In-work progression in Universal Credit Contents

Conclusions and recommendations

1. In-work support in Universal Credit is a radical policy departure, the first of its scale in the world. In promising progress in breaking the cycle of people stuck in low pay, low prospects employment, it could be revolutionary. It is potentially the most significant welfare reform since 1948. We congratulate the Government for developing this innovation. (Paragraph 16)

2. Starting with part-time workers earning less than the equivalent of full-time work at the National Living Wage is sensible. The UK’s productivity challenge, however, is much broader than that. If an in-work service achieves its potential, there is a clear case, in time, for extending it further up the earnings scale. (Paragraph 17)

3. One year from the start of the DWP’s in-work progression pilot, there is insufficient information in the public domain about the number and characteristics of participants and effects on their pay and employment. Making such information more freely available would strengthen the credibility of the pilot, raise awareness of the in-work service and allow other experts to appraise the results of the trial. Greater transparency will make for better policy. We recommend the DWP regularly publish basic information about the nature and outcomes of its pilot. The first such publication should, at the latest, coincide with the Government response to this Report. (Paragraph 23)

4. There is no comprehensive evidence on which to determine how to deliver an effective in-work service. The DWP will therefore be learning on the job. As the risks and potential rewards are both high, it is vital the DWP carefully builds a broad evidence base. The randomised controlled trial is a commendable start. The pilot will, however, only give a partial picture. (Paragraph 29)

5. If the policy is to be successful, and achieve its great potential, we recommend the DWP direct the best of its welfare reform talent at developing the service. As part of its wider assessment of in-work progression, we recommend the DWP test more flexible forms of contact in addition to face-to-face interviews and draw more widely on voluntary, community and private sector-led support. It should also consider broader measures of progress alongside earnings and clarify any plans or timescales to incorporate financial bonuses in in-work schemes. (Paragraph 30)

6. For in-work progression to succeed, Jobcentre Plus (JCP) Work Coaches will need to be a new kind of public servant, possessing new skills and operating on a new agenda. They will need to address structural barriers to progression, such as access to childcare, skills development and job opportunities, on a personalised basis. They will also need to understand local labour markets and engage with employers to a far greater extent than they have done before. Compared to the existing role of moving people out of work into employment, this will require the DWP to nurture Work Coaches with a substantially expanded set of skills. Should a full service be delivered in-house by JCP, supporting an estimated one million in-work claimants will also entail a sharp increase in JCP workload. (Paragraph 45)

7. We recommend the DWP uses its pilot to evaluate fully:

This assessment should be used to estimate the budget required to provide such a service. (Paragraph 46)

8. The case for in-work conditionality backed up by financial sanctions is so far untested. Employed people self-evidently do not lack the motivation to work, and there is strong evidence that their barriers to earning more tend to be structural or due to personal circumstances, rather than motivational. The claimant’s opportunities for progression are also dependent on the needs of the employer. Conditionality is less likely to be effective in these circumstances. Requiring an individual to pay a financial penalty can, in some cases, work against the aim to increase their earnings. (Paragraph 57)

9. We would expect the use of financial sanctions for in-work claimants to be low in comparison to out-of-work claimants. It is a very different kind of welfare. We welcome both the Department’s commitment to follow the evidence on the efficacy of sanctions for in-work claimants and its intention to publish sanctions data. We recommend the Department publish the number and rate of in-work sanctions, by claimant characteristics and JCP district, on a quarterly basis from autumn 2016. (Paragraph 58)

10. We recommend the DWP publish more comprehensive guidance for Work Coaches on applying in-work conditionality. This guidance should incorporate how to account for individual circumstances relating to skills, confidence, health, caring responsibilities, access to both care and transport, and the availability of additional local work, in setting in-work conditions. We further recommend the guidance sets out circumstances when it would be appropriate and constructive to take into account input from an employer in establishing the reasonable conditions of a Claimant Commitment. (Paragraph 59)

© Parliamentary copyright 2015

Prepared 06 May 2016