Universal Credit: Why do we think more threats and less choice helps the unemployed?

The Government has announced a new jobs “mission”. The headline policy in this mission is to say to people who lose their job that after four weeks they will also lose their choice about what jobs they should apply for. If they insist on having a choice in how they earn a living, they will be punished by being sanctioned and losing their living allowance[1].

In an unfortunate co-incidence, we also found out on the same day that the Department of Work and Pensions has refused to release under the Freedom of Information Act its report into the effectiveness of the threats and punishments that make up the benefit sanctions system. Despite repeated promises dating back from 2019 that the research would be published, the Minister’s opinion is now that informing the public of the outcomes of the research into Benefit Sanctions would not be in the public interest.

It is now the case that because everyone waits five weeks for their first Universal Credit payment, if someone decides to keep their job search focused on work they have experience of doing, they’ll get a sanction a week before they get any money.

The evidence does not tell us that more or quicker threats help get people into a job

There is evidence that some forms of sanctions improve movements into work – but, and it is a massive but – they are on regimes much less severe than the UK’s. The classic study from the Netherlands performed in the 1990s involved warnings before 1-month deductions of 20% of the living allowance. The UK now has a system where 100% of the allowance is taken for up to 6-months. Moreover, sanctions run consecutively and can be re-applied every two weeks.

Importantly there is also evidence that when threat and punishment are used to speed people into accepting jobs, which appears to be Government’s main aim, the jobs accepted in haste are less suitable and people are not able to sustain them. The result is more cycles of low pay to no pay and back again, with the stress and insecurity that brings, and more time spent claiming benefits than if the person had been allowed the time to find a more suitable job.[2]

None of the research has ever found a positive employment effect from a system as severe as the UK’s. There is no reason to believe that harsher punishments mean better employment effects – in fact, the opposite is more likely to be true. It is however absolutely clear that the human costs in terms of hardship, foodbank visits, and damaged health increase with the severity of punishment.

Before 2019 the DWP refused to look at the effectiveness of sanctions, so the National Audit Office used the best data it could get from the DWP, and could not see a positive effect. Moreover, the Government’s own auditors did see a negative effect on employment for those with illness or disability. It should come as no surprise that threats and punishments harm vulnerable people[3].

In 2019, after much pressure, the DWP started a study into the effects of sanctions[4] and promised to publish its results. It reported to ministers at least a year ago. The day that the government announces an expansion of the sanctions system, we are told it is not in the public interest to see the DWP’s research into the effectiveness of the sanctions system.

I think we are free to draw conclusions from this, if only because a DWP decision-maker looking at a sanction[5] is encouraged to draw a negative inference should a claimant refuse to provide evidence.

Taking more power away from the claimant and handing it to the work coach

DWP has shown no evidence that forcing people to apply for a wider range of jobs after four weeks of unemployment will improve their employment prospects and there is no reason to think it will. The main effect is to increase people’s exposure to sanctions and to further move power away from the claimant and to the Jobcentre’s work coach.

In most instances, the view is that people know both their own goals and circumstances better than anyone else possibly could, and therefore are best placed to make their own decisions. We have a Government that repeatedly espouses this philosophy and claims to be instinctively hostile to transferring power to from individuals to a state bureaucracy. Yet for the very recently unemployed, the decision is to hand power to a state employee.

Why do we believe that unemployed people can’t make good choices for themselves?

The DWP’s press release says that they are expanding sanctions because it is in people’s best interests to get a job. It uses a trademark unsourced and implausible figure of “at least £6000 better off in full-time work” to say people will be better in any job.

If you take this at face value, the question is why do they believe that work coaches can’t convince people to expand their work search voluntarily? Why do they think they need to use threats to do so? If this course of action is so much in the claimant’s favour, why does the DWP not trust claimants to make good decisions for themselves?

Let’s be clear: newly unemployed people are moving into work quickly already. The is no reason to believe, and nor have the DWP claimed, that this policy addresses an identified problem. Unemployed people appear to be making good decisions already – and despite that, their power to make decisions is being reduced.

