Impact assessment

Equality Analysis: Removing the couple Administrative Earnings Threshold (Spring Budget 2023 announcement)

Published 17 April 2023

Policy summary

The policy at present

For couples, there are Household and Individual earnings thresholds. The couples Administrative Earnings Threshold (AET) is calculated based on the earnings of both partners combined, and the threshold is used to assess regime allocation. For example, when a couple earns above the AET, they are both placed in the Light Touch (LT) regime and are not required to frequently meet with a Work Coach. The distribution of earnings worked between a couple can vary and can be shared between them meaning the earnings of one partner can affect the regime allocation of the other. For example, a member of a couple who meets the individual threshold would still move into the LT regime even if they don’t meet the couple’s threshold.

Where an individual’s earnings meet the individual threshold, or where in a couple, their combined earnings meet the household threshold – the claimant/s would be allocated to the LT regime.

The proposed change

Removing the couples AET means that individuals in a couple will each separately need to reach the individual threshold of the AET to be placed in the LT regime. This means that anyone working and earning a low wage will be impacted as Non-working/low earning partners (NW/LEPs) conditionality will be assessed based on individual earnings. For example, members of a couple who are both working but both earning less than the individual threshold but more than the couples threshold will both be placed in the Intensive Work Search (IWS) regime. They stay in the IWS regime until their own earnings go above the individual AET and will be required to frequently meet with a Work Coach until they themselves earn above the individual AET. Work Search Requirements can vary to reflect individual circumstances and any restrictions on the claimants’ availability and what they can do will be considered at the Claimant Commitment Review (CCR).

Policy rationale

Maximising support for more UC claimants to increase their earnings at a time of cost-of-living pressures, large labour force vacancies and high levels of economic inactivity is a DWP priority. Alongside increasing the AET threshold and roll out of the In Work Progression Offer, removing the couples AET will enable Jobcentre Plus (JCP) to support a further estimated 80,000 non-working partners (the average monthly non-working partners caseload in LT) by bringing them into the Intensive Work Search regime. The policy rationale is that support to take up work and increase earnings should be available to non-working/low earning claimants in the same way that it is for single claimants. NW/LEPs will be offered the same Work Coach support and opportunities that an individual claimant receives, increasing the parity of JCP services to all claimants. Widening JCP support will also help to increase and upskill the labour market force meaning more claimants are supported to increase their earnings and decrease their reliance on the UC support that they require.

This policy change will not alter existing procedures that are in place to protect those with individual circumstances such as those with health and/or caring responsibilities and who are therefore limited to certain working commitments.

High Level EA

Does the policy have a disproportionate impact (positive or negative) on any group which share a protected characteristic? What forms of mitigation can be applied to lessen the impact? Please confirm where these will be applied. Where a difference of treatment is identified, please provide a high level justification for it.

The impact of introducing conditionality for NW/LEPs in UC by removing the couples AET are addressed below:

Age

Based on ONS 2020 population estimates of the UK working age population, 16.9% are aged between 16-24, 52.1% are between 25-49, and 31.0% are 50-64^{[footnote 1]}.

For NW/LEP who will move to the IWS regime because of this policy change, 2.6% are 16-24, 79.5% are 25-49, 17.6% are 50+ and 0.4% were not recorded for statistical purposes.

Claimants who are aged 25-49 and those 50+ are likely to be more impacted by this policy change. This is because they are likely to have caring responsibilities for children or parents. Work Coaches will provide tailored job support and advice to meet these claimants’ individual circumstances.

Parenting

Parents make up 86.1% of NW/LEPs.

Claimants who are parents are likely to be more impacted by this policy change. This is because they are likely to have parenting responsibilities such as looking after young children.

As their children grow up, NW/LEPs are likely to have more capacity to increase their earnings. Work Coaches can support these claimants to find/increase work commitments and opportunities that fit around their schedules and circumstances.

Sex

Women make up 61.5% of NW/LEPs.

Women are more likely to be impacted than men since they are more likely to be the lead carer. Currently, single parents are required to frequently meet with a Work Coach if they earn below the AET while NW/LEP are not required if their partner earns above the AET. To increase parity across UC claimants, the policy rationale is that NW/LEPs should be treated the same as single claimants who earn below the single AET. NW/LEPs should be required to meet the individual AET, regardless of their partner, and should be equally provided with job seeking and in work support from Work Coaches where they do not meet the individual AET.

Disability

This policy affects UC claimants who have declared a health condition and/or disability that doesn’t affect their ability to work or those awaiting a Work Capability Assessment (WCA). Removing the couples AET will result in more claimants who are awaiting a WCA being in the IWS regime. People with health conditions/disabilities often have varied and complex needs when it comes to finding work, which regular Work Coach support can help with. Work Coaches can use alternative communication channels when F2F meetings are not mutually beneficial.

UC claimants who have been assessed as having limited capability for work or having limited capability for work-related activity are not affected. Our analysis of UC data shows that 2.0% of claimants, who will leave the LT regime because of removing the couples AET, have declared a health condition and are awaiting a WCA.

Sanctions

This change will mean more people are in a regime where they could be subject to sanctions. Sanctions are there to encourage engagement with Work Coaches and help people move into/progress in work. A Work Coach will only refer a claimant for a sanction if they do not comply with their agreed requirements without good reasons. Where a claimant cannot provide a good reason for not attending an appointment, then they will be referred for a sanction decision. Our decision makers take a holistic view of the claimant’s situation before a sanction is applied. For people with children this would include things such as unexpected unavoidable childcare duties, which would count as good reason (or a temporary easement applied if known about in advance).

The Department has no evidence or reason to suspect that this policy change will disproportionately affect anyone based on the protected characteristics of their gender reassignment, marriage/civil partnership, pregnancy and maternity, race, region/belief or sexual orientation. The policy change will indirectly affect women, those aged 25-49 and 50+, those with a disability and those with caring responsibilities, however, removing the couples AET is justified because JCP will be able to support more claimants into and in work to increase their earnings and will still follow existing processes to protect claimants who require claimant commitment conditions specific to their individual circumstances and capabilities.

Lead Analyst Sign off

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Legal Lead Sign-Off

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SCS Policy Sign-Off

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1. Analysis of population estimates tool for UK, Office for National Statistics, 2021. ↩