Benefit Sanctions Contents

4Universal Credit and sanctions

In-work conditionality

64.Under the legacy system, Working Tax Credit claimants, who necessarily work more than 16 hours per week, typically had no ongoing support from, or obligations to, the jobcentre. With the roll-out of UC, however, people claiming benefits while also working will, for the first time, stay engaged with the jobcentre and receive support to increase their earnings and progress in work. In 2010, the DWP said this programme, known as “in-work progression”, will

encourage people to increase their earnings and hours in a way that we have never been able to do before, helping people along a journey toward financial independence from the state.151

In its 2016 report, In-work progression in Universal Credit, our predecessor committee commended the Government for this policy. It said “an employment support service for in-work claimants of Universal Credit holds the potential to be the most significant welfare reform since 1948”.152 Similarly, Kayley Hignell, Head of Policy for Families Welfare and Work at Citizens Advice, told us that in-work progression presented “some massive opportunities” and, among others, welcomed support for low paid workers.153

65.More contentiously, working claimants could be required to take active steps to increase their earnings as an ongoing condition of receiving their UC. This is known as ‘in-work conditionality’. Different levels of conditionality apply to in-work claimants depending on how their income relates to the Conditionality Earnings Threshold (CET) and the Administrative Earnings Threshold (AET), as shown below:

The policy for the people in the “light touch” regime is still in an experimental stage. It was the focus of the Government’s recent In-Work Progression Randomised Controlled Trial (RCT).

The In-Work Progression Randomised Controlled Trial

66.The RCT was a national trial that ran between 2015 and 2018. To be eligible, claimants had to be in the “light touch” regime, shown above. The aim of the RCT was to “test whether DWP could help Universal Credit claimants in work to increase their earnings through a combination of support and conditionality”.154 Participants were randomly assigned to one of three groups with different levels of support and mandatory activities: Frequent, Moderate and Minimal.

Source: Department for Work and Pensions and Government Social Research, “Universal Credit: In-work progression randomised controlled trial, findings from quantitative survey and qualitative research”, September 2018

Findings

67.Analysis found that after one year, participants in the Frequent and Moderate support groups earnt £5.25 and £4.43 more on average per week, respectively, than the Minimal support group.155 Participation in the Frequent support group also had “a positive impact on behaviours”, including taking more steps to improve the chances of progression. For example, Frequent support participants “were more likely than other participants to have been on a training course”.156 The evaluation concluded, however, that the frequency of support was not particularly significant. It was more important that support was tailored to people’s needs and addressed any personal barriers to progressing in work.157

Sanctions

68.If someone failed to attend an appointment or carry out an agreed mandatory action, they could be sanctioned. As shown below, the overall sanction rate for the trial was low (2.4%) and failing to attend a meeting was the most common reason for being sanctioned; it accounted for 91.2% of all sanctions in the trial.

Table 5: Levels of sanctions

Sanction level

Frequent

Moderate

Minimal

Total

High

12

8

6

26

Medium

8

5

2

15

Low

180

164

101

445

Grand total

200

177

109

486

All participants in group

6,417

6,704

7,086

20,207

Percentage

3.1%

2.6%

1.5%

2.4%

Source: Department for Work and Pensions and Government Social Research, “Universal Credit: In-work progression randomised controlled trial, impact assessment”, September 2018

Table 6: Reason for sanction

Reason for sanction

Frequent

Moderate

Minimal

Total

Fail to apply for a job

1

0

0

1

Fail to comply with a work preparation requirement

2

0

0

2

Fail to undertake all reasonable work search action

8

5

2

15

Failed to attend

178

164

101

443

Leaving employment voluntarily

7

4

2

13

Lose pay voluntarily

1

2

0

3

Loss of employment through misconduct

3

2

4

9

Grand total

200

177

109

486

Source: Department for Work and Pensions and Government Social Research, “Universal Credit: In-work progression randomised controlled trial, impact assessment”, September 2018

The effectiveness of in-work conditionality and sanctions

69.Our inquiry took place before the evaluation of the RCT was published, but witnesses were sceptical about how effective sanctions would be for in-work claimants. Kirsty McHugh, Chief Executive of the Employment Related Service Association, told us:

The evidence is there for in-work support. The evidence is not there for in-work conditionality and the evidence is definitely not there for sanctions in work.158

Moreover, in 2016, Wright et al claimed that the idea of conditionality and sanctions leading to positive behaviour change was undermined when people felt they were sanctioned unfairly, particularly if they were already working.159

