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Universal Credit isn’t working: proposals for reform Contents

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Chapter 4: Employment, sanctions and support

Conditionality

191.Claimants who can look or prepare for work are required to do so as a condition of receiving certain benefits. Those who do not meet these commitments can face financial sanctions. This is known as conditionality.

192.Conditionality has been an established feature of out-of-work benefits since the foundation of the welfare state.209 However, the scale of conditionality has been ratcheted up significantly since the introduction of Universal Credit.210 It operates on the principle that claimants should do everything they can in order to find work.

193.Conditionality has been intensified in two ways under Universal Credit. First, the conditions placed on claimants are more demanding. For example, claimants who are able to work full time are usually expected to complete up to 35 hours of work search activity a week.211 Second, it will be extended to a million more claimants compared with legacy benefits, many of these for the first time.212 Universal Credit’s conditionality regime is set out in Table 3.

Table 3: Universal Credit conditionality regime

Conditionality regime/claimant group	Requirements
All work-related requirements. Consists of two labour market regimes: Intensive Work Search: claimants not working and claimants in work on very low earnings who are expected to increase their earnings. Includes claimants with health conditions who have not completed a Work Capability Assessment (WCA), some self-employed claimants and lead carers whose youngest child is aged three or four. Light Touch regime: claimants on low earnings between two thresholds set by the DWP.	Intensive Work Search: requirements might include carrying out work searches, making job applications, creating a CV and online job profiles, and obtaining references. Light Touch: claimants in this regime currently face no work search related requirements.
Work preparation: claimants expected to work in future but are not currently expected to look for work. Includes claimants who have been assessed as having limited capability for work following a WCA and a lead carer where the youngest child is aged two.	Requirements for this group may include completing a skills assessment, creating a CV and researching childcare provision and costs.
Work focused interview: claimants who are expected to work in the future but not expected to look for work yet as they are currently lead carers, including foster carers looking after a child aged one. It also includes claimants who have become responsible for the child of a friend or relative in the last 12 months and foster carers with children over one in special circumstances.	Requirements include identifying training opportunities and assessing prospects for remaining in or finding paid work.
No work-related requirements: consists of two labour market regimes (i) claimants who are earning enough and (ii) claimants who are not expected to undertake any work-related activity. The latter includes claimants with disabilities and health conditions preventing them from working and claimants over the state pension age. It includes lead carers, including foster carers with a child under the age of 1 and claimants with caring responsibilities for a severely disabled person for at least 35 hours.	No work-related requirements.

Source: Social Security Advisory Committee, The effectiveness of the claimant commitment in Universal Credit (9 September 2019) p 7: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/833426/ssac-occasional-paper-21-effectiveness-of-claimant-commitment-in-universal-credit.pdf [accessed 17 July 2020]

Sanctions

194.We were told that sanctions under Universal Credit are some of the most punitive in the world.213 Claimants can have their award cut altogether if they are judged not to have adhered to their Claimant Commitment, which can be for infractions such as failing to apply for a particular job or missing an appointment at a Jobcentre.214 Sanctioned claimants will usually lose 100% of their standard allowance, or half if claiming as a couple. If a claimant receives a ‘lowest level’ sanction, or is vulnerable, a reduced rate of 40% of the standard allowance applies. Multiple sanctions can be applied consecutively rather than concurrently215 and sanctions may be applied until the end of a pre-determined period even if a claimant has changed his or her behaviour in the interim.

195.The chart below shows that the proportion of people on Universal Credit who were subject to conditionality and who were also sanctioned had fallen to 2.38% by November 2019.

Figure 3: Percentage of Universal Credit claimants (live and full service) subject to conditionality with a sanction deduction, August 2015 to November 2019

Source: Department for Work and Pensions, Official Statistics: Benefit sanctions statistics to October 2019 (experimental) 18 June2020: https://www.gov.uk/government/publications/benefit-sanctions-statistics-to-october-2019-experimental/benefit-sanctions-statistics-to-october-2019-experimental [accessed 20 July 2020]

196.The DWP has taken other steps to soften the sanctions regime. In November 2019 it reduced the maximum length for a higher-level sanction from three years to six months. It has also tested giving a written warning instead of a sanction when a claimant first fails to attend an appointment without good reason. The DWP is evaluating the results.216 The sanctions regime is set out in Table 4.

Table 4: Universal Credit sanctions regime

Sanction level	Cause
Higher Claimants will be sanctioned for 91 days (13 weeks) for the first higher-level sanction and 182 days (26 weeks) for the second and each subsequent higher-level sanction in any 364-day period.	Failing to apply for a particular job when told to do so if claimant has to meet the ‘work search requirement’. Refusing a job offer when a claimant has to meet the ‘work availability requirement’. Leaving work or reducing hours, whether voluntarily or due to ‘misconduct’, when claiming Universal Credit or just before a claim.217
Medium Claimants will be sanctioned for 28 days for the first medium level sanction in any 364-day period, or 91 days for the second.	Failing to take all reasonable actions to find paid work or increase earnings from work if a claimant has to meet the ‘work search requirement’. Failing to be available to start work or attend interviews if a claimant has to meet the ‘work availability requirement’.
Low These last until a claimant does whatever it was that they were sanctioned for failing to do, plus 7 days for the first low-level sanction in any 364-day period, 14 days for the second or 28 days for the third.	Failing to attend or take part in a work-focused interview and a lowest sanction level does not apply. Failing to attend or take part in a training course. Failing to take a specific action to get paid work or to increase earnings from work.
Lowest These last until a claimant takes part in a work-focused interview when they have failed to attend previously.	Failing to attend or take part in a work-focused interview if a claimant has to meet only the work-focused interview requirement.

