Earnings top-up evaluation: qualitative evidence
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 Security, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 133
By Claire Heaver, Simon Roberts, Bruce Stafford and Jill Vincent
Earnings top-up (ETU) was an in-work benefit available to low paid workers without children. ETU was piloted from October 1996 to October 1999 in eight areas across Britain. This volume is part of a set of seven final reports from the evaluation of the ETU pilot, and presents the findings of qualitative research conducted by CRSP as part of the evaluation of ETU. The report has three parts focusing on ex-recipients of ETU, self-employed recipients and unsuccessful ETU applicants.
The main findings include:
Ex-recipients of ETU
- Four main reasons for leaving ETU could be categorised into: those who calculated that they would not be eligible and didn’t apply again; those who thought they would be better off without ETU; those who applied unsuccessfully; and those who lost their jobs and claimed JSA.
- Most of those who had left ETU continued in work, and their incomes increased either through longer hours or higher pay. Most of the others felt they were better off claiming benefits.
Self-employed Recipients
- Most of those who were self-employed preferred working for themselves, although they acknowledged the insecurity and other costs.
- ETU played an important role in helping new businesses to become established and it allowed those who were barely surviving to manage, it also propped up or cushioned the fall of those in decline and allowed some to carry on longer than they would have otherwise.
- Those who were self-employed appeared to be more critical of the application forms and supporting evidence necessary to claim ETU.
Unsuccessful Applicants
- Applicants were mainly unsuccessful in claiming ETU because they worked too few hours, or their income was too high. Others were redirected to more appropriate benefits, such as disability benefits.
- Those who had been disallowed either tried to compensate for the loss of ETU, or waited for the return of a stable work pattern to re-apply, if applicable. Some reported hardship as a result of being refused ETU.
- Nearly all respondents accepted the decision to refuse them ETU, but some felt angry, this was especially true among those who had claimed ETU before.
Part one – Ex-recipients of ETU
Interviews were held with 64 people who had received ETU, but no longer did so early in 1999. The study explored their experience of ETU and their destinations. Four patterns of award were represented: ex-recipients who had received only one ETU award; those who had renewed their award once or twice and then stopped; those who had made an unsuccessful application to renew their award, and those who had completed two discrete periods with ETU. The sample was also divided between those who claimed early in the pilot (their claim finished before 31 March 1998) and those who had received ETU until recently (their claim finished after March 1998).
The applicants and their work
Five patterns of work were identified: first-time employees; steady job-holders; people who had been in a series of short-term jobs; those with a chequered history of jobs and unemployment; and some who had been mostly unemployed or economically inactive.
The work histories and occupations of the ex-recipients were similar to those of respondents to the other qualitative studies carried out for the evaluation of ETU. Men and women did different types of work; their working hours related to the occupation and industry and to women’s family responsibilities. Self-employment was mostly male and in urban settings. Most thought that work was very important for social, psychological and financial reasons. Nearly all the respondents who had been unemployed found it a negative experience they wished to avoid repeating. However, respondents said they could not take work if it meant they would be financially worse off.
Local labour markets
Male respondents found it more difficult to get work in their local area than female respondents. Older men from urban settings described the loss of major industries. Several men said that jobs were available, but they were low-paid and part-time or on short-term contracts. Choice of employment was limited by age, lack of qualifications and experience and the distance people could travel to work.
Applying for ETU
Most of the respondents were living in their parents’ house when they applied for ETU and most were already in work. A very few were unemployed and took a low paid job because of ETU. Some claims were triggered by an event such as a spouse’s unemployment. Half the men were self-employed, but very few of the women were.
Most of the respondents who were already in work when they applied for ETU said they would have stayed on anyway, but a substantial minority thought ETU had given them vital help. Some self-employed people found ETU very helpful when they were establishing their business. A few had more than one job in order to find the necessary 16 hours to qualify for ETU. Respondents who received ETU earlier in the pilot heard about it from Jobcentre staff, work colleagues and local publicity. Later recipients also heard about it from family and friends, and from their employers. A few self-employed people were told by staff at small business support units. Most said the application process was straightforward but a few, particularly self-employed people, found it very demanding. Some found the questions intrusive. A minority reported difficulties with employers who were slow or inefficient in providing information.
