Last month, the Department for Work and Pensions released its internal review into the effectiveness of benefit sanctions[1].
To summarise the report – sanctions are not effective. Not only are they ineffective – they are harmful. Previous research shows that removing benefits increases hardship, destitution and foodbank use as well as damaging physical and mental health[2]. The DWP’s data now shows that sanctions fail on their own terms, as they also damage both earnings and employment prospects.
“So sanctions will be applied more rigorously…”
–Jeremy Hunt, Spring Budget 2023
You probably think that now the DWP know about the harm sanctions do, the policy is bound to change. Indeed, it is: the Chancellor announced that sanctions will be applied more rigorously.
The additional rigour will mainly be encouraging Jobcentre employees to press their customers more vigorously, but it also includes bringing many low-paid workers who previously could not be sanction into the sanctions system. Already the number of sanctions given out has doubled over the pre-pandemic levels from 2.2% of claimants (37,000) under sanction each day to almost 7% (120,000) in the latest figures. This research states – and the government accepts – that on average each person will have their long-term employment and earnings harmed by the sanction.
The research is not to new to affect policy. The report was produced in 2020, but the DWP decided it was not in the public interest to publish it, despite previous promises to do so. It took a tenacious Freedom of Information campaign by Dr David Webster of Glasgow University and the Information Commissioner to force publication. The DWP felt the best time to do this was 4.55pm on Maundy Thursday before the Easter weekend; a time unlikely to encourage press coverage.
What are sanctions?
▷ A sanction is a punishment given to people claiming Universal Credit, for not obeying the instructions of the Jobcentre – usually being late or not attending an appointment.
▷ People sanctioned may be unemployed, in low-paid work or assessed unfit but capable of preparing for work.
▷ A sanction removes a person’s “basic allowance” for up to 6 months. The average sanction duration is around 11 weeks.
▷ Sanctions are not used to punish dishonesty or fraud.
The very opposite of what a benefits system should do
“In summary, a sanction leads the average claimant to exit less quickly into PAYE earnings and to earn less upon exiting.”
The Impact of Benefit Sanctions on Employment Outcomes, page 26
Taking away the jargon, this quote from the report simply means the average person when sanctioned gets a job less quickly, and when they do, they earn less. The very opposite of what a benefits system should do.
For those receiving a sanction, even when they get work, they earn on average £34 a month less for the following 6 months than people who weren’t sanctioned. This is extraordinary. By contrast, the government was ecstatic about results from early trials of Universal Credit which said the new benefit would lead to around £15 of additional earnings sustained over 3 months (however this trend was not replicated when Universal Credit was more fully rolled out)[3].
The report is short – but it is unremittingly bad news for advocates of benefit sanctions. It is also the only research report I have ever read which continually tries to convince the reader its results are unimportant. To underline this, a “context note” was published alongside the report[4].
The report and note argue that it is “the deterrent effect” of sanctions that is important. Essentially, the view is put forward that sanctions deter jobseekers from slacking off and are needed to force benefit claimants to comply with the Jobcentre’s instructions. This begs the question: if you think deterrence is important, why don’t you look into it? It is an easy question to answer, and fortunately more curious nations have.
Even the threat of sanctions harms job prospects
It isn’t a shock that being sanctioned harms job prospects. The National Audit Office said similar things seven years ago[5]. There is a growing body of research from many nations saying that people who are sanctioned are almost invariably harmed. However even the threat of sanctions – also known as the “deterrent effect” – has negative effects as it encourages people to take unsuitable jobs leading to lower earnings and more spells of unemployment[6].
For example, in December, Dutch researchers published results[7] from a trial where 130,000 people looking for work were either offered advice about their next steps by the employment service, or offered advice which the jobseekers were told they must follow or have some of their benefits removed.
The threat of benefit sanctions encouraged jobseekers to comply. However, these compliant jobseekers actually got into work slower than those who were not threatened. The active harm that adding the threat of sanction to employment advice was still detectable in people’s lower employment and earnings 3 years later.
A Finnish study asked the question of what would happen if a relatively generous level of benefits was offered to unemployed people unconditionally with no rules or threats. The answer is they stayed out of work for longer, but when they got work it was more sustained and importantly the often large hit to wellbeing caused by unemployment was hugely reduced[8].
It appears that when agencies like the DWP threaten to remove benefits, they shift people’s priorities from the goal of finding work towards the urgent but unhelpful goal of simply avoiding punishment. People focused on avoiding punishment don’t get as good jobs as those solely focused on getting a good job.
The sanctions fashion is turning
The fashion for ramping up benefit sanctions to “drive behaviour change” began in Europe 25 years ago. There was evidence that sanctions (much milder than the UK’s) increased the speed at which people signed off benefits. What has become clear is that they often left benefits for no work, sickness benefits or unsuitable, unsustainable jobs. In terms of improving lives or reducing government spending, sanctions have been a flop.
In part because of this, in November last year, Germany whose “Hartz IV” reforms paved the way for the UK’s system, made substantial changes relaxing its sanctions regime. Reforms were proposed which more closely followed the evidence on what helps people get back to work, and would have reduced the sanctions regime and the use of compulsion of jobseekers even further. This was almost made law, but unfortunately, at the last moment there was a panic around what would happen if the poorest were allowed even more agency and choice as they looked for work.
The reasons behind that panic, which slows reform in countries that are following the evidence, has led the UK government to simply avoid engaging with the evidence. This will be the subject of my next blog.
Where next?
Universal Credit is barely enough to live on, falling well short of what is needed for families to sustainably avoid destitution[9]. Each day, 7% of families relying on Universal Credit are not receiving their full benefit because of a sanction. If the sanction period overlapped with a Cost of Living payment date, they lost out on that too.
Sanctions are costly. The constant setting and checking of rules takes time and money. The administration and adjudication of the sanctions takes more time and more money. And there is no rational reason to do it. The state is paying to harm to the wellbeing and job prospects of the poorest. That cannot continue and in other nations it is being rowed back on.
In 2016, it was clear to churches and charities on the ground that sanctions were causing a great deal of harm to the least well off. The estimate was that for every ten sanctions, five food parcels were given out[10]. Along with partners, we led a campaign saying it was “Time to rethink Benefit Sanctions”. It still is.
[1] DWP (20XX) The Impact of Benefit Sanctions on Employment Outcomes
[2] JPIT (2015) Time to Rethink Benefit Sanctions
[3] DWP (2015) Estimating the early labour market impacts of Universal Credit
[4] DWP (2023) Benefit sanctions evaluation context note
[5] https://www.nao.org.uk/insights/benefit-sanctions/
[6] There is a growing consensus on this see for example: House of Commons Library: Department for Work and Pensions policy on benefit sanctions debate pack, Benefits and tax credits, The IFS Deaton Review of Inequalities, Codreanu, Mihai and Tom Waters (2023) Do work search requirements work? Evidence from a UK reform targeting single parents or (sadly paywalled) Card, D, J Kluve and A Weber (2010), “Active labour market policy evaluations: A meta‐analysis”, Economic Journal 120(548): F452–F477.
[7] van der Klaauw, B and H Vethaak (eds) (2022), “DP17734 Empirical Evaluation of Broader Job Search Requirements for Unemployed Workers”, CEPR Press Discussion Paper No. 17734.
[9] JRF – Essentials Guarantee
[10] Strong link between increased benefit sanctions and higher foodbank use