70.Both concerns were borne out in the evaluation of the RCT. It found that while the threat of sanctions “encouraged compliance”, being sanctioned did not positively affect people’s motivation because “it was difficult for participants to agree that their sanction was justified, which led to negative feelings towards the work coach and jobcentre plus”.160 Overall, the evaluation concluded:

There is no evidence of different outcomes depending on reported experience of sanctions.161

External barriers, unintended consequences and work coach capacity

71.A lot of evidence we received questioned whether conditionality and sanctions could ever be effective for in-work claimants owing to the fact that barriers to progressing in work were often structural, rather than motivational. For example, work-related decisions needed to consider a “huge number of factors”, such as childcare, caring responsibilities, transport, and managing a disability or health condition.162 Other external factors, such as the employer’s circumstances, the local job market, or wider market conditions, could mean it simply was not possible for someone to increase their hours or pay. Citizens Advice found that over a quarter of current Working Tax Credit or UC claimants felt “employment constraints and personal circumstances” would make it difficult to increase their income from work.163

72.Furthermore, witnesses were concerned that in-work conditionality and sanctions could in fact have negative unintended consequences. First, the Welfare Conditionality Project found that in-work claimants “clearly resented” the threat of sanctions and often reacted by “relinquishing their right” to support.164 Second, Kayley Hignell said that in-work conditionality and sanctions risked undermining claimants’ incentives, or ability, to stay in work, for example, if a sanction meant they were unable to pay for travel or childcare.165 Third, Ed Boyd, Programmes Director at the Centre for Social Justice, was concerned that requiring claimants to push for more, or better paid, work could “sour” their relationship with their employer.166

73.Given these risks, we were told that it was vital work coaches were prepared and able to implement in-work conditionality and sanctions appropriately. The Department estimated that once UC was fully rolled out there would be 1 million in-work claimants.167 Citizens Advice told us:

As more and more people are brought into the Jobcentre remit through in-work conditionality the overall caseload for work coaches is set to grow over the coming years. The Government will need to expand Work Coach numbers to maintain and bring down caseloads. Work Coach capability and expertise will also need to improve to ensure they are able to determine the full range of support needs or challenges faced by those in low income work …168

Ed Boyd also stressed the key role work coaches played. He said their training, skills and capacity—particularly their understanding of structural barriers to in-work progression—would be “absolutely vital”169 to setting realistic requirements and applying sanctions appropriately.170 But the Department’s evaluation of work coaches’ experiences of the trial found inconsistencies, in terms of the training they received, the level of support they offered to in-work claimants, and their confidence in delivering the programme, particularly when it came to imposing sanctions.171

What next?

74.Based on information available before the evaluation of the RCT was published, Professor Peter Dwyer said the lack of evidence meant it was inappropriate to extend conditionality to in-work claimants.172 Kayley Hignell said if sanctions continued to apply to in-work claimants they should be an absolute last resort. But she questioned whether this would be the case given her observation of how sanctions were currently applied to out-of-work claimants.173 Ed Boyd stressed the need to act on evidence:

Success will require learning from the evidence base and rolling out what actually works rather than what politicians or anyone else thinks works without the evidence base being there.174

75.Concluding its evaluation of the RCT, the Department did not state its position on the future of in-work conditionality and sanctions based on the trial’s evaluation. It merely recommended “that we continue to track performance [of participants] beyond the 52 week point to assess whether there is further impact of the intervention”. It has already committed £8 million over 4 years from 2018–19 to develop its understanding of in-work progression further.175

76.We stand by our predecessor committee’s conclusion in 2016 that in-work progression has the potential to be revolutionary in its ability to break the cycle of people getting stuck in low paid, low prospects employment. But this great opportunity could quickly be undermined if it is coupled with conditionality and sanctions, particularly if work coaches—the key agent here—have even greater and greater workloads. The Government’s own research shows that the effect of sanctions is not conclusive. Any evidence that the threat of a sanction motivates claimants to comply is outweighed by the possible unintended consequences of a sanction, once imposed. The risks are even greater given that work coaches are not yet sufficiently trained or equipped to implement this policy consistently. In light of this, the Department would be unwise to press ahead with in-work conditionality.