Experience of/living on ETU
“One award only. ”ETU helped some of the members of this group over a difficult time, or to set up a business. Some said that ETU helped them a lot, in particular because of secure, regular payments. A few thought they were hardly better off with ETU because it counted as income in the assessment of benefits, while they incurred work-related expenses
“Renewal awards. ”Most thought ETU helped them to budget within tight constraints, but a substantial minority considered that they gained little or no cash advantage because ETU counted as income in the calculation of other benefits.
“Eventually disallowed. ”Two older people thought there was little or no advantage to receiving ETU because of their housing costs. However, housing tenure did not determine people’s experience: those who owned or rented their home equally welcomed ETU at a time when they were struggling. For many, it made the difference between managing and failing to manage.
“Subsequent award. ”Most made their second application when they changed job, or changed their hours in the same job. A few had taken seasonal work or set up as self-employed. All found ETU helpful, and some said it was a big help; only a few were critical. As in all the groups, the young people who lived at home with their parents gained the most in terms of personal spending power, though to different degrees.
Leaving ETU
Four types of experience leaving ETU were discerned: people who calculated they would not be eligible and did not reapply; people who reckoned they would be better off without ETU and did not reapply; those who applied unsuccessfully; and those who lost their jobs and claimed JSA. In addition, three women moved from work with ETU to claiming DWA, Income Support or retirement pension.
Most of the unsuccessful claimants thought they had been given a clear explanation and felt no need to dispute the decision. Some questioned the fairness of assessment, based on unrepresentative weeks and criteria that they could not recall from their first application.
Impact of loss of ETU award
People who did not renew or applied with little hope of success were least likely to experience an adverse effect. Those who expected to be successful were more likely to find the loss affected them badly. Many said the increase in their income offset the loss of ETU and a few were much better off. Some felt the loss of income quite keenly, in some cases because ETU was separate from the main flow of income and was earmarked for particular use.
Destinations after ETU
Nearly all first time employees continued in the same, full-time job and were financially better off and gaining skills. One was unemployed because her job was seasonal“. ”Those who had steady work continued after ETU with improved pay and/or hours. Most of the self-employed continued to build up their businesses. Several thought their current jobs were better than before ETU, though only a few felt better off financially. Most said their jobs with ETU enhanced their job prospects, and also that they would have taken or stayed in that job without ETU. A few valued ETU for the help it gave during a particularly difficult time.
Those who had a series of short-term jobs had been in steady employment since claiming ETU, some in the same job as when they applied. They received more pay or worked longer hours and thought their job with ETU had enhanced their prospects, with increased skills and experience. However, all but one of the self-employed respondents had wound up their businesses.
All but one of those who had a history of moving in and out of work had been in and out of work since their job with ETU and were unemployed at the time of the interview. One had taken various short-term and seasonal jobs. All the unemployed respondents were worse off when interviewed; the one in work did not feel much better off, but enjoyed his work“. ”
Of those who were mostly out of work, half were in the same job they had with ETU, with an increase in pay and/or hours, and half were unemployed (all women over 45). Only one person had been self-employed while claiming ETU; he was unemployed.
Overall, three groups were identified: those who had not escaped low paid and insecure work; those who were managing, with modest expectations; and those who had increased their earnings. The categories were associated with people’s work status, but not determined by it: some were better off claiming unemployment-related benefits than in low paid work.
Respondents’ views of ETU
Respondents almost universally praised ETU for the help it gave them and the security of the regular payment. Some respondents from all pilot areas said that ETU enabled people to take the low paid and part-time work that was on offer and that they otherwise would not have been able to consider ETU helped particular groups such as respondents with a limited capacity to work and trainees and apprentices who were learning and had to buy tools and equipment
Many ex-recipients said they could think of no criticisms, but others had experienced problems themselves or raised more general points. A minority, employed and self-employed, referred to the claims process. In addition, ETU was criticised for: excluding people on training schemes; age-related availability and award levels; assessment based on four, possibly unrepresentative, pay slips; lack of information and clarity about self-employed people and renewal dates; and not entailing free prescriptions and other benefits. A few believed that the amount of the award was inadequate to run a home. ETU helped them to manage, but kept them poor. Some thought that ETU might encourage people to take or stay in unsatisfactory jobs; support employers who paid very low wages; and interact with benefits so that some recipients were no better off.
