3 The evidence base for sanctions
policy
The success of "active"
unemployment benefit regimes
42. DWP was adamant that "active policies work"
in relation to unemployment benefit systems. It also emphasised
that most developed countries attach quite strict work conditions
to the receipt of unemployment benefits, and that financial sanctions
"for refusing job offers or failing to participate in activities
to help them into work [are] the norm."[39]
43. A number of witnesses agreed that the general
approach had been shown to be relatively successful.[40]
Tony Wilson of the Centre for Economic and Social Inclusion (Inclusion)
told us that there was "robust" international evidence
that active, conditional unemployment benefit systems, backed
up by financial sanctions, are "more effective than the alternatives."[41]
The part played by financial sanctions
in successful active benefit regimes
44. However, expert and academic witnesses reported
that the international evidence on the specific part played by
the application, or deterrent threat, of financial sanctions in
successful active regimes was more nuanced and far from clear-cut.
The joint university Welfare Conditionality research project told
us that the current academic evidence "does not enable one
to untangle the relative impacts of the job-search conditions
themselves, the sanctions regime that enforces them, and any accompanying
forms of support."[42]
Evidence from the University of Oxford and the London School
of Hygiene and Tropical Medicine (LSHTM), which undertook a comparative
analysis of the social security sanctions systems applied in the
EU and USA, indicates that they have variable effectiveness in
getting claimants back into work, and that the UK's system was
one of the most punitive.[43]
45. Inclusion's analysis was that:
There is some evidence that [sanctions] may increase
the likelihood of entering employment, but it often appears to
be poorer quality employment, temporary employment or unstable
employment. There are very clear offsetting negative impacts,
which are likely to outweigh any small, marginal positive impacts.[44]
This is borne out by a number of academic sources,
including a comprehensive review of the international evidence
published by the Joseph Rowntree Foundation in 2010.[45]
46. While almost all witnesses accepted that a set
of basic entitlement conditions, and an accompanying system of
disallowances, was necessary in any unemployment benefit regime,
some believed that active regimes could operate, or even be enhanced,
without the application of financial sanctions to enforce the
wider range of conditionality.[46]
47. The Public and Commercial Services Union (PCS),
which represents DWP staff, believed that very stringent and wide-ranging
conditionality left claimants feeling that "the smallest
misdemeanour will result in them being sanctioned". Its view
was that this adversely affected the necessary relationship of
trust between JCP Work Coach and claimant.[47]
48. However, DWP insisted that sanctions were an
important and necessary part of the overall system. Chris Hayes
pointed to research by the Organisation for Economic Co-operation
and Development (OECD), which found that "having a credible
benefit reduction leads to increased work search and an up to
50% increase of flow into employment because of that work search."[48]
49. Earlier in this Parliament, after considering
DWP's plans for conditionality within Universal Credit, we came
to the view that sanctions were necessary, but with important
caveats about the way in which the system ought to be applied:
Sanctions are a necessary and important part of the
benefits process, but there is little evidence that they strengthen
work incentives on their own. The effectiveness of the new regime
is likely to depend heavily on the quality of the face-to-face
support provided by DWP through Jobcentre advisers. Sanctions
must be used by DWP staff primarily as a deterrent and a last
resort.[49]
However, with the emerging evidence of the application
and effects of sanctions, our view is now more nuanced.
50. A range of witnesses to this inquiry emphasised
the importance of balancing stricter conditionality with more
intensive employment advice and support. Some believed that a
proper balance was not currently being achieved.[50]
We were concerned that support for claimants was likely to reduce
or stop during a sanction period, as the claimant might stop engaging
with JCP or the contracted provider. The Minster insisted that
sanctioned claimants received "extra support", but she
was unable to describe the types of additional help they typically
receive.[51]
51. We agree that benefit conditionality is
appropriate and necessary but reiterate our view that it is important
that conditionality is balanced by effective employment advice
and support for claimants. We recommend that DWP ensure that the
relevant guidance to JCP Work Coaches includes that sanctioned
claimants should be offered additional, tailored support, to help
them meet their benefit conditions and improve their employment
prospects, including attending a specific meeting after a sanction
has been applied to discuss how to improve compliance and ensure
that the Claimant Commitment fairly reflects the individual's
needs and abilities.
