Working Hard or Hardly Working? Universal Credit and the problem of conditionality

Posted in: Business and the labour market, UK politics, Welfare and social security

Joan Abbas is an IPR doctoral candidate studying in-work benefits across advanced welfare states.

On Wednesday this week, Parliament voted in favour of a non-binding motion tabled by the Opposition to pause the rollout of Universal Credit, the government’s flagship welfare programme[1]. First introduced by the Coalition Government in 2010, Universal Credit replaces several means-tested social security benefits and tax credits for working-age adults[2]. The merged system is intended to simplify a complex and disjointed system of social security benefits and tax credits for different purposes and groups. Universal Credit is designed to ease the transition from unemployment to work, improve financial incentives to work and encourage working recipients to increase their income or hours[3]. Following a slower-than-anticipated roll-out, there were 590,000 people on Universal Credit in August 2017[4]. Once fully rolled out in 2022, the number of recipients will be around 7 million. The stakes are high in this radical overhaul of the UK’s social security system for people of working age.

Although the government is not mandated to pause Universal Credit following the vote in Parliament, it is likely to be feeling the pressure – not least because the vote followed extensive media coverage of Universal Credit as evidence emerged showing the impact of a built-in wait of six weeks before payments are made to new recipients. This delay left some claimants in rent arrears and threatened with eviction, and some turning to food banks and pay day loans[5]. Citizens Advice warned the expansion of the policy is a ‘disaster waiting to happen’. Nonetheless, the government imposed a three line whip for its MPs to abstain from the vote on Wednesday and reaffirmed plans to press on with the rollout of Universal Credit. Such resolve might not hold up if more issues with Universal Credit surface and opposition intensifies. In this blog, I look at one potential problem area for Universal Credit – in-work conditionality – and examine whether there is an appetite for this type of reform among the public more widely using recent polling data.

In-work conditionality: another Universal Credit shortfall?

Universal Credit brings about a number of radical changes for recipients that are in paid work. For those working under 35 hours a week or earning below a threshold, there will be requirements to spend a specified amount of time looking for more hours or better paid work, depending on claimants’ circumstances. Claimants will be required to sign a Claimant Commitment, an agreement drawn up with the Jobcentre Plus, detailing requirements around searching for work and attendance at mandatory appointments with advisers or ‘Work Coaches’. In social policy, making benefit payments contingent on requirements is known as ‘conditionality’. If recipients do not comply with Universal Credit requirements, they could be sanctioned and payments halted.

These requirements are central to ‘in-work progression’ under Universal Credit – the idea that working claimants will take on more hours or better-paid work (including temporary, flexible and part-time work) to move up the pay ladder, out of poverty[6] and, ultimately, off social security benefits. While helping low-income families move out of poverty through work is widely supported, there are concerns about how in-work progression will work in practice. First, there are the capacity issues for DWP staff. Second, there are issues about whether people can easily access more hours or change jobs, given the structural barriers to doing so (e.g. affordable childcare). Third, there is limited evidence about whether extending conditionality to working recipients will actually help them achieve in-work progression – and thus serious doubts about this aspect of Universal Credit. The research evidence suggests that many of those in work do not lack motivation to work or have negative attitudes towards employment, and so conditionality and the threat of sanctions could be debilitating and counterproductive. Indeed, it is structural and personal barriers that get in the way of working more, including difficulties predicting actual work hours in temporary and zero-hour contract work. For some people, such as working lone mothers, in-work conditionality will create extra challenges to balance work and family responsibilities.

Although sanctions for those in work are expected to be less severe than for people that are not working, there are concerns about the impact on recipients. There is some evidence of both positive and negative experiences of in-work conditionality in areas where Universal Credit has been rolled out to those in work, but in general sanctions were perceived as unfair and unfitting. The same project finds that sanctions with an impact on welfare benefits have led to “feelings of widespread anxiety and disempowerment”, and have a detrimental impact on people’s finances and physical and mental health, “with people reporting debts, reliance on charities and food banks and arrears on utilities and rent”. The Child Poverty Action Group and others have instead called for voluntary employment support for in-work claimants. The DWP is expected to produce the results of a trial into in-work progression (and in-work conditionality) by 2018. Given the limited evidence at this stage, the effectiveness and the impact of in-work conditionality on recipients is yet to be seen.