Equity, stigma and self-esteem
Many wanted ETU to be better targeted according to people’s needs. Many thought there should be no need for ETU: employers should pay fair wages and should not be allowed to use ETU to subsidise cheap labour. Respondents from across the country described a local surplus of labour that they said allowed employers to hold down wages. Most of the ex-recipients would have preferred not to have to claim a benefit, but did not find the process of claiming and receiving ETU too painful or stigmatising.
Abuse
A few respondents thought that all provision was abused. Some could see a number of ways that ETU could be abused, but few thought it was actually taking place. Some ideas rested on misunderstandings about how ETU worked.
Improvements
More publicity; simplification of claims process; ignore other benefits or partner’s income in assessment of ETU; awards to be higher, perhaps for a shorter period; employers to pay fair wages; and abolition of age-related rates.
Views on ‘going national’
The majority of respondents thought that ETU should be introduced nationally because of the preponderance of low paid and part-time work. Many thought it only fair that others should be helped as they were. Some thought that piloting was unfair. Concern was expressed that ETU would come to an end, leaving people ‘stuck’ in low paid jobs and unable to manage.
Conclusion
ETU helped many, though not all, to improve their circumstances and prospects. Others stayed in and coped with low paid work, but some failed to escape from insecurity and unemployment. Some felt that they were as well off, or even better off, when claiming out-of-work benefits.
The relatively small difference between the best and the worst off meant that security of employment, improved hours and rates of pay and modest ETU awards all brought positive effects. Conversely, insecure employment, fluctuating hours, illness and redundancy could put people in difficulties.
Part two - Self-employed recipients
In-depth interviews were undertaken with 30 self-employed people who received ETU during 1999. The study explored the experiences and views of self-employed recipients.
Work histories
A few respondents went straight into self-employment from school or training; some were employed in what became their self-employed line of work; and others’ jobs were unrelated to their self-employment. Some had worked steadily for long periods, while others had more chequered histories, including periods of unemployment.
Three types of businesses were identified: relatively new and expanding, barely surviving, and in decline.
Most respondents preferred self-employment because it gave them greater self-determination and control, a sense of achievement and the flexibility to plan their time around other responsibilities. They acknowledged the insecurity and other costs. Most thought that the advantages outweighed the disadvantages, but a few sought the security of employment. Respondents thought jobs were available locally, but they were boring and low paid and competition was fierce. Those from the north of England and Scotland reported the greatest job scarcity, in particular for young and older people and for men.
Applying for ETU
Men’s businesses tended to carry out manual work, while women’s mostly provided personal services. A few respondents appeared to be only nominally self-employed because they worked for one company. Respondents with established businesses, sometimes of many years standing, applied for ETU because their business was struggling. Those who had just set up their business applied because they thought that ETU would help them while they were building their business.
Recipients heard about ETU from Jobcentre staff, business start-up schemes and word-of-mouth. A few found out from local publicity. The majority of the respondents found the application and renewal process problem-free though a few said that the form was too long or intrusive or they needed help to complete it. Some found it difficult to estimate their future earnings or calculate their potential ETU. Processing staff were praised for their speed and helpfulness.
Impact of ETU
ETU played an important role, though the impact differed: it helped new businesses to become established; it allowed those who were barely surviving to manage; and it propped up, or cushioned the fall of, those in decline and allowed some to carry on longer than they would have otherwise.
ETU helped respondents and their households: they tended to earmark it for specific expenses. Nearly all of them said that they were better off financially working with ETU. Respondents also reported wider positive effects on their confidence.
Views about ETU
Respondents almost universally praised ETU for the help it provided. They said it particularly helped self-employed people because it provided a regular and secure income. They thought it encouraged people to take employment, was operated efficiently and helped groups who usually were ignored.
A few made criticisms: ETU might be open to abuse by self-employed applicants; awards were set too low and were sometimes based on unrepresentative earnings; and some people might do only enough to meet the minimum requirements. They regretted that wages were so low that ETU was needed and that it had not been better publicised.
The majority believed that ETU would be a work incentive though some sympathised with people’s fear when making the transition from benefits to work. They cautioned against taking a job with no prospects. Some pointed out that ETU would have to be better publicised if it was to have a work incentive effect.
Many, though not all, believed that employers would exploit ETU; others thought that the introduction of the National Minimum Wage prevented abuse. A few said ETU could help companies to expand their labour force.