Source: Department for Work and Pensions, Guidance: Universal Credit and you (updated 6 April 2020) para 1.10: https://www.gov.uk/government/publications/universal-credit-and-you/draft-uc-and-you [accessed 20 July 2020]

Suspension of conditionality and sanctions

197.On 25 March 2020, the Secretary of State said that the DWP would no longer check conditionality requirements on looking for and being available for work and no sanctions would be applied until 30 June 2020. The suspension was to allow staff to prioritise the processing of the high number of new claims resulting from the economic impact of lockdown measures.218 Neil Couling told us that the DWP continued to help claimants to look for work over the telephone, rather than via visits to jobcentres.219

198.On 29 June 2020, the Secretary of State said that jobcentres would reopen in July and conditionality and sanctions would resume. She said, “It is an essential part of the contract to help people start to reconsider what vacancies there are, but I know that I can trust the work coaches and jobcentre managers, who are empowered to act proactively with people.”220

Conditionality and the labour market

199.Conditionality is based substantially on the supply side of the economy and does not pay sufficient regard to the demand side. Before the COVID-19 pandemic record levels of employment meant that there were few people not working who were able to work. We were told that in those conditions it did not make sense to enforce conditionality using the strict sanctions under Universal Credit. We heard that the main labour market problem was underemployment.221 The Office for National Statistics (ONS) released data in May 2020, which set out an underemployment rate of 7.9%.222

200.Unemployment is likely to increase a great deal further as a result of the COVID-19 pandemic. HM Treasury’s job retention scheme is currently intended to end in the coming months. The Bank of England has predicted that unemployment will reach 9% this year.223 Others predict that the labour market may be changed forever as a result of the pandemic. In May 2020 the Institute for Fiscal Studies said, “many jobs will not be available again immediately, or perhaps ever” and that there may be permanently reduced demand for certain occupations.224 Tony Wilson, Institute Director at the Institute for Employment Studies, suggested that in the coming years there would be “much weaker demand for labour, higher worklessness and potentially lower wages.”225

201.Professor Mike Brewer, Deputy Chief Executive and Chief Economist at the Resolution Foundation, said that conditionality would have to be reintroduced to tackle unemployment, but not until the number of vacancies begins to increase. He said, “There is not a lot of point in pressuring people to look for work if there are no jobs available or the jobs available are not compatible with someone’s family or health situation.”226 He went on to say, “the policies on Universal Credit and its approach to the labour market, with the idea that people would leave unemployment quickly, were designed for better times. That general system will need looking at and changing.”227

202.Conditionality must be adapted so that it is able to accommodate dynamically changing labour market conditions, including at the local level. The DWP should, with HM Treasury, the Department for Business, Energy and Industrial Strategy and other relevant departments, review how conditionality should be reconstructed to support millions of people back into work in an environment in which there are far fewer vacancies and in which large sectors of the economy such as non-food retail, hospitality and tourism—which are most likely to employ young people—remain depressed or do not recover fully. The DWP should ramp up and improve the provision of training that is available to claimants.

203.We regret that the DWP has resumed the monitoring of conditionality requirements so soon and that it will begin imposing sanctions on claimants after a brief suspension when each day is bringing announcements of a significant reduction in total jobs. The DWP faces the prospect of several million more unemployed but threatening claimants with long and severe sanctions at this stage is unfair and counterproductive.

204.The social security system must be flexible enough to adapt to a labour market that has changed substantially. Conditionality and sanctions as they are set currently are inappropriate while we are still so far from an economic recovery.

205.According to the Institute for Fiscal Studies, employees aged under 25 are about two and a half times as likely to work in a sector that is now shut down as other employees.228 In recent months, both the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) have called on the Government to introduce new labour market policies. Both organisations highlighted how it was important to support young people.

206.The CBI called upon the Government to create a new version of the Future Jobs Fund, which was launched after the 2008 financial crisis and provided subsidised jobs, training or work placements for young people.229 It said, “Past recessions show the impact of joblessness is deeply uneven. Without immediate intervention, pre-crisis inequalities across regions, gender and race will worsen. Long term unemployment leaves generational scars.”230 The TUC called for the Government to provide funding to offer a new jobs guarantee built on best practice from the Future Jobs Fund and similar schemes across Europe. It said that this should provide a minimum six-month job with accredited training, paid at least at the level of the real living wage, or the trade union negotiated rate for the role.231

Claimant Commitments

207.New claimants must agree a Claimant Commitment before they can receive their first payment.232 This is designed to be like an employment contract with the DWP in the role of employer. It sets out what individuals have agreed to do to prepare for work or what they need to do to increase their earnings if they are working already. It also sets out what will happen if claimants do not meet their commitments, including the imposition of financial sanctions.

208.The DWP’s 2018 ‘Full Service Survey’ found 54% of claimants said that their Claimant Commitment took account of their personal circumstances and 63% believed their Commitment was achievable.233 In September 2019, survey data by the Social Security Advisory Committee found similar rates of dissatisfaction. The Social Security Advisory Committee said, “Claimants with physical and mental health problems were less likely than other claimants to feel that their commitment reflected their circumstances.”234 It concluded:

“‘Based on the evidence we have, it is our view that unless action is taken there is a risk that the claimant commitment will not help all claimants to achieve better labour market outcomes and, in some cases, could have a detrimental impact, especially on claimants in vulnerable circumstances.”235