Recent policy development
Welfare Reform Act 2012: a clearer system of
longer fixed-period sanctions
52. Prior to the coming into force of Section 46
of the Welfare Reform Act 2012 (WRA 2012) in October 2012, JSA
claimants could be sanctioned for periods of between one week
and 26 weeks, as prescribed by DWP.[52]
The Department believed that, under this system, it was "not
always clear what level of sanction will be imposed for any particular
failure."[53]
53. The WRA 2012 more clearly set out fixed period
benefit sanctions which would be applied for the range of claimant
failures, and introduced a system of escalating sanction periods
for repeat failures on the part of the claimant. JSA sanctions
are now applied according to the seriousness of the infraction,
as follows:
· Low
level failures, for example missing an appointment, can result
in a four week cessation of benefit payment, or 13 weeks for a
repeat failure within a 52 week period;
· Intermediate
failures are more general failures to actively seek work or be
available for work and result in JSA claims being closed. If claimants
re-apply, no benefit is payable for four weeks after a claim following
a first failure and 13 weeks after a second or subsequent claim
where the most recent closure of claim was within a 52 week period;
and
· High level
failures, including failure to accept a reasonable job offer,
result in a sanction of: 13 weeks for a first failure; 26 weeks
for a second failure within 52 weeks of the first; and 156 weeks
(three years) for a third failure within 52 weeks of the most
recent failure.[54]
We examine the types of claimant failures, and official
data on the number of sanctions applied in each of the categories
since the new rules came into force, in more detail in chapter
5.
54. Chris Hayes told us that the new system was intended
to be more "credible", in line with the OECD findings
mentioned above.[55]
The Minister emphasised that the Government's intention was to
establish a fairer and more consistent approach, in which claimants
"would know what the sanction would be".[56]
The Department also pointed out that the WRA 2012 changes had
halved the maximum sanction period for a low-level failure, from
26 to 13 weeks. It also emphasised that by the end of June 2014,
by which point there had been a total of 1,444,411 adverse decisions
under the new regime, only 1,767 people had received the maximum
three year sanction.[57]
This had increased to 2,048 by September 2014, by which point
there had been 1,562,893 adverse decisions.[58]
PLANS FOR "IN-WORK CONDITIONALITY"
55. Universal Credit Regulations allow for a system
of in-work conditionality, in which very low-paid claimants may
be required to take steps to increase their earnings. The Department
has not yet decided exactly how Universal Credit in-work conditionality
will operate. It began testing different approaches in 2014, and
will continue to do so this year; the necessary Regulations to
allow for a range of further pilots were made in January 2015.
The pilots will test approaches which focus on: additional support
for claimants; the role of employers in driving pay progression;
the impact of conditionality; and additional "financial levers,
over and above the inherent incentives in Universal Credit".
Claimants taking part in the pilots who fail to comply with the
requirements without good reason will be subject to the normal
sanctions regime.[59]
56. We recommend that the Government does not
proceed with in-work sanctions beyond the existing pilots until
robust evidence is available from the pilots to demonstrate that
in-work conditionality can be effectively applied.
Evidence on the efficacy and
impacts of the current regime
57. Expert witnesses, including Matthew Oakley, were
concerned that the potential for longer minimum sanction periods
had been introduced without any apparent evaluation by DWP of
its likely impacts on claimants. Other witnesses noted a lack
of evidence that the application, or deterrent threat, of longer
sanction periods is any more effective than that of shorter ones.[60]
Steve Hughes of Policy Exchange, which has been an advocate of
stringent conditionality, noted that DWP's Impact Assessment of
the new sanctions regime stated that "it is not possible
to quantify the behavioural impacts".[61]
Tony Wilson described this area of policy as an "evidence-free
zone".[62]
58. We wanted to know what evidence the Department
had considered on the likely wider impacts on claimants of minimum
sanction periods of four weeks before implementing the WRA 2012
changes. The Minister could only point us to evidence for the
efficacy of the overall approach.[63]
Chris Hayes reiterated the point that it was important for any
sanctions regime to be "credible", and was satisfied
that the WRA 2012 changes achieved this. He told us that the UK
was around "mid-table [of OECD countries] in terms of [the
severity of] its overall conditionality regime." He noted
that the three-year sanction was "not unique", and emphasised
that in Germany an indefinite sanction could be applied in certain
circumstances.[64]
59. There is evidence that active and conditional
unemployment benefit regimes, in which financial sanctions play
a part, are relatively effective, but there is very limited evidence,
from the UK or overseas, on the relative impacts of the three
parts of the overall approach: the benefit conditions themselves;
the accompanying employment support; and the application, or deterrent
threat, of financial sanctions. We accept that any sanctions regime
must be "credible" if it is to influence claimant behaviour;
however, it is not possible from the available evidence to come
to a view on the relative efficacy and impacts of longer minimum
sanction periods compared to shorter ones. We believe that it
is important that the Government conduct evaluations to enhance
the evidence base in this policy area, to demonstrate that the
use of sanctions is not purely punitive.
