Sanctioned claimants face lower earnings

A report from the Department for Work and Pensions shows people who are sanctioned earn less on average than other claimants.

Child hold woman's hand at a table. She has her head in her hands and there is an open purse on the table with just a few pence spilling out of it.

 

The average Universal Credit claimant who has been sanctioned ends up earning less than other claimants, according to a Government report.

The Government’s much delayed report on the impact of benefits sanctions suggests the sanctions policy increases poverty for many. It says sanctions lead to claimants pulling out of the UC system. However, they are then less likely than other claimants to move into PAYE employment and into higher paid work.

Parents are particularly badly affected. While claimants with a health condition, with a partner and males all move into jobs more quickly as a result of a sanction, sanctioned claimants with children leave the UC intensive job seeking phase seven per cent more slowly than those who have not been sanctioned.

The report says that, on average, sanctioned claimants earn on average £34 per month less than non-sanctioned claimants over a six-month period. This is driven by lower earnings, particularly for those under 26.

The Government says that this is not proof that sanctions don’t work because they are intended to incentivise claimants to attend Job Centre interviews and to seek work. It says this is proven by a 3% reduction in sanction rates between August 2017 and August 2018. However, this had climbed to around 7% by October 2022.

The report comes after a 2018 report by the Work and Pensions Select Committee [WPSC] which recommended that ‘the department urgently evaluate the effectiveness of reforms to welfare conditionality and sanctions introduced since 2012 in achieving their stated policy aims’. In addition, the WPSC recommended that the evaluation include an assessment ‘of the impact sanctions have on claimants’ financial and personal well-being’.

Tony Wilson from the Institute for Employment Studies said that the report is “pretty conclusive evidence that the UK system is bad for those sanctioned, bad for economy and bad for society. It needs fundamental reform”. He added: “The report weakly suggests that the ‘deterrent’ effect may make up for this. I think that’s nonsense, but just to reiterate, the Government has had this research for five years. So we shouldn’t have to speculate; it’s had years to test that theory if it had really wanted to.”

In his recent Budget, the Chancellor announced an extension of the sanctions regime. He said people working less than 19 hours a week on minimum wage will come under a more intensive job-seeking regime, meaning that if they don’t seek more hours they could face benefits sanctions. This is an increase on the current level of 16 hours. The Chancellor also announced that the Universal Credit sanctions regime will be strengthened “by providing additional training for Work Coaches to apply sanctions effectively…and automating administrative elements of the sanctions process to reduce error rates and free up Work Coach time”.

At the time, Gingerbread, the charity for single parents, expressed concerns about extending the more intensive job-seeking regime, saying: “The Chancellor’s approach risks pressurising parents into low-paid, low-skilled, precarious work – at a time when three-quarters of children in poverty are in working households…It’s especially concerning that job-search requirements will be tightened for parents of young children on Universal Credit, with no recognition of the constraints on them as primary carers, a shortage of funded childcare places during job preparation and of funded training opportunities.”

Two-child policy

Meanwhile, the Child Poverty Action Group has called on the Government to end the two-child limit on UC and tax credit payments for those born after April 2017, saying the policy has caused widespread suffering and hardship among families affected with parents struggling to meet children’s basic needs as living costs soar.

CPAG’s survey records a sharp rise in the number of families reporting that the policy has affected their ability to pay for gas and electricity, despite government intervention – from 73% in 2021/22 to 82% in 2022/23.

The number of working families affected by the policy who report that it has affected their ability to pay for food has risen from 78% in 2021/22 to 87% in 2022/23. The rate among non-working households has consistently reached 90% since 2019.

Most families (58%) subject to the policy are working and CPAG estimates 1.5 million children are currently affected by it, including 1.1 million growing up in poverty.

It says the impact of the policy on families’ budgets has been compounded by the cost-of-living crisis and that abolishing it would lift 250,000 children out of poverty, and a further 850,000 children would be in less deep poverty at cost of £1.3 billion.

Chief Executive Alison Garnham said: “Six years to the day since this nastiest of policies came into effect, our survey is showing its devastating effects.  The two-child limit makes it impossible for parents to provide their children with essentials – and the cost of living crisis is adding extra pain.   The number of children in poverty rose by 350,000 last year – and the two-child limit played a big part in that rise.   There is no place for this policy in a country that believes all children deserve a good start.   Ministers must remove it before it does more damage to children and to family life.”



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