Chancellor Kwasi Kwarteng has laid out the government’s “mini budget”, a package of tax cuts that will mostly benefit the wealthiest in Britain. But people on the other end of the income scale are facing changes too.
Kwarteng announced that those on universal credit will now face stricter requirements to look for work or face their benefits being cut. People in part-time work will need to prove they are looking for more work.
For those of us who have spent years researching the benefits system and the impact of welfare reforms, our collective sigh was audible. This announcement contradicts countless studies showing that this kind of policy is ineffective and only increases pressure on people who are already struggling. As workers grapple with a devastating cost-of-living crisis, this renewed offensive on low-income households is the wrong move at the worst time.
Approximately 6 million people now claim universal credit, a single monthly payment for people who are unemployed or on a low income. Of these claimants, around 2.3 million are in work.
Claimants can be required to undertake job search and work-related activities for up to 35 hours per week. This is what’s known as conditionality – your eligibility to receive benefits is contingent upon you meeting certain conditions.
Historically, the UK benefits system has imposed conditionality on unemployed people (you must be actively looking for work to receive benefits). Universal credit expanded this when it was introduced in 2013, bringing out-of-work and in-work claimants into the same system, and requiring part-time workers to actively seek additional work.
Failure to comply with these expectations can result in a benefit sanction, when benefits are stopped for a specified period – in some cases, up to six months.
The chancellor’s new growth plan requires people on universal credit who earn less than the equivalent of 15 hours a week at the national living wage to take steps to increase their earnings, or face benefit reductions. Previously, this was the case for people working nine hours a week or less, and was already set to increase to 12 hours this month.
This new move is anticipated to bring an additional 120,000 people into the government’s intensive work search regime, which usually involves weekly or fortnightly meetings with a work coach.
The government’s own research failed to deliver a compelling case for this policy change. A randomised control trial conducted between 2015-18 found that after 52 weeks, people in an intensive in-work progression regime only earned an average of £5.25 more per week compared with workers who weren’t receiving additional support. A further assessment at 78 weeks suggested that there was no significant impact.
Universal Credit is built around flawed incentives that are doing real damage – fixing it is essential
The real effects of benefits sanctions
Our research, carried out over a five-year period from 2013-2018, demonstrates that sanctions-backed conditionality can be counterproductive and ineffective. We have previously highlighted the flaws in increasing conditionality for in-work claimants.
Pressuring low-paid, part-time workers to increase their hours or take on multiple jobs can have adverse physical and mental health impacts. Working parents in our research noted the strain of balancing work and home life, including the shortcomings and high costs of childcare, and a heavy reliance on family or friends to compensate for this. The dangers of taking away essential income from people during difficult times are evident.
When speaking to people on universal credit, we found that many experienced increasing distress with the mounting pressure of in-work conditionality. Some even ended up leaving universal credit despite remaining eligible. This resulted in significant financial hardship.
An independent review commissioned by the Department for Work and Pensions (DWP) in 2020 called for incentive-based approaches rather than sanctions. Baroness Ruby McGregor-Smith, who conducted the review, highlighted the need for investing in training, childcare and transport to enable people to progress. She also noted that JobCentres and other free or affordable support are primarily aimed at helping people into work in the first place – not to progress in work.
The government’s latest announcement is not just a concern for claimants. In recent research with employers, businesses reported that they may not be able to offer more hours on a consistent basis, and raised concerns about how this policy would impact staff wellbeing and retention rates.
Who will be hit hardest?
The people most likely to be hit hardest by this policy are people who are already disadvantaged and struggling. Women, especially mothers and those with caring duties, disabled people and some black and minority ethnic groups, are often in part-time or lower-paid work, so are more likely to face these requirements. They are also at higher risk of underemployment and insecure jobs.
The UK’s ‘work-first’ approach to benefits hurts mothers
The DWP’s own analysis shows that most in-work universal credit claimants likely to be brought under an in-work conditionality regime will be women (77%) and parents (70%), with over half (51%) expected to be lone parents. Nearly one-third (27%) will be disabled or limited by a health condition.
The department acknowledges that getting another job or advancing in their current job is difficult for people who have to balance work with caring responsibilities and health conditions. Placing more pressure on working claimants will amplify the disadvantages they already face, and the difficulties of contending with the cost-of-living crisis this winter.
Lisa Scullion has previously received funding from UKRI/ESRC
Katy Jones receives funding from the ESRC.
Sharon Wright receives funding from UKRI/ESRC.