60. We recommend that DWP evaluate, by testing
different approaches, the relative impacts on movements off out-of-work
benefits and into work of: benefit conditions themselves; the
level of accompanying employment support; and the application,
or deterrent threat, of financial sanctions. We further recommend
that DWP evaluate the efficacy and impacts of four-week minimum
sanction periods, as introduced following the Welfare Reform Act
2012, compared to minimum sanction periods of one week.
Impacts on benefit off-flow and
the destinations of claimants
61. There is clear evidence that benefit sanctions
tend to increase exits from benefitsknown as benefit off-flow;
however, the destinations of claimants who leave benefit following
a sanction, and the wider social impacts, are less well understood.
There are concerns that sanctions might lead to a range of unintended
consequences, including severe financial hardship and associated
wider social impacts.[65]
We consider the system in place to prevent severe hardship in
chapter 7.
62. Recent research by the University of Oxford and
LSHTM examined official data on sanctioning rates, employment
rates, and benefit off-flow in the period 2005-2014 across 375
local authority areas in the UK. The study found no relationship
between local sanctioning rates and employment rates. It found
a strong relationship between sanctioning rates and off-flow,
and that this relationship had become stronger since 2011 (taken
to be the point at which there was an escalation in conditionality
brought about by the introduction of the mandatory Back to Work
schemes, followed by the WRA changes in 2012). In the period 2011-2014,
the study estimated that for every 100 JSA sanctions applied there
was an associated off-flow from JSA of 42.4 persons. It claims
that only about 20% of those leaving benefit following a sanction
reported having found employment. [66]
63. One of the potential weaknesses in the above
study was the difficulty in tracking the outcomes of individual
claimants or cohorts of claimants. We noted this issue in our
January 2014 Report on JCP. Since 2011 JCP's primary key performance
indicator has been off-flow from benefit at the 13th, 26th, 39th
and 52nd weeks of claims. Previously JCP's performance had been
measured against a range of performance indicators, including
off-flows from benefit into employment. From 2009 DWP no longer
required JCP staff to record the reason a claimant left
benefit. [67]
A reason for leaving benefit, including where the claimant entered
work, is recorded in only around 55% of cases. The Oxford/LSHTM
study concluded that "there is a clear need to develop better
monitoring systems for tracking what happens to persons who exit
unemployment benefits."[68]
This accords with the conclusions in our January 2014 Report.
64. The Minister strongly disputed the Oxford/LSHTM
study's conclusions; she believed that the researchers had "reached
a conclusion [
] they wished to come to." She argued
that official data on economic inactivity suggested that there
had not been an increase in the number of people exiting benefits
without finding work; she emphasised that official labour market
data show that the number of economically inactive people has
fallen by around 400,000 since 2010.[69]
It is a concern that the Minister provided evidence to us on destinations
of JSA, Income Support and ESA claimants from 2011, that pre-dated
the new sanctions regime (NSR) introduced in 2012, in an attempt
to challenge the findings of the University of Oxford/LSHTM study
on the effects of the NSR on getting JSA claimants off-flow.[70]
This was regrettable.
