Labour is contemplating a significant shift in the UK's welfare policy, potentially easing job search requirements for benefit claimants. The proposal, stemming from a recent Institute for Employment Studies (IEA) report, suggests replacing the current 35-hour weekly job search mandate with a requirement to complete three job-hunting activities per week.
The existing policy, implemented by the Conservative-led government in 2013, has been criticized by the IEA as ineffective. The think tank's report, released on 18 September 2024, labels the 35-hour rule as "bad policy" with "no evidence to justify it." This rule, initially applied to Jobseeker's Allowance claimants and later extended to some Universal Credit recipients, has been a cornerstone of the UK's welfare-to-work approach for over a decade.
Alison McGovern, the Employment Minister, stated: "The obsession with benefits management must end if we're to bring about the change the country is crying out for, and that's why we have a plan to get Britain working again." McGovern is expected to present a white paper later this autumn, outlining comprehensive changes to the welfare system.
The IEA report is set to inform Labour's ambitious plan to increase Britain's employment rate from the current 74.5% to 80%, a level unseen in generations. This goal is particularly significant given that the UK's employment rate peaked at 76.6% just before the pandemic in early 2020. Achieving this target could potentially address a substantial portion of the £22 billion deficit identified by Chancellor Rachel Reeves.
The economic implications of such a shift are substantial. The IEA report suggests that raising the employment rate to 77% and lifting one million people out of low-paid work could result in a £16 billion boost to the Treasury and generate £25 billion in additional annual growth. This aligns with the UK's historical efforts to balance welfare support with economic growth, dating back to the introduction of the first unemployment insurance scheme in 1911.
The proposed reforms extend beyond job search requirements. They aim to transform Jobcentres into a universal employment network, serving not only benefit claimants but also individuals out of work due to health conditions. This approach reflects a broader trend in welfare policy, moving away from the more stringent measures introduced in the 2012 Welfare Reform Act.
For those in low-paying jobs receiving benefits, the proposal suggests eliminating the need to prove a minimum of 35 working hours weekly. Instead, claimants would attend periodic meetings to develop voluntary plans for finding better-paying employment. This shift acknowledges the growing issue of in-work poverty, which affected 13% of UK workers in 2018/19.
The IEA also recommends exempting claimants with severe health conditions or young children from job-hunting activities, requiring only voluntary engagement with work coaches. This nuanced approach recognizes the diverse needs of benefit recipients and aligns with the evolving nature of the UK's welfare system, which has seen significant changes since the establishment of Jobcentre Plus in 2002.
As Labour considers these proposals, the potential overhaul of the UK's welfare system represents a significant shift in approach to employment support and benefit management. The outcome of these deliberations could reshape the landscape of job seeking and welfare in the UK for years to come.