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Government can cut welfare bill by increasing conditions for in-work claimants, says new report

Changes need to be made to the government’s flagship welfare policy in order to ensure less people in work are reliant on the state to top up their wages.

At the moment there are 1.3 million workers who rely on benefits, in the form of Working Tax Credit, to top up their incomes. A new report from Policy Exchange shows that while people said they wanted to work more, they did not actually follow their words up with action. Nearly three quarters of in-work claimants, 970,000, are not currently looking for additional work to increase their earnings.

It found that:

• Only 30% of part time workers who expressed a desire for full time work were actively looking for full time work
• Only one in five part time workers on Working Tax Credit were actually seeking additional hours

Responding to the DWP’s call for ideas, the paper, Slow Progress: Improving progression in the UK labour market, says that there must be greater conditions for in-work claimants to ensure that they are doing all they can to increase their hours and earnings. The introduction of Universal Credit this year provides the government with an opportunity to ensure that workers reliant on state benefits are explicitly asked to do more to find more work where possible.

The report makes a number of recommendations:

• All new in-work claimants of Universal Credit should be required to attend an initial claim interview at a JobCentre where a conditionality regime should be set up to ensure the individual is doing all they can to increase their hours and earnings.
• In-work claimants would be required to attend a quarterly meeting at a JobCentre to be reminded of their responsibility to try to increase their earnings. Sanctions would be applied for failing to attend.
• Measures of Jobcentre performance need to change to encourage staff to help claimants into long-term sustainable work, rather than simply getting them off Jobseekers Allowance.
• Contracts with Work Programme providers need to change to ensure that they are incentivised to help claimants progress from smaller jobs to ones with greater earnings.

Matthew Oakley, author of the report, “Helping in-work claimants to increase their earnings would raise living standards for families and reduce the benefit bill. But a large number of people do not currently seem motivated to increase their earnings, relying on benefits to top up their pay packets. Government must be radical in its approach by asking more of claimants while at the same time providing better support through Jobcentres and the Work Programme.

“Of course, the key to success will be ensuring that all of these reforms are targeted effectively. Instead of a one-size-fits all policy, government must personalise both requirements and support to make sure, for instance, that those with caring responsibilities, ill health or a disability are effectively helped.”