Get a job or see benefits cut, claimants told
Benefits claimants are being told they need to increase their earnings from paid work or face cuts in their welfare payments.
Chancellor Kwasi Kwarteng wants to get claimants off the dole and into employment to help ease labour shortages.
The controversial move is part of the new government’s plan to boost economic growth and will form part of a shake-up of the welfare system. Mr Kwarteng will say that getting people into jobs will increase their earnings.
It will mean changes to Universal Credit that will require benefit claimants working up to 15 hours a week at National Living Wage to meet regularly with their Work Coach “to take active steps to increase their earnings or face having their benefits reduced”, said the Treasury.
This gradual expansion is an increase from the 12-hour threshold and will bring an additional 120,000 benefit claimants into the Intensive Work Search regime.
With more than 1.2 million job vacancies across the UK, Work Coaches will set clear expectations with claimants and make sure they stick to their commitments.
These commitments could include applying for jobs, attending interviews or increasing their hours. People who don’t fulfil their job-search commitments without good reason could have their benefits reduced in line with existing benefit sanctions policy.
Eligible claimants over 50 years old, including new claimants and the long-term unemployed, will also get extra support from Work Coaches. The newly unemployed will get nine months of targeted sessions, and people who are long-term unemployed will receive a booster session followed by three months of intensive employment support.
The Treasury says rising economic inactivity in the over-50s is contributing to shortages in the jobs market, driving up inflation and limiting growth. Returning to pre-pandemic activity rates in the over-50s could boost the level of GDP by up to 1 percentage point.
Mr Kwarteng said: “Our jobs market is remarkably resilient, but it is not perfect. While unemployment is at is at its lowest rate for nearly fifty years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth.
“We must get Britain working again. These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.
“It’s a win-win. It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”
Work and Pensions Secretary Chloe Smith said: “As we continue to face economic challenges and labour market shortages, we are committed to helping people on lower incomes to boost their pay – because we know work is one of the best ways to support your family and help grow our economy.
“Whether it’s increasing their hours in their current role, entering a new sector or switching careers, we want people of all ages and all stages to be able to progress into fulfilling careers.
“The expertise our dedicated DWP Work Coaches bring, will help to drive this change by removing barriers to progression and opening up opportunities for training and building skills, to increase earnings.”
These changes will be Great Britain-wide and, in line with usual practice, the UK Government will work with the Northern Ireland Civil Service to determine the most suitable way to deliver support in Northern Ireland in due course.
Certain groups will remain exempt from sanctions, including people who are unable to work due to long-term sickness or a disability.
These changes are expected to be implemented from January 2023. Full details will be set out in due course.
This new increase in the Administrative Earnings Threshold builds on the rise from 9 to 12 hours at national Living Wage (i.e. from £355 to £494 per month) for an individual claimant, which takes effect this month, bringing 114,000 more people into the Intensive Work Search Regime.
Raising the threshold to 15 hours at National Living Wage equates to £618 per calendar month for an individual claimant.
Long-term unemployed is defined as someone who has been out of work for 12 months or more.
Inactivity due to long-term sickness has been rising since 2018.