The Department for Work and Pensions should make better use of its own data to evaluate and improve the system of benefits sanctions, according to a new report from the National Audit Office public spending watchdog.
Sanctions are imposed when out-of-work benefit claimants do not meet the conditions attached to their claims. The Department issued 400,000 sanctions in 2015, which cost around £30m-£50m to administer.
But the NAO found the department “has limited evidence to support its design choices” around benefits sanctions, and has used sanctions inconsistently, with rates varying across Jobcentres and Work Programme providers.
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“Our review of the available evidence suggests the department’s use of sanctions is linked as much to management priorities and local staff discretion as it is to claimants’ behaviour,” said the report.
The NAO acknowledges that sanctions may be necessary to enforce conditions on benefits, but it says the DWP has "a responsibility to constantly evaluate sanction rules, and balance their effectiveness in encouraging employment against the impacts on claimants and any wider costs for public spending".
According to the NAO's report, the DWP has not used its own administrative data to evaluate the impact of sanctions in the UK, because it is concerned about the underlying methodology. As part of its investigation, the watchdog therefore used the DWP’s data to consider how sanctions affect those who are hit by them.
“Our review of the available evidence suggests the department’s use of sanctions is linked as much to management priorities and local staff discretion as it is to claimants’ behaviour" – National Audit Office
Sanctions had a “large and significant impact” on those claiming Jobseeker's Allowance, the NAO found, and although employment levels increased for those who received a sanction, the watchdog did not find a similar increase in earnings.
“This could reflect data limitations, but is consistent with evidence in other countries that sanctions encourage people to enter less well-paid jobs, which reduce their long-term earnings," the report said.
Among those claiming Employment and Support Allowance – paid to those unable to work because of a disability or illness – the NAO found sanctions had less effect, but did reduce their time in employment, “suggesting sanctions may have discouraged some claimants from working”.
“This report fails to recognise the improvements we have made to sanctions" – DWP spokesperson
The NAO was cautious about the findings, noting that the DWP “has expressed caution about the analysis we undertook in this area on the grounds that these results are preliminary and not extensively peer-reviewed”.
“Our analysis of the effects of sanctions is preliminary and needs further investigation but shows that the department should do more to understand sanction outcomes and the effects of changes in the way sanctions are used,” says the report.
A DWP spokesperson said: “Sanctions are an important part of our benefits system and it is right that there is a system in place for tackling those few who do not fulfil their commitment to find work.
“This report fails to recognise the improvements we have made to sanctions, particularly to help those who are vulnerable. The number of sanctions has fallen, and they are only ever used as a last resort after people fail to do what is asked of them in return for benefits.
“We will consider the recommendations, and respond fully in due course.”
"Relationship of trust"
Elsewhere in its report, the NAO urges the DWP to assess the wider cost of sanctions to central and local government – for example, the knock-on effect of people who have received a sanction then going on to claim hardship funds from local councils.
Kirsty Mchugh, chief executive of the Employment Related Services Association (ERSA) trade body, said the report showed the need for "fundamental reform" of the system of benefit sanctions.
“Today’s NAO report adds to the growing weight of support for overhauling the current sanction regime" – Kirsty Mchugh, chief executive of the Employment Related Services Association
"We strongly believe that employment support works best when there is a relationship of trust between jobseeker and adviser and that the threat of sanctions can undermine this positive relationship," she said.
“Today’s NAO report adds to the growing weight of support for overhauling the current sanction regime – this is a welcome and necessary development if we are to properly support jobseekers, some of whom are the most vulnerable in society.”
The report was also welcomed by the Public and Commercial Services (PCS) union, which represents many frontline DWP staff.
“We have said time and again that benefit sanctions are cruel and counter-productive, so it is shocking that years on the government still has no real clue about the effects of its policy," general secretary Mark Serwotka said.
“Ministers turned jobcentres from places to go for help into places of suspicion and conflict, and it is about time the regime was scrapped in favour of proper investment in staff to provide genuine support to those who need it.”