I thank noble Lords for what has been a series of good contributions to this debate. These regulations are driving at a very simple question: how best can we support lower-earning, universal credit claimants to progress in work and increase their earnings? Let me try to deal with all the questions.
My noble friend Lord Farmer asked how many people would be affected in relative terms. As he said, there are about 1 million universal credit claimants in low-paid work and that is as a proportion of a total of 7.7 million people. We cannot at this stage quantify the monetary benefits of that in-work support. One of the reasons for these trials is to find out whether it is cost effective to provide support above the bare minimum and whether we get a return. However, universal credit has, bluntly, astonishing returns on its investment, saving the Government and the taxpayer £38 billion from now until 2022-23. When it is fully in, it will have an economic benefit of £7 billion a year.
I was urged by my noble friend Lord German and the noble Baroness, Lady Sherlock, to give extraordinarily precise figures on this. We are ramping up very rapidly now, and by spring, as we said, we will be in one in three jobcentres; we are currently in about one in eight. Clearly that implies that the 15,000 people will be a much smaller proportion of the current 27,000 that we see. However, I am not in a position to give more numbers.
As to the balance between sticks and carrots, an issue raised by my noble friend, most of the areas we are looking at will focus on how we support and help people. We need to learn how to do that. At the same time, we are working closely with employers. We have implemented a couple of programmes to find out what kind of support and incentives work. There is a great deal of emphasis on the support element. Basically, the intensive work coach discussions are a kind of mentoring process in which one goes through the options.
All noble Lords who have contributed are interested in the safeguards that we have in place. There are a number of regulatory safeguards to ensure that conditionality is applied to claimants only when it would be appropriate. The trials are limited to those in the all-work requirement conditionality group. In other words, they explicitly exclude those who are disabled, an issue which was of some concern. Claimants in the other conditionality groups will not be part of these trials and those in specific circumstances, such as recent victims of domestic violence, will be excluded from the outset.
Beyond that, as a more formal protection, we realise that claimants will have individual circumstances and it will be for the work coach, after discussions, to work out what the tailoring requirements should be. That will give the work coach the scope to set reasonable, achievable requirements and earnings goals, taking into account the kind of commitments mentioned by the noble Baroness, Lady Sherlock, in regard to caring responsibilities and so on. The result will be a personalised claimant commitment that places reasonable expectations on clients.
My noble friend made a point about transparency to Parliament. Given that we are trying to ensure that we have an accountable and flexible process—that is the delicate balance that we are trying to achieve—for transparency we will share information as we change the trials with the Social Security Advisory Committee. We will do that by letter and I shall ensure that the information is placed in the Library so that Parliament can see what is happening.
In response to a question from my noble friend, we are discussing with SACC the issue of self-employed people trying to start businesses. We will take account of that circumstance, among others, and people building businesses will be able to do so and guidance will be provided.
In response to the noble Baroness, Lady Sherlock, the regulations expire after three years of being in force. Where we need to gather more evidence, we can extend these regulations by a further period of up to 12 months without returning to Parliament. Such an extension does not expand the powers within the regulations, which strictly define limits to testing work-related requirements and will have been subject to full scrutiny. All it does is extend the period.
My noble friend and the noble Baroness, Lady Sherlock, asked about the business case, the question asked by Steve Timms. A letter has been sent to Steve Timms, which I can give chapter and verse on. The strategic outline business case approved contained a light-touch regime and £15,000. The objective of that £15,000 was to find out, against the control of that light touch, whether we can do better.
The core of the question asked by the noble Baroness, Lady Sherlock, was about how we treat people. The real protection, which is not explicit in the regulations but is nevertheless there, is that under these regulations our expectations of in-work claimants cannot exceed what we expect from out-of-work claimants. The level
and extent of sanctions will therefore be within those existing constraints. That is the constraint we have for this trial.
Getting into some of the detail of the trial, the reason there is a figure of 15,000 is that 5,000 are the control. We are looking at two main types, which I described in my opening remarks. Then we will segment that 5,000, looking at four or five different categories and geographically. That is how the numbers add up as we run this trial to 2016.
As we see people, we will start supportive conversations with them almost immediately. We will start to have tougher conversations after a person has been in work for two months. That is the initial testing. I think I have dealt with carers.
Ethics are a very interesting issue as we move into other, more elaborating trialling. This first trial is rather straightforward and is within the context of the kind of conditionality we do anyway, and we have a requirement to be reasonable to the individual with the safeguards I have described. However, I appreciate the point the noble Baroness made that for future trials and as the system develops we may have to think about ethical controls more on a medical model. For this trial, we have SSAC overseeing it, which means there is a group of experts having a look as we run along.
The noble Baroness asked about couples versus individuals. Members of a couple are treated as joint claimants so their earning threshold is set on a joint basis and conditionality is imposed on the basis of their combined income. If that exceeds the household threshold, neither partner will be part of the trial. That reflects the underlying philosophy of universal credit.
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I was asked what kind of help was on offer. I will quickly run through some of the elements that we are expecting to test. There will be an underlying expectation that they will take all reasonable steps to increase their earnings in return for the support that we provide, which includes a clear understanding of what is specifically required; a motivation process, to encourage them to progress in work and take action, which could be around skills acquisition; help to identify what is realistic; giving responsibility to the claimant to identify opportunities—that is the new philosophy, whereby we are coaching and not telling people; help in having the right conversations with their current employer about what the opportunities are; looking at what the barriers to progression might be—in confidence or motivation, or in skills or childcare; looking to what support is available to address those barriers; and providing supportive and challenging conversations on action and progress.
Clearly, sanctions are there to deter non-compliance. We are testing what a mandatory system would be; there would be no point in having a voluntary system in the testing when you are trying to test for a national system. All that builds very much on what we have learnt and—again, through our test and learn approach—developed about the role of the work coach to give responsibility for individuals. We are moving that approach, which has been very successful, into this new sphere.
We will tweak trials once we have learning and evaluation to show whether it is the right thing to do. Sometimes one can learn pretty fast, but sometimes it takes a bit of time. The noble Baroness will be delighted about how we are going to track information. We now have an astonishingly valuable tool of real-time information; we know what people are earning, so we can now measure the effectiveness of trials. We can start to do a lot of trials, because we can relatively cheaply see what is happening by earnings.
I must pick up the noble Baroness’s throwaway line about the value for money of previous trials, about how only two of 14 were effective. The expert on this, Jim Manzi, to whom I have the privilege of talking on a couple of occasions on other issues, said that one in 10 trials finds you something. That is the whole reason why we need to do so many, because the fall-down rate is high, and that takes us back to why we need the flexibility and dynamic approach, which is something that Governments have not done because of the restrictions.
The noble Baroness asked about pressure and when we would talk to someone about looking for a new job. We will have to take individual circumstances into account. Sometimes, it may be reasonable to expect people to take up new employment, but we will never impose a sanction if claimants have a good reason not to do so. I think that the noble Baroness picked up on some of the reasons that would be accepted.
Not only does the system have to work but it has to be cost effective. The cost of making these interventions could be very substantial if they were intensive. We need to know that they are value for money, and that is one of the key tests when we establish what a national system will look like. Then there is the question of how the controls look. We will keep that control group of 5,000 constant. The control element is that light-tough regime, which is already in the universal credit business case.
What are we looking for? We are looking to help people to earn more, which is not just about looking for more hours; it could involve more skills. We will find that out. That is a good outcome. I think that I have dealt with all the issues.