DWP urged to do more to monitor impact of benefit sanctions

30 Nov 16

The government is not doing enough to measure the impact of sanctions on people who are drawing benefits or on wider society, according to the National Audit Office.

In a report published today, auditors called on the Department for Work & Pensions to carry out a wide-ranging review of benefit sanctions, particularly as it makes the transition over to universal credit.

Today’s analysis found that the DWP withheld £132m from claimants due to sanctions in 2015, and spends £30-50m a year applying them. Moreover, it spends £200m annually monitoring the conditions it sets for benefit claimants.

The department was found to be meeting its target timescales for most sanction decisions, but is missing its targets around universal credit sanctions. For August this year, 42% of universal credit sanctions took longer than 28 days.

A benefit sanction is a penalty imposed upon a claimant resulting in a loss of income. Sanctions are typically applied when people fail to attend jobseekers allowance appointments, or do not meet other requirements. Sanctions can be fixed in length for up to three years, and can also continue indefinitely until a claimant meets conditions.

The amount of benefit lost for a four-week sanction by a single Jobseeker’s Allowance claimant aged 25 or over is around £300. Almost a quarter (24%) of claimants received at least one sanction between 2010 and 2015, according to the report.

Auditors found a significant reduction in the referral rate for Jobseeker’s Allowance sanctions from 2011 (11%) to 2015 (3%). The report stated that “there are many reasons for this variation but it cannot be fully explained by claimant behaviour”. It concluded that it was likely that management focus and local discretion have had a substantial influence on whether sanctions were applied.

The NAO urged the DWP to make greater use of its own data, which it has not used to assess the impact of the sanctions it applies. They cited international studies that showed people who receive sanctions are more likely to get work, but the impact can be short-lived.

The overall impact of sanctions on wider public spending is currently unknown. However, the analysis revealed that the use of sanctions varies substantially, with some Work Programme providers referring twice as many people for sanctions as other providers in the same areas.

Auditors noted that although the department has commissioned external reviews of its sanctions process, and taken steps to make improvements, it has so far rejected calls for a wider review, such as from the work and pensions select committee last year.

Universal credit is designed to simplify the benefit system in the UK by rolling six types of benefit into one monthly payment. The Institute for Government recently reported that the scheme was back on track.

NAO head Amyas Morse said benefit sanctions have a high opportunity cost for claimants and also implications for the efficient use of public resources.

“We acknowledge the department’s effort to reduce its error rate on sanctions, but we think there is more to do in terms of reducing them further, and in reducing the notable differences in sanctions applications between comparable localities,” he said.

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