Respondents thought that ETU could be improved by raising awards, increasing publicity and including help with housing costs. For self-employed people, they suggested that: the assessment and payment periods should be adjusted to take account of fluctuations in earnings and make awards more appropriate to current needs; better monitoring would decrease the likelihood of abuse; and Jobcentre staff should be able to give relevant advice. Many approved of piloting in principle, but some deplored the unfairness in practice, and could not understand why ETU was being discontinued when it appeared to be so effective. Some feared they could not manage without it.
Conclusion
Self-employed recipients were compared with employees. Similarities were: their work histories and gendered patterns of employment; their positive experiences of the process of applying for and receiving ETU; and the aspects of the scheme that they praised and criticised. They believed that ETU had successfully achieved its aims and regretted that it was to be withdrawn.
There were some differences: self-employed respondents tended to think that ETU had strongly influenced their decisions about their businesses, and the outcomes; the application forms and supporting evidence presented particular problems to self-employed people; self-employed people appeared to suffer greater insecurity and variation in their earnings than employees; some self-employment seemed to be only nominal; self-employed people ploughed ETU back into their business as they invested in tools and equipment; ETU for self-employed people could be seen as an investment in the future, with a multiplier effect when businesses developed and took on employees.
Part three - unsuccessful applicants
In-depth-interviews were carried out during Spring 1999 with 30 people who had made one or more unsuccessful claim for ETU. (Although some had also made a successful claim at some stage.) The aim of the study was to explore why some people mistakenly applied for ETU.
Applicants’ work histories
Work histories and occupations were similar to successful claimants. Most of the jobs did not require qualifications or involve supervisory tasks. A number of respondents were educated to a level beyond that required by their job. A number of respondents had experienced traumatic or tragic events that had impacted on their working lives. Some suffered from chronic illnesses that restricted the type of work they were able to do.
Most of the younger respondents had yet to establish a pattern of employment. Several of the older men had stable work histories that fragmented as they got older. All the older women had held long-term jobs, interrupted for many by periods out of work or working part-time while caring for children or sick relatives or contributing to their husband’s business. Self-employed respondents were setting up fledgling businesses, just managing to stay solvent or in failing businesses.
Attitudes to work
Almost all respondents thought that the benefits of work extended beyond earned income to include social and psychological aspects. Some older men were angry that their abilities had been discarded. Other older people believed that they had made their contribution and were moving towards retirement. A number of the younger respondents were ambitious.
Respondents’ perceptions of their local labour market
Respondents’ perceptions were almost entirely negative: they reported low paid, unskilled jobs on insecure, short-term contracts for themselves and people like them in their area. Work could be found, particularly by women, but the pay was low, the work often unpalatable, and health and safety considerations neglected. Nearly all felt pessimistic about future job opportunities and some said that it would be necessary for young people to leave the area in order to find work“.”
Circumstances at time of application
At the time they made their claim for ETU nearly all the younger respondents lived with their parents while the older ones lived alone or with a partner. Women had left the parental home at a younger age than the men. Some of the respondents owned their own home.
Most respondents, both male and female, were in work when they applied for ETU. Several of the employed men were in part-time work. More women were in full-time than part-time work. Some worked part-time out of choice, most from necessity in that they were unable to find full-time work or they had responsibility caring for a relative“.”
Reasons for making a claim
- renewal claim, but the respondents had allowed a period of more than two weeks to elapse after the expiry of their order book;
- respondents found their income from employment inadequate and made a first application for ETU;
- some claims were triggered by a crisis such as a partner leaving;
- self-employed people claimed because their business did not yield enough income; and
- a few should have claimed another benefit.
Finding out about ETU
Respondents first learned about ETU through their local Benefits Agency office or Employment Service Jobcentre; local publicity campaigns (early on); family and friends; employer and work colleagues; and from training services.
The claim process
Employed and self-employed respondents differed. In general, employed respondents found the claim process straightforward, but some found the forms difficult or employers unhelpful. Most respondents did not consult Benefit Agency or Jobcentre staff about their entitlement. Some self-employed respondents said that they found completing the form burdensome.
Reasons for refusal
Typically, applicants were refused because they worked too few hours or their income was too high. One was disallowed because her job would not last for five weeks. Others had children, were retired or disabled; they were directed to the right benefit“.”
Immediate response to refusal
Nearly all the respondents accepted the decision to refuse them ETU, but some felt angry. A few contrasted their own ‘deserving’ case with other ‘undeserving’ cases.
