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Sanctions Within Conditional Benefit Systems

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Sanctions Within Conditional Benefit Systems SanctionsChapter heading within conditional benefi t systems A review of evidence Julia Griggs and December 2010 Martin Evans This study reviews and consolidates international evidence on sanctions operating within welfare systems where benefi ts are conditional upon claimants’ behaviour. Recent reform of (workless) benefi t systems in Britain and other post-industrial nations has sought to promote employment through work-related conditions backed by fi nancial sanctions; the rationale being that sanctions will promote desired behaviour, and therefore favourable outcomes. This review examines an international body of evidence on sanctions, their impacts, outcomes and context, and explores how far the theoretical and political ‘assumptions’ that underlie them are met in practice. The report: • considers the different ways in which benefi t sanctions may (theoretically) affect claimant behaviour; • examines evaluative evidence of sanction impacts within unemployment benefi t and US welfare systems; • contextualises impact evidence within literature on the operation and administration of sanctions as well as the results of surveys and qualitative studies conducted with claimants; • explores the effect of sanctions and conditionality on other (non-employment-related) behaviours; • discusses how this evidence relates to the political justifi cations voiced in support of benefi t sanctions. www.jrf.org.uk ChapterContents heading List of fi gures and tables 3 Executive summary 4 1 Background 9 2 The review’s theory and methods 11 3 Sanctions linked to employment-related conditionality 16 4 Contextual studies of employment-related sanctions 29 5 Sanctions and other types of conditionality 38 6 Justifi cations for sanction-backed conditionality 42 7 Conclusions and recommendations 48 Glossary 50 Notes 51 References 55 Appendix 1 64 Appendix 2 66 Appendix 3 72 Acknowledgements 74 About the authors 74 2 Contents List of fi gures and tables Figures Tables 1 Theoretical framework for identifying 1 Sanctions and the destinations of welfare sanction effects 12 leavers – odds ratios 26 2 Timing effects of sanctions 13 2 Characteristics identifi ed as more prevalent among sanctioned than non-sanctioned 3 Results from post-reform observational benefi t recipients 32 studies on the effects of sanctions on caseload/welfare use (per cent effects) 25 3 Employment rates by sanction status and hardship experience 36 4 Impacts of sanctions on unemployment benefi ts 66 5 Impacts of sanctions in US welfare studies 69 List of fi gures and tables 3 ChapterExecutive heading summary Introduction 1 The type of sanction: whether the sanction results from an administrative failure This study reviews and synthesises international (e.g. not completing required paperwork/ evidence on sanctions operating as part of failure to attend a meeting), or from a conditional welfare systems. It considers evaluative behavioural ‘misdemeanour’ (e.g. not ‘actively evidence of sanction impacts, the wider literature looking’ for work, or refusing employment). on operational context and the qualitative In practice this distinction may not always experience of sanctioned claimants. It then be clear-cut. discusses how this evidence relates to the political justifi cations voiced in support of benefi t sanctions. 2 The type of effect: whether a sanction impact arises directly from lower levels of benefi t Background entitlement (i.e. welfare use/caseloads and spending) (entitlement effects), or from The rolling programme of welfare reform under the changed behaviour of claimants Gordon Brown’s Labour Government sought (treatment effects). to change the fundamental assumptions of many social security programmes to promote 3 The timing of the impact: whether the effect employment. This approach of increased is created by the threat of a sanction, or the sanctioned-backed conditionality has grown sanction itself. There are three points at which incrementally over time but has also broadened sanctions can have an impact: 1) before to include ‘new’ claimant groups. The move to the claim: the presence of sanction-backed conditionality has also extended purely work-related conditions and the prospect of (potentially) issues into a policy model that sees conditionality being sanctioned in the future may deter and sanctions as tools to change other behaviours, potential claimants from entering the system for example housing benefi t sanctions as a (take-up effects), 2) during the claim, but means of preventing anti-social behaviour. before the sanction: either the result of the The extension of benefi t conditionality and general threat of sanctions or an actual use of sanctions has not been confi ned to the warning (threat