The Way to Work … won’t work

I didn’t respond immediately to the Government announcement of new rules for unemployed people, because I can’t actually make sense of those rules.  All I’ve found to go on is a press release, which tells me that unemployed people will be expected to find work in any job, regardless of skills, after four weeks.  More specifically, the press release says this:

 those who are capable of work will be expected to search more widely for available jobs from the fourth week of their claim, rather than from three months as is currently the case. … Under existing rules claimants have 3 months to find a job in their preferred sector before facing the prospect of sanctions. New rules will mean that sanctions could begin 4 weeks after their initial UC claim, if they’re not making reasonable efforts to find and secure a job in any sector or turn down a job offer.

The way the system is supposed to work is this.  People make a claim for Universal Credit when they become unemployed.  They are then invited to a meeting with a work coach who gets them to sign a claimant commitment.  They do not receive benefit before five weeks.  So it seems that

      • the claimant commitment will be established and signed at a point where the obligations allow them to specify what their expertise and competence makes reasonable.
      • After four weeks, the claimant commitment will have to be torn up and replaced with other obligations.
      • The renegotiation is going to happen before claimants are actually paid anything.

I may have this completely muddled – I can’t tell from the details that have been made available – but if this is right, what I’d expect to happen is this. Some work coaches will  jump the gun – if they don’t, it would double their workload. People with skills will not bother claiming at all, because the extreme economic prejudice of taking any job will outweigh the potential benefit. Others will be sanctioned because they don’t turn up to a second meeting with the work coach. Employers will be flooded with inappropriate applications.

Stepping back from the details, there’s much more wrong with this policy.  The first misconception is that sanctions encourage people to get into work.  There’s no evidence to back that up.  The main use of sanctions in practice is to ensure compliance with the benefit rules – the vast majority of sanctions are given for not coming to meetings – and it’s not clear that they even do that.  Second, there is the myth that unemployed people won’t work otherwise.  Before the government started messing about, about 90% of unemployed people were back to work in a year.  That figure has fallen to about 80%, I suspect largely because of the forced transfer of many people from Incapacity Benefit or ESA – those who are too sick to work.  And the third is the ridiculously misconceived position that Universal Credit is mainly a benefit intended to get people into work.  It isn’t. It covers people on low wages, and as the transfer is proceeding there are increasing numbers of people without jobs who  are chronically sick or caring for young children – people who would previously have been receiving Incapacity Benefit/ESA  or Income Support.  The numbers of long-term unemployed people are relatively small, but policies have been driven by the myth that dealing with them is the main purpose of the benefits system. No wonder it’s a mess.


The Work and Pensions Committee is critical of sanctions

The House of Commons Work and Pensions Committee has reported critically on the sanctions regime.  The Committee recommends that

  • sanctions should stop for people who do not have capacity for work
  • there should not be in-work sanctions on UC until the system is fully operational
  • deductions should not be more than the benefit
  • there should be clear rules about what is a good reason for non-compliance
  • there should be warnings before the first sanction, and
  • families with young children should not have more than 20% of benefit deducted.

They accept that “Sanctions must be a last resort and claimants should be able to challenge the decision before it is imposed.”  That alone would make a marked difference to current practice.

This could have gone further. The DWP has no evidence about the effects of sanctions in most cases, and the Committee asks them to get some.  That looks like a recipe for delay, because there’s no shortage of other evidence. Looking over the recommendations, the Committee clearly sees no good reason to sanction people who have no prospect or reason to go to work instead – and that is the vast majority of people who depend on ‘working age’ benefits.

Additional note, 24th November:  Michael Adler has posted a detailed summary and critique of the Committee’s report.

Unemployment benefits are being reformed in France

The government of President Macron has proposed a series of changes to unemployment benefits.  The context is very different to the UK.   Unemployment benefits are not run by the government, but by Unédic, a formal consortium of employers and trades unions.  The benefits are contributory and related to previous income (which makes them generous by comparison with UK benefits); they get reduced for longer periods of unemployment.