TRACKING CLAIMANT DESTINATIONS WITHIN UNIVERSAL CREDIT
65. Chris Hayes pointed out that the introduction
of Universal Credit, because it is paid to claimants both out
of work and in lower paid work, afforded considerable opportunities
to improve the tracking of claimants' movements into employment
and progress in work. The key to this was the utilisation of HMRC's
real-time information (RTI) on PAYE income, which enables DWP
to track claimants' entries into salaried employment and their
earnings progress. As Universal Credit is implemented over the
next few years, benefit off-flow will cease to be a coherent measure
of JCP's performance. Mr Hayes told us that the Department was
using three separate measures of JCP's performance under Universal
Credit: movements into work from no work; sustainment in employment
over a six-month period; and progress in work over a longer period.[71]
66. Recently published research emphasises
the importance of developing more effective systems for monitoring
the destinations of claimants leaving benefit in general and,
in particular, the destinations of claimants leaving benefit following
a sanction. The introduction of Universal Credit affords the Department
considerable opportunities to develop new and more effective systems.
We recommend that DWP develop systems, using RTI data, to track
shorter and longer term employment outcomes and earnings progress
for sanctioned benefit claimants within Universal Credit, as part
of its ongoing evaluation of the efficacy and impacts of benefit
sanctions policy.
39 DWP (SAN0142) Back
40
See, for example, Q23 [Matthew Oakley]; Q24 [Tony Wilson] Back
41
Q24 Back
42
Welfare Conditionality: Sanctions, Support and Behaviour Change
Project (SAN0054) Back
43
Loopstra, R, Reeves A, McKee, M, and Stuckler, D, Do punitive approaches to unemployment benefit recipients increase welfare exits and employment?,
University of Oxford, Sociology Working Paper No. 2015-1,
January 2015 Back
44
Q24 [Tony Wilson] Back
45
Griggs, J, and Evans, M, Sanctions within conditional benefit systems: A review of evidence,
Joseph Rowntree Foundation, December 2010 Back
46
See, for example, Dr David Webster (SAN0110) and Q46; Public and
Commercial Services Union (SAN0109) Back
47
Public and Commercial Services Union (SAN0109) Back
48
Q189 Back
49
Work and Pensions Committee, Third Report of Session 2012-13,
Universal Credit implementation: Meeting the needs of vulnerable claimants,
HC 576, para 183 Back
50
Kirklees Financial Inclusion Steering Group (SAN0065); YMCA (SAN0066);
Centre for Economic and Social Inclusion (Inclusion) (SAN0143) Back
51
Qq197-200 Back
52
Jobseekers Act 1995, section 19 Back
53
DWP Impact Assessment, Conditionality Measures in the 2011 Welfare Reform Bill,
October 2011 Back
54
Welfare Reform Act 2012, sections 26-7; 46; For a summary of the
changes see also, CPAG, Regime change: sanctions and the law on claimants,
October 2012 [accessed 25 February 2015] Back
55
Qq189-90 Back
56
Q215 Back
57
DWP (further supplementary evidence) (SAN0163) Back
58
DWP, Jobseeker's Allowance and Employment and Support Allowance sanctions: decisions made to September 2014,
18 February 2015, table 1.7 Back
59
The Universal Credit (Work-Related Requirements) In Work Pilot Scheme and Amendment Regulations 2015 Back
60
Q21 [Matthew Oakley]; Oxfam GB (SAN0088); Inclusion (SAN0143) Back
61
Q135; DWP, Conditionality Measures in the 2011 Welfare Reform Bill: Impact Assessment,
October 2011 Back
62
Q24 Back
63
Qq182-86 Back
64
Q190 Back
65
See, for example, Joseph Rowntree Foundation, Welfare sanctions and conditionality in the UK,
September 2014 Back
66
Loopstra, R, Reeves, A, McKee, M, and Stuckler, D, Do punitive approaches to unemployment benefit recipients increase welfare exit and employment? A cross-area analysis of UK sanctioning reforms,
University of Oxford, Sociology Work Paper No. 2015-1, January
2015 Back
67
JCP Report, paras 102-104 Back
68
Loopstra, et al, Do punitive approaches to unemployment benefit recipients increase welfare exit and employment? A cross-area analysis of UK sanctioning reforms,
University of Oxford, Sociology Work Paper No. 2015-1, January
2015 Back
69
Q238 Back
70
See, for example, Qq229-31 Back
71
Qq268-70 Back
|