Unemployment benefits have always been conditional. A system of disallowances where claimants do not meet the underlying entitlement conditions, including being involuntarily unemployed, available for work, and actively seeking work, has existed with some variations since the introduction of Unemployment Benefit in 1911.
Benefit sanctionscessation of payments for a period where claimants fail to meet a broader range of more precise conditionshave been part of the system for at least the last four decades. The stringency of the benefit sanctions regime has increased under successive governments since the 1980s, most recently in the Welfare Reform Act 2012; claimants can be required to undertake a greater number, and greater range, of actions to find work. These more "active" benefit regimes are the norm in developed economies.
Despite the apparent mainstream political consensus, sanctions are controversial, because they withhold subsistence-level benefit payments from people who may have little or no other income. We agree that benefit conditionality is appropriate and necessary, but it is essential that any system draws on robust evidence on the efficacy and impacts of sanctions; has clear and coherent rules; has strong safeguards to protect the vulnerable; is fair and proportionate; and effectively mitigates the risks of severe financial hardship. The sanctions regime, as currently applied, does not always achieve this, despite the existence of hardship payments and efforts by Government to improve efficacy.
A broader independent review
Issues which were set out in our January 2014 Report, Jobcentre Plus in the reformed welfare system, are not rehearsed at length in this Report; however, in the light of additional evidence received, we reiterate our recommendation that:
The Department for Work and Pensions (DWP) establish a broad independent review of benefit conditionality and sanctions, to investigate whether sanctions are being applied appropriately, fairly and proportionately, in accordance with the relevant Regulations and guidance, across the Jobcentre Plus network.
This review should additionally examine the clarity and coherence of the legislative framework for benefit sanctions policy, to ensure that the basis for sanctioning is clearly defined, and safeguards to protect vulnerable groups clearly set out.
Full implementation of the Oakley Review
The Oakley Review of Jobseekers Allowance (JSA) sanctions in relation to Back to Work Schemes was welcome, and the steps the Government has so far taken, particularly in relation to improving the clarity of its information and communications, will go some way towards improving claimants' understanding of their obligations and of the sanctioning process.
DWP should take the necessary steps, as soon as is practicable in the next Parliament, to fully implement the Oakley Review's broader recommendations, in particular: piloting of pre-sanction written warnings and non-financial sanctions in relation to the Work Programme; and allowing Work Programme providers a greater level of discretion, including the ability to accept claimants' obvious "good reasons" for not meeting mandatory conditions. More broadly, the Department should consider, as part of the renegotiation of Work Programme contracts, implementing a more flexible approach to the mandatory requirements placed on claimants ("mandation") in the Work Programme.
Increasing the evidence base
There is evidence that more "active" unemployment benefit policies are more effective than the alternatives; but evidence on the specific part played by financial sanctions in successful active regimes is very limited and far from clear-cut. DWP should increase the evidence base through a series of evaluations. In particular, it should test the efficacy and impacts of the longer minimum sanction periods which were introduced under the Welfare Reform Act 2012, and investigate whether the application of a longer sanction makes it more, or less, likely that the claimant moves into employment.
DWP should ensure that the relevant guidance to Jobcentre Plus (JCP) Work Coaches includes that sanctioned claimants should be offered additional, tailored support, to help them to fulfil their benefit conditions and improve their employment prospects.
Setting appropriate job-seeking conditions
The recently introduced Claimant Commitment intensifies job-searching conditionality. There is evidence that claimants are signing Claimant Commitments they know they cannot fulfil, for fear of being sanctioned if they refuse. DWP's evaluation of the Claimant Commitment, currently due to be completed in summer 2016, should be expedited, and should include assessments of whether it is genuinely involving claimants in the development of their job-searching strategy, and setting reasonable conditions for all groups of JSA claimants, including those with physical and mental ill health, learning disabilities, and caring responsibilities. The evaluation should also assess whether Jobseeker Directions are being used appropriately in the new system.
The Department should develop its guidance on vulnerability, specifically to assist JCP staff in identifying vulnerable claimants and tailoring the conditions applied to them accordingly. This guidance should then be routinely followed as part of the process for agreeing and monitoring the Claimant Commitment.
There is evidence that the setting of conditionality for single parents is not always functioning as it should. Better training for JCP staff is required on the regulatory flexibilities which apply to this group. The Department should also produce a straightforward, plain English guide to the flexibilities, for all single parent claimants.
Testing a more targeted approach to strict conditionality
Most unemployed people are well-motivated to find work. Strict conditionality is only necessary for a minority of claimants, particularly those whose lack of engagement with employment support arises mainly from their lack of motivation and attitudes towards working. DWP should draw on its own research into the attitudes and motivations of unemployed people, in order to develop and test approaches which identify, and focus on, those claimants whose attitudes it seeks to change.
Coherence of the JSA sanctioning system
There should be a greater distinction drawn, in the Department's processes, communications, and official data, between claimants who are not meeting the underlying conditions of entitlement, in particular those who are genuinely "not actively seeking employment" and may therefore be abusing the system, and those who are making significant efforts to find work but have not fully complied with the precise terms of a Claimant Commitment. At the moment both receive the same penalty.
Employment and Support Allowance (ESA) sanctions
ESA claimants have been assessed as having disabilities or long-term health conditions which affect their capacity for work. This means that the employment support they require is likely to be more intensive and/or tailored to their specific health-related employment barriers.
There is concern that the stringency of the ESA regime is not currently balanced by effective support for this group in the Work Programme. Furthermore, there is very limited evidence that financial sanctions are effective at moving claimants who are some way from the labour market closer to work, and may conversely be hindering progress already made. There is some evidence that voluntary approaches are more appropriate and effective.
The Department should review ESA sanctioning in relation to the Work Programme, accelerating development of more effective support for this group and prioritising the updating of regulations early in the next Parliament to empower Work Programme providers to be able to accept "good cause".
DWP is currently conducting pilots of alternative forms of employment support for ESA claimants. The Department should ensure that its pilots include voluntary approaches, including the Individual Placement with Support model.
Mitigating the risks of severe financial hardship
DWP has made welcome changes to discretionary hardship payments, including steps to increase claimants' awareness of their availability. However, further changes are required to ensure that hardship payments are more effective in mitigating the risks of severe financial hardship arising from sanctions. This should include making all payments available from the first day of sanction periods, and ensuring that the hardship payment process for vulnerable claimants and those with dependent children is initiated by the Department, rather than waiting for the claimant to apply.