Government must review use and impact of benefit sanctions says PAC report

Unexplained variations in the use of benefit sanctions are unacceptable and must be addressed, the Committee of Public Accounts says today.

In a new Report, the Committee urges the Department for Work & Pensions to review the use of sanctions, which it finds “have increased in severity in recent years and can have serious consequences”.

The Committee acknowledges sanctions – a reduction or suspension of payments because a claimant has not met conditions for receiving benefit – do encourage some people into work.

However, it concludes the Department has poor data with which to evaluate what works and is unable to estimate the wider impact of sanctions – including their overall cost or benefit to the public purse.

The Committee highlights the inconsistent imposition of sanctions by different jobcentres and providers, with some Work Programme providers referring twice as many people for sanctions as other providers in the same area.

It is also concerned that the Department does not know whether vulnerable claimants, some of whom can be excused from having to meet benefit conditions, receive the protection to which they are entitled.

Among its recommendations to Government, the Committee adds its voice to calls for the Department to undertake a trial of warnings, rather than sanctions, for first sanctionable offences.

The Department should monitor variations in sanction referrals and assess reasons for the differences across jobcentres; report back on the take-up of protections for vulnerable groups, and “set out what more it will do to assure itself that Housing Benefit is not being stopped in error due to sanctions”.

The Committee concludes there are significant gaps in the Department’s understanding of sanctions and urges it to make and report progress in improving data systems, including on linking earnings outcomes to sanctions data.

The Department should also collaborate on work to estimate the impacts of sanctions on claimants and their wider costs to government.

The Committee’s conclusions and recommendations are set out in detail below and in the attached Report.

Meg Hillier MP, Chair of the PAC, said today: “Benefit sanctions have been used as a blunt instrument by Government.

“It is an article of faith for the Department for Work & Pensions that sanctions encourage people into work. The reality is far more complex and the potential consequences severe.

“Sanctions and exemptions are being applied inconsistently, with little understanding of why.

Some people who receive sanctions stop claiming without finding work, adding to pressures on other services.

“Suspending people’s benefit payments can lead them into debt, rent arrears and homelessness, which can undermine their efforts to find work.

“A third of people surveyed by the charity Crisis who were claiming Housing Benefit had this stopped in error because of a sanction – an appalling situation to be faced with.

“All of this highlights the need for a far more nuanced approach to sanctioning claimants, with meaningful measures in place to monitor its effectiveness.

“As a priority the Government must make better use of data and evidence from the frontline to improve its understanding of what best supports both claimants and the interests of taxpayers in general.”

PAC REPORT SUMMARY

The Department for Work & Pensions uses sanctions to encourage people to meet conditions for receiving benefits.

We know that sanctions encourage some people into work but sanctions have increased in severity in recent years and can have serious consequences, such as debt, rent arrears, and homelessness.

It is therefore important that the Department uses sanctions carefully and protects vulnerable people from unnecessary hardship.

Yet there is an unacceptable amount of unexplained variation in the Department’s use of sanctions, so claimants are being treated differently depending on where they live.

The Department has poor data and therefore cannot be confident about what approaches work best and why, and what is not working.

It does not know whether vulnerable people are protected as they are meant to be. Nor can it estimate the wider effects of sanctions on people, and their overall cost or benefit to government.

CONCLUSIONS AND RECOMMENDATIONS

Benefit sanctions affect a large number of people, sometimes leading to hardship and undermining efforts to find work. Around a quarter of people on Jobseeker’s Allowance between 2010 and 2015 had at least one sanction imposed on them. Suspending people’s benefit payments can lead to rent arrears and homelessness. While these consequences can encourage some people to look for employment, they can undermine others’ efforts to find work. The consequences of sanctions on claimants can be serious so they should be used carefully. However, sanctions can be imposed for honest mistakes. Citizens Advice highlighted the need for flexibility for people who are trying their best.

Recommendation: The Department should undertake a trial of warnings (rather than sanctions) for first sanctionable offences, as recommended by the independent Oakley Review and the Work & Pensions Select Committee.

Sanctions are imposed inconsistently on claimants by different jobcentres and providers. Sanction use varies substantially – some Work Programme providers refer twice as many people for sanctions as other providers in the same area. The Department told us there will always be variation. This does not mean that current levels of unexplained variation are acceptable. It is important that the use of sanctions is fair and consistent and the Department has not analysed why some jobcentres use sanctions so much more than others. Jobcentres may be applying different standards. Citizens Advice and Crisis are concerned that inconsistency affects vulnerable claimants the most. Some vulnerable claimants can be excused from having to meet benefit conditions, but the Department does not monitor how often these exemptions are used, so it cannot be sure that vulnerable people receive the protection they are entitled to. 

Recommendation: The Department should monitor variation in sanction referrals and assess reasons for the differences across jobcentres. It should monitor the use and take-up of protections for vulnerable groups, reporting back to us by the end of 2017.

The Department’s data systems are not yet good enough for it to routinely understand what effect sanctions have on claimants’ employment prospects. There are significant gaps in the Department’s understanding of sanctions and it has not prioritised the improvement of its data. It may be difficult or impossible to determine an ideal level of sanctions, but the lack of data in this area is a barrier to making improvements. The Department now plans, over the next 12 months, to improve its old and poorly-connected systems, to extract better data, and allow it to track the impact sanctions have on claimants’ earnings.

Recommendation: The Department should report back to us by the end of 2017 on its progress in improving data systems, including on linking earnings outcomes to sanctions data, and addressing recommendations for better information made by the UK Statistics Authority and National Audit Office.

The Department does not understand the wider effects of sanctions. The Department intends that sanctions prompt claimants to comply with conditions and take up support from jobcentres. This should make people more likely to find work. The Department emphasised evidence that sanctions increase employment, but the evidence is also very mixed. Sanctions can lead to short-term and lower-paid work. Other people stop claiming after a sanction without finding a job. This can create knock-on effects that others pay for, such as using food banks or needing advice from local authorities or charities for dealing with debt.

Recommendation: The Department should work with the rest of government to estimate the impacts of sanctions on claimants and their wider costs to government and report back to us on progress at the end of 2017.

The impacts of sanctions can be worse for people with housing-related barriers to employment. For some people, their main barrier to moving into employment is the struggle to find, or keep, a permanent roof over their head. The charity Crisis raised concerns about sanctions exacerbating these housing-related barriers to employment, and even causing homelessness in some cases. A third of people surveyed by Crisis who were claiming Housing Benefit had this stopped because of a sanction. The Department confirmed that Housing Benefit should not be stopped due to sanctions and told us that it found no evidence of the problem when it examined the issue in one area.

Recommendation: The Department should work to better understand the relationship between sanctions and the housing-related barriers to employment that some people face. It should set out what more it will do to assure itself that Housing Benefit is not being stopped in error due to sanctions.