More than 100,000 people in part-time work could face a benefit cut if they don’t look for more work in the right way, the chancellor will announce in his mini-budget on Friday.
Among a number of measures to be unveiled by Kwasi Kwarteng is a significant shake-up of the welfare system, requiring those working up to 15 hours a week on the National Living Wage to meet regularly with a work coach and take “active steps” to increase their earnings.
If they don’t, their benefits may be reduced under the plan.
Billed by the Treasury as a gradual expansion, the move will be an increase from the incoming 12-hour threshold for a more intensive jobseeking regime and is expected to come into effect from January as part of the Universal Credit system.
While unemployment is at a nearly 50-year low, the high number of job vacancies that still exist and labor market inactivity are limiting economic growth
Chancellor Kwasi Kwarteng
Mr Kwarteng has described the policy as a “win-win”, pitching it as a way to fill 1.2 million vacancies across the country.
According to the changes, injured parties over the age of 50 will also receive extra support from work coaches, while the recently unemployed will receive nine months of targeted sessions.
The Ministry of Finance believes that increasing economic inactivity among the over-50s contributes to a shortage in the labor market, drives up inflation and limits growth.
A return to pre-pandemic economic activity among over-50s, according to a government estimate, could increase GDP by up to one percentage point.
“Our labor market is remarkably robust, but it is not perfect. While the unemployment rate is at a nearly 50-year low, the high number of job vacancies that still exist and labor market inactivity are limiting economic growth, Kwarteng said.
“We need to get Britain back to work. These gradual changes focus on getting people back to work and maximizing the hours people put in to help grow the economy and raise living standards for all.
“It’s a win-win.
“It increases incomes for families and helps businesses get the domestic workers they need, while supporting economic growth.”
Whether it’s increasing hours in their current role, moving into a new sector or changing careers, we want people of all ages and at all stages to be able to develop into rewarding careers
Work and Pensions Secretary Chloe Smith
The latest announcement comes ahead of a mini-budget on Friday, where Kwarteng will outline details of the government’s plans to boost growth and attract investment, including how it will pay for the energy price guarantee for households and businesses.
As well as reversing the rise in National Insurance contributions and scrapping a planned rise in corporation tax, as Prime Minister Liz Truss has promised, it has been reported that the Chancellor will cut stamp duty in a further bid to drive growth.
Work and Pensions Secretary Chloe Smith said of the plan: “Whether it’s increasing their hours in their current role, moving into a new sector or changing careers, we want people of all ages and stages to be able to develop into a rewarding career.
“The expertise our dedicated DWP work coaches bring will help drive this change by removing barriers to progression and opening up opportunities for training and building skills, to increase earnings.”
Labor was quick to respond to the plan, with the shadow work and pensions secretary referring to a reported Conservative plan to remove the cap on bankers’ bonuses.
“So Tory ministers think the reason we have over a million vacancies is because the low paid don’t work hard enough and need to be threatened with sanctions, but bankers need big bonuses,” tweeted Jonathan Ashworth.
“We need a serious plan to support people to return to work and increase employment,” he said.