understand the benefit of removing the hours rule and there is a good case to be made for doing so, but there is a worry that employers will no longer feel obliged to provide at least 16 hours of work per week, and so will give shorter hours. Given the proliferation of zero-hours contracts over the past few years, some people could end up in great difficulties, with only small amounts of pay in some weeks. Will the Minister tell us whether an estimate has been made on that? 

There is a clustering of jobs around the 16 hours a week mark so that employees can benefit from tax credits, but that incentive will go when universal credit is introduced. Has any provision been made to address that situation? If a lot of people find that their hours are reduced and they have to receive commensurately more universal credit to support themselves, it could significantly increase costs. 

I hope that the Minister can provide helpful and informative answers to those questions. I am certainly not going to suggest that the Committee oppose what the Government are trying to do, but we will follow the progress of the pilots to be established by the regulations with great interest. I hope the Government will be as open as possible about the conclusions they draw from them. 

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9.23 am 

Nigel Mills:  I have a few questions for the Minister. I, too, would be grateful if she expanded a little on how sanctions are expected to work. 

Everyone would agree that this is a good idea. It seems absolutely right that we support people on their journey through to maximising their potential rather than stopping that support when they have cleared the first hurdle, so I wholeheartedly support what we are trying to do with the regulations. However, there are questions about how they will work in the current system. I can see, intellectually, how we could find a way to trial in-work support. That is clearly going to work: if we give people the right amount of support for the right amount of time from people with the right skills, and if we make that support something that they want to engage with and can see will help them, it is likely to be really quite effective. 

There is a second issue, however, which is whether to fit that support into the existing Jobcentre Plus system or whether to get other people to do it, and what the cost implications will be. Will the trials also be a trial from the Jobcentre Plus end, so we see not just whether in-work support will work in theory, but how we can use existing staff resources to make the pilot work? I suppose what might happen is that where someone falls out of work and has a Jobcentre Plus adviser they work well with, that adviser might be the one who continues to engage with them when they get back into work and perhaps gives them the encouragement and support to try to progress through their career. Is that expected to happen or will different people—totally unknown to that person—be making a phone call every now and again? 

How soon after someone finds their job will the process kick in? Are we saying that if someone has been out of work for a while and then finds a job, they will want some time to bed down and get used to being back in work? Will there be a pause before they get the new support or will it kick in almost straight away—“Great news, you’ve found yourself a 16-hour job. Now how are you going to make it a 35-hour job?” It seems a little harsh to start putting more requirements on someone just after they have started a job. That whole process—how we get people on the journey, when the right time to re-engage with them is and whether there should be a gap—needs to be thought through. 

Clearly, there will be a large group of people in the 1 million who may get in-work support who have not been out of work for a long time, have no Jobcentre Plus relationship and are now claiming tax credits. They probably do not think that they are on welfare, but on some complicated tax rebate scheme. We all get cases where people say, “I’ve never claimed benefits in my life,” even though they are claiming tax credits. When they eventually get rolled into universal credit, they will be claiming the same benefit, within reason, as somebody who is out of work. I suspect that the psychology for them will be different from someone who has been recently out of work and can see that there is a journey to get back to full-time work above the £12,000 level. 

I accept that it may be hard in a universal credit regulation to work out how to deal with people who are only claiming tax credits—not universal credit— and how they would engage in in-work support. Is the

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Department thinking about how to handle a group of people who have not had any kind of external support for their career and who may suddenly, at some point, come within the scope of the provision? I suppose that will come down to how we communicate and sell the support. 

Will the support be sold, as the Minister implied, as senior people getting career support and mentoring? Will it be sold as something that people will want to have, will engage with and is there to help them, or will they receive a rather blunt letter from the Department when they get selected saying, “You have been selected for in-work support and conditionality. You must engage with this, speak to your adviser and turn up when you are told to, otherwise you might start having your universal credit sanctioned.”? I suspect that if we start with that letter, the process will become confrontational, rather than something that people will want to engage in and support. Is the Minister thinking about how to engage people at the start? 