The proposed reform makes three substantial changes.  First, it will extend unemployment benefits for the first time to the self-employed.  Second, employees will not longer be excluded from  claiming if they have given up their previous work voluntarily.  The government is justifying this by suggesting that it offers people the opportunity to start a business.  At this stage, it’s not clear whether that will be a formal condition; if it’s not, there are others who may find different uses for it.   (The Thatcher government in the UK used to have a separate system of support for small business start ups, and one person I knew at the time was funded to become a successful writer of comedy.)

Third, there will be new sanctions; a person who refuses two reasonable offers of employment will have benefits halved.  That’s a little more leeway than claimants in the UK get, where claimants are driven to destitution for missing an appointment.    A report yesterday gives two examples of people having benefits stopped for the serious offence of being in hospital at the wrong time.

A dispiriting review of sanctions

David Webster’s 13th briefing on sanctions makes for disturbing reading.  The figures from DWP have consistently and substantially underestimated the numbers of people undergoing sanctions; the effect of taking account of the high rate of sanctions for Universal Credit claimants is almost to double the reported figures.  Key issues, such as suspension of Housing Benefit, have been misreported to Parliament.  Although the rate of sanctions has slowed, sanctions have by now been imposed on most longer term claimants of JSA, and 85% of those unemployed for more than three years.

0-3 months 3-6 months 6 months-1 year 1-2 years 2-3 years 3-4 years 4-5 years
% of individual claimants
36 19 20 15 6 3 1
% of these claimants sanctioned 6 15 24 37 49 85 n.a.

The long-awaited report from the Public Accounts Committee does not address these issues.  Their strongest criticism is that the DWP seem not to know what the effects of sanctions are.  They are attracted by the idea of a warning system, which has been trialled and, David argues, has already been shown not to work.    They call for greater evidence for consistency between offices – in other words, for targets.

The NAO criticises the inconsistent application of sanctions

The National Audit Office has published a critical report on benefits sanctions. In 2015, 400,000 claimants were sanctioned, out of 3.5 million claimants of sanctionable benefits; the NAO reports that 24% of JSA claimants have been sanctioned.  The application of sanctions is not properly monitored,  and the DWP does not know what effect this is having.  The NAO raise doubts about consistency, accuracy and timeliness.  Their overall conclusion is this:

The Department has not used sanctions consistently. Referral rates vary substantially across jobcentres and providers, and have risen and fallen over time in ways that cannot be explained by changes in claimant compliance. While the Department is correcting errors earlier, it needs to do more to show that the quality of referrals and sanction decisions has improved. Our review of the available evidence suggests the Department’s use of sanctions is linked as much to management priorities and local staff discretion as it is to claimants’ behaviour.

The DWP, as is their wont, have blamed inconsistencies on the front line staff (p 26).  We should be careful what we wish for.  It’s perhaps worth putting this together with the information from the Couling Report, which denied (however implausibly) that the DWP had any centrally directed policy to impose sanctions or targets governing their number. If the DWP does as the NAO asks, it will have to.

There are much more serious concerns about sanctions than their inconsistent application.  There are reasons to question their purpose, their scope and their legality.  I hope that when the Public Accounts Committee will go further when they report on their inquiry.

The Scotland Act has passed. Now we can do something about sanctions.

The Scotland Act 2016 has received royal assent.  I’ve been critical of the aspects that deal with benefits.  The first draft bill was sloppily drafted, the purpose of the clauses was misinterpreted, and the resistance of the Scotland Office to most amendments meant that improvements were slow and difficult.  There are still parts of the Act that are badly thought through  – for example, the disability clauses, which I’ve written about before, the assumption that Winter Fuel Payment would be covered by rules about cold weather, or the removal of the Scottish Parliament’s existing power to authorise crisis loans. But there is also a significant loophole which the Scottish Government could, if it wanted, use to challenge the system of sanctions.   Now the Act has passed,  the loophole could only be removed by a further Act of Parliament.