209.Many contributors to our inquiry said that Claimant Commitments were not tailored enough to claimants, and that for some vulnerable people they could be wholly inappropriate given their personal circumstances. Homeless Link, a membership charity for organisations working with the homeless, said that ‘easements’—suspensions of the requirement to engage in work-related activity—are not applied consistently. This means that mental health issues, drug and alcohol dependency issues, and cognitive impairments are not being accounted for in Claimant Commitments, leaving people at risk of being sanctioned.236 Homeless Link said, “often the need for easements only comes to light after a claimant has been sanctioned for non-compliance.”237 Caridon Landlord Solutions, which provides advice on benefits to housing providers, told us, “the level of work commitment is dependent on the experience or empathy of the work coach rather than the abilities/restrictions of the claimant.”238

210.We heard that Claimant Commitments are too focused on claimants’ responsibilities and not enough on the support to which claimants should be entitled. The Salvation Army said that Claimant Commitments need a “rethink” so that they can be used to track how work coaches are identifying need and signposting relevant support, not only monitoring compliance with work search requirements.239 A 2019 report by Bright Blue, a think tank, recommended that Claimant Commitments be changed to reflect the obligations of the individuals and institutions that are delivering Universal Credit:

“For work coaches, for example, this could include their commitment to respond to the entries in the online journals of UC claimants, or facilitate suitable training or work experience, within a specified time period. For the DWP, this should include the obligation to pay claimants their UC award—especially their initial award—on a specified date.”240

211.We heard that the initial meeting between claimants and work coaches may not be the ideal time for such a discussion. Minesh Patel, Principal Policy Manager for Citizens Advice, told us:

“People agree to their claimant commitment at the same time as they are waiting for their Universal Credit payment. People are often not in the right mindset to be thinking, “What is best for me in looking for work?” People are focused on getting their money.”

He said that there was a case for splitting the process of agreeing a Claimant Commitment, so that conditionality can be reviewed once the initial payment has been secured.241

Box 8: Claimant Commitment case study provided by the National Association of Welfare Rights Advisers

“Claimants are often given inappropriate Claimant Commitments which pay no attention to limitations upon their ability to seek work or try work-related activities. I recently dealt with a profoundly deaf claimant whose deafness (and other serious family-related issues) was not referred to at all in the CC. The claimant states that she was told to seek work or be sanctioned, took inappropriate work as a panic measure, and owing to this suffered a breakdown. Owing to the ages of her children, and her disability, she should not have been told to seek work at all. This claimant stated that she did in fact wish to work, but only when she was well enough to do so and in a working situation that did not require telephone work or a noisy environment. Had her wishes been properly recorded and appropriate support and encouragement (as opposed to threats of sanctions) been provided, she may have been back to work and better off by now, but she remains at home, too unwell to work.”

Source: Written evidence from National Association of Welfare Rights Advisers (EUC0098)

212.Conditionality must be rebalanced. The preoccupation with sanctions-backed compliance needs to be reconsidered, with more emphasis on and resources for personalised employment support for those who can work.

213.The Claimant Commitment can be a useful means of setting out the responsibilities and entitlements which are part of benefit entitlement. However, Claimant Commitments over-emphasise obligations and penalties. Claimant Commitments should be rebalanced, with greater emphasis on the level and type of support that claimants can expect to receive in order to help them to find work or to progress. In most cases claimants will know what support they would benefit from; therefore, they should have an equal role in setting expectations. A more balanced combination of responsibilities and entitlements would better reflect the relationship between employer and employee that the DWP wishes to emulate and would demonstrate to claimants that they are an active participant in their claimant journey.

214.Claimants can be at their most vulnerable and desperate when making their first benefit claim. This is not an appropriate time for people to make important commitments or to decide exactly what support they will require. Claimants should be able to agree to a Claimant Commitment in two stages in order to provide time to consider what support, coaching, training or other intervention from the DWP would be of use, and to consider whether obligations discussed in the first meeting are appropriate.

Efficacy of conditionality and sanctions

215.The DWP provided us with research on conditionality and sanctions. These included the results of a survey, pilots and trials on both Jobseeker’s Allowance and Universal Credit conducted between 2006 and July 2018. Broadly, the results found that more frequent interventions by jobcentre staff meant people stayed on benefits for shorter periods.242

216.There is extensive academic literature on the effectiveness of conditionality and sanctions, which shows both positive and negative effects. One academic paper that the DWP provided to us found that sanctions led to reductions in post-employment earnings.243 Other studies have highlighted the risk of adverse impacts on mental health.244

217.The Welfare Conditionality Project was an academic study conducted between 2013 and 2018. It examined the effectiveness of conditionality in changing behaviour and circumstances in which the use of conditionality may or may not be justifiable. Its top-line findings, based on qualitative longitudinal research involving interviews with claimants, included:

• Benefit sanctions do little to enhance people’s motivation to prepare for, seek or enter paid work. They routinely trigger negative personal, financial, health and behavioural outcomes and push some people away from collectivised welfare provision.
• Respondents commonly endorsed the broad principle of welfare conditionality and there was widespread support for policies that promote responsible behaviour, paid work and other social contributions (e.g. informal care work). But whilst generally supportive of linking rights to responsibilities, people believed that in many cases welfare conditionality was being inappropriately implemented.245

218.Tony Wilson said the evidence on the effectiveness of sanctions was “pretty mixed internationally.” He said, “You can see how conditional systems might work, around getting ‘something for something’ and trying to drive behaviour. But the actual application of a sanction is not really behavioural at all at that point; it is a penalty for non-compliance.” He said the sanctions policy introduced in 2012 “put [the UK] at the furthest extreme internationally in our approach to sanctions.”246 Professor Sharon Wright, from the University of Glasgow, described the UK’s sanctions regime as “the second harshest in the world”.247 Her research had shown that people were often unemployed as a result of ill health, disabilities or caring responsibilities, rather than from a lack of motivation and that this was misunderstood by the DWP’s conditionality regime.248

219.Sharon Wright also told us, “It is very strange that the social security system can now impose greater financial penalties than the courts but without the same level of scrutiny or evidence.” Furthermore, she said that it was easy to trigger sanctions by, for example, “being late for an appointment or not providing what a work coach considers to be adequate evidence of job search.”249

220.The DWP has committed to publishing an evaluation of the effectiveness of sanctions in supporting claimants to “search for work”. In February 2019, the DWP told the House of Commons Work and Pensions Committee that the results of its evaluation would be published by spring 2019250 but in March 2020 the Parliamentary Under Secretary of State for Work and Pensions said the results would now be published by “spring 2020.”251 On 2 June 2020, in evidence to us, Neil Couling said, “it will be coming as soon as we can.”252 The work remains unpublished.

