Research and analysis

Numbers moved to Universal Credit’s Intensive Work Search Regime because of the increase in the Administrative Earnings Threshold

Published 5 August 2022

Applies to England, Scotland and Wales

Commentary

In Universal Credit, the Administration Earnings Threshold (AET) demarcates the Intensive Work Search (IWS) labour market regime from the Light Touch labour market regime. From 26 September 2022, the AET will be raised:

• from £355 to £494 a month for a single claimant
• from £567 to £782 a month for a couple

It is estimated that this change will move around 114,000 claimants who are currently in the Light Touch regime across to the Intensive Work Search regime.

Context of the statistics

In Universal Credit (UC), the Administration Earnings Threshold (AET) demarcates the Intensive Work Search (IWS) labour market regime from the Light Touch labour market regime. Claimants with no earnings or with earnings below the AET are placed in the Intensive Work Search regime. Those earning the AET or above are placed in the Light Touch regime.

The labour market regime determines the amount of contact that a claimant has with Jobcentre Plus and the work-related requirements placed on them. Those in IWS are required to undertake all work-related requirements, whereas until now, those in Light Touch have not been required to have regular contact with Jobcentre Plus and as such have had no work-related requirement placed on them or the opportunity for support which access to a work coach provides. From September this year, DWP will be developing a new labour market regime for Light Touch that will enable Light Touch claimants to access support through the Jobcentre Plus.

Since its introduction in 2013, the AET has not kept pace with the increases in the National Living Wage, with the result that the number of hours needed to work to earn the AET has fallen over time. The adjustment will bring the AET back to its original ‘parity’ with the National Living Wage.

This amendment to section 99 (6) of the Universal Credit Regulations 2013 will raise the AET to the equivalent of an individual working 12 hours per week or a couple working 19 hours per week between them. In cash terms, this is an increase from £355 to £494 per calendar month for individual claimants, and from £567 to £782 per calendar month for couples. In future, the threshold will rise in line with the National Living Wage.

The estimates in this release relate to Great Britain. Social Security is devolved to Northern Ireland and the decision on whether or not to raise the AET in Northern Ireland will be a decision for the Northern Ireland Government.

Read more information on Universal Credit.

Purpose of the statistics

The purpose of this ad hoc statistical release is to provide an estimate for the number of UC claimants who are expected to be moved from the Light Touch regime to the Intensive Work Search regime because of the increase in the AET.

Limitations of the statistics

Unlike a statistic recording a historical outcome, the estimate for the numbers moved by the AET change is a prediction of a future event. The estimate is based on Autumn Budget forecasts for UC caseloads. As with any forecast, it is subject to revision as new information comes available.

Comparisons between the statistics

The Universal Credit statistics provides the primary official source of information about people and households on Universal Credit that covers historical data on actual claims.

The estimate described in this ad hoc statistical release differs from UC statistics in a number of respects:

• First – it is based on a forecast for the number of claimants with in-payment claims in the Light Touch regime in September 2022
• Second – it is based on modelling of how the AET change applies to single and couple claims. For a single claim, a claimant’s earnings determine whether or not they are moved to Intensive Work Search. For a couple claim, each claimant’s earnings and their combined earnings can both play a part in determining whether or not one or both claimants are moved into Intensive Work Search
• Third – some claims recorded on UC statistics will not be covered by the change in the AET. Examples include new claims awaiting verification and claims that remain open but where a claimant’s earnings have risen enough to nil the UC award. Reflecting this, the estimate is based on a forecast for number of claimants with an in-payment UC claim

Source of the statistics

The estimate is based on forecasts for the number of claimants (‘the caseload’) with an in-payment UC claim. The forecasts are derived from models used by DWP for its internal planning which draw on detailed management information on the flows on and off UC that the Department collects through its operation of the benefit. The forecasts embody assumptions about the future move to UC as claimants move across from legacy benefits that UC replaces, together with assumptions about the state of the economy and the labour market.

An analysis of the earnings reported by claimants on the UC caseload between April to June 2021, drawing on detailed administrative data held by DWP for the purposes of administrating the benefit, established that around 17% of the Light Touch caseload would be moved to Intensive Work Search by the increase in the level of the AET.

This proportion is applied to the forecasts for the total Light Touch caseload to derive estimates for the number of claimants moved by the April increase in the AET. It is assumed that no behavioural changes occur, and our modelling suggests that around 114,000 claimants will be moved by the change.

Definitions and terminology

Administrative Earnings Threshold

An earnings threshold used in UC to demarcate two labour market regimes, the Intensive Work Search regime and the Light Touch regime.

Caseload

The average number of UC claimants during a given month. The caseload can refer to the total UC caseload or to the caseload of one of UC’s six labour market regimes.

In-payment claim

A UC claim where the claimant is in receipt of benefit. A claim might out-of-payment for a number of reasons. For example, a new claim may be waiting verification, or for an existing claim an increase in earnings may reduce the UC award to zero.

Intensive Work Search

One of UC’s six labour market regimes. Claimants in Intensive Work Search are required to meet all of UC’s work-related requirements.

Legacy benefits

UC replaces six benefits, Housing Benefit, income-related Employment and Support Allowance (ESA), income-based Jobseeker’s Allowance (JSA), Child Tax Credits (CTC), Working Tax Credits (WTC) and Income Support.

Light Touch

One of UC’s six labour market regimes. Claimants in Light Touch have not been required to fulfil any of UC’s work-related requirements. A new regime for Light Touch is under development which will give Light Touch claimants access to support through Jobcentre Plus.

Management information (MI)

Information needed to administer the benefits system which is regularly collected and monitored. MI is used to ensure the effective delivery of the service, ensure correct payment of benefit and detect of fraud and error.

Off and on-flows

Movements of claimants either on and off UC, or between the six UC labour market regimes.

Universal Credit

Universal Credit is a working age benefit for people on a low income or out of work. It includes support for the cost of housing, children and childcare, and financial support for people with disabilities, carers and people too ill to work.

Revisions to the statistics

This statistical release relates to the movement of claimants between the Light Touch and Intensive Work Search regime that will happen because of the increase in the AET from 26 September 2022. No update is planned.

Status of the statistics

This publication is classified as Management Information (MI).

Quality Statement

The forecasts and modelling used to derive the estimate have been subject to DWP’s rigorous internal quality assurance procedures.

Feedback

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Produced by: philip.thomas@dwp.gov.uk

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