Universal Credit transforms the way the state interacts with workers on a low income. Alongside more stringent requirements for out-of-work claimants to engage in job-seeking activity, it may – controversially – involve the introduction of “in-work conditionality” to claimants on a low income, placing responsibilities on individual workers to increase their earnings.

The traditional distinctions drawn by policymakers between strivers and skivers, workers or shirkers, are now blurred as both unemployed people and low-income workers come under the DWP's remit. But the big question is how will this change the way the state interacts with people in work? In this chapter, we focus on how the government might support this group. After briefly outlining this policy shift, we review recent developments in this new, experimental, policy area and consider whether or not we are on the right track not only to support people into, but also to progress in work.

IN-WORK BENEFITS: FROM TAX CREDITS TO UNIVERSAL CREDIT

Alongside conditionality for people who are out of work, many countries also seek to incentivize employment via in-work benefits. As with active labour market policies (ALMPs) for the unemployed, in-work benefits also vary in design. They are also typically combined with other “make work pay” measures including minimum wages, and have the twin aims of incentivizing employment and reducing in-work poverty (Clegg 2015). Particularly since the 1990s, and against a backdrop of “deindustrialization and labour market flexibilization”, in-work benefits saw considerable expansion across advanced welfare states – as the carrots to the sticks of conditionality (Clasen 2020: 2).

In-work benefits have made a significant difference to the incomes of low-income working households (Ray et al. 2014). They have also been historically popular across political divides. However, while they are “a response to … the growth of low-wage jobs and atypical types of employment”, they may also support it (Clasen 2020: 10). Policymakers express concerns about both the sustainability of growing in-work benefit expenditure, and the extent to which it subsidizes part-time and/or poor quality work (Clegg 2015).

The UK has been a keen innovator of policymaking in this area as it explores the possibility of extending behavioural conditionality to working social security claimants. The Social Security Advisory Committee (SSAC 2017) described this as a “ground-breaking” move with “no comparable precedents”, and marks a fundamental shift in the reach of conditionality to those in work.