221.In 2016 a National Audit Office (NAO) report examined a range of studies on welfare and sanctions. It found, “sanctions prompt some people to move into work more quickly, by accepting less well-paid and sustainable work than they otherwise would have done.” It also found that other people respond less well to sanctions: “Sanctions encourage some claimants to become ‘inactive’—stopping their claim without finding work. Reasons for inactivity vary. Some people may experience hardship. Others may rely on unreported income or support from local authorities, charities, or friends and family.”253

222.We were concerned to hear that such harsh sanctions can be applied to claimants so easily, particularly when a claimant may already be subject to high deductions to pay back advances and other debts. Any reasonable system, such as the justice system, would not impose fines which can result in extreme poverty for such minor offences. A fairer system should take far greater care to assess the effect of sanctions on those to which they apply. Before imposing a sanction, we recommend that the DWP conduct a hardship assessment before deciding on the level of sanction.

223.The UK has some of the most punitive sanctions in the world but the evidence that sanctions achieve positive behavioural change and lead to better employment and earnings outcomes is mixed. Removing people’s main source of support for extended periods risks pushing them further into extreme poverty, indebtedness and reliance on foodbanks. We welcome the reduction in the DWP’s use of sanctions since 2017 and reducing the maximum sanctions length from six months to three. The DWP should expedite its work on introducing a written warning system before applying a sanction. This would ensure sanctions are a last resort.

224.We are disappointed that the DWP did not publish its evaluation of the efficacy of sanctions before it lifted the suspension on the use of sanctions. The evaluation should be published with urgency and should set out the DWP’s understanding of how the current length and level of sanctions facilitate positive behaviour change from claimants and how sanctions lead to sustainable work outcomes.

Sanctions and mental health

225.Witnesses provided us with a substantial body of evidence on how living under the threat of sanctions can negatively affect people’s mental health. Tony Wilson told us that the decline in the use of sanctions suggested that the DWP was learning from recent studies, particularly those “looking at their negative effects on health and well-being and on mental health in particular.”254 Professor Sharon Wright said that her research had shown:

“Sanctions had serious impacts on mental and physical health, worsened existing conditions, and caused new health problems. These impacts were out of all proportion to the often very minor indiscretions that triggered them (e.g. missing an appointment). Many felt angry, hurt, and resentful about what they considered to be inhumane and unjust treatment.”255

226.Research by Dr Mandy Cheetham, Teesside University, and Dr Suzanne Moffat, Newcastle University, found:

“The threat of punitive sanctions for failing to meet the enhanced conditionality requirements under Universal Credit added to claimants’ vulnerabilities and distress. Our evidence suggests Universal Credit is undermining vulnerable claimants’ mental health, decreasing the likelihood of finding and keeping a job and increasing the risk of poverty, hardship, destitution and suicidality. The experiences of staff supporting Universal Credit claimants who participated in the study concurs with those of the claimants themselves, adding to the reliability of the findings.”256

227.Dr Katy Jones, Senior Research Associate at Manchester Metropolitan University, told us, “a sanction, whether or not people experienced it, led to profound levels of stress and anxiety.” When people were sanctioned, “it worsened their situation. It put them into debt and led to alcohol abuse and adverse mental health.” She said that these adverse effects had been observed throughout the wider evidence base, both in the UK and internationally.257

228.Despite this growing body of evidence, the DWP has not undertaken work to assess the effect of conditionality and sanctions on claimants’ mental health. When it introduced the stricter regimes it said, “At this stage it is not possible to quantify the impact of the behavioural impact of the claimant commitment, changes to the sanctions regime, or changes to hardship payments.” It committed to reviewing the policy after 2013 on “an ongoing basis.”258 In February 2019 the DWP told the Commons Work and Pensions Committee that it had made sanctions data available to external researchers:

“The Department… has made sanctions data available to external researchers via the Administrative Data Research Network to look at health outcomes. Following the evaluation into the effectiveness of reform to welfare conditionality and sanctions, the Department will decide on options for undertaking further analysis on well-being.”259

229.However, in January 2020 Mims Davies MP, Parliamentary Under Secretary of State at the DWP, said that, “No assessment has been made to see whether there is any potential link between the sanctions regime and conditionality on the mental health and wellbeing of individuals.”260

230.There is a great deal of evidence to show that sanctions and the threat of sanctions affect people’s mental health. The DWP’s refusal to examine the extent of these effects endangers claimants. The DWP must meet the commitment it made in 2013 to evaluate the impact of conditionality and sanctions on claimants’ mental health and wellbeing.

In-work progression

231.‘In-work progression’, or in-work conditionality, currently applies to a limited number of claimants earning below a certain threshold. Such people may be expected to increase their hours in their current job or to find new or additional employment. Alternatively, they may be asked to “prepare” for work—for example to attend interviews at the Jobcentre or to go on training. It aims to encourage low-paid working people to earn more and become independent of means-tested benefits, which will save public money.