Who do policy makers trust?

Eventually it comes down to trust. Given the choice of who to give even very limited choices to – a work coach or the person looking for a job, the UK government has chosen the work coach – and people mainly nod along without examining the value judgment they are making.

Maybe that is because most people have not had experience of having their choices removed in this way. For many people, their life experience is that they can trust people on the other side of government desks. In the past their soft power of persuasion and kicking up a fuss has seen them through OK. But to someone who has been told that they need to either accept four hours of minimum wage work on the other side of the city or face their children going hungry, a transfer of power from their side of the table to the other is a much more frightening prospect.

It is hard not to conclude that not having money and not having a job makes you untrustworthy in the eyes of policymakers. Interestingly there is a lot of evidence to say it is the wealthy, who expect more and fear consequences less who we should be wary of – but that is for another blog[6].

Despite the evidence that the poorest can be trusted, and that showing trust builds confidence and leads to better outcomes (as well as being simply the decent thing to do) – trust is absent. Despite the evidence that threats, punishment and distrust don’t produce better outcomes, these continue and are even expanded in the face of the irrefutable evidence of the huge harm they cause.

You can see it in how systems are designed. The experts in poverty who live it every day are not usually invited to help design welfare systems. Universal Credit from the beginning was a project from the well off to the poor[7]. If you trusted the people locked in poverty, they would be in the room.

The recent independent Commission on Social Security did that, and developed a very different design with very different priorities[8]. I would note that it is not a system that is “soft” or blindly trusting, but its posture is to offer trust until that has been shown to be misplaced. It may not be a perfect system, but as a basis for respectful dialogue with the usual ‘experts’, it’s a great start.

Who should we trust?

My belief is that at the root of the announcement is that Government does not trust the newly unemployed to make good decisions for themselves – so they have grabbed the power to coerce them into making the decisions the government believes they should.

I think that the policy will be popular politically because most people unconsciously agree with the premise – even many of those who oppose the specifics of the policy. I know that before I first sat down, drank tea, and spent time with people who experienced poverty, I opposed the policies that made them poorer – but somewhere underneath I agreed with the Government’s premise.

The evidence of my eyes and ears sharing stories and jokes with people who struggle with poverty every day tells me I was wrong. The evidence in the data, that offering trust improves outcomes, while removing it makes things worse, tells me I was wrong. My reading of the Bible – where James tells me not favour the rich and Genesis tells me we are all created in God’s image – tells me I was wrong.

If you have made it this far, I would ask you to think about whether the amount of trust you offer people is affected by the amount of money they appear to have.

[1] Universal Credit is made up of multiple components including rent, disability, children’s payments but the core is called the standard allowance or living allowance. When someone is sanctioned this money which is used for the basics of life such as food, energy, transport, and part payment of rent is subtracted.

[2] Arni et al (2010) How effective are Unemployment Benefit Sanctions? Looking Beyond unemployment exit www.onlinelibrary.wiley.com/doi/10.1002/jae.2289/abstract  & Petrolongo (2008) The Long-Term Effects of Job Search Requirements: Evidence from the UK JSA Reform www.iza.org/dp3856.pdf

[3] https://www.nao.org.uk/report/benefit-sanctions/

[4] Para 10, Benefit sanctions: Government Response to the Committee’s Nineteenth Report of Session 2017-19 https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/1949/1949.pdf

[5] Advice for Decision Makers Chapter K1 – Sanctions, General Principles https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/843715/admk1.pdf

[6] Until I get round to writing it you can read here the experimental evidence showing why the wealthy are more likely to literally take candy from babies https://www.washingtonpost.com/blogs/ezra-klein/post/study-rich-more-likely-to-take-candy-from-babies/2011/08/25/gIQAXE0beR_blog.html

[7] https://www.centreforsocialjustice.org.uk/wp-content/uploads/2018/03/CSJ-dynamic-benefits.pdf

[8] Commission on Social Security https://www.commissiononsocialsecurity.org/


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