Promoting social inclusion in the labour market

Blog

06
Nov

Sharp rise in sanctions - many drop their JSA claim

Paul Bivand, Inclusion's Associate Director of Statistics and Analysis, blogs on the recent publication of the sanctions statistics by the Department for Work and Pensions.

DWP has, after a long break, re-started publishing figures for 'sanctions' on jobseekers. Some of this analysis is the work of Dr David Webster, of Glasgow University.

The headlines:

  • In the quarter to June 2013, 513,360 jobseekers were referred for sanction
  • In each month, this is 12% of total jobseekers being referred for sanction
  • To compare, in 2007 when the JSA regime had been toughened and the highest ever off-flow rates achieved, less than 8% of jobseekers were referred for sanction
  • Three out of every ten people referred for sanction drop their claim - this is double that in the 2007
  • 50,000 a month are dropping their claim after having been referred for sanction - this was 10,000 a month in 2007.

Chart 1: JSA sanction rates since 2000
chart 1

The proportion of sanctions decisions in favour of the claimant has been dropping. The proportion of decisions in favour of sanctioning has also dropped a little - from 50% to 43%. What is driving these changes is the sharp rise in the number of people ceasing to claim when they have been referred for sanction.

Chart 2: Sanctions - in favour of claimant as % of total decisions
chart 2

The new JSA sanctions regime is clearly driving people off benefits. The question to be answered is whether they are leaving because they have found work and, if not, what income are they surviving on? It is not just a matter of losing JSA because if people have a Housing Benefit claim, this will also be automatically stopped.

Some may have been working already - whether odd jobs for cash or regular work. Jobcentre Plus systems have always checked for this - benefit fraud hotlines are not new and the old New Deals involved 30 hour per week of activity, which the Work Programme does not.

Chart 3: Sanctions: Decisions reserved/cancelled on dropped claims (thousand)
chart 3

What we do know is that the proportion of the unemployed (on the international standard definition) who were not claiming JSA was falling up to the start of the new sanctions regime – see Chart 4. But since October 2012 (the new sanctions regime) there has been a very sharp rise in the gap between JSA and unemployment. This has been puzzling economists for some time.

So it is valid to ask whether the rise in the gap between unemployment and the claimant count is due to dropped JSA claims. This question will no doubt be analysed more deeply in the coming weeks.

On launching the new sanctions regime DWP said that it would 'encourage people to engage with the support being offered by Jobcentres'. The question is open as to whether it has achieved that, or has pushed people away from Jobcentre support.

Chart 4: Per cent of the unemployed not claiming JSA
chart 4