As well as presenting a potential change in how much support people will receive (following initial transitional protection), the move to UC will also change many people’s interactions with the benefits system. 73% of those that have been sent a migration notice are over 40 and will now face stringent conditions on their claim (figure 1). So far, one in five (19%) of closed claims (those that have moved onto UC or had their previous claim closed) have resulted in a family not claiming UC, substantially more than the DWP’s initial assumption of 3%. The latest estimate is that 26% of families in receipt of tax credits only and 4% of those in receipt of other legacy benefits will not move onto UC, instead seeing their support end.

Early research by Ipsos for DWP found some explanations for those not moving onto UC, including perceived stigma of claiming UC, that they didn’t believe the migration notice applied to them, and that their support would be small and not worth the greater interaction with DWP.

Indeed, changes to the conditions people face, such as the expectation to meet with work coaches or take on work that doesn’t fit with their current living arrangements, may result in some people ending their support, reducing their income and leaving them more susceptible to income shocks. While this may be an option for some, such as those with minor savings, most will have little choice but to comply with the conditions placed on them by their work coach. Those who fall short of these expectations will find themselves pushed to take any job going, particularly impacting the 39,000 over 50s that have moved onto UC with a higher chance of a skills mismatch.

Unlike UC, tax credits contain no expectations of hours worked beyond the minimum levels necessary for eligibility. For single parents this is 16 hours per week. Under UC a lone parent is expected to work up to 30 hours per week once their youngest child turns three, increasing to 35 hours once they reach 13. Sanctions are also not present in the tax credits system, with an incentive feature instead for those working over 30 hours.

The conditions placed for those on UC and in work have also increased in recent years. Someone earning less than the administrative earnings threshold (AET) will be placed in the intensive work search (IWS) regime, comprising the greatest work search expectations. In 2022/​23 the AET for a single person increased from £355 per month to £677, or 15 hours worked per week at the national living wage (NLW). For couples, the AET increased from £567 per month to £988, a combined 24 hours per week at the NLW.

While welcome, the substantial increases to the NLW in recent years have led to large hikes in the AET. From April 2024 these thresholds will be £743 and £1,189. This will have the greatest impact on someone working one of the 366,000 jobs underpaying the NLW or with a higher hourly pay and working less hours. The AET is set to be increased further, with yet to be implemented changes from the 2023 Spring budget increasing the single person AET to 18 hours and the couple’s AET set to be scrapped altogether.

The increased requirements for people in receipt of UC have coincided with reduced time to find appropriate work. Someone placed into the IWS used to have three months to find a job of their choice, with earnings above the AET, before facing the risk of sanctions to push them into any job. This was reduced to four weeks in early 2022 without any evidence base being provided in support. At the time of the policy change, the social security advisory committee noted that they had not been presented with any analysis of the potential negative impact of this policy. Indeed, no evaluation of the change has been conducted to date. In fact, the DWP rarely evaluates the impact of its policy changes, at least publicly, despite owning a wealth of data on household incomes and peoples’ interactions with the labour market.

Findings from the wider literature imply these changes are unlikely to have positive impacts. Conditionality has been found to have little effect in supporting people into work or onto better paid roles, with intermittent work common for those that do find a job. Employers are also sceptical of the efficacy of ​‘ABC’, instead preferring an approach to employment support that better matches people to work based on their skills and circumstances. 

The cost of conditionality to government

The government has argued that allowing people more flexibility over their work search creates costs because they spend longer out of work. But this ignores the longer-term impact of someone potentially ending up in a better and more secure job, the undesirable outcomes have followed when conditionality has been tightened on lone parents in the past, and the concerns employers have expressed about people being pushed towards poorly-matched job vacancies. In the absence of DWP data on work trajectories, in this section we explore a few examples of how much could be reinvested into social security through a better system of employment support.

The next figure presents three possible illustrative work trajectories for someone on UC to demonstrate this point. The green line shows the monthly savings to government if someone on UC does just enough to not have regular meetings with a work coach by earning at their conditionality earnings threshold – 35 hours of work per week at the national living wage (NLW). While there are early savings to government, the work they have found in the one-month since claiming UC is low-quality and not well suited to their experience or commitments. As a result, they spend the next three years cycling in- and out t‑of ‑work. The next scenario, in blue, assumes this person is given longer to find a suitable role. They find long-term work paying the real living wage (RLW), increasing tax revenue and reducing UC spend.

Figure 2: Government can save more by helping people into better jobs, even if they spend longer searching for the right role