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“In work, could do more”: how much substance is there to post-employment support under Universal Credit?

Authors: Ceri Hughes Ceri Hughes

04 September 2013

Much has been made of what Universal Credit – set to become the UK’s main working age benefit in 2017 –  could achieve, but it has also attracted a great deal of critical attention. With tomorrow’s (5 September) National Audit Office report on progress in implementing Universal Credit likely to substantiate some of these criticisms, an assessment of the state of post-employment support seems timely. Yet, so far, it remains unclear how it will help more people to enter and progress in work at a time of slack labour demand.

Universal Credit will combine basic means-tested benefits, such as Jobseeker’s Allowance, and benefits available to people in work, such as Tax Credits. Its aims are ambitious, with it being heralded as the solution to a number of pressing problems, including: addressing the complexities of the welfare system; tackling poverty; adjusting work incentives; and taking people out of low-wage work.

Under Universal Credit, people moving into work that pays below a certain threshold will continue to be able to access support, but claimants who are working and who are deemed able to work more hours will be subject to in-work conditionality. This may include attending work-focussed interviews and searching for different jobs. The government hopes that ‘in-work conditionality’ will encourage low-paid claimants to progress into better paid jobs, or encourage those working part-time to take on more hours.

Precisely who falls into this ‘working, could do more’ category will depend on individual and household circumstances, but those working less than 35 hours per week on the minimum wage (£220 from October) with the capacity to do more hours or increase their earnings are potentially in scope. It has been estimated that more than one million claimants will fall into this group.

The extension of support to people in low-paid work presents a great opportunity. If implemented well, post-employment support could provide low-wage workers in the UK with the opportunity to assess their job prospects, develop careers, overcome barriers to progression, and/or escape from dead-end jobs. But it will be difficult to translate all this into reality.

First, whilst one long-term aim of providing post-employment support may be to save money for the government by moving people off benefits and into work, there is little indication that the resource is there to deliver an effective programme of support to achieve this. This needs to be addressed, particularly if post-employment support is to extend beyond digital support, such as e-mailing vacancies to claimants on a semi-regular basis.

Second, helping people in work will require some sensitivity. It is not clear how claimants will be asked to combine their claimant obligations with their obligation to their employer; asking workers to take time out from work to attend work-focussed interviews, for example, could actually hold them back in work.

Third, it is not just pay that matters: it may be that a given job is conveniently located, or that a worker feels they are gaining valuable experience. In these situations, it might not make sense to push people to move to a higher paying job.

Most importantly, there is a lack of evidence around what works in helping people to progress in work. It may be that good post-employment support will look similar to good pre-employment support. The responses to the DWP’s call for ideas certainly reiterate the importance of access to good labour market information and training opportunities. But, as the performance figures for the Work Programme providers highlight, we still do not have in place an especially effective means of supporting people into work in the first place.

A few interesting pilots have trialled different ways of engaging with claimants and helping them to retain employment and progress. These include trialling the provision of structured advice to people in work and the development of a database of short-term and limited hours jobs. However, it is not clear how transferable any positive outcomes will be, given that the pilots are voluntary whereas claimants will not choose to opt into in-work conditionality. It will also be difficult to evaluate what impact these pilots have had over the short time-scales that are envisaged.

Ultimately, much of the success of Universal Credit – whether it will be associated with improved employment entry rates, longer periods of employment and low-wage mobility – is likely to be determined in large part by how realistically the ‘working, could do more’ group of claimants are defined; the amount of resource that is put into post-employment support; and wider labour market conditions.

The Work Foundation has been examining the prospects for low-wage workers through its Bottom Ten Million research programme. Our next paper will consider how to improve the prospects for low-wage workers in the UK, with a discussion of policies to increase low-wage mobility.