77.We recommend that the Department does not proceed with its policy of applying conditionality and sanctions to in-work claimants until Universal Credit has been fully rolled out. 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, it should focus its efforts on understanding better:

Claimants moving conditionality group

78.Under the legacy system, if a claimant’s circumstances changed, resulting in reduced conditionality, they would move accordingly between JSA, ESA and Income Support. Any sanction imposed on one benefit would not travel with the claimant to a new benefit. This is not the case under UC, as explained by the Minister:

UC sanctions have been designed so that they remain in place for the duration of the sanction regardless of whether the circumstances of the claimant who has been sanctioned change.176

For this reason, at February 2018, 1,108 claimants in the “working enough” or “no work-related requirement” conditionality group were subject to a sanction.177 The Minister noted, however, that the sanction would be reduced from 100% to 40% for claimants who move into the “no work-related requirements” group “because they have become parents or carers”.178 For example, a sanction imposed upon a pregnant woman would continue, but be reduced to 40% when she had her baby, having become the main carer for a child under the age of one.

79.Nonetheless, CPAG argued:

It is perverse that a sanction continues during a period when, either through ill health or caring responsibilities, a claimant is unable (and has been assessed as such by the DWP) to take up work. In this situation the sanction cannot be intended to drive behaviour change. What then is its purpose?179

80.The Committee posed that very question to the Minister.180 He said:

[It] produces a consistent approach across the labour market regimes and reinforces the message that there are implications for non-compliance.181

81.The objective of a sanction is to incentivise people to move into work. But if someone is no longer able, or required, to look for work, the sanction serves no purpose. Worse, it imposes hardship upon people who are particularly vulnerable according to the Department’s own assessment. Any message the DWP sends through the continued application of a sanction will be interpreted as unfair and punitive, and risks eroding the relationship between claimants and the Department.

82.We 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.

Children and housing elements

83.Under UC, the maximum sanction is 100% of someone’s standard allowance. In theory, this means that other elements, such as those for children and housing, are protected. Evidence suggests, however, that in practice, this is not always the case. Newcastle Citizens Advice explained that if someone is receiving less than their full standard allowance, for example because of deductions as a result of rent arrears, the imposition of a sanction that amounts to 100% of their standard allowance eats into other elements, as shown below.182

While it may therefore be true, as the Minister said, that there are no cases where “a sanction deduction of more than the standard allowance has been applied to a claimant’s UC award”, it does not equate to protecting the housing or children elements from the effect of a sanction. Newcastle Citizens Advice stressed the risk this presents to housing and children’s well-being. Together with CAPG, it recommended that the housing and children elements should always be protected.183

84.In theory, sanctions should only ever withdraw a maximum of 100% of the UC standard allowance. Other elements, such as for housing and children should therefore be unaffected. But in reality, this is not always the case: when someone is already receiving less than 100% of their standard allowance, for example because of deductions as result of rent arrears, the sanction imposed is still for the full amount. When there is no more standard allowance to be withdrawn, the sanction necessarily eats into other elements, putting housing and the welfare of children at risk. This is clearly not the Government’s intention and it requires urgent resolution.

85.We recommend that any deductions from a claimant’s standard allowance are postponed when a sanction is applied, for the duration of that sanction, to ensure other elements are protected.


151 Department for Work and Pensions, “Universal Credit: Welfare that works”, Cm 7957, November 2010

152 Work and Pensions Committee, Tenth Report of Session 2015–16, “In-work progression in Universal Credit”, HC 549

153 Q206

155 Department for Work and Pensions and Government Social Research, “Universal Credit: In-work progression randomised controlled trial, impact assessment”, September 2018

158 Q210, see also: Q204 [Ed Boyd] and Q206 [Kayley Hignell]

159 Sharon Wright and Alasdair B R Stewart, “Welfare Conditionality Project first wave findings: Jobseekers”, May 2016

162 Citizens Advice (ANC 0067)

163 Citizens Advice (ANC 0067)

164 Welfare Conditionality Project (ANC 0079)

165 Q206 and Q213

166 Q231 [Ed Boyd] and Q232 [Kirsty McHugh]

168 Citizens Advice (ANC 0067)

169 Q221

170 Citizens Advice (ANC 0067), Q231

172 Q184

173 Q214

174 Q204

175 Department for Work and Pensions, “DWP response to SSAC report on In-work progression and Universal Credit: government response”, March 2018, accessed 23 October 2018

179 Child Poverty Action Group (ANC 0056)

182 Citizens Advice Newcastle (ANC 0051)

183 Citizens Advice Newcastle (ANC 0051)




Published: 06 November 2018