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Select committee inquiry

In-work progression in Universal Credit inquiry

Closed

Work and Pensions Committee · Opened 9 December 2015 · Closed 19 July 2016

5 recommendations · 5 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“Committee report In-work progression in Universal Credit In-work progression in Universal Credit (PDF 878KB) Government response In-work progression in Universal Credit: Government Response to the Committee’s Tenth Report of Session 2015–16 In-work progression in Universal Credit: Government Response to the Committee’s Tenth Report of Session 2015–16 (PDF 160KB) Written submissions are invited addressing the following points: DWP’s plans for in-work progression pilots in 2015/16, and how they should be evaluated Which organisations are best-placed to deliver the in-work service for DWP e.g. Jobcentre Plus/other providers from the private, public or voluntary sectors? What should in-work progression support entail and how should it be delivered (e.g. regularity and nature of contact with claimants)? Which groups of claimants should be included and which should be exempt? How should employers be encouraged to facilitate progression? In what circumstances would it be appropriate to sanction a Universal Credit claimant who is in work? Is there any UK or international evidence on effective ways of encouraging in-work progression? Terms of reference: Universal Credit "in-work progression"”

The committee's words, from the inquiry page on parliament.uk ↗.

What it found

In the committee's words, from the summary of 10th Report - In-work progression in Universal Credit ↗

The Department for Work and Pensions (DWP)’s intention to introduce an employment support service for in-work claimants of Universal Credit (UC) holds the potential to be the most significant welfare reform since 1948. If this great potential is to be realised, the DWP needs to nurture teams of Jobcentre Work Coaches carefully. This will require learning on the job, which any reform of course requires, but is even more necessary here in that no one has presented us with evidence of such a reform being operated anywhere else in the world. Further, as any department only has a certain pool of talent to drive reform, an important part of the DWP’s welfare reform talent now needs to be directed at developing the full potential of this employment support service for people already in work.

The service will encourage working claimants to increase their earnings through taking on extra work or being paid more. Claimants will be required to take mandatory actions to these ends. While such support and requirements are common for out-of-work claimants, for in-work claimants this is a radical policy departure. The in-work service is potentially revolutionary, promising progress in breaking the cycle of people stuck in low pay, low prospects employment. We congratulate the Government for developing this innovation.

Given there is no comprehensive evidence on how to run an effective in-work service, the DWP will be learning as it develops this innovation. It is therefore right to start with a relatively small-scale scientific trial. The Department is piloting an in-work service led by Jobcentre Plus (JCP) which aims to support low-paid claimants of Universal Credit to increase their earnings to at least the equivalent of 35 hours per week at the National Living Wage, and ultimately become financially independent. It must help confront the structural or personal barriers in-work claimants face to taking on more work, such as a lack of access to childcare and limited opportunities to take on extra hours or new jobs. Employed people self-evidently do not lack the motivation to work and we would therefore expect the use of financial sanctions for in-work claimants to be on a different scale to those imposed on out-of-work claimants. A successful in-work service will also require partnership between JCP and employers to a degree not seen before. It is a very different kind of welfare.

JCP Work Coaches will be central to delivering a successful in-work service. Supporting in-work claimants will require Work Coaches to have additional and enhanced skills; in fact to become a new kind of public servant. Should the pilot be developed into a full national service, around one million working people will be subject to some form of in-work requirements. This will be resource-intensive at a time when DWP budgets are stretched.

While UK unemployment has fallen in recent years, underemployment, where employed people wish to work more hours, has remained stubbornly high. The UK’s productivity lags behind other major economies. This challenge is much broader than supporting the lowest paid part-time workers and is a clear case for extending it further up the earnings scale. If in-work progression is to be successful, and its great potential achieved, it will require broad and continuing political support.

What the government said

The government responded on 21 July 2016.

Summary written by Accountability Index from the government's response.

The government welcomes the Committee's report and says it will use its "test and learn" trials, with large-scale trial findings due in early 2018, to build the evidence base before a future in-work service is finalised.

  • On publishing pilot information, it commits to "an additional interim update on progress in the trial in early 2017", while saying it wants to publish information only once it is "fully assured".
  • On Work Coaches, it says its evaluation will include building understanding of their skills, experience and training needs, and will account for "the staffing requirement needed" and the costs of delivery.
  • On sanctions, it does not commit to quarterly publication. It says the final trial report in early 2018 will include sanctions data, with "headline information about sanctions" in the early 2017 interim report.
  • On employer input into Claimant Commitments, it says it does not believe that, "under normal circumstances", employers should be directly involved in setting requirements, but expects employment circumstances to form part of the Work Coach and claimant discussion.

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 9 December 2015 to 21 July 2016.