232.Conditionality will be extended to more people in work as part of an enhanced in-work conditionality regime.261 There are few similar policies internationally and the ones that exist are difficult to compare directly.262 The DWP is still testing how to make the policy work and so there are few conditionality requirements currently for in-work claimants.263

233.Paul Gray, a former Chair of the Social Security Advisory Committee, said that the reason why so many people on Universal Credit will also be working is simply a result of low wages; despite successive increases in the minimum wage, “levels of entitlement, particularly for families, are deemed to require significant top-ups from the system.”264

234.Nick Philips, project co-ordinator of London Unemployed Strategies and Chair of the Commission on Social Security,265 described in-work conditionality as “more draconian” than previous conditionality requirements. He said:

“The system is complicated, but potentially there are people claiming in-work benefits who still could be threatened with sanctions and forced to do intensive work searches if they are not earning what the DWP deems enough—even though they are trying—because they are in work. It is a big issue. A lot of people who are on in-work benefits do not want the added pressure of being told, “If you don’t try even harder to earn even more, we could take your money away”.266

235.The TUC said that there was “no evidence to support the idea that those subject to in-work conditionality will progress in-work”. It set out barriers that claimants face to progressing in-work. These included:

• Those in insecure work often face significant fluctuations in their hours over which they have little control.
• The current employer may not able to offer additional hours.
• In-work claimants can have childcare and other caring responsibilities that they need to fit in with their working hours.
• Universal Credit financial incentives for progression in working more hours or higher hourly pay are not strong.
• The system of monthly assessment periods and the corresponding benefit payment can be complex; it is difficult for claimants to understand if they are better off financially.
• In-work conditionality assumes employer engagement; there is no evidence to show that this will be in place.

236.The TUC also said that in-work claimants are likely to encounter difficulties in attending interviews with a work coach.267 Dr Katy Jones told us that in-work conditionality is inappropriate as it fails to consider long-standing issues “including poor work quality and management practices, and broader issues relating to the needs of workers outside of the paid labour market.” She said that “more emphasis should be placed on improving employer practices, rather than focusing solely on claimants.”268

237.Emma Stewart, CEO and Co-Founder of Timewise Foundation, a consultancy on flexible working, said that greater clarity is needed on how progression should be defined and what “good work” means to different people who are looking to progress in work:

“For some it means a job that is much more local, for others it may mean a job that is more secure so they do not have those peaks and troughs and that unpredictability, and for yet others it may just mean having more money on a weekly basis in a different industry or a different job. It is about having something that is very bespoke and very much tailored.”

238.She said, “We do not necessarily have the level of support in place that can respond to those issues for a wide variety of groups.”269

239.In September 2018 the DWP published the results of a Randomised Controlled Trial, which found that there was no difference in earnings and hours worked between participants who said that their Universal Credit had been stopped or reduced compared with other participants. It concluded, “There is no evidence of different outcomes depending on reported experience of sanctions.”270 In October 2019, the DWP followed up on this work with an analysis of outcomes for claimants over a longer period and a cost benefit analysis. It found a small positive earnings impact of more intensive work coach support and evidence that this was value-for-money. However, it acknowledged high statistical uncertainty around all estimates.271 In March 2020 the DWP announced that it was establishing an ‘In-work Progression Commission’ to support policy development on helping people to progress in work.272

240.While such work on developing the in-work conditionality policy continues, the DWP has acknowledged the sensitivities and difficulties involved in its implementation. Neil Couling said, “research shows that supporting people in employment to have conversations with employers to increase hours looks to be a better intervention than the application of extra conditionality.”273

241.The introduction of an in-work conditionality regime is radical and unprecedented. It will, for the first time, extend conditionality to a significant number of people who may face sanctioning even though they are already working. Millions of working people should not be compelled to prove their motivation to progress in work. We heard that claimants’ personal circumstances, constraints in the local labour market and employer preferences are far more significant reasons for why people struggle to earn more compared with low motivation.

242.We agree with the DWP’s aim to help people become independent of means-tested social security benefits. We welcome the DWP’s acknowledgment that additional support for claimants and working with employers is a better way to achieve it than expanding conditionality. We recommend that the DWP offer future in-work claimants enhanced coaching and training on a voluntary basis. It should end in-work conditionality requirements and the threat of sanctions from existing in-work claimants.

Personalised support and work coaches

243.We were told that sustained, individualised support is more effective at helping people into work than rigid forms of conditionality and the threat of sanctions. Tony Wilson told us, “the behavioural techniques that they might use to try to encourage job-search behaviour, for example, do not rely on sanctions at all; they rely on good-quality one-to-one work-coach support.”274 Emma Stewart said:

“From our experience in delivering services, we have certainly seen that individuals who are considered to be very far from the labour market are not necessarily far from the labour market or lacking in motivation. The intervention that is bespoke, supportive and responsive to their needs drives engagement.”275

244.Some employment support is already available to claimants, including basic maths, English and IT skills courses; sector-based work academies, work experience opportunities, work trials, traineeships for those aged 16–24, and specialist support for self-employed claimants. The Work and Health Programme also provides employment support. It is voluntary except for those who have claimed unemployment benefits for 24 months.276 Bright Blue examined these training opportunities as part of its research and found a significant proportion of interviewees were critical of the available opportunities.277

Work coaches

245.Personalised support should be delivered to claimants by work coaches. However, we heard that work coaches have struggled to provide this as a result of large caseloads. In March 2019, the NAO reported that the number of cases per work coach is expected to increase from around 130 to over 280 as jobcentres take on more claimants. This was before the surge in new claimants as a result of the COVID-19 pandemic.278 Work coaches will also be responsible for more in-work claimants when the DWP fully rolls out its in-work service.279