Will there be separate trials? Perhaps some could get a friendly offer of further career support to see if they engage with that, and some could get the full, threatening, rather badly written thing from Department—“This could lead to sanctions”—which I suspect people will not engage with. The friendlier, more constructive approach is likely to work better with a lot of people. 

My last question is: how will we measure the success of the support? It is an ongoing issue for the Department that the measure that jobcentres work on is people who have come off benefits, either because they have found work or because they have just left the system and do not want to engage and claim benefits any more. Everyone has been trying to work out what the new measures for judging Jobcentre Plus performance should be, when people are not coming off benefits because they are reducing their benefits, but staying on universal credit. 

When the pilots for the scheme are in place, will we look to change how we measure the performance of Jobcentre Plus, so that we find a measure for people who have got into some kind of work and a separate measure of how long it takes to get them into earning more than the £12,000 that the Minister quoted? Is this going to be a totally stand-alone scheme that does not look at that? If we target people with achieving, it is important to understand how we know when they are successful and where the cut-off is. For how many years do we engage with individuals—for a certain period after they have started going back to work or a longer period? 

I wholeheartedly support this idea. It is right that we trial it and see what works and what does not. It is important to find out in the trial how we can plug into the existing system so that if it works, it can be rolled out and scaled up in a way that is effective across the whole country, rather than finding out that spending quite a lot of money on some intensive support for people works and not knowing how to scale that up and make it effective. 

9.29 am 

Esther McVey:  There are lots of questions to be asked and many relevant ones have been raised today. However, we know that what we are doing is simplifying

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the benefits system to ensure that everybody is better off in work. It will provide a bed of benefits that will react to fluctuating increases of wages. That is a liberating factor to enable people to take jobs and move forward. People will no longer face the clunky cliff-edges around 16 hours, or worry about taking work if they might be taxed at over 90% and lose housing benefit. 

All of those unknowns have trapped people on benefits, as we all know. People would say, “I would have loved to have done X, Y and Z. I would have loved to have got a job. I would have liked to have got my foot on the bottom rung of the ladder and get a job, but I couldn’t, because I did a stock take of what would be coming into my house and it didn’t make economic sense.” 

Although we might say in response, “Yes, but in the future things will be better: you’ll have had a job and you could have moved forward,” we understand the concerns about the 16-hour rule and the ridiculous 98% tax rate that some people would have. We asked how we could alter that to bring in a brand new system. That is why there was cross-party support. We knew we had to do something. The aim is to help people progress and to move more people out of poverty. Of the numbers we have looked at, there will be 3.2 million more people better off by nearly £200 a month if they engage with universal credit and the support and get into work. 

What are we doing and how are we setting these tests? There was a big call for action in January 2013, asking who would come on board and work with us to offer their ideas. As I said before, this has never been done on any scale before, nationally or internationally. As a result, 350 parties came forward, such as stakeholders, academics, think-tanks, charities and individuals, to ask how best to undertake a test-and-learn process for in-work progression and how they could work with us on that. 

We are looking at what the state can do, what business can do and how we can work together to make it possible. The state could offer support by addressing barriers and attitudes to progression, and help with the education and skills needed by an individual to get a job. We need to know what conditions should be put in place to ensure we have the right drivers for individuals to want to take part and move forward. How do we work with employers to test innovative approaches to support in-work progression in the workplace? What financial incentives could influence claimants’ behaviour? 

We need to support all of that. Equally, we need to know who would be best to deliver the support. Will it always be the Jobcentre Plus adviser? Could there be some other providers? Is it best through digital support? Is it best done face-to-face? Is it best on the telephone? That is why we have run tests with people who are on tax credits. We want to know how we could best engage. For a lot of people it was by phone contact. They felt that was the least invasive and the most supportive way—that was what helped them most in the trials we held in north London. There are simple things such as flexibility of times for Jobcentre Plus. When should they be open? When should people be available? How are we helping the claimant—the person who is in work—to do more? 