  1. Oral evidence 3 sessions
  2. Report 11 May 2016
  3. Government response 21 Jul 2016
  4. Correspondence 2 letters

What it recommended 5 recommendations · 5 conclusions

1In-work support in Universal Credit is a radical policy departure, the first of its scale...
Concluded (the committee's words)
In-work support in Universal Credit is a radical policy departure, the first of its scale in the world. In promising progress in breaking the cycle of people stuck in low pay, low prospects employment, it could be revolutionary. It is potentially the most significant welfare reform since 1948. We congratulate the Government for developing this innovation.
2Starting with part-time workers earning less than the equivalent of full-time work at the National...
Concluded (the committee's words)
Starting with part-time workers earning less than the equivalent of full-time work at the National Living Wage is sensible. The UK’s productivity challenge, however, is much broader than that. If an in-work service achieves its potential, there is a clear case, in time, for extending it further up the earnings scale.
3One year from the start of the DWP’s in-work progression pilot, there is insufficient information...
Recommended (the committee's words)
One year from the start of the DWP’s in-work progression pilot, there is insufficient information in the public domain about the number and characteristics of participants and effects on their pay and employment. Making such information more freely available would strengthen the credibility of the pilot, raise awareness of the in-work service and allow other experts to appraise the results of the trial. Greater transparency will make for better policy. We recommend the DWP regularly publish basic information about the nature and outcomes of its pilot. The first such publication should, at the latest, coincide with the Government response to this Report.
4There is no comprehensive evidence on which to determine how to deliver an effective in-work...
Concluded (the committee's words)
There is no comprehensive evidence on which to determine how to deliver an effective in-work service. The DWP will therefore be learning on the job. As the risks and potential rewards are both high, it is vital the DWP carefully builds a broad evidence base. The randomised controlled trial is a commendable start. The pilot will, however, only give a partial picture.
5If the policy is to be successful, and achieve its great potential, we recommend the...
Recommended (the committee's words)
If the policy is to be successful, and achieve its great potential, we recommend the DWP direct the best of its welfare reform talent at developing the service. As part of its wider assessment of in-work progression, we recommend the DWP test more flexible forms of contact in addition to face-to-face interviews and draw more widely on voluntary, community and private sector-led support. It should also consider broader measures of progress alongside earnings and clarify any plans or timescales to incorporate financial bonuses in in-work schemes.
6For in-work progression to succeed, Jobcentre Plus (JCP) Work Coaches will need to be a...
Concluded (the committee's words)
For in-work progression to succeed, Jobcentre Plus (JCP) Work Coaches will need to be a new kind of public servant, possessing new skills and operating on a new agenda. They will need to address structural barriers to progression, such as access to childcare, skills development and job opportunities, on a personalised basis. They will also need to understand local labour markets and engage with employers to a far greater extent than they have done before. Compared to the existing role of moving people out of work into employment, this will require the DWP to nurture Work Coaches with a substantially expanded set of skills. Should a full service be delivered in-house by JCP, supporting an estimated one million in-work claimants will also entail a sharp increase in JCP workload.
7We recommend the DWP uses its pilot to evaluate fully: • the skills, experience and...
Recommended (the committee's words)
We recommend the DWP uses its pilot to evaluate fully: • the skills, experience and training needs of Work Coaches; and • the number of Work Coaches required to deliver a full in-work service. This assessment should be used to estimate the budget required to provide such a service.
8The case for in-work conditionality backed up by financial sanctions is so far untested.
Concluded (the committee's words)
The case for in-work conditionality backed up by financial sanctions is so far untested. Employed people self-evidently do not lack the motivation to work, and there is strong evidence that their barriers to earning more tend to be structural or due to personal circumstances, rather than motivational. The claimant’s opportunities for progression are also dependent on the needs of the employer. Conditionality is less likely to be effective in these circumstances. Requiring an individual to pay a financial penalty can, in some cases, work against the aim to increase their earnings.
9We would expect the use of financial sanctions for in-work claimants to be low in...
Recommended (the committee's words)
We would expect the use of financial sanctions for in-work claimants to be low in comparison to out-of-work claimants. It is a very different kind of welfare. We welcome both the Department’s commitment to follow the evidence on the efficacy of sanctions for in-work claimants and its intention to publish sanctions data. We recommend the Department publish the number and rate of in-work sanctions, by claimant characteristics and JCP district, on a quarterly basis from autumn 2016.
10We recommend the DWP publish more comprehensive guidance for Work Coaches on applying in-work conditionality.
Recommended (the committee's words)
We recommend the DWP publish more comprehensive guidance for Work Coaches on applying in-work conditionality. This guidance should incorporate how to account for individual circumstances relating to skills, confidence, health, caring responsibilities, access to both care and transport, and the availability of additional local work, in setting in-work conditions. We further recommend the guidance sets out circumstances when it would be appropriate and constructive to take into account input from an employer in establishing the reasonable conditions of a Claimant Commitment.

Evidence

Oral evidence sessions 3

Correspondence 2 letters