246.Some witnesses praised the dedication of work coaches, but we were told their time is overstretched. The Salvation Army said that it had heard claimants describe, “rushed appointments, with a focus entirely on signing their Claimant Commitment, and not enough time spent on individual need.”280 Professor Sharon Wright, University of Glasgow, told us that her research found that work coaches agreed that there was a problem of high caseloads and limited time.281

247.Nick Phillips has conducted surveys of London-based claimants which showed “a high degree of dissatisfaction with job coaches. Between 70% to 80% were either dissatisfied or very dissatisfied.” He attributed this largely to those “who fund the service and not the individuals.” He said work coaches do not have enough capacity, training or time.282 Witnesses with experience of claiming Universal Credit and interacting with work coaches told us that service levels varied substantially between individuals. It was common to receive responses from a number of different work coaches rather than receiving a dedicated service from a single person.283

248.A 2018 NAO report found some jobcentre staff found it difficult to identify claimants who needed additional support; lacked the confidence to apply benefit processes flexibly and make appropriate adjustments; and felt overwhelmed by the volume of claimants reporting health problems.284

249.The DWP is recruiting work coaches to manage the high number of new cases that will result from the economic impact of the COVID-19 pandemic. The Secretary of State did not set out how the DWP would judge how many work coaches would be required. She told us that there are around 13,500 work coaches today, but this number may double depending on the duration of the economic downturn and its effects on the labour market.285

250.We welcome the DWP’s decision to increase the recruitment of new work coaches over the coming months in response to the COVID-19 pandemic. Caseloads for work coaches have risen in recent years and are already too high to expect the level of sustained, personalised support that best helps claimants into work.

251.The Secretary of State indicated that the number of work coaches may double. We are concerned that this may not be enough to support claimants to find work in what may be a stagnant labour market with high levels of competition for many vacancies. The DWP should cap the number of cases for which each work coach can be responsible. Local jobcentres will have to decide how best to ensure that the cap reflects the composition of work coaches’ caseloads, as some claimants will require more intensive support than others.

Working with employers

252.Conditionality is leading to frustrating outcomes for employers and claimants. Dr Katy Jones said employers incurred costs when Universal Credit conditionality required large numbers of unsuitable applicants to apply for jobs.286 The National Association of Welfare Rights Advisers also told us that, “large organisations do not recruit people in this way and expecting claimants to do that is putting undue pressure on them, and reducing their confidence as it will inevitably lead to rejection.”287

253.We heard that successful welfare-to-work policies involve collaboration between the state, claimants and employers but that this model is not operating widely in the UK. Dr Katy Jones said, “[employers] have tended not to be involved in research or even policy debates, which is surprising and a mistake, given that Universal Credit is now extending to those in work.” Professor Sharon Wright said other countries provide more sophisticated support than in the UK. She said, “we only really have one form of support: self-help and self-directed job search … There is a bit of training. There are some support services, but compared with other countries it really is a bargain basement.” She said that employment services in Denmark identify the needs of the employer, “and then have very generous training, which works specifically with employers to train the available workforce according to what the business needs.”288 The Local Government Association told us that the UK has one of the most centralised systems for employment and skills in the world. 289

254.We heard that the social security system is “at odds” with the skills needed in the economy. Dr Katy Jones said:

“Since 2015, I have been interviewing claimants on Universal Credit and the earlier legacy systems, and I have asked them about the support that they have received, including training. The only things that they have been able to tell me about, if they have been able to tell me about anything at all, are the CSCS, or construction health and safety card, or the SIA badge, which is a security qualification. They might have been able to get some ESOL, whether or not they needed it, although not recently. That is completely at odds with the skills needs in our UK economy.290

255.The Local Government Association said that it had analysed the skills gap and its impact on the economy. It predicted that by 2030 there could be a shortage of 2.5 million high-skilled people and a surplus of 6 million intermediate or low skilled relative to available jobs across England. We were told, “This shortfall of high-skilled people could risk future economic growth and an economic output of around £120 billion.” The Local Government Association has launched a programme to improve employment and skills services through local public–private collaborations called ‘Work Local’. The scheme “proposes a model for integrated employment and skills that meets the needs of both individual and employers.”291

256.We heard that the biggest challenge for the Government in the coming months will be to introduce new labour market policies that can help workers move into new roles, as some jobs may no longer be economically viable. Mike Brewer said if there are persistently high levels of benefit claims, the DWP would need to introduce an active labour market policy “that is a little more supportive and intensive than its conditionality policies.”292 The Secretary of State for Work and Pensions and the Chancellor of the Exchequer told us that new labour market policies were under consideration.293

257.The CBI has called for the DWP to transform jobcentres into ‘Jobs and Skills Hubs’ to support young people into new jobs and training. It said, “by harnessing the expertise of colleges, universities, unions and businesses, local resources can be directed where they are most needed.” It pointed to recent examples of successful local collaboration, such as in Swindon following the closure of Honda and across the country in after the collapse of Thomas Cook, when local colleges adapted courses to train for local skill needs. The CBI said that the Jobs and Skills Hubs should have two roles. First, they should provide “rapid matching of people to new job opportunities”. Second, they should source “high quality training in areas of future demand in the local labour market.”294

258.In June 2018, we published our report, Treating Students Fairly: The Economics of Post-School Education. We found that the quality and availability of apprenticeships and alternatives to higher education were inadequate or required improvement. We said that we were concerned that the Government’s apprenticeship levy had encouraged the rebadging of training activity that should not be funded or described as an apprenticeship. We called for better funding for alternatives to higher education and said that the Government should renew its vision for apprenticeships, concentrating on the skills and choices that employers and individuals really need.295

259.On 8 July 2020, the Chancellor of the Exchequer set out ‘a plan for jobs’. It included:

• A £2 billion ‘Kickstart Scheme’ to pay employers to create new jobs for any 16 to 24-year-old at risk of long-term unemployment. The Government will pay young people’s wages for six months, plus an amount to cover overheads.
• A scheme to pay businesses to hire young apprentices, with a new payment of £2,000 per apprentice. It will pay businesses £1,500 to hire apprentices aged 25 and over.
• A scheme to pay employers £1,000 to take on new trainees, with triple the number of places to support 18-19-year olds leaving school or college to find work in high-demand sectors like engineering, construction and social care.296

260.The coming jobs crisis will not affect everyone equally; young people will disproportionally experience job losses. We know that long-term unemployment reduces people’s employment and earnings potential in perpetuity and entrenches existing inequalities.