Three clauses contain the same wording, apparently intended to stop interference with the sanctions régime.  Clauses 24, 25 and 26 deal with top ups to reserved benefits, discretionary housing payments and discretionary benefits. They all include the same qualification about sanctions.  Clause 26 reads:

This … does not except providing financial assistance where the requirement for it arises from reduction, non-payability or suspension of a reserved benefit as a result of an individual’s conduct (for example, non-compliance with work-related requirements relating to the benefit) unless—

(a) the requirement for it also arises from some exceptional event or exceptional circumstances, and
the requirement for it is immediate.

The key phrase here is that the requirement for financial assistance “arises from some exceptional event or exceptional circumstances”.   Now, it might be that someone thought that “short term” means one off, that “discretionary” means “only do it once” and “exceptional” should be taken to mean “very rare and unusual”.  That is not what those terms mean in social security law or practice.

  • The “short term” benefits introduced after 1948 were intended to cover unemployment, sickness and maternity, while the “long term” benefits covered pensions, bereavement and death.  This distinction lasted till the mid-1990s.
  • “Discretion” covered all benefits not paid as a right: the discretion of the Supplementary Benefits Commission (1966-1980) included elaborate rules for extra payments, including provision for Urgent Needs Payments, Exceptional Needs Payments and Exceptional Circumstances Additions.  The rules were largely covered in the “A Code”, but a summary of the rules were laid out annually in the Supplementary Benefits Handbook.  There is no incompatibility between discretion and rules.
  • The term “exceptional” was taken by the SBC to mean anything that lay out of the ‘normal’ provision of benefits.  So, for example, there was an Exceptional Circumstances Addition of 30p per bath for anyone who needed more than one bath a week for medical reasons.

The Scottish Government does not have the same discretion as the SBC – it is not possible to argue that discretion must always be used the same way.  But the principles guiding discretion share an important common element: it has been clearly established that discretion can be interpreted and expressed in terms of rules.  It follows that the Scottish Government can use their discretion to issue guidance under these provisions, defining the rules applying to provision and the circumstances which should be treated as exceptional.  Such rules may reasonably extend provision,  for example, to families under pressure, cases of special hardship and circumstances where the personal circumstances of the claimant, such as mental illness or conflicting duties, have led to sanctions being imposed.

This would have the effect of removing some sanctions; it would not remove most of them.  There is a tenable argument for adding a further rule defining an exceptional circumstance, which could have a much more profound impact.  Professor Michael Adler has argued that in several respects it is questionable whether the  current sanctions regime is consistent with the established principles of the rule of law.  Of the many points he makes, one seems to me to stand out: it is that people who are affected must have a hearing.  The current practice lies in breach of an ancient principle of administrative law:  audi alteram partem, which is one of the elements of natural justice.  If decisions are being taken about claimants, they must have an opportunity to put their case.  (It has now  been decided, for example, that the bedroom tax cannot be imposed without a hearing in cases where bedroom size and use is disputed).  In the current sanctions régime, claimants can only be heard after the punishment has been imposed – and indeed they may not know that a sanction has been imposed until after  the punishment has taken effect.

I think it can plausibly be  argued that any punishment or variation in the rights of a citizen must be lawfully done, and that circumstances where they are not lawfully done should always be considered exceptional.   In any case where people have been sanctioned without a hearing, the Scottish Government could exercise its discretion to make payments to mitigate the sanction.   If the DWP doesn’t agree, they are welcome to test that proposition in the courts.

People excluded by sanctions ‘beg, borrow and steal’

A report for Crisis, undertaken by researchers at Sheffield Hallam, records the devastating effect of  sanctions on homeless people (though 21% of the sample became homeless because of the sanction).  People who are sanctioned are driven to ‘beg, borrow and steal’; 38% of those sanctioned had stolen essential items.  (I commented on the likelihood of this, using some rather old evidence, two years ago.)  Three quarters of the large sample reported negative effects on their health.   Sanctions do not drive people into work; they drive people away from the labour market.  They are creating problems that will take us a generation to resolve – if ever we do.

