Piloting change: interim qualitative findings from the Earnings Top-up evaluation
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 113
By Jill Vincent, David Abbott, Claire Heaver, Sue Maguire, Adrienne Miles and Bruce Stafford
In October 1996, the Department of Social Security (DSS) launched a pilot of Earnings Top-up (ETU) a new in-work benefit for people (singles and couples) without dependent children. As part of the pilot evaluation a programme of qualitative research was commissioned from Centre for Research in Social Policy (CRSP). This report provides interim findings from three components of this research undertaken in 1997 and 1998: two group discussions with Employment Service (ES) and Benefits Agency (BA) staff; face-to-face interviews with ETU recipients; and telephone interviews with employers. Further research will add to these findings and therefore the conclusions presented in this report should be seen as provisional.
- Between early 1997 and 1998 BA and ES staff views on the objectives of ETU developed within a changing policy context. As well as seeing ETU as a work incentive measure, staff began to see a broader role in preventing young people getting used to life on benefit and helping people into work and independence.
- Staff thought that ETU helped some groups more than others, particularly young people living at home. People with mortgages were thought to be the least likely to be helped by ETU.
- Training and awareness appeared to have been more systematic in the BA than the ES, although BA staff reported that they rarely used ETU, compared with the ES.
- Both Jobseeker's Allowance and New Deal had an impact on the way ETU was implemented. Some ETU recipients said that they had taken work because they felt under pressure from JSA requirements. Staff said that ETU could be used in combination with New Deal to offer young people a further work incentive.
- Recipients' experiences of claiming were mostly positive and straightforward. They said that ETU had broadened the choice of work available, and had encouraged them to stay in less than 'ideal' jobs. However, some recipients felt no better off in work because of loss of entitlements to Council Tax Benefit (CTB) and Housing Benefit (HB) and costs incurred from being in work.
- Some anxieties were voiced by staff and recipients on the concept of piloting benefits. the administration of the end of the pilot was a particular concern among staff. Views among recipients were mixed: some were worried about any loss of income if ETU were stopped; others thought they would manage, as they had done before.
- Employers were concerned with flexibility in meeting business needs. Those with experience of ETU who had seen improvements to recruitment welcomed it, but others were anxious about in-work benefits causing rigidities in hours of work.
- Although most employers in the study said that they had heard of ETU, few showed much understanding of the benefit. A few employers had encouraged take-up of ETU, and had adjusted hours to help claims.
Overview
Earnings Top-up (ETU), a new in-work benefit, was introduced by the DSS as a three year pilot in October 1996. ETU was available to people (couples and singles) working 16 or more hours per week, without dependent children. The aim of ETU was to improve incentives for people to take up work or stay in work of 16 hours or more.
Two different rates of benefit were piloted - lower rate Scheme A and higher rate Scheme B. Each scheme was introduced in four areas reflecting four types of labour market: major urban areas, large towns, rural and seaside areas. Four other matching areas were selected as controls.
ETU was delivered in the pilot areas through Benefits Agency (BA) and Employment Service (ES) offices, and was centrally processed and administered by the BA in liaison with the ES.
This report presents interim findings from a process evaluation using qualitative methods carried out by the Centre for Research in Social Policy (CRSP). Three strands of the research are covered: the first and second meetings of BA and ES staff panels; face-to-face interviews with ETU recipients; and qualitative telephone interviews with their employers. This research was conducted in 1997 and 1998. Further research with other applicants was also conducted, and will feed into the final evaluation reporting.
The first and second meetings of the staff panels
Local panels of BA and ES staff in the pilot areas and one composed of central staff were constituted to investigate the influence of administrative arrangements and of local interpretation and performance. They met three times, in 1997, 1998 and 1999. The first two meetings are reported here.
ETU objectives
Staff views about the objectives of ETU shifted in response to changes in the policy context. ETU was introduced as part of a package of work incentives and staff thought it still fulfilled those aims. In the second round, staff emphasised its role in preventing young people from slipping into the habit of benefit receipt and in helping people into work and independence, and discussed the effects of the minimum wage. BA staff saw the provision of an in-work benefit for all low paid people, rather than just for families with dependent children or for disabled people, as a matter of fairness and social justice.
