For a long time, the UK’s out-of-work benefits have been framed in terms of responsibilities and rights, from which derives a system of conditionality and sanctions. There are certain things the state expects you to do as a condition of receiving out-of-work benefits; if you fail to do those things your benefit may be stopped. The Committee does not believe in unconditional benefits for those who are capable of moving into work. But unfair and disproportionate application of the current sanctions regime is causing unintended consequences.
The objective of conditionality and sanctions is to motivate people to engage with support and to take active steps to move them closer to work. But the evidence on the role of sanctions in achieving this goal is patchy. At the very least, it calls for more research. The Welfare Reform Act 2012 and subsequent changes have made sanctions longer, more severe and applicable to more people than ever before. The previous Government did not know the impact of these changes in 2012 and, six years later, it is still unknown. What we do know is that sanction rates are higher under Universal Credit than under the legacy system, and when applied inappropriately can have profoundly negative effects on people’s financial and personal well-being.
The failure to evaluate the 2012 reforms is unacceptable. It is time for the Government urgently to evaluate the effectiveness of reforms to welfare conditionality and sanctions introduced since 2012, including an assessment of sanctions’ impact on people’s financial and personal well-being. Furthermore, until the Government can point to robust evidence that longer sanctions are more effective, higher level sanctions should be reduced to two, four and six months for first, second and subsequent failures to comply.
Some groups of people are disproportionately vulnerable to, and affected by, the withdrawal of their benefit. These include single parents, care leavers and people with an impairment or health condition. The Government must develop a better understanding of how sanctions affect employment outcomes for vulnerable claimants. Only strong causal relationships can justify these groups’ continued inclusion in the sanctions regime. In the meantime, we recommend that people who are the responsible carer for a child under the age of 5, or a child with demonstrable additional needs and care costs, and care leavers under the age of 25, only ever have 20% of their benefit withheld if sanctioned. As well as reduced sanctions, care leavers need better support. So we recommend that the Government review working practices between local authority personal advisers and work coaches to ensure they are collaborating as effectively as possible to support care leavers. It must also introduce a way of identifying care leavers within the benefits system to allow ongoing monitoring of their experiences, including of sanctions, and to inform further tailored support.
Of all the evidence we received, none was more compelling than that against the imposition of conditionality and sanctions on people with a disability or health condition. It does not work. Worse, it is harmful and counterproductive. We recommend that the Government immediately stop imposing conditionality and sanctions on anyone found to have limited capability for work, or who presents a valid doctor’s note (Fit Note) stating that they are unable to work, including those who present such a note while waiting for a Work Capability Assessment. Instead, it should work with experts to develop a programme of voluntary employment support.
We still believe that support for people in work to increase their hours and earnings has the potential to be revolutionary. But its promise risks being undermined by hasty roll-out of a policy not grounded in robust evidence. The Randomised Controlled Trial showed sanctions had no effect on in-work claimants’ outcomes and work coaches are not yet equipped to get decisions right every time for every claimant. Sanctioning people who are working is too great a risk for too little return. We recommend that the Department does not proceed with conditionality and sanctions for in-work claimants until full roll-out of Universal Credit is complete. Even then, the policy should only be introduced on the basis of robust evidence that it will be effective at driving progress in work. In the meantime, the Department should focus on providing in-work claimants with the right support.
Under Universal Credit, a sanction incurred under one conditionality regime continues to apply even if the claimant’s circumstances change and they are no longer able, or required, to look for work. At that point, the argument that the sanction will incentivise them towards work no longer holds water. The sanction becomes little more than a seemingly unfair punishment for non-compliance. We therefore recommend that sanctions are cancelled when a claimant’s change in circumstance means they are no longer subject to the requirement that led to their sanction in the first place.
