The next stage of welfare reform: work more hours or lose your benefits

Ministers consider plans to force workers to increase their hours or change jobs in return for receiving Universal Credit payments.

Rarely a day now passes without ministers looking to impose new conditions on welfare claimants. The latest proposal under consideration, as today's Guardian reports, is for low-paid workers to be forced to work more hours or face losing their benefits.

Ahead of the national launch of Universal Credit in October, a DWP document notes that "the current Jobseekers Allowance caseload will be joined by current claimants of tax credits/housing benefit who are working less than could reasonably be expected." It adds: "The Welfare Reform Act enables us to place a wide range of mandatory requirements on this group (e.g. work search, work availability and work preparation requirements). Any requirement must be intended to help them find work, more work or better paid work." 

Universal Credit claimants will be divided into six groups (see below): working enough (individual and household), working could do more, not working, too sick to work right now, too committed to work right now and too sick to work. It is the second of these groups that the proposals are concerned with. The DWP suggests that claimants could be required to move job if and where "other avenues (additional job, more work with same employer) have proved unsuccessful". 

Responding to the department's "call for ideas", a new Policy Exchange report recommends that all new in-work claimants should be required to attend an initial interview at a JobCentre "where a conditionality regime should be set up to ensure the individual is doing all they can to increase their hours and earnings". It adds that claimants should then be forced to attend a quarterly meeting "to be reminded of their responsibility to try to increase their earnings", with sanctions applied for failing to attend. 

Ministers will no doubt argue that the plans are aimed at assisting the 1.4m people who are working part-time because they could not find a full-time job. The Policy Exchange report found that only 30 per cent of part-time workers who expressed a desire for full-time work were actively looking for it. Ministers will merely help push claimants in the right direction. But given the routine abuse of existing benefit sanctions by job centres, the danger is that this will become an underhand means of reducing the welfare bill.

And, rather like the suggestion that the minimum wage could be frozen or cut, the proposals sit uneasily with some of ministers' recent rhetoric. At last week's Resolution Foundation event on low pay, the skills minister Matthew Hancock (George Osborne's former chief of staff) argued that people were wrong to suggest that "working longer hours is the best way to boost earnings, and that getting people to work longer hours will help solve our economic problems." He observed: "Now I love my job, and work a humungous number of hours. And while many people in this room might do the same, let me let you into a secret: we’re unusual.

"Working more hours may be a necessary thing, but it’s not necessarily a good thing. It means less time to see the family; less time in the garden. Less free time. I’m in favour of more freedom. If the cardinal sin of modern economics is assuming that markets are always rational, then the second great failing is forgetting who we’re in it for."

If ministers are to avoid alienating the very "strivers" they purport to support, they should heed Hancock's words. 

The Department for Work and Pensions suggested that claimants could be required to seek "more work or better paid work" in return for receiving in-work benefits. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Budget 2017: What announcements will Philip Hammond make?

What will the first budget after Brexit hold for the economy?

This spring’s Budget - set to be announced on Wednesday 8 March 2017 - will be forced to confront the implications of last June's Brexit vote, along with dealing with issues of reliance on consumer spending, business rates and government borrowing. The government also (quietly) announced on Monday night that it will be asking ministerial departments to outline cuts up to 6 per cent, a potential nod for what’s to come next week.

All these things, along with the fact the Chancellor Philip Hammond is scrapping the spring Budget, meaning this announcement should be an interesting one.

The big story at the moment focuses on borrowing. The Resolution Foundation has predicted that healthier-than-expected tax revenues and the lack of a Brexit effect so far will lower Budget borrowing forecasts by £29bn between 2015-16 and 2020-21. 

The FT reports a possible £3bn reduction in borrowing, to £67bn. They also pin this optimistic prediction to higher-than-average self-assessment tax receipts, after changes in the taxation of dividends.

The Chancellor will potentially stick to the three key changes he made from George Osborne’s former financial commitments, according to The Sun. These consist of not predicting a surplus in 2019/20, slightly relieving the cap on welfare spending and no longer committing to reducing debt. The paper also predicts he’ll announce a change to the controversial business rates that were recently released, that could leave “shopkeepers and publicans clobbered with tax hikes of up to 400 per cent".

What do we know for sure?

The government has announced a few key changes in in advance of the Budget.

  1. The Spring Budget 2017 will be the final Budget held during springtime
  2. Finance Bill will follow the Budget, as it does now
  3. From 2018 "Legislation day" will move to the summer
  4. An Autumn Budget means tax changes will be announced well in advance of the start of the tax year
  5. 2018 will see the first Spring Statement