Implementation and operation
Staff praised the implementation of ETU. However, the training and awareness were more extensive and systematic in BA offices than in ES Jobcentres, even though ES staff were more likely to use ETU as part of their daily work. In the second round, ES reported the use of casual staff who received little training. Circulation of Newsletters about ETU seemed unsystematic in both agencies.
The introduction of ETU coincided with the introduction of JSA. Initial publicity about ETU was widespread within the constraints of the pilot, but none had been undertaken subsequently. 'Word of mouth' was thought more effective in the former mining and heavy industry areas than rural or seaside areas. Staff thought people who were already in low-waged jobs received little publicity about ETU.
In both rounds, staff reported that BA office staff rarely used ETU while ES staff used it as part of their daily practice; however, Benefits Investigation Officers promoted ETU. In the second round, they described how ETU and New Deal reinforced each other. ES individual and office targets (performance measures) were less evident by the second round.
Recipients
Staff in both rounds believed that young people living at home with their parents were most likely to be helped by ETU. Staff thought that the people less likely to be helped: had financial commitments, running their own home; were in a Scheme A (lower rate) area; were disadvantaged, for example by poor rural transport; or persisted in seeking 'proper' full-time jobs.
Employers
In both rounds, staff referred to employers' practices that affected workers' eligibility. They disagreed on whether employers were getting to know about ETU. Central staff thought small local employers were more likely to know about ETU than the big multiples because it was a pilot. Staff believed that some employers exploited FC and thought that they would exploit ETU in the same way.
Take-up and targeting
The original targets were met early. Staff expected Scheme B to do better because it was more generous, but they found it difficult to judge take-up or targeting because they lacked information.
Variability on take-up among the pilot areas appeared to be associated with: Scheme A or Scheme B; local cost of living and proximity to London; the profile given to ETU; traditional and current patterns of employment and availability of jobs; and social and personal characteristics among local populations.
Views on ETU
In both rounds, staff said the number of recipients and the speed with which the overall targets were met demonstrated the success of ETU. Moreover, ETU: met its aims and encouraged people into work they otherwise might not have considered; helped specific groups; had a preventive role for young people; offered something positive to clients; and completed the availability of in-work benefits for all except 16 and 17 year olds.
Staff saw the following as less successful: unreliable monitoring; ETU did not count as income towards qualification for National Insurance; operating the pilot eligibility conditions; poor publicity; Scheme A set too low; and groups such as mortgage holders who could not be helped. All staff agreed that all or some of ETU should be disregarded in the calculation of Housing and Council Tax Benefits.
Views on piloting
The ETU pilot was welcomed by some as a 'real pilot' while others questioned the legitimacy and fairness of the approach.
Some believed the pilot was flawed because: political and policy changes had taken place during its life; the grounds for going national were not known; ES appeared not to have been involved in developing the measures for evaluation; and lack of publicity since ETU was initiated meant that the pilot would not show the potential take-up of the benefit.
ES staff feared the loss of ETU as a useful tool that had become part of their normal work. Most respondents believed that if ETU were withdrawn many people would have to give up their jobs. Central staff were concerned about the management of customer expectations.
ETU recipients
Forty people who were in employment and receiving ETU were interviewed, to explore their experiences and views on work and ETU. Five recipients were interviewed in each of the Scheme A and Scheme B pilot areas.
Recipients' work experience and views
Most respondents had been in work more than they had been unemployed, mostly in service occupations that required little training. Many held a variety of jobs, often short-term, though some had worked in similar occupations and stayed in their jobs for relatively long periods. Almost all the men had worked full-time; many of the women worked part-time, which they related to their domestic responsibilities. No area or Scheme differences were discerned; rather, differences related to the personal characteristics of respondents.
Nearly all of the respondents said that work was important to them: work brought financial and social benefits, while unemployment was stigmatised. However, they would not wish to take work that they saw as less than ideal because of the hours, pay or conditions, and could not take work that made them financially worse off.
