Why benefit sanctions could end up costing the taxpayer more

Sanctions push people into insecure, badly-paid jobs that leave them back on welfare soon afterwards.

The welfare system is now tougher than ever. Figures out today show there were half a million sanctions against Jobseeker’s Allowance (JSA) claimants between 22 October 2012 and June 2013.

Sanctions and conditions in the benefits system that are clearly communicated and fairly applied make an important contribution to a well-functioning welfare-to-work system. But they must go hand in hand with measures to support people into good, sustainable jobs. Together these actions can promote behaviour that is in the interests of claimants and taxpayers.

But JRF’s systematic review of the international evidence on the impact of sanctions shows that in practice they often create perverse effects. These can cause severe hardship and create higher costs in the long-term. Evidence from the US shows that sanctions can be an effective tool for getting people off benefits, but this is partly because people drop out of the system altogether. This may reduce the welfare bill in the short-term but can cause destitution and cost the public dear in other ways.

Evidence from Europe shows the use of sanctions can increase people moving into work, but it tends to be lower-paid, insecure work, which sees people quickly back on benefits again. This is because the threat or use of sanctions makes people take poorer jobs than if they had been allowed to wait for better opportunities. JRF is conducting a review of the impact of welfare sanctions, which will cast more light on this in the future.

New targets for jobcentres encourage them to focus on keeping people in work and helping them progress to better-paid jobs and move off in-work benefits; this is exactly what all the evidence says they should be doing. But it seems sanctions are not being used to support this. Rather, they undermine it by pushing more people into insecure, badly-paid, dead-end jobs. 

The welfare system as a whole needs to be refocused to concentrate on getting people into work that they can sustain and that will allow them to increase their hours and pay to a point where they no longer need the state to top up their earnings. At the moment, bits of it have been reformed to achieve this, while other bits still have the old approach of 'get a job, any job!' Let’s get the whole system pulling in the same direction.

Helen Barnard is Poverty Research Manager at the Joseph Rowntree Foundation

People enter the Jobcentre Plus office on January 18, 2012 in Bath. Photograph: Getty Images.

Helen Barnard is a Policy and Research Manager for the Joseph Rowntree Foundation.

Getty
Show Hide image

Why Angela Merkel's comments about the UK and US shouldn't be given too much weight

The Chancellor's comments are aimed at a domestic and European audience, and she won't be abandoning Anglo-German relationships just yet.

Angela Merkel’s latest remarks do not seem well-judged but should not be given undue significance. Speaking as part of a rally in Munich for her sister party, the CSU, the German Chancellor claimed “we Europeans must really take our own fate into our hands”.

The comments should be read in the context of September's German elections and Merkel’s determination to restrain the fortune of her main political rival, Martin Schulz – obviously a strong Europhile and a committed Trump critic. Sigmar Gabriel - previously seen as a candidate to lead the left-wing SPD - has for some time been pressing for Germany and Europe to have “enough self-confidence” to stand up to Trump. He called for a “self-confident position, not just on behalf of us Germans but all Europeans”. Merkel is in part responding to this pressure.

Her words were well received by her audience. The beer hall crowd erupted into sustained applause. But taking an implicit pop at Donald Trump is hardly likely to be a divisive tactic at such a gathering. Criticising the UK post-Brexit and the US under Trump is the sort of virtue signalling guaranteed to ensure a good clap.

It’s not clear that the comments represent that much of a new departure, as she herself has since claimed. She said something similar earlier this year. In January, after the publication of Donald Trump’s interview with The Times and Bild, she said that “we Europeans have our fate in our own hands”.

At one level what Merkel said is something of a truism: in two year’s time Britain will no longer be directly deciding the fate of the EU. In future no British Prime Minister will attend the European Council, and British MEPs will leave the Parliament at the next round of European elections in 2019. Yet Merkel’s words “we Europeans”, conflate Europe and the EU, something she has previously rejected. Back in July last year, at a joint press conference with Theresa May, she said: “the UK after all remains part of Europe, if not of the Union”.

At the same press conference, Merkel also confirmed that the EU and the UK would need to continue to work together. At that time she even used the first person plural to include Britain, saying “we have certain missions also to fulfil with the rest of the world” – there the ‘we’ meant Britain and the EU, now the 'we' excludes Britain.

Her comments surely also mark a frustration born of difficulties at the G7 summit over climate change, but Britain and Germany agreed at the meeting in Sicily on the Paris Accord. More broadly, the next few months will be crucial for determining the future relationship between Britain and the EU. There will be many difficult negotiations ahead.

Merkel is widely expected to remain the German Chancellor after this autumn’s election. As the single most powerful individual in the EU27, she is the most crucial person in determining future relations between the UK and the EU. Indeed, to some extent, it was her intransigence during Cameron’s ‘renegotiation’ which precipitated Brexit itself. She also needs to watch with care growing irritation across the EU at the (perceived) extent of German influence and control over the institutions and direction of the European project. Recent reports in the Frankfurter Allgemeine Zeitung which suggested a Merkel plan for Jens Weidmann of the Bundesbank to succeed Mario Draghi at the ECB have not gone down well across southern Europe. For those critics, the hands controlling the fate of Europe are Merkel’s.

Brexit remains a crucial challenge for the EU. How the issue is handled will shape the future of the Union. Many across Europe’s capitals are worried that Brussels risks driving Britain further away than Brexit will require; they are worried lest the Channel becomes metaphorically wider and Britain turns its back on the continent. On the UK side, Theresa May has accepted the EU, and particularly Merkel’s, insistence, that there can be no cherry picking, and therefore she has committed to leaving the single market as well as the EU. May has offered a “deep and special” partnership and a comprehensive free trading arrangement. Merkel should welcome Britain’s clarity. She must work with new French President Emmanuel Macron and others to lead the EU towards a new relationship with Britain – a close partnership which protects free trade, security and the other forms of cooperation which benefit all Europeans.

Henry Newman is the director of Open Europe. He tweets @henrynewman.

0800 7318496