Date laid: 19 April 2024
Parliamentary procedure: negative
These Regulations increase the Administrative Earnings Threshold (AET) of Universal Credit, which relates to those who are in work but on low income, by 20% above the increase in the National Living Wage, to £892 per month for an individual and £1,437 per month for a couple, with effect from 6 May 2024. Department for Work and Pensions (DWP) analysts estimate that this change will bring a further 180,000 claimants into the Intensive Work Search (IWS) regime. This is the third such increase since September 2022.
In relation to the last increase, we expressed disappointment that the Explanatory Memorandum made no reference to the outcome of the first instrument or how each increase contributes to DWP’s overarching policy goal: the same criticism applies here. The Social Security Advisory Committee (SSAC), a statutory consultee, has published a report to accompany this third increment, recommending that DWP should only pilot the changes on low-risk claimants until it has more robust evidence available.1 We intend to seek oral evidence from the Minister to provide more information on the wider impacts of this initiative, better to inform the House.
The Regulations are drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation.
1.The Universal Credit Administrative Earnings Threshold (AET) determines the degree of work search required by those Universal Credit claimants who are in work but on a low income. Claimants earning below the threshold are subject to the Intensive Work Search regime (IWS), and are required to attend regular meetings with their Work Coach and more actively seek ways to improve their earnings by extending their hours or employment prospects. Failure to comply with the IWS can result in their benefits being sanctioned.
2.This instrument raises the AET to: £892 per month for an individual claimant, a sum equivalent to working 18 hours per week at National Living Wage (NLW); and to £1,437 per month for a couple, equivalent to working a combined total of 29 hours per week at NLW (both at 2024–25 NLW rates). For individuals the AET is increased by three hours per week (up from 15 hours per week or £677 per month), and for couples by 5 hours (up from 24 hours a week, equivalent to £1,083 per month) (both at 2023–24 NLW rates). These increases are equivalent to approximately 32% in cash terms, and are 20% above the rate of increase of the NLW between 2023–24 and 2024–25.2
3.This is the third increase in the AET in just over 18 months. The first increment, which took effect on 26 September 2022,3 was anticipated to bring 114,000 claimants (16.5% of Light Touch claimants) into the IWS regime. The second was estimated to move a further 130,000. This third increase is projected to bring over 180,000 additional claimants into the IWS.
4.The cumulative effect of these regulations is that more than 400,000 claimants are being moved into the IWS regime. Each IWS claimant is supposed to have regular contact with their Work Coach to monitor their efforts, but DWP does not state if there is sufficient staff capacity within Jobcentres for these needs to be met.
5.In connection with the second increase we wrote to the then Minister of Employment, Guy Opperman MP, in January 2023,4 asking what DWP’s criteria for success were. Mr Opperman responded that it was “to help low paid Universal Credit claimants to increase their income.” Now, in connection with the third increment, the Social Security Advisory Committee (SSAC), a statutory consultee, has published a report,5 which among other things highlights that:
“the stated policy intent has evolved from the initial ambition to get more claimants in to higher-paid work, to a reframing of the social contract between claimants and the Department to better balance the responsibilities that are asked of claimants in return for their benefits”.
6.The House may wish to probe this “evolution” further.
7.In our report on the second increase in the AET,6 which took effect on 30 January 2023, we expressed disappointment that the Department for Work and Pensions (DWP) had made no reference to the outcome of the first instrument or how each increment contributes to DWP’s overarching policy goal: the same criticism applies here.
8.In February 2023, at the time of our previous report, DWP said:
“We have robust evidence (which we plan to publish soon) that the Intensive Work Search regime can support the lowest earning UC claimants to boost their earnings.”
We are not aware that that evidence has yet been published. Indeed, it appears that references to some limited evidence that was made available to the SSAC have been redacted from the SSAC’s report.
9.At paragraph 5.24 of the Explanatory Memorandum (EM) to this latest instrument, DWP states that evaluations of the previous increases to the AET are “currently ongoing.” We find the lack of data inexplicable, since Mr Opperman’s letter said that “earnings increases will take around 6-9 months to materialise”, and the two preceding instruments took effect in September 2022 and January 2023 respectively. We intend to seek oral evidence from the Minister on this point.
