Why are sanction rates higher under Universal Credit?

Richard Keen

Sanctions applied to claimants of Universal Credit (UC), and some other benefits, if they do not fulfil certain requirements, appear to be several times higher than the sanctions applied to the ‘legacy’ benefits UC is replacing.

As a result, sanctions data is the subject of increasing debate and controversy surrounding the Government’s flagship welfare reform.

This Insight aims to unpick trends shown within the Department for Work and Pension’s (DWP) range of new sanctions data releases and guide readers through some of the key difficulties and pitfalls of comparing sanction trends under UC to those observed under legacy benefits.

We can measure sanction prevalence and incidence

Several benefits in the UK include conditions which may lead to sanctions if not fulfilled by claimants. These include Job Seekers Allowance (JSA), some Employment and Support Allowance (ESA) cases, Income Support and, now, UC.

When a claimant is ‘sanctioned’ their benefit payments are reduced for a certain length of time which, depending on the level of the sanction, can last anywhere between a number of days to years.

UC is unusual in that, unlike JSA, it incorporates different levels of conditionality for different claimants. Remembering this is crucial to the analysis below and any attempt to understand DWP’s sanction statistics. This is because we must always be sure to compare like with like and, as far as possible, account for the impact of different policy regimes on data trends.

DWP publishes two different types of sanction statistic. To coin some definitions: we can think of these in terms of ‘prevalence’ and ‘incidence’.

Prevalence is a measure of how many people are currently under a sanction.

Incidence is a measure of how many sanctions are newly issued in a given period.

‘Prevalence’ rates give us a better idea of how many people are affected by sanctions – i.e. currently have their benefit payments reduced – at any one time. ‘Incidence’ rates give us a better idea of the actual volume of sanction decisions being made each month.

Sanctions are more prevalent under UC than under JSA

DWP’s headline sanction (prevalence) rate statistics show that around 0.3% of JSA claimants were currently experiencing a sanction as of December 2017 compared to around 4.6% of UC claimants.

This includes all claimants of UC, however, whatever conditionality regime they are under. This is not comparing like with like, because UC includes a number of claimants who are under a range of conditionality regimes and not necessarily, unlike JSA, required to search for work.

Focusing specifically on claimants required to search for work – that is, under full work-search conditionality – under UC provides a more direct comparison with JSA.

8.2% of UC claimants required to search for work were being sanctioned as of December 2017 (compared to 0.3% of JSA claimants). More recent data is available for UC than JSA: in May 2018, the proportion of claimants required to search for work and currently sanctioned fell to 5.3%.

UC also has a higher incidence of sanctions

As far as we can tell, sanction incidence rates also are higher under UC than under JSA.

Data is limited, however: DWP only publishes sanction incidence (new decisions) data for claimants receiving UC under the live service. The live service is an early version of UC now being replaced by the full service; DWP aims to complete full service roll-out by the end of 2018. This means that the number of UC live service claimants is falling. As such, live service sanction decisions data is steadily becoming less representative of UC as a whole.

In April 2018 there were around 7,000 individuals newly sanctioned under the UC live service and around 2,300 under JSA. This is equivalent to around 5% of all UC live service claimants and around 1% of all JSA claimants.

(It’s also worth noting that both charts above show a spike in UC sanctions late 2016 / early 2017. This is when DWP cleared a backlog of pending sanction decisions – see paragraphs 2.26 & 2.27 of the NAO’s 2016 Benefit sanctions report.)

Policy differences might be behind the higher sanction rate under UC

DWP states the higher rate of sanctioning under UC is due to the way claimants who miss mandatory work-search interviews are dealt with under UC compared to JSA.

Under JSA, the DWP stops payments to claimants who miss an advisor interview without good reason. This is on the assumption that the claimant has found work without informing the Jobcentre.

It is not advisable to simply stop UC payments in the same way because UC, unlike JSA, can support claimants for a range of needs beyond unemployment (e.g. rental costs, child and any incapacity related costs). When a UC claimant required to search for work fails an interview related requirement, which includes those who miss an advisor interview without good reason, therefore, DWP sanctions that claimant instead of stopping the benefit entirely.

Our analysis appears to confirm this

We can test whether the above is true using UC live service sanction decisions data, because this data includes information on the reasons claimants are sanctioned.

The proportion of individuals sanctioned due to failing an interview requirement (which includes those who miss an interview without good reason) is significantly higher under the UC live service than under JSA. Around 86% of newly sanctioned individuals on the UC live service were sanctioned in April 2018 due to failing an interview requirement, compared to 29% under JSA.

However, if we ignore interview-related sanctions under UC and compare the incidence of sanctions under JSA to the UC live service, the rates for both UC and JSA look much similar.

In April 2018 around 0.8% of UC live service claimants were newly sanctioned for reasons other than failing an interview requirement, compared to around 0.4% of JSA claimants.

But questions still remain

Our analysis appears to confirm DWP’s statements that, among claimants searching for work, sanction rates are higher under UC than JSA largely because of the way DWP deals with claimants who miss a work-search interview.

This still leaves questions we cannot yet answer, however.

This includes asking why so many claimants are sanctioned for failing an interview requirement under UC – is the number who are sanctioned what we might expect, or is it a sign of some other problem? And what of claimants in conditionality groups other than the ‘searching for work’ group, or of former ‘legacy’ benefit and tax credits claimants who are now becoming subject to conditionality under UC for the first time? Our new research briefing outlines these issues in more detail.