Universal Credit – can we distinguish disallowances from withdrawn claims?

David Webster’s latest sanctions briefing will shortly be listed on the CPAG website.  He comments that the transfer of single people to Universal Credit seems to be distorting the statistics.

The Universal Credit statistics have already marked a large discrepancy between the number of people receiving the benefit, and those who have claimed  – 251,000 claims, but 141,000 current recipients.  There’s no immediate way in that of distinguishing rejected claims, sanctions and disallowances, and terminations.

I’ve recently had the opportunity to observe the Universal Credit process in a Jobcentre, and I think there may be an anomaly in the process.   The way it works is that people make an initial claim online, they go to the Jobcentre, and they’re told there what the conditions are.  Then they have to wait – the payment date is 5-6 weeks after claim, and the Jobcentre interview is meant to happen very shortly after the claim, so by the time of the JCP interview they’ll probably have four or five weeks more to wait.  After that point, JCP staff told me, a fair number of people disappear – they just don’t come back in, and JCP don’t know why.  But there is no easy way to terminate a UC claim.  The JCP officers aren’t expected – or permitted –  to handle this.  It’s left to claimants  to inform the Service Centre by telephone if their circumstances change.  If they don’t there’ll be warning letters, a sanctions procedure,  possible disallowance and so on.

There are lots of things we don’t know here.  How many people are put off by the waiting period?  How many find work shortly after claiming?  Are there people giving up claims they should carry on with while in work?  Are there people who think that telling one DWP officer ought to be enough?  There has to be a suspicion that the process of sanctions and disallowance is clocking up disallowances in cases where conditionality is not the issue at all.  If that’s happening, it’s an own goal for the DWP, because the UC figures may look worse than they should.

The Government’s defence of sanctions

In the past I’ve hosted David Webster’s reports on this blog, but his material is now being hosted by CPAG here.  We met up yesterday and he suggested I might like to comment on his latest briefing separately.    His key criticisms of the Government’s response on sanctions are these:

The government’s response does not acknowledge any of the fundamental problems of the sanctions system identified by the Committee:

  • lack of evidence to justify financial sanctions, or their severity;
  • doubts about the reasonableness of Claimant Commitments;
  • lack of protection for vulnerable groups and single parents;
  • an inappropriately strict approach to all claimants rather than a focus on those who are genuinely not engaging in work search;
  • fundamental doubts about the appropriateness of sanctions for ESA claimants; and
  • inadequacy of the hardship payments system.

It repeats the by now habitual unjustified claims

  • that sanctions only affect a small minority of claimants,
  • that Claimant Commitments are genuinely agreed between claimants and Jobcentre Plus,
  • that there are effective safeguards against wrongful sanctioning, and
  • that the UK sanctions system can be justified by reference to international evidence.

In relation to the international evidence, I think David’s response concedes too much when he suggests they show small positive effects on the labour market.  The claims made in the literature are made about active labour market policies – sanctions are a part of that, but they have not been evaluated distinctly, and it would be difficult to do so.  The central thing to understand about conditionality is that every relevant benefit, everywhere, has some conditions, so there is no point in trying to assess whether the existence of conditions alone produces an effect; any meaningful comparison has to be about the degree to which sanctions have an independent effect when other things taken into account.  It’s also worth asking what the penalties are for.  Some of the evidence on cash assistance in developing countries implies that less strict conditions can have a beneficial effect, for example by allowing small enterprises to develop.

There is more to sanctions, in any case, than the claimed effects on the labour market.  Frank Castles once suggested that expenditure on benefits was probably less important in comparing welfare systems than understandings and expectations about entitlement.  It’s those understandings which have been undermined by the current regime.


David Webster: Briefing on JSA/ESA sanctions release, 12 August

David Webster has sent me his latest briefing for posting on this blog. There has been a fall in the numbers, reflecting the reduction in the numbers of people counted as unemployed. On page 11 he also has details of the complaint that he and Jonathan Portes made to the UK Statistics Authority about the sanctions statistics.