A North-South divide was evident between respondents' views about their local labour markets: those from areas in the north thought that it was hard to get decent work, with acceptable pay, hours and security, while those in the south felt that there were jobs in their area if people wanted them.
Respondents' current jobs were semi- and unskilled; the majority earned between £3 and £3.50 per hour.
Applying for ETU
Respondents applied for ETU because: they were unemployed and needed to supplement their potential wages so as to make them better off in work; they were advised to do so by ES or BA staff; or they sought to increase their existing earnings. Few of those who were already in low paid work when they applied heard about ETU from BA or ES staff, which suggests that staff panel perceptions that they did not reach people in employment may be appropriate.
The process differed for men and women: women tended to find out about ETU through social networks while men were more likely to have heard through the publicity.
The process of claiming and of renewal was usually straightforward and respondents were satisfied with their experiences. Only a few found it difficult to complete the form or collect evidence from their employer.
Effects of ETU
ETU helped some respondents who otherwise would have needed more hours or higher pay. Some wanted part-time work and were able to afford it with ETU; others wanted full-time work.
For some unemployed respondents, ETU made work affordable, giving an option and an escape. A few said they had not responded to ETU but to a perceived threat that their JSA would be sanctioned. Some said they would consider jobs in the future they would not normally have looked at.
Respondents were low paid, and few thought their incomes were adequate even with ETU. Most of the younger ones who lived with their parents, thought they did not earn enough to move into their own place.
The average ETU award for this sample, in 1998, was £28 per week. Most spent it on necessities, though a few could afford modest 'extras'; some who applied when in work saw it as a bonus.
Not all felt better off as they moved from unemployment to a job with ETU, in particular when the loss of Housing and Council Tax Benefits cancelled out the gain from ETU. Difficulties during the transition to ETU were associated with changes to these benefits.
When respondents' employers knew about ETU they seemed to be neutral about it or happy to co-operate. Occasionally, ETU had been actively promoted but only one respondent saw their employer as exploiting government subsidy.
Views about ETU
Most respondents were positive about ETU because: the six-month award gave stability; it was an incentive to take work and widened choice; it was a legitimate reward for working; and it gave parity with Family Credit.
Respondents criticised ETU: as a government subsidy to low pay and open to abuse by employers; because the loss of Housing and Council Tax Benefits could cancel out ETU; when the earnings used to calculate the award were not typical; and because the awards were too low.
Most knew that ETU was a pilot. They were concerned about: their eventual loss of income; the availability of adequately paid work; and the loss of a good scheme that helped people to help themselves. A few thought the pilot was unfair in practice because some people were denied it on the grounds of where they lived.
Employers
The 40 ETU recipients were asked for details of their employers; they were assured that neither their name nor the fact that they had initiated the firm's inclusion would be divulged. Under these circumstances, 36 respondents provided information. Twenty three employers (two-thirds) agreed to be interviewed.
The interviews aimed to explore the possible effects of ETU on employers' behaviour through discussion of their experience and views on in-work benefits, setting wages and staff recruitment and retention.
The firms
Certain sub-sectors of service industries had high representation and only one manufacturing employer was included. Half the employers described themselves as local; the rest said they were part of a national or international business.
Most of the firms were small or medium sized. The majority employed mostly semi- or unskilled labour, and had predominantly female workforces.
Employers stressed their need for a flexible workforce, working hours to meet business needs. Most of their employees worked 16 hours or more. In all firms, part-time work was dominated by female labour.
Employers in companies that were part of a national or international business did not determine wage rates or the total number of hours worked by their employees. Both were decided at head office within an overall strategy. Local employers used a 'rule of thumb' that took account of: the rates offered by other local employers, out of date professional or trade scales, and levels of unemployment.
Recruitment in areas with high levels of unemployment presented no problems, except for unpopular shifts and when: jobs were poorly perceived and could not attract people of the required standard; new companies moved into the area and increased demand; starting salaries were very low; and the job entailed the cost and inconvenience of travelling.