The first trial that we are setting out today is about developing the evidence around the potential core components of an in-work service. We are looking to build robust evidence as quickly as possible to find out

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how we best support people to get into work. The success of our trials and the eventual delivery model will be about promoting earnings for claimants in low-paid work. It will be about increasing the number of people getting into work. It will be about promoting financial independence and reducing people’s need to be on benefits. It is about achieving efficiencies and support for the taxpayer and the wider economy. 

Stephen Timms:  How many different trials is the Minister proposing? 

Esther McVey:  In core 1, we are looking at the best way to support people to go for jobs, as well as how to get over any barriers to applying for work. It is about working with businesses to find out what they can do and how they can engage with this. We are doing and have already done a selection of trials. We know where we want to get to. We know that people want to engage, and the success we have had so far is that people are doing far more work searches and engaging far more. A lot of that comes from the claimant commitment that we have already rolled out to 1 million people. Some of these things are already key for bedding in universal credit. People are doing significantly more hours; they are spending 27.1 hours, compared with just 13.6 hours, a week on average looking for work. 

The results so far show that 94% of claimants felt that the conditions of claiming universal credit were well explained. They felt that the encouragement to work was working for them, with 85% believing that universal credit staff have the necessary skills and knowledge to support them, and 85% agreeing that the advice and support offered by the work coach matched their personal needs. Those are the positive findings that we are gradually getting from working with claimants, whether it is those using the claimant commitment and jobseeker’s allowance or the new claimants under universal credit. We are working with key people for the trials—not just businesses, but the Chartered Institute of Personnel and Development, and advisers who provide support to employers. 

Stephen Timms:  Was the provision for this in-work conditionality included in the strategic business case signed off by the Treasury in the autumn? 

Esther McVey:  I do not believe that it was. I will double-check and write to the right hon. Gentleman to let him know. We know from our engagement with individuals so far that they are finding this extra support helpful. They have never had it before; they have never had people taking an interest in them. We are finding that there is greater retention when people are now getting work. The phone calls and support to find out how it is going for the first six months are working. Prior to that, people got a job and they were not helped. Sometimes, that can be the biggest hurdle or obstacle. This could be a whole difference in someone’s life or different from what the rest of their family are doing, so that extra support is key. 

Those are the things that we are testing out at the moment to move forward. We talked about milestones and how many people are now working with universal credit. This spring, one in three jobcentres will be rolling out universal credit. We have singles and partners

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already on universal credit, and we have rolled it out for families at six jobcentres. The right hon. Gentleman was right to say that, at the moment, there are about 30,000 people on universal credit. That will move to 0.1 million in May this year and 0.5 million next year. It is significantly ramping up at the moment. 

As we all know, our key aim is to support people in work. We have record rates of people in work. At any one time, there are 700,000 job vacancies. We know that we have the right conditions and we know that there are vacancies out there. From working with businesses, we know that they want to expand and to develop their staff in order to take on work so that they can increase their business and productivity.

Now is the time to work with the individual who we know wants more work and more money coming into the house to support the family. This is the key way to go forward. No, it has never been attempted before, but this is the key way to do it. Through the trials, we will find out the best way forward; if we do not do them, we will never know. We know that we have to do this. The aim is to support people and get them into work and doing far more work. We have had back some very good case studies. We have been working with people on tax credits, but now really is the time to reach out and get these trials done. For that reason, I recommend the regulations to the Committee. 

David Wright (Telford) (Lab):  Will the Minister address the points made by Government Back Benchers and Opposition Front Benchers about how the sanctions regime will work under the pilot scheme? She has described the pilot as fairly open, and I am sure that she wants it to be constructive. She has been positive today, so I am not being critical, but I want to understand how the sanctions regime will work. 

