The Public Accounts Committee (PAC) is calling for government to trial the use of warnings, rather than sanctions, when job seekers do not meet the conditions attached to their benefits claims.
A report published today by the cross-party committee of MPs found that the Department for Work and Pensions (DWP) has “significant gaps” in its understanding of sanctions, both in terms of how they are administered, and their impacts.
Sanctions are imposed when out-of-work benefit claimants fail to meet certain conditions and aim to ensure these claimants are actively looking for work. DWP issued 400,000 sanctions in 2015, which cost around £30m-£50m to administer.
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But MPs found mixed evidence on the impact of sanctions. In oral evidence, the DWP pointed to international studies showing that sanctions increase the likelihood of claimants finding work, but a National Audit Office review of international evidence showed that sanctions can increase the chance of claimants taking low-wage, short term employment.
The PAC report also notes that sanctions can have wider impacts such as a decline in mental health, falling into arrears with bill payments and even the potential for increased risk of homelessness if sanctions are not properly administered.
MPs also heard evidence from the charity Crisis, which warned that sanctions could exacerbate the housing-related reasons why people struggle to find work, and may even cause homelessness in some cases.
A third of people surveyed by the charity had their housing benefit stopped because of a sanction. This benefit should not be included in sanctions, and the DWP said that it had found no evidence of this happening when it examined a sample of 300 cases.
The PAC's new report adds that sanctions can also have an impact across other parts of government: “Supporting people the department sanctions may lead to extra public spending in areas such as local authority funded welfare support.”
“These sometimes serious consequences of sanctions mean that they should be used carefully,” says the report. The committee backs recommendations made by a 2014 independent review of Jobseeker’s Allowance sanctions and by the separate Work and Pensions Committee in 2015, which both said that warnings and non-financial sanctions should be used the first time a claimant fails to meet required conditions.
MPs found that the DWP “lacked evidence” of the effects a new, stricter sanctions regime would have when it was introduced in 2012, and said the department still does not understand the impact of the regime.
“[DWP] also acknowledged that this situation had not improved: we heard that it is impossible for the department to take a view on whether the new system is making a difference, due to the lack of a counterfactual,” says the report.
The department announced last year that homeless people and those with mental health conditions will be able to claim immediate hardship payments from this year if they receive a JSA sanction. People receiving ESA can also apply for hardship payments from day one of the sanction, though at a lower rate.
However, the PAC report raises concerns that measures in place to protect vulnerable claimants from sanctions – for example by taking account of health needs when setting out the conditions which jobseekers must meet – are not being consistently used.
An NAO report published last year found that the use of sanctions varies significantly across the country and is "linked as much to management priorities and local staff discretion as it is to claimants’ behaviour".
The PAC report calls on government to provide a report for MPs by the end of the year which would aim to fill some of the gaps in the evidence around sanctions.
The department should monitor and assess reasons for the variations in sanction referral rates across departments, the MPs say, as well as monitoring the use of protections for vulnerable groups.
It should work with other departments to estimate the wider costs to government when sacnctions are imposed, and also report on progress in improving data systems which would allow it to track the use and impact of sanctions.
In its report to the PAC, the department should also “set out what more it will do to assure itself that housing benefit is not being stopped in error due to sanctions,” the committee said.
Responding to the report, a DWP spokesperson said: “Our sanctions guidance is the same right across the UK and the fact is the number of sanctions has more than halved in recent years.
“Sanctions are an important part of our benefits system, and are only used in a very small percentage of cases as a last resort when people don’t fulfil their commitment to find work.”