Under Universal Credit, the maximum amount someone can be sanctioned is 100% of their standard allowance. In theory, housing and children elements are therefore protected. But in reality, this is not always the case: If someone is receiving less than their full standard allowance because of deductions, such as for rent arrears, a sanction representing 100% of their standard allowance eats into other elements. It is a technical glitch, but it puts housing and children’s welfare at risk and must be resolved with the greatest urgency. We therefore recommend that the Government immediately ensures any deductions from standard allowances are postponed for the duration of any sanction imposed to ensure that the children and housing elements are always protected.
Setting the right policy is important. But so too is implementing it on the ground. Over and again we heard stories of it going horribly wrong, resulting in inappropriate sanctions causing unjustified and sustained hardship. We heard about people being asked to comply with impossible requirements.
We also heard that work coaches were not consistently applying the exemptions (‘easements’) they have the power to use. Claimants did not know they existed and work coaches had neither the time nor the expertise to ask questions about every avenue of someone’s life. We recommend that the Department develop a standard set of questions, covering all possible easements, which work coaches routinely ask claimants when agreeing their Claimant Commitment. The Department should also review and improve information about easements made available to claimants.
If a work coach thinks someone has failed to comply with their Claimant Commitment they raise a doubt and put in motion the wheels that could lead to a sanction. We recognise that giving work coaches and decision-makers the right amount of flexibility is a challenge. But we heard too many stories of poor decision-making to believe the current system has got it right. The first hurdle is deciding what counts as ‘good reason’ for failing to comply, which is currently a judgment call for work coaches. This is a big ask when the consequences of getting it wrong can be so great. What’s more, it inevitably means that claimants in similar circumstances are treated inconsistently. But this could be easily fixed by carefully drafted regulations. We therefore recommend that the Department introduce regulations on what counts as good reason, which still allow work coaches to exercise judgment in any situation not included.
If a work coach concludes someone did not have good reason for failing to comply, they must refer them for a sanction. We heard repeatedly, however, that the welfare system is being reformed to reflect the world of work. But we do not think it is fair or proportionate for someone’s first mistake to be met with the harshest penalty, either in the world of work or benefits system. We welcome the Government’s announcement to trial a system of warnings, instead of sanctions, for first sanctionable failures, but it only applies to narrow circumstances. We therefore recommend that the Government use the trial as an opportunity to learn lessons, while taking steps towards introducing warnings, instead of sanctions, for every claimant’s first failure to comply.
We recognise the importance of an independent decision-maker to impose the sanction. It is, however, a missed opportunity that a work coach’s relationship with the claimant and insight into their circumstances—supposedly at the very heart of Universal Credit—plays no role at this stage of the process. What is more, a sanction can only be challenged once the decision has been made, by which stage the damage has been done, and the burden of proof falls to the claimant. We recommend that when a work coach refers a claimant for a sanction they are required to include a recommendation on whether a sanction should be imposed based on their knowledge of the claimant and their circumstances. Decision-makers should contact the claimant to let them know their ‘provisional decision’ and, if it is to impose a sanction, the evidence on which this is based. The claimant should then have 30 days to challenge the provisional decision or actively opt not to provide further evidence.
Claimants can challenge the final decision to impose a sanction first, through Mandatory Reconsideration, and then via First-tier Tribunal. But in the absence of any commitment from the Department on how long these decisions will take, people can endure the hardship of a sanction for weeks on end. This is all the more painful if, after all that time, the sanction is overturned. We therefore recommend that the Department commit to a timetable for making decisions about sanctions at Mandatory Reconsideration and appeal.
Hardship payments are made to those who would otherwise be left with nothing when sanctioned. But recovering that payment at a rate of 40% of someone’s standard allowance imposes further significant hardship. It is neither necessary for the Government—as it appears not to be financially motivated to recover the money—nor affordable for those who have been recognised as at risk of extreme poverty. Our final recommendation is therefore that the Department issues revised guidance to all work coaches to ensure hardship repayments are set at a rate that is affordable for the claimant, with the default being 5% of their standard allowance.
Published: 06 November 2018