Esther McVey:  We are seeking to work with the individual, asking, “How best can we work with you? What is it that you can do?” So there will be claimant commitments and an agreement either way. What steps could reasonably have been taken to go forward? Could someone have done training to improve themselves? Is that something that we both agree to? If we have agreed that the training could be an improvement and someone does not turn up for it, a sanction could be applied. It is something that would enhance someone and could enable something that has been agreed—that is, the path that we are going down. Yes, sanctions could be applied, but it is about how best to get the right reaction from someone who is doing the right thing and who wants to progress and move forward. It is fundamentally about those steps to getting a promotion or a job. 

Meg Munn (Sheffield, Heeley) (Lab/Co-op):  I am sorry to press the Minister, but I want to follow up on the point made by my hon. Friend the Member for Telford. People in my constituency who work for the organisations that are putting the Work programme and the like into practice tell me that they have no room for discretion. Even when they are very clear that someone has a very good reason for why they did not turn up—for example, they broke their arm and had to go to hospital—they must still go through the sanctioning process. Is the Minister saying that, under the pilot scheme, which is obviously different, there will be a

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different method for sanctions? The current process, in which people have to report for sanctioning, is causing extreme distress and hardship. If that continues, we will not build the kind of relationships that she spoke about. 

Esther McVey:  In the current process, where someone has done something that could be deemed a sanctionable offence, their adviser will say to them, “This is something that you could be sanctioned for.” However, there may be a good reason—it could be that they ended up in hospital, or the times or dates were wrong. Whatever it was, if it is deemed to be a good reason—the adviser does not decide on the case; it goes to a decision maker and then comes back—it will not go to a sanction, but a person would be told at the beginning of the process, “This could be an action that could result in a sanction.” At that stage, roughly half of them never become a sanction, because it goes to the decision maker, who looks at the evidence available, and if there is a good reason, they will say, “This doesn’t seem right. Why would you do it?” After that, if required, there would be a mandatory reconsideration, at which point about 12% are overturned. Should it go to an appeal after that, less than 1% of decisions are overturned. That is the route that is followed. 

We have talked about Matt Oakley and how communications can be better. How do people know what is expected of them? How do they know whether they have been sanctioned? How do they get hardship payments? Will their housing benefit continue to be paid? We have accepted all Matt Oakley’s recommendations. We did not simply keep people in the Work programme; we moved them across to JSA, and to employment and support allowance as well. 

We undertook a test-and-learn process—it is a slow roll-out—but we are now really understanding a group of people with whom we have never worked before. We have never worked with anybody who has been in a job. People would frequently tip out of a job within a couple

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of months. So far, we are enabling people to remain in a job with the extra support. At the moment, telephoning seems best, but it might not be. Again, we are looking at how we increase people’s maths and English standards through online learning, blended learning and digital support. All that will come into play. 

To be honest, we will not know, unless we do the trials, how best to take this forward. What we have seen so far is positive. The claimants coming through have faith in what we are doing, and they feel for the first time ever that they are being supported. Claimant satisfaction has gone up because they feel they are more in control of their lives. I have heard it said that advisers feel they are being forced to do things. The reports we are getting back now indicate that they are actually doing what they have always wanted to do: help people progress into work. People are getting real job satisfaction and support. So far the experience has been positive and I hope the Committee will support the regulations. 

Stephen Timms:  The Minister said earlier that the business case signed off in the autumn did not include provisions for this. Does she envisage that the outline business case due in the summer will contain those provisions? Given that the pilots will not have been going for very long by that stage, will it still be unclear how much this is going to cost and what the business case will be? 

Esther McVey:  I did not give an answer either way to the right hon. Gentleman. I will write to him with a full explanation. 

Question put and agreed to.  


That the Committee has considered the draft Universal Credit (Work-Related Requirements) in Work Pilot Scheme and Amendment Regulations 2015. 

9.47 am 

Committee rose.  

Prepared 15th January 2015