Disappointment was related, in part, to expectations. Respondents who had previously received ETU were most aggrieved. Respondents who had been advised to claim by people in apparently identical circumstances were also annoyed. Younger people were less accepting or at least more vocal about it than older people.
Longer term outcomes
“Repeat claim disallowed”: Respondents either tried to compensate for the loss of ETU, or waited for the return of a stable work pattern to re-apply. There was no evidence that anyone declined extra work in order to re-claim ETU. Respondents reported hardship.
“Inadequate income”: Most respondents said their income was inadequate without ETU. They responded according to the available options, such as seeking work with stable hours or with lower travel costs. Others were unemployed by the time of the interview.
“Following a crisis”: In one case the crisis resolved itself; otherwise respondents said that hardship and anxiety continued.
“To support a business”: The fledgling businesses improved; those in decline had ceased trading, though because of difficulties outside the scope of ETU; and a few continued not to generate sufficient income and had been augmented with part-time jobs.
“Interface with another benefit”: Respondents who applied for the wrong benefit were advised by the DSS accordingly and made successful claims for DWA, Family Credit or Retirement Pension. Only a few respondents grasped the details of the benefits concerned.
Views on ETU
Increasing the net income of people on low wages was almost universally supported and justified under current labour market conditions. Many favoured a National Minimum Wage, making employers responsible for paying a decent wage, not the taxpayer. ETU was seen as particularly helpful for part-time workers. Self-employed respondents suggested that ETU could have an important role when starting up a business.
Some were satisfied with the level of the award, but others found it inadequate. Respondents living at home with their parents were more satisfied than those running their own household. Many said rates should reflect recipients’ responsibilities. Many claimants felt that the conditions of entitlement should be relaxed to broaden the number of beneficiaries. Some felt the six-month payment period was too inflexible, and that assessment should accommodate unrepresentative departures from normal patterns of work.
Respondents felt that ETU was an incentive to take up or remain in low paid work, but some were not convinced this was always a good thing. Self-employed respondents said that ETU would have the beneficial effect of encouraging employers to take on staff. Some employees claimed it would help employers to hold down wages. Respondents almost universally believed that it was better to work for money than receive benefits. ETU was judged not to be as stigmatising as out-of-work benefits.
Conclusion
There appears to be a constituency of low paid people who find it difficult to make ends meet, but fall just outside the criteria for ETU. They need the proactive provision of explanation and advice by agency staff so that they can understand their rights and responsibilities. Such provision could be provided by Personal Advisors in the ONE pilots.
Publication details
Heaver, C., Roberts, S. Stafford, B. and Vincent, J. (2001) “Earnings Top-up Evaluation: Qualitative Evidence”, Department of Social Security Research Report No. 133, CDS: Leeds. (£30.00)
Relevant publications
Marsh, A., (2001) “Earnings Top-up Evaluation: The Synthesis Report”, Department of Social Security Research Report No. 135, CDS: Leeds.
Smith, A., Dorsett, R. and McKnight, A., (2001) “Earnings Top-up Evaluation: Effects on Unemployed People”, Department of Social Security Research Report No. 131, CDS: Leeds
Marsh, A., Stephenson, A., Dorsett, R and Elias, P., (2001) “Earnings Top-up Evaluation: Effects on Low Paid Workers” Department of Social Security Research Report No. 134, CDS: Leeds
Lissenburgh, S., Hasluck, C and Green A. (2001) “Earnings Top-up Evaluation : Employers Reactions”, Department of Social Security Research Report No. 132, CDS: Leeds
Vincent J., Heaver, C., Roberts, S. and Stafford, B., (2001) “Earnings Top-up Evaluation: Staff Views”, Department of Social Security In-house Research Report No. 74, London
Green, A. (2001) “Earnings Top-up Evaluation: Labour Market Conditions”, Department of Social Security Research Report No. 75, London
Marsh, A., Callender, C., Finlayson, L., Ford, R., Green, A and White, M., (1999) “Low Paid Work in Britain”, Department of Social Security Research Report No. 95) CDS: Leeds
Finlayson, L., Ford, R., Marsh, A., Smith, A., and White, M., (2000) “The First Effects of Earnings Top-up”, Department of Social Security Research Report No.112) CDS: Leeds
Vincent, J., Abbott, D., Heaver, C., Maguire, S., Miles, A., Stafford, D., (2000) “Piloting Change”, Department of Social Security Research Report No. 113 CDS: Leeds