It is also not clear if there is public support for introducing conditionality for working recipients of Universal Credit. In the UK, we know that support for tough welfare measures for the unemployed is quite high. However, Universal Credit marks a sharp turning point as recipients are not just the unemployed, a group which has typically been characterised as “undeserving.” Instead, the “hard-working families”, the “just about managing”, and the “deserving poor,” could face punitive measures, such as sanctions, as well. This rhetoric, separating workers and non-workers, does not seem to square with a single system for people both in and out of work.

A snapshot of support for in-work conditionality in the UK

To gauge public support for in-work conditionality, questions were added to an online poll carried out by Ipsos MORI on behalf of the IPR in August 2017 on this subject. The survey was sent to a representative quota sample of 1,111 adults in the UK aged 18-75. Respondents were asked if they thought it was acceptable or not to reduce tax credit payments (described as payments to working adults on low wages to top up their wages) in four scenarios (figure 1). These scenarios represented four modes of ‘in-work conditionality’. The first two modes require less action on the part of the recipient: they ask whether payments should be reduced if recipients did not accept an offer of a better-paid job, or an offer of more hours of work to increase income. The second two modes of in-work conditionality resemble that in Universal Credit: payments would be reduced if recipients did not actively search for a better paid job or more hours, representing a more demanding form of in-work conditionality. Although in-work conditionality relating to job offers could also occur under Universal Credit, requirements go beyond this as claimants must search for more hours/pay, and not simply wait for offers of more hours and/or better paid work.

Figure 1: 4 modes of in-work conditionality

Survey question

As you may know, working adults on low wages are entitled to payments, such as tax credits, to top up their wages.

Some people argue that working adults on low wages who are receiving tax credits to top up their wages should be doing their best to increase their income in other ways, so they wouldn’t need to receive these tax credits.

Imagine now a working adult on low wages who is receiving tax credits from the UK Government to top up their wages. Do you feel it would be acceptable or not for the UK Government to reduce the payments that person receives in each of the following situations?

Recipients were asked about in-work conditionality in relation to tax credits. We did not mention Universal Credit in order to focus on the issues, rather than that specific benefit.

Changing levels of support and opposition for different types of in-work conditionality

The results paint a picture of dwindling support and increasing opposition for in-work conditionality whereby claimants who are already doing some work are required to look for a better paid job or one with more hours. Over half (54%) of respondents thought it would be acceptable to reduce tax credit payments to a working adult on low wages if they received an offer of a better paid job and did not take this work, and 29% opposed reducing payments in this scenario (figure 2). Similarly, 50% of respondents said it would be acceptable to reduce payments if recipients were offered more hours of work to increase their income and did not take this on, and 33% of respondents opposed reducing payments in these circumstances.

Source: IPR/Ipsos MORI online poll of 1,111 UK adults aged 18 – 75

Support dropped to 36% for modes of in-work conditionality that go as far as in-work progression in Universal Credit (reducing payments if not actively searching for better-paid work or more hours). Opposition was also higher: 45% thought it was not acceptable to reduce payments if respondents had not been actively looking for a paid job and 42% answered it was not acceptable to reduce payments if recipients had not been actively looking to increase their work hours to increase income.

Across all modes of in-work conditionality, a considerable proportion of respondents (17% to 21%) said they did not know if was acceptable or not to reduce payments in any of these scenarios, which could reflect the relative complexity of the question, or that many did not have a strong view either way – which could be expected, given that in-work conditionality is likely to be a new concept.

Where does support and opposition for in-work conditionality come from?

The results also suggest there are differences in opinion on in-work conditionality relating to characteristics, such as age, gender, region, political party preferences, income and education. For example, in England, respondents in the North were more likely to oppose conditionality relating to searching for a better-paid job (50% compared to 39% in the South). This regional difference could reflect labour market context and the type of in-work progression that might be feasible in respondents’ local area. The findings also show above-average support for in-work conditionality among the youngest and oldest respondents, with 43% of 16-24 year-olds and 40% of 55-75 year-olds saying that it is acceptable to reduce payments in these circumstances.