261.The DWP’s successful management of large numbers of new claims by frontline staff involved a rapid reorganisation of priorities and resources. The DWP should already be reorganising to meet the unfolding jobs crisis. It must build stronger links with employers, local authorities and local education providers to harness their skills, expertise and resources to train and match claimants who can work with available jobs in a difficult and transformed labour market.

262.We welcome the Government’s announcement on providing more money to businesses in return for creating apprenticeships. The promotion of high-quality and well-funded apprenticeships should continue to be prioritised to support the training of the current generation of school leavers and for ensuring that other people can reskill, particularly those from employment sectors that may not see same level of demand for certain roles. The Government should also take steps to reform the apprenticeship levy.

263.We welcome the Government’s consideration of new active labour market policies. We urge it to act quickly and boldly.

Support: claiming and managing Universal Credit

264.We heard that the DWP has consistently underestimated the level of support that people need to make and manage their claims. Southwark Council set out its experience of working with the DWP on an early Universal Support trial in 2013:

“It was our view that many claimants would require support to transition successfully to the new [Universal Credit] system and a significant minority would likely require intensive and ongoing support. The DWP’s view was that only a small minority of claimants would require support and that any support offered should be temporary and targeted at enabling claimants to exercise greater individual responsibility for making and managing their claim and that this would be achieved through a mixture of budgeting and digital skills advice”297

265.In April 2019 the DWP announced a new support service, called ‘Help to Claim’ which is delivered by Citizens Advice and Citizens Advice Scotland.298 The support is limited to helping people to make their first claim.299 Neil Couling told us that the DWP did not include ongoing support to claimants in the contract because, “We have put responsibility for that aspect on to the work coaches, in terms of the ongoing relationship with claimants as their claim matures—and, one hopes, many of them move into work and beyond.”300

266.Local authorities and housing providers set out the extent to which they have had to transform their support services in order to manage the effects of Universal Credit. The Local Government Association said that in many cases a claimant’s ability to “maintain their claim, progress in work, manage on a reduced income or meet the terms of their claimant commitment are down to ‘safety net’ support delivered and/or funded by the local council.” Newcastle City Council and Your Homes Newcastle said that they were continuing to provide assisted digital support and personal budgeting support to supplement the Help to Claim service.301

267.We heard that these networks of local support have enabled the Government to make ‘savings’ by transferring the costs of support from central Government to councils and other local service providers.302 Swansea Council told us that local authorities have to spend far more to help claimants to make and maintain claims, manage their money and deal with associated issues such as “intensive support, increased pressures on housing services, preventative services and social services in particular.”303 The Guinness Partnership, a social landlord, said it provides support to claimants to help them to manage their claims: “With around 500 customers moving onto [Universal Credit] per month, the resource requirement from Guinness to perform this service is substantial.”304

268.The Government has provided funding for limited support to claimants, notably via the Help to Claim service. However, this stops after the first successful claim. The Government expects work coaches to be the main agents of support thereafter, but their time is already stretched.

269.It should not be necessary for claimants to require specialist help to navigate the system. As this is necessary under Universal Credit, claimants have a right to informed, independent and free advice. The benefit has had a dramatic impact on the provision of support services by local authorities, housing providers and community-based advice bodies, as helping claimants to navigate the system has become one of the main functions of such services. Claimants have a right to such support; but this has had a significant impact on the budgets of such organisations. The Government should devise a fund for supporting this work, work alongside local authorities to identify best practice for providing ongoing and accessible advice, and publish the results.

Support: vulnerable claimants

270.Personalised support is most important for claimants who are vulnerable.305 The number of vulnerable claimants is likely to be large. In 2017, the Independent Projects Authority, which monitors the roll out of Universal Credit, found a high level of uncertainty about the proportion of UC claimants who could be considered vulnerable, noting that estimates ranged between 25% and 50%.306

271.Sir Iain Duncan Smith MP, and his former advisers Baroness Stroud and Stephen Brien, said they had envisaged a comprehensive system of ‘Universal Support’ to provide lasting, individualised help to claimants, which would have been delivered by work coaches collaborating with a network of local services. This would have supported claimants with a wide range of complex social problems beyond managing Universal Credit claims, including chronic debt and drug misuse.307 However, this vision was never rolled out and we were told this was because of the Government’s savings programme after the 2007/8 financial crisis.308

272.Some witnesses told us that the original model of Universal Support had merit. Paul Gray, former Chair of the Social Security Advisory Committee, told us, “investing further in the originally intended Universal Support system still seems to me a big priority.” He said this is because it is “extremely difficult” to expect work coaches to both fulfil their usual advice role and, “to recognise and diagnose people suffering varying degrees of vulnerability, whether it is mental health or elsewhere.309 Gareth Morgan told us:

the damage done to the other advice and support services that used to be very widely available to people who needed help and support, frankly, has been shameful. It would take a very long time to rebuild the framework of the advice and support services that have been lost, but, particularly in the current circumstances, it should be done. Informed, independent and free advice and support should be recognised as an essential element of the system itself.310

273.The Local Government Association told us that the local council is the main service provider to most claimants and therefore best placed to identify complex needs and refer people to the most appropriate services. It said, “ … claimants are very often core users of council services such as supported housing, public health, mental health or social care. The Department has posed a particular question—‘who knows me?’ in relation to these claimants—very often the answer to that question is ‘the council’.”311

274.The original proponents of Universal Credit envisaged a comprehensive system of support for the most vulnerable people and those with the most complex needs. However, we were told that this work was never undertaken as a result of the cuts to public spending that took place under the Coalition Government. The Government must do more to recognise and fund the impressive networks of local support and advice that are doing the vital work of supporting the hardest to reach claimants at great expense. This would ensure that vulnerable people are able to receive the help that they need and are able to navigate the social security system.

