Chancellor Kwasi Kwarteng has announced that low-paid part-time workers on Universal Credit will face tougher requirements to seek more or better-paid work, as part of measures outlined in Friday's mini-budget. The reform, effective from January 2023, will extend the conditionality threshold from 12 to 15 hours per week at the National Living Wage.
Under the current rules, claimants working up to 12 hours a week risk benefit reductions if they fail to take active steps to increase earnings and attend regular meetings with a work coach. The change is expected to affect an additional 120,000 claimants, with exemptions remaining for those unable to work due to long-term sickness or disability.
The Treasury argued that rising economic inactivity among over-50s is contributing to labour shortages, driving inflation, and limiting growth. To address this, the government will provide extra support for unemployed over-50s, including additional time with jobcentre work coaches. Returning to pre-pandemic activity rates among this group could boost GDP by up to one percentage point, the Treasury said.
Labour criticised the move, with shadow work and pensions secretary Jonathan Ashworth tweeting that the government was threatening sanctions on the low-paid while awarding bonuses to bankers. He called for a serious plan to support people back into work and increase labour supply.
Mr Kwarteng said: "One of the proudest achievements of our government is that unemployment is at the lowest level for nearly 50 years. But with more vacancies than unemployed people to fill them, we need to encourage people to join the labour market. We will make work pay by reducing people's benefits if they don't fulfil their job search commitments."