Half the employers had no problem with staff turnover. Where it did occur, it was linked to particular occupations rather than labour markets. Low pay, unsocial hours, temporary contracts and part-time hours were cited as contributory factors.
In-work benefits
Nearly all of the employers were aware of the existence of in-work benefits, but few knew about them in detail. Typically, they thought only one or two of their employees were receiving an in-work benefit. Only one respondent (from a recruitment agency) said she had several temporary staff who had applied for in-work benefits.
The majority felt that in-work benefits aided recruitment, particularly to part-time jobs, but a few said it was too soon to tell. One firm had grouped together cleaning contracts so that employees could be guaranteed a minimum of 16 hours a week; this had been successful in urban locations, but not where transport was a problem.
Many said that in-work benefits had not affected wage setting because they did not control wages locally; also, some believed that many employers were still unaware that such benefits existed. However, there was evidence to suggest exploitation of ETU, and one employer acknowledged that, in the absence of in-work benefits, his hotel would have to review its wage rates.
Some employers appeared confused about the 16 hour rule. They said it introduced rigidity and reluctance to work more hours, while they prized flexibility. However, they seem to have been describing the hours of employment allowed when claiming out-of-work benefit. Some employers recognised - rightly - that workers limited their hours only when in-work benefits were about to be reassessed.
In general, employers had not considered how a minimum wage might interact with in-work benefits. A few already paid above the proposed level.
Employers' behaviour and ETU
Although most of the employers claimed to have heard of ETU, few showed much understanding, though one firm had to adjust their wage rates because some workers lived in a pilot area and some did not.
Employers said they heard about ETU from their employees, who they believed found out about it from other workers. One employer had actively encouraged employees to claim.
There was evidence that employers adjusted the number of hours they offered so that employees could be eligible for in-work benefits, and one employer acknowledged a direct effect on wage rates.
Conclusions
The purposes of ETU
Staff views were influenced by the policy climate and changed between the first and second meetings. They agreed it was a work incentive: in the first round they focused on its role in getting people into work; by the second round they saw it as reducing the barriers to working by helping people to overcome their fears of leaving the security of benefit receipt, and by encouraging them to take part-time and low paid jobs they would not have considered otherwise.
Staff thought that measures of success should include how far ETU reached those who were eligible, prevented young people from slipping into a habit of benefit receipt, and provided a stepping stone into better employment. BA staff raised the issue of social justice and the extension of ETU nationally in the context of other in-work benefits.
The studies of ETU recipients and their employers showed direct and more diffuse effects. For example, the availability of ETU was said to have widened job choices for unemployed people, encouraged them to take it into account for the future, and helped them to stay in less than ideal jobs. It should be noted however, that complementary quantitative surveys did not find any discernible effect on job retention. ETU combined with other measures to produce effects, for example as a 'sweetener' to the introduction of JSA, and as a complement to New Deal.
Employers were not concerned about the government's intentions for ETU, but whether it met the needs of their firms for a flexible labour force and to recruit and retain quality employees. The employers welcomed ETU (and other in-work benefits) when they thought they helped towards their needs.
Few of the employers appeared to exercise enough control over wage rates and hours or to be well enough versed in the rules of ETU or other in-work benefits for this directly to affect wage setting. However, it is possible that the availability of in-work benefits indirectly affected local wage levels.
Respondents differed on whether ETU rules encouraged employers to offer work of 16 hours or more a week so that employees could meet eligibility criteria. Staff panels thought employers were reluctant to offer jobs at pay levels at which they incurred obligations, but a few employer respondents had actively created jobs at 16 hours to aid recruitment. That said, employers showed some confusion about the rules governing in- and out-of-work benefits.
From the perspective of employers, ETU met their needs by helping them to recruit and retain staff in part-time and low paid employment and unpopular shifts. From the perspective of staff and recipients, ETU encouraged people to take and stay in jobs they otherwise would have rejected.
The effectiveness of ETU
Staff thought ETU was effective because of its design and administration and the pattern of available jobs and growth in part-time and low paid work, mostly in the service sector. ETU could encourage people to take these jobs because they would be better off in employment, and they might hope that the job would be a stepping stone to something better.