10.Our previous report said that without proper evaluation we thought further legislation was premature. The SSAC’s report to accompany this third increment follows similar lines.7 It noted that:
“The Department took delivery of its externally commissioned analysis of the impact of earlier AET uplifts at the end of January 2024 and … officials presented high-level findings on 9 February. However, what we have seen has not been able to convince us that evidence gaps have been plugged, nor that there will be sufficient opportunity for the proposals to be informed by this evidence before the regulations are scheduled to be laid in early April.”
11.Amongst other things, the SSAC report recommended that DWP should:
(i)develop the evidence base around the circumstances where IWS would be the most effective approach, and for those cases where alternatives should be considered. That evidence should be used to inform adaptations to the regulations and operational guidance to better deliver the Government’s policy intent;
(ii)prepare, consider and publish a more comprehensive Equality Impact Assessment to help build its evidence base; and
(iii)pause its plans for full implementation of these proposals while it pilots a phased approach, initially involving claimants in a low-risk category.
12.SSAC has in mind that many of those in work who also claim benefits do so because they have complex lives involving health issues or caring responsibilities. While DWP states in its response to SSAC that there is guidance to inform Work Coaches of the available easements and support paths for all customers with complex circumstances, Parliament may wish to have information on how often these mechanisms have been used in the last two years. It would also be useful to have information on how many claimants have successfully increased their earnings and how many have ceased to claim Universal Credit or moved into sickness benefits. We intend to seek oral evidence from the Minister to provide more information on the wider impacts of this initiative, better to inform the House.
13.In the EM, DWP explains that the laying of the original Regulations (SI 2024/529) was delayed due to events in the Middle East postponing the scheduled announcement, and we are grateful that the Department tried to revoke and replace them so that Parliament might still have the standard 21-day period for its scrutiny. Unfortunately, the second instrument, SI 2024/536, did not include a provision to revoke the original immediately and so implementation of the policy still takes place on 6 May and has not been deferred as intended.
1 Social Security Advisory Committee, Report on the Universal Credit (Administrative Earnings Threshold) (Amendment) Regulations 2024 (8 March 2024): https://assets.publishing.service.gov.uk/media/66267a881cbbb3400ba7e5b1/universal-credit-transitional-provisions-amdt-regs-2024-accessible.pdf [accessed 29 April 2024].
2 The main rate of NLW increased by 9.8% between 2023–24 and 2024–25. See HM Government, ‘National Minimum Wage and National Living Wage rates’: https://www.gov.uk/national-minimum-wage-rates [accessed 1 May 2024].
3 Universal Credit (Administrative Earnings Threshold) (Amendment) Regulations 2022 (SI 2022/886). See SLSC 13th Report (Session 2022–23, HL Paper 68), paras 25–26.
4 See Appendix 2 in 27th Report (Session 2022–23, HL Paper 143).
5 Social Security Advisory Committee, Report on the Universal Credit (Administrative Earnings Threshold) (Amendment) Regulations 2024 (8 March 2024): https://assets.publishing.service.gov.uk/media/66267a881cbbb3400ba7e5b1/universal-credit-transitional-provisions-amdt-regs-2024-accessible.pdf [accessed 29 April 2024].
6 See second item in 27th Report (Session 2022–23, HL Paper 143).
7 Social Security Advisory Committee, Report on the Universal Credit (Administrative Earnings Threshold) (Amendment) Regulations 2024 (8 March 2024): https://assets.publishing.service.gov.uk/media/66267a881cbbb3400ba7e5b1/universal-credit-transitional-provisions-amdt-regs-2024-accessible.pdf [accessed 29 April 2024].
8 Agriculture (Removal of Cross-Compliance and Miscellaneous Revocations and Amendments, etc.) (England) Regulations 2023 (SI 2023/816); SLSC, 52nd Report (Session 2022–23, HL Paper 256).
9 Submission on the draft Management of Hedgerows (England) Regulations 2024 and government response: https://committees.parliament.uk/publications/44581/documents/221425/default/.
10 Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/696); SLSC (Sub-Committee B), 17th Report (Session 2017–19, HL Paper 293).
11 National Audit Office, Local authority investments in commercial property (February 2020): https://www.nao.org.uk/wp-content/uploads/2020/02/Local-authority-investment-in-commercial-property.pdf [accessed 29 April 2024].
12 Public Accounts Committee, Local authority investment in commercial property (Eleventh Report, Session 2019–21, HC 312).
13 Home Office, ‘Police officer dismissals: Home Office review’ (26 October 2023): https://www.gov.uk/government/publications/police-officer-dismissals-home-office-review [accessed 29 April 2024].