Support: digital skills

275.Universal Credit is designed to be a predominantly digital service.312 The DWP has said that investment in digital support will free up work coaches’ time for those who need the most intensive support.313 Neil Couling said that the predominantly digital and automated nature of Universal Credit helped significantly in processing the surge in new claims in recent months.314

276.Claimants are expected to manage claims online, and awards are calculated and paid automatically. All activities required to fulfil a Claimant Commitment, such as updating the online journal and searching for employment, are expected to be completed online. Work coaches communicate essential information through the online journal, including changes to jobcentre appointments and requesting that a person completes additional tasks.

277.For some claimants this approach is a significant barrier to claiming and managing Universal Credit. We heard that those most affected include people with disabilities, mental or physical health problems, learning difficulties, poor literacy skills or who do not have English as a first language.315 Claimants can be sanctioned if they fail to complete certain tasks which will have been set digitally.

278.In June 2018 the Government published the results of research into claimants’ experiences of Universal Credit, which set out the proportion of claimants who struggled with the predominantly digital approach:

“Universal Credit is a digital service and 98 per cent of claimants did claim online. Over half (54 per cent) of all claimants were able to register their claim online unassisted, with a further fifth (21 per cent) completing it online but with help. Three in ten (30 per cent) of those who registered a claim online found this difficult, and the process of verifying their identity online was seen as particularly difficult. Overall, more than four in ten (43 per cent) claimants said they needed more support registering their claim for [Universal Credit]. Three in ten (31 per cent) said they need more ongoing support with using their [Universal Credit] digital account.”316

279.Money Advice Plus, a charity, told us that to make a claim people need “to have a mobile phone to receive a text on, an internet enabled device to make the claim on, and an email account they can access and receive a code on. For many people these are all complicated and alien things.”317

280.Professor Sharon Wright told us that cuts in recent years to local services such as libraries had made it more difficult to access computers and that, “People are often using their phone, but people do not necessarily have a good phone set-up. It might cost you £25 per month for mobile data. That is a huge proportion of your income, because Universal Credit rates are so low.”318 According to 2018 research by Ofcom, households with the lowest incomes are significantly less likely than average to have a smartphone or access to the internet. Furthermore, the likelihood of owning an internet connected device declines as people age or if they have a disability, as the table below sets out.

Table 5: Ownership/use of internet and smartphone, by broad age and socio-economic group

% ownership by age within socio-economic group			Non-disabled	Disabled total
Internet (use)	Aged under 65	ABC1	96%	81%*
		C2DE	93%	67%*
	Aged 65+	ABC1	82%	65%*
		C2DE	53%	35%*
Smartphone	Aged under 65	ABC1	86%	66%*
		C2DE	83%	55%*
	Aged 65+	ABC1	52%	41%*
		C2DE	31%	23%*

Note: * indicates that a disability group is significantly lower than non-disabled people (significance tested to 95%). Internet (use) is based on access anywhere whereas smartphone is based on household access.

Source: Ofcom, Access and Inclusion in 2018: Consumers’ experiences in communications markets (January 2019): https://www.ofcom.org.uk/__data/assets/pdf_file/0018/132912/Access-and-Inclusion-report-2018.pdf [accessed 20 July 2020]

281.Witnesses said that more resources and flexibility are needed for those without digital skills or access to technology. Non-digital options for making claims are available but only in exceptional circumstances, such as having no friends or relatives who can provide support. These include home visits for claimants who cannot leave the house or are in hospital, appointees to manage claims on a claimant’s behalf and support based in the jobcentre.319

282.Approximately 25,000 claims are maintained over the DWP’s helpline.320 However, we heard that this system can cause further problems for claimants and frontline staff. Professor Sharon Wright explained that a telephone claim “is not properly on the system and cannot later be accessed digitally.”321 Giles Elliott, Advice Service Manager at Manchester Mind, told us that waiting times were on average 30 minutes and that he had heard instances of people using the helpline being refused support to which they were entitled.322

Box 9: Case study provided by The Welcome Centre

“Mark worked full-time in quite a physical job but had to be signed off work sick due to back pain. Mark was only entitled to statutory sick pay, so he was advised to apply for Universal Credit whilst he was signed off work. Mark had never claimed benefits before and was unsure what to do. Mark had no PC or smartphone and delayed applying for Universal Credit because he didn’t know where to get help in completing the online application. Eventually, Mark was referred to The Welcome Centre because he was really struggling to manage. As well as supporting Mark with food and toiletries, The Welcome Centre helped Mark to make his Universal Credit claim. Unfortunately, though, by the time he was referred to The Welcome Centre Mark was already in arrears with his rent, water, and council tax bills.”

Source: Written evidence from The Welcome Centre (EUC0030)

283.Most people do not struggle with a predominantly digital service, but a significant minority do. The need to provide digital support does not end at the first claim. Claimants are expected to manage their Universal Credit accounts and work journals online for the duration of their claim. It is essential that trusted organisations are funded to guide people through the process.

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