UK's lowest-paid employees to be classed as 'not working enough'

One million of Britain's lowest paid employees will be classed as "not working enough" and could find themselves pushed with the threat of sanctions to find more income under radical changes to benefits, the Department for Work and Pensions has said.

DWP internal documents seen by the Guardian reveal that people earning between £330 and around £950 a month – just under the rate of the national minimum wage for a 35-hour week – could be mandated to attend jobcentre meetings where their working habits will be examined as part of the universal credit programme.

Some of those deemed to be "not working enough" could also be instructed to take on extra training – and if they fail to complete tasks they could be stripped of their UC benefits in a move which departmental insiders conceded is controversial.

The DWP said that their overall plans for those in low-paid work were not yet definite and recognised that supporting working families to increase their income was a complex area into which the state hadn't previously intervened. But the department estimates there are one million people in this lower-paid bracket.

Not all of those will be forced into jobcentres, with individuals with caring responsibilities or other constraints preventing them taking on full-time work highly likely to be excluded.

The DWP said: "There isn't any real clear, definite plan as to how this [part] would work."

However the department did confirm that docking social security payments for those who are categorised as "not working enough" formed part of their plans.

The shadow work and pensions minister, Liam Byrne, said that the policy was attempting to push people into work that wasn't there. "What this out-of-touch government fails to realise is that there simply aren't that many extra shifts to go around. Millions are locked out of work and millions more are desperate to increase their hours."

The senior ministers involved in heading up welfare reform have spoken about how their flagship reform would completely change the culture of benefits.

Speaking in parliament during answers to urgent questions on Thursday, Iain Duncan Smith said: "Universal credit isn't just about IT, it is massively about cultural change, to get people back to work and to ensure those who do go to work, particularly the poorest, benefit the most."

Documents seen by the Guardian show how millions of people currently in receipt of some sort of benefit will be categorised into seven classes including, "too sick to work", "too committed to work", a category including lone parents, and those deemed to be "not working enough".

UC aims to merges six different benefits with the claimant receiving a single monthly household payment, although earlier this week the National Audit Office warned that the underlying IT project had been beset by "weak management ineffective control and poor governance" and that £34m of the £303m spent on technology had already been written off.

Sources say that new JSA claims will be "shut down" by July 2015 while the tax credits system – created by Gordon Brown as Labour chancellor – will end for new claims by November that year. Meanwhile income support for lone parents will be terminated by October 2015. These benefits and others are planned to be folded into to one single universal payment.

One recent policy document sets out the rationale for placing conditions on those who are in work: "Moving to universal credit will not only remove systemic barriers to employment, it will also remove the distinction between in and out of work, meaning that even one hour of work would profit the claimant … the decision for the claimant will therefore be simplified – do they want the additional income from employment, or not?"

Reflecting the biggest change to social security since 1945, language now being employed at the DWP includes describing the "claimant journey" where getting into work "is just the first step".

The TUC's general secretary, Frances O'Grady said the DWP's policy would be forcing people from secure and into insecure work: "This unfair move could force people on low-paid jobs to trade relatively secure employment for work of a much more precarious nature, simply to justify a few weeks work on a slightly higher rate of pay.

"It shows how out of touch the government is with the problems facing low-income families – who already have more than enough on their plates struggling to make ends meet. They will be living in constant fear of being punished at a time when there are simply not enough decent jobs to go round."

The DWP said: "This is obviously a complex area where the state has not previously intervened and supported people to increase their earnings. That is why we are working on pilots to get this help right and to determine the most effective support for in-work universal credit claimants.

"Too many people in low-income work have no support to help them earn more and eventually move to independence."