moneyThe National Audit Office (NAO) has said the Department for Work and Pensions (DWP) is not doing enough to find out how sanctions affect people on benefits and recommended it undertake a review of them as it continues to roll out Universal Credit.

This call has been backed by mental health charity Mind, which say that sanctions can often push people with mental ill health further from employment, rather than incentivising them to get a job.

A benefit sanction is a penalty imposed on a claimant meaning a loss of income when someone does not meet conditions like attending jobcentre appointments. Sanctions are not rare: 24% of Jobseeker’s Allowance claimants received at least one between 2010 and 2015. Use of sanctions varies substantially, with some Work Programme providers referring twice as many people for sanctions as other providers in the same area.

The NAO report found that the DWP is meeting target timescales for most sanction decisions but is missing its Universal Credit targets. In August 2016, 42% of decisions about Universal Credit sanctions took longer than 28 working days.

International studies show people who receive sanctions are more likely to get work, but the effect can be short-lived, lead to lower wages and increase the number of people moving off benefits into inactivity. The DWP has not used its own data to evaluate the impact of sanctions in the UK. The NAO undertook preliminary analysis of the impact of Work Programme sanctions on employment, inactivity and earnings. The results show the DWP should do more to understand these sanctions outcomes.

Sanctions have costs for people who receive them and also for the government. The Department does not track the costs and benefits of sanctions, but estimates that it spends £30-50 million a year applying sanctions, and around £200 million monitoring the conditions it sets for claimants. The NAO estimates the Department withheld £132 million from claimants due to sanctions in 2015, and paid them £35 million in hardship payments. The overall impact of sanctions on wider public spending is unknown.

The NAO recommended that the DWP carries out a wide-ranging review of benefit sanctions, particularly as it introduces further changes to labour market support such as Universal Credit. The DWP has commissioned independent reviews and taken steps to improve processes but rejected previous calls for a wider review. The NAO finds that the previous government increased the scope and severity of sanctions in 2012, and recognised that these changes would affect claimants’ behaviour in ways that were difficult to predict.

“Sanctions on benefits have a high opportunity cost, not only for those who are dependent on those benefits if sanctions are applied, but for the efficient use of public resources,” said Amyas Morse, head of the NAO. “We acknowledge the department's effort to reduce its error rate on sanctions, but we think there is more to do in terms of reducing them further, and in reducing the notable differences in sanctions applications between comparable localities.”

Vicki Nash, head of policy and campaigns at Mind, said: “We welcome this report which confirms what people with mental health problems tell us. There is no evidence that sanctions help people with mental health problems move towards employment. In fact, they often make people’s mental health worse and make it harder for them to get back into work.

“The government has claimed sanctions help motivate people to find work. Yet one particularly worrying finding of the report was that people claiming ESA who were sanctioned while on the Government’s flagship back-to-work support scheme, the Work Programme, were actually less likely to spend time in paid employment. It’s also concerning that decisions to cut someone’s disability benefit seem to vary so wildly from one work coach to another.

“Now is the time for a meaningful overhaul of the benefits and back-to-work system to one focused on support rather than sanctions, which are cruel, inappropriate and ineffective. We know that the right type of work at the right time can improve mental health, but it needs to be suited to someone’s individual skills and ambitions. People with mental health problems who aren’t currently working due to their health desperately need tailored, voluntary support to help them overcome the barriers they face in getting and staying in work, without constantly living in fear of having their money stopped if they aren’t able to engage.”