The regulations before the Committee today introduce powers to test a range of approaches to establish how we can best support working universal credit claimants who are on low earnings to progress in work and earn more. This is a core principle of universal credit.
I take this opportunity to update noble Lords on where we are with universal credit. Universal credit is now in almost 100 jobcentres. Some 55,000 people have claimed and almost 27,000 people—including couples and families—currently benefit from the much enhanced support that it provides. For example, we are seeing that universal credit claimants spend twice as long looking for work than claimants on current benefits. Two-thirds of claimants surveyed believe that universal credit provides better financial incentives to work and earn. Early evidence shows that universal credit claimants are taking up more work when compared to those people on jobseeker’s allowance.
Universal credit is working for not just claimants but for employers, too. It removes the inflexibilities that exist in current systems and means that employers will now have access to a more engaged and flexible workforce—people willing to take up more hours as they are available without the fear of having to stop and restart their benefit claims. This is excellent progress and from next month we will roll out universal credit nationally. By the spring, universal credit will be in one in three of the country’s jobcentres.
A key question we are now looking to address is how we will support working claimants who are on universal credit and in some of the lowest-income households, typically earning less than £12,000 a year. Our aim is clear: we want to help encourage, influence and support low-paid claimants who can earn more to progress in work and increase their pay. The potential benefits of this support are significant and wide-ranging. There will be more people working and earning more, and living more independently of benefits. We will strengthen our ability to tackle and reduce poverty. Employers will benefit, too. They will have a more engaged and motivated workforce and will benefit from the rewards that that will bring. To realise these benefits, it is crucial that we put in place the right help and support. It is a key reform, a unique challenge and it is transformational.
I want to be open about the challenge that we face. It is no easy task. This is the first time any nation has attempted to support working claimants in such a large-scale way to increase their earnings. Because we are one of the first nations to try to do this, there is very limited evidence on what works. For this reason, we must run trials to learn what is effective. We must do things differently if we are to succeed. The approaches of the past—static trialling of rigid, fixed approaches—will simply not work here. We therefore must look to do things differently. Our approach to trials needs to be more flexible. We need the ability to tweak and change things as we learn about what works and what does not. This is about trialling to refine and perfect our approach. Having broadly defined trialling regulations, as we are discussing today, with clearly defined parameters and safeguards will allow this tailoring and tweaking. On the other hand, a traditional approach of defining every element of a trial would have left us locked into one approach, even if it proved to be ineffective. To test changes and variations, we would then have to stop and come back to Parliament to secure brand new powers to test something slightly different.
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The approach we are looking to take is endorsed by some of the world leaders in trial design and theories. Jim Manzi, a predominant expert in trial principles, is clear that many trials fail because we cannot accurately predict how people will respond. He recommends that, in order to understand what works, you must be able to be responsive in your approach so that trials can be flexed and adapted to learning. There is clearly a strong case to have the flexibility that we are seeking with the powers today.
I now turn to transparency. I am fully committed to being transparent about what we plan to test. I have given a clear commitment to share with the Social Security Advisory Committee details of any future trials under this regulation. We are also committed to publishing regular updates on universal credit, including details of our future plans, such as our publication in October 2014, Universal Credit at Work. We will also publish formal evaluations of these large-scale trials to ensure that our findings are available publicly. Noble Lords have my commitment on this.
I should like to spend a few moments outlining what we will do first with the proposed powers. From April 2015, we plan to launch the first large-scale trial in universal credit. This first trial aims to set the baseline for effective interventions of a core in-work service. In doing so, it will explore the impacts of providing tailored support based on the individual’s circumstances, setting and embedding clear expectations for our claimants, and reinforcing the consequences of non-compliance so that claimants fully understand the implications of their actions.
This first trial will be delivered by Jobcentre Plus and will focus clearly on providing tailored, personalised support to low-earning claimants. These conversations will be led by our work coaches. They will be responsible for setting the relevant and appropriate goals and building the right aspirations. They will help the individual
to consider what they could do to increase their earnings and they will also define what activities they should undertake.
Some of the activities that we will set will be mandatory, particularly where they offer a claimant a strong opportunity to increase their salaries. This is to encourage claimants to engage with the support on offer. We will also be testing the impact of the regularity of very challenging conversations with claimants on the progress they are making, comparing fortnightly discussions and conversations every few months. This overall approach will be tested against much lighter support that consists of two telephone calls with a work coach. This is our control for the trial, against which we will measure whether intensive treatment delivers better results.
We aim to trial this first approach with more than 15,000 low-earning in-work universal credit claimants across the country, subject to us seeing positive early results. Testing on this scale is necessary for us to gather robust statistical evidence to demonstrate whether our interventions are effective at helping people to progress in work. Importantly, the larger numbers give us more granularity in the data, helping us to understand not only whether something like this works but how it works and for whom.
It is also important to trial across a different range of geographical areas, hence the requirement to be able to test in many different locations. Local labour markets vary immensely from area to area, so restricting trials to just one or two areas would give us a less clear indication of whether something would work well across the country. The first trial will be run as a randomised controlled trial, perhaps one of the most effective ways to test new approaches. It is certainly endorsed as the gold standard approach by many external experts.
It is important that we do not lose sight of why we are doing these trials. It is to learn about the best ways to support and drive greater independence from benefits by getting individuals to earn and work more.
Given the challenge that we face and the clear need to test a range of measures, we are seeking regulations that enable us to test this and optimise the approach over time. The regulations are broadly worded but they do not provide unlimited powers. They set out clearly defined areas and parameters for us to test in, and provide a number of protections and safeguards to ensure we only require more from those who can do more.
I recognise that this is a marked departure from the more static DWP trialling approaches of the past. However, we believe that this more dynamic approach provides the best opportunity to build the evidence we need while retaining the right balance in safeguards and flexibilities. I commend the regulations to the Committee.