effects) and 3) during the UK, but is in evidence throughout Europe, North claim, following a sanction: a behavioural America and Australasia, with international and change or reaction to being sanctioned European bodies, such as the Organisation (imposition effects). for Economic Co-operation and Development (OECD) and the European Union (EU), overtly 4 The type of outcome: whether the impact is promoting the use of (sanction-backed) activation short-lived and limited, or is sustained over the policies (see, for example, OECD, 1996). longer term. Sanctions have the potential to impact on claimants and their families in many The theoretical approach to ways. In the short term they may promote sanction effects compliance or participation (intermediate outcomes), or encourage claimants to end When considering the impact of benefi t sanctions their claim (thus affecting caseloads and it is important to be aware of the different types of spending), possibly to enter employment. effect sanctions have (or might have) on claimants. In the longer term they may affect child There are four key dimensions to these differences: welfare, earnings and material hardship. 4 Executive summary Impacts: sanctions linked to • The one study exploring spill-over effects employment-related conditionality found that sanctions had unfavourable impacts on local crime rates (Machin and Despite the wide range of potential effects Marie, 2004). identifi ed in theory, empirical studies exploring the effectiveness of sanctions focus almost • An exploration of earning expectations exclusively on the post-claim impacts of imposed found no effects from imposed sanctions sanctions, with a small number also looking at (a fi nding that runs contrary to job the impact of direct warnings. Effects on take- search theory) (Schneider, 2008). up and on the presence of sanctions on the behaviour of the general claimant population are Despite this evidence there are still many not considered. This limits the messages we are unknowns. This creates a need for more able to draw from impact studies, as well as their evidence on the duration of effects, differences potential application to the current policy context. by claimant characteristics (e.g. gender) and Consolidating fi ndings of the unemployment infl ow and take-up effects, as well as on a benefi t and welfare evaluations identifi ed, we can range of exit destinations and longer-term conclude that sanctions for employment-related impacts, such as income, post-unemployment conditions (full-family sanctions in the case of work sustainability and earnings. US welfare systems) strongly reduce benefi t use and raise exits from benefi ts, but have generally Contextual studies of employment- unfavourable effects on longer-term outcomes related sanctions (earnings over time, child welfare, job quality) and spill-over effects (i.e. crime rates). However, The nature of the impact studies identifi ed means beyond this the evidence is harder to reconcile. that there are potential effects that are poorly For example, while unemployment benefi t covered by high-quality evidence. Thus the wider programmes tend to demonstrate positive impacts contextual literature that surrounds the ‘core’ on employment, this is not the case for impact and outcome evaluations is very useful welfare studies. both in its own right and in interpretation and To summarise: generalisation of fi ndings on sanction effects, particularly those studies offering direct insights • There is compelling and consistent evidence into claimant experiences. Also of importance of the short-term effects of sanctions in are those factors that affect the way that unemployment benefi t (UB) systems – raising sanctions operate (for example, claimant unemployment benefi t exits and job entry. knowledge of the system and bias in administration), factors which play a role in • Evidence of sanction effects in the US how effi cient, effective or equitable they are. welfare system is more mixed. While more Claimant knowledge and understanding: severe sanctions (in particular, immediate studies conducted with claimants demonstrate full-family sanctions) signifi cantly reduce low levels of awareness of sanctions; while welfare caseloads, evidence on employment people knew penalties were part of the system and earnings is far less conclusive or they rarely knew when they could be imposed favourable (two studies indicating a or how they could be reversed. This is signifi cant negative impact, the third a positive one). because claimants who do not know what is expected of them and what will happen if they • Recent evidence from a single study of fail to meet these expectations are effectively unemployment benefi t sanctions (Arni et al., being punished for a lack of understanding 2009) suggests earlier UB exits prompted by rather than (deliberate) non-compliance.
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