Contrary to findings on attitudes to unemployment benefits, those with a qualification at degree-level or higher (41%) were most likely to support in-work conditionality based on recipients actively looking for better-paid work. Those with other qualifications or education and those with no qualifications were less likely to support and more likely to oppose this form of conditionality. This difference may be because those with degrees (or equivalent) perceive there are opportunities to find better-paid work. Similarly, support for in-work conditionality based on looking for better-paid work was higher among those with higher household income.

Turning to employment status, we might expect working respondents to support conditionality if they perceive there to be opportunities to earn more. However, working respondents were divided, with almost as many opposing in-work conditionality (41%) as supporting it (40%). Those in work that oppose in-work conditionality could be aware of labour market limitations or other barriers to searching for more work. Similarly, this could explain higher opposition to in-work conditionality among inactive and non-working respondents.

Source: IPR/Ipsos MORI online poll of 1,111 UK adults aged 18 – 75

There were clear divisions between those that voted Conservative and Labour in the 2017 General Election. More than half of Conservative voters (51%) thought it was acceptable to reduce payments if recipients of tax credits were not actively searching for paid work compared to 29% of Labour voters, and 38% of Liberal Democrat voters thought it was acceptable to reduce payments in this scenario. There was greatest opposition to this form of conditionality among those voting for other political parties (59%). There was still notable opposition to this mode of in-work conditionality among Conservative voters; over a third of Conservative voters (34%) were opposed to this form of in-work conditionality. Support grew among Conservative voters for requirements to look for more hours (51% to 57%) and opposition dropped among Labour voters (56% to 52%). As more Labour voters responded with ‘don’t know’ (21%), the level of support remained roughly the same.

Soft support for in-work conditionality – time to pause and rethink?

This is a first attempt to look at attitudes to in-work conditionality in the UK. The findings, including the relationship between characteristics and attitudes to conditionality, will be explored further in future research. This snapshot of public opinion comes at a time of heated debate over Universal Credit, but in-work conditionality has so far mostly remained out of the headlines. At this point, there appears to be fairly weak support for in-work conditionality similar to that in Universal Credit, whereby recipients are required to actively search for more hours or better paid work, or see their payments reduced. We would probably expect support to drop if respondents were aware of the requirements for working recipients of Universal Credit, such as hours of job searching, and if sanctions were mentioned. There are currently 230,000 working recipients of Universal Credit and this will of course increase over time. It is also yet to be seen what stories and experiences will emerge from working Universal Credit claimants as the numbers increase. Nonetheless, limited public support for in-work conditionality, barriers to in-work progression working in practice, and mixed evidence on the impact and effectiveness of in-work conditionality, mean the government might want to pause and rethink imposing conditionality on working people receiving Universal Credit.

 

Footnotes

[1] See https://www.parliament.uk/business/news/2017/october/mps-to-debate-universal-credit/ and http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8096

[2] Universal Credit replaces six-means tested benefits with one monthly payment. They are Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Housing Benefit)

[3] See https://www.gov.uk/government/publications/universal-credit-understanding-how-it-influences-employment-behaviour, https://theconversation.com/what-its-like-to-transition-on-to-universal-credit-85190 and https://publications.parliament.uk/pa/cm201516/cmselect/cmworpen/549/54904.htm#_idTextAnchor005

[4] See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/637845/dwp-quarterly-benefit-stats-summary-august-2017.pdf and researchbriefings.files.parliament.uk/documents/CBP-8096/CBP-8096.pdf

[5] See http://www.bbc.co.uk/news/uk-41487126, https://www.theguardian.com/society/2017/oct/02/universal-credit-why-problem-can-benefits-system-be-fixed and https://fullfact.org/economy/universal-credit-leading-rent-arrears/

[6] See https://publications.parliament.uk/pa/cm201516/cmselect/cmworpen/549/54904.htm#_idTextAnchor005, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/643952/understanding-how-universal-credit-influences-employment-behaviour.pdf and http://data.parliament.uk/WrittenEvidence/CommitteeEvidence.svc/EvidenceDocument/Work%20and%20Pensions/Universal%20Credit%20inwork%20progression/written/26597.html

Posted in: Business and the labour market, UK politics, Welfare and social security

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