Staff said that, because of the jobs available, ETU was more effective for women; also, different types of people found ETU useful - a point supported by the evidence from the study of recipients.
The effectiveness of ETU was inhibited by: employers' poor practices; lack of publicity and information; and because it counted as income in the calculation of Housing and Council Tax Benefits. Recipients supported the latter point.
There was no evidence of systematic differences between Scheme A and Scheme B, but a North-South divide was apparent among recipients' views of their local labour markets. The characteristics of labour markets may support or inhibit the effectiveness of ETU.
Tensions within ETU
The staff panels raised these issues: ETU 'belonged' to the BA because it was a benefit, but it was mostly used by the ES; low paid workers might not hear about ETU; the complexity and inter-relatedness of the benefits system; the importance of ETU in conjunction with New Deal for Young People; and the exclusion of 16 and 17 year olds from ETU measures. Staff differed on the enthusiasm with which they promoted ETU.
Piloting
Staff thought some aspects of the pilot raised doubts about its adequacy; were uneasy about piloting and how the end of the three years would be managed; and some condemned it as unjust.
Some recipients worried how they would cope with the loss of income and thought that unemployment would rise; others regretted the loss of such a good idea in principle; some thought they would manage.
This is an interim report, accordingly these conclusions are provisional.
Relevant publications
Bottomley, D., McKay S., and Walker, R., (1997), “Unemployment and Jobseeking” (Research Report No. 62), TSO
Bryson, A., and Marsh, A., (1996), “Leaving Family Credit” (Research Report No. 48), HMSO
Callender, C., Court, G., Thompson, M., and Patch, A., (1995), “Employers and Family Credit” (Research Report No. 32), HMSO
Elam, G. and Thomas, A. (1997), “Stepping Stones to Employment” (DSS Research Report No. 71), TSO
Elam, G., Diffley, M., and Shaw, A., (1998), “Getting the Message Across” (Research Report No. 85), CDS
Finlayson, L., Ford, R., Marsh, A., Smith, A., and White, M., (2000), “The First Effects of Earnings Top-up: Interim Survey Findings from the Earnings Top-up Evaluation” (DSS Research Report 112), CDS.
Finlayson, L., and Marsh, A., (1998) “Lone Parents on the Margins of Work” (Research Report No. 80), CDS
Ford, R., Marsh A., and Finlayson, L., (1998), “What Happens to lone parents” (Research Report No. 77), CDS
Kellard, K. and Stafford, B (1997), “Delivering Benefits to Unemployed People” (DSS Research Report No. 69), TSO
Marsh, A., Callender, C., Finlayson, L., Ford, R., Green, A., and White, M., (1999), “Low Paid Work in Britain: Baseline Surveys from the Earnings Top-up Evaluation” (DSS Research Report 95), CDS.
McKay, S., Smith, A., Youngs, R., and Walker, R., (1999) “Unemployment and Jobseeking after the Introduction of Jobseekers Allowance” (DSS Research Report No. 99), CDS
McKay, S., Walker, R. and Youngs, R. (1997), “Unemployment and Jobseeking before Jobseeker's Allowance” (DSS Research Report No. 73), TSO
Shaw, A., Walker, R., Ashworth, K., Jenkins, S., and Middleton, S., (1996), “Moving off Income Support: Barriers and Bridges” (Research Report No. 53), HMSO
Snape, D. (1998), “Recruiting Long Term Unemployed People” (DSS Research Report No. 76), TSO
Stafford, B., Heaver, C., Croden, N., Abel Smith, A., Maguire, S., and Vincent, J“.”, (1998),“ Moving into Work: Bridging Housing Costs” (Research Report No. 79), CDS? “ ”
Thomas, A., Pettigrew, N., Cotton, D., and Tovey, P., (1999)“ Keeping In touch with the Labour Market” (DSS Research Report No. 96), CDS
Trickey, H., Kellard, K., Walker, R., Ashworth, K., and Walker A., (1998) “Unemployment and Jobseeking: Two Years On” (DSS Research Report No. 87), CDS