The Employment Support sector has the answers

As it stands, two of the biggest drivers behind the cost-of-living crisis are high levels of economic inactivity and low pay. As was discussed at length during both of ERSA’s joint party conference fringe events, with New Philanthropy Capital, employment support and civil society have answers to the problems facing this current government, but it is integral that we are listened to and supported.

Rising inflation has meant workers have suffered a real-term pay cut, people are more scared than ever before to leave benefits for work in the fear that they would be left worse off, and those that left the labour market during the pandemic may be pushed back into work because of their current economic circumstances.

The Department for Work and Pensions (DWP) method of “any job, better job, career” has not yet sufficiently lowered the levels of vacancy numbers, and more recent government announcements have proven that they are an incredibly long way away from tackling the roots of the problems facing people who are either unemployed, economically inactive or in-work.

As well as being a social problem, then a political one will soon follow for this government. The Centre for Progressive Policy recently found in their report, Hard Up: How rising prices are hitting different places, and how they can respond, that 71% of former Red Wall areas are identified as being in the 25% of local authorities most vulnerable to rising prices. These figures should seriously concern Liz Truss and they will hopefully ensure some significant action is quickly implemented.

With around 40% of Universal Credit claimants being in work, providing opportunities for secure work and routes for progression is vital to tackling this worrying figure. Employment support organisations can help with in-work progression thanks to their experience with Payment by Result programmes. This has meant that organisations, and their supply chains, have often had to continue working with jobseekers after they have started a job, to ensure that the individual remains in work. Placing people into insecure work is not beneficial to the individual or the economy, and it will certainly not persuade jobseekers to re-enter the labour market.

Similarly, on a smaller and more localised scale, ERSA members are perfectly placed to support people into the labour market. These, often third-sector, organisations are trusted in local communities and have relationships with the types of people that are currently unreachable by Job Centre Plus and existing DWP schemes. They can and should be integral in plans for economic growth.

ERSA members and the wider employment support sector have a proven track record of tackling the current problems that face this government, whether that is the problem of economic inactivity, the need for in-work progression, or filling the high levels of vacancies. It is a real shame that underspent funds on DWP schemes like Restart and Kickstart have gone back to the Treasury, instead of being spent on being responsive to the new problems that faces our economy and labour market. This, coupled with the end of the European Social Fund in 2023 and the ‘People and Skills’ strand of its replacement, the UK Shared Prosperity Fund, not being available in England until 2024, will mean that the employment support sector is stretched, expertise will be lost, and people will miss out on support.

ERSA has recently offered to utilise its vastly varied and experienced membership base and run roundtables for commissioners, including the DWP, to shape what comes next based on current experience, intelligence and information, and first-hand knowledge of what works. This will be combined with a focus on the sector’s experience of working with specific groups of people who are furthest away from the labour market.

It is vital that the employment support sector is listened to, in both the immediate and long-term. It is a sector filled with expertise, opinions, and experience, which should be utilised to help tackle the cost-of-living crisis that currently engulfs the United Kingdom.

Further information:

Henry Foulkes, Labour Market and Policy Researcher, ERSA

Contact Henry via

ERSA’s work on UKSPF

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Henry Foulkes chairing a panel discussion at the ERSA Conference in April 2022
Henry Foulkes chairing a panel discussion at the ERSA Conference in April 2022

Universal Credit, childcare and in-work progression

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On Wednesday I went to the ERSA annual conference and heard many interesting and inspiring stories of great projects helping people into or to sustain work. I was struck though, by the number of times Universal Credit came up as a barrier to work, especially for groups with more challenges. Universal Credit’s big selling point is that it makes it easier to get in work benefits, as your entitlement continues once you find work, just at a different rate. Universal Credit slowly tapers away at a steady rate as earnings increase. There is no need to sign off Jobseeker’s Allowance and make a claim to Working Tax Credit, you just receive Universal Credit all the way through your progression from unemployment to work.

So, if the core concept works well, why is Universal Credit a barrier to in-work progression? There are a number of reasons why this might be but I want to focus on one crucial one here – childcare.

Universal Credit expects a high degree of market engagement from parents. The standard assumption for Universal Credit claimants is that they will work, or look for work, for 35 hours a week. For primary carers of younger children this can be reduced to 25 or 16 hours a week. Crucially this expectation starts when the youngest child reaches age three. We’ll leave aside for now the issue of whether mandating work activity for parents of young children is a good idea. However, the basic concept of Universal Credit, that benefit entitlement goes down gently as the claimant enters employment, works well here. Also, Universal Credit can pay for some childcare costs to help that entry into work. Universal Credit covers 85% of childcare costs paid out by the claimant. This compares well with the old system, as Working Tax Credit only covered 70% of childcare costs.

However, there is a maximum cap on the amount of support that can be claimed towards childcare. For two or more children, the most help that Universal Credit will pay out for childcare is £1,108 per month. This should be adequate for covering part time work but, as hours increase and childcare costs rise, this cap can easily be reached. This is especially true of high cost childcare, in London or other expensive areas.

Lone parents, especially, will often require childcare costs to be met through benefits in order to meet the mandatory work requirements In Universal Credit. The essential structure of the calculation encourages entry into work but the cap on childcare costs makes in-work progression difficult to achieve. Unless the cap on childcare costs is raised or removed, or more free childcare is provided nationally, the progression in work for parents, especially lone parents, will continue to be a struggle.

Dan Rust is Founder and Director of Turquoise Training and Consultancy and guru on all things Universal Credit. There’s still a few places left for next week’s training sessions ‘Universal Credit an Essential Update for Frontlnie Advisers in Manchester (3 December) and London (4 December). Check out the events pages  or get in touch with the events team for more information via or 020 3757 9415.