Benefit sanctions lead claimants to find work less quickly and earn less when they do, a secret Government report concluded.
The DWP study has been kept under wraps since it was completed in 2020 - but last month the Information Commissioner's Office ordered its release.
In a damning conclusion - finally published today - it states: "A sanction leads the average claimant to exit less quickly into PAYE earnings and earn less upon exiting.
"In a narrow sense, this constitutes a negative impact of a sanction on claimant finances."
It warned sanctioned claimants, who eventually leave the intensive job search programme, earn £34 per-month less on average than those not sanctioned over a 6-month period.
"This is driven by lower earnings when employed, rather than fewer months spent in employment," the 35-page report says.
It added claimants under the age of 26 who have had payments docked "fare worse than average, earning £43 per-month less than non-sanctioned claimants in the same age group".
The report adds: "Economic theory suggests this is driven by sanctioned claimants lowering their wage expectations as being unemployed becomes less attractive when they are no longer in receipt of their UC [Universal Credit] standard allowance.
"In other words, they are under greater financial pressure to find a job, and therefore may be more likely to accept a job which pays less".
The 35-page report makes clear it does not evaluate the "deterrent" effect of sanctions on other people claiming benefits, which ministers say is key to the system.
It adds the "negative financial effect" of a sanction should be "balanced against the likely deterrent effect that the sanction regime has by incentivising claimant attendance".
Labour's Shadow Work and Pensions Secretary Jonathan Ashworth said: "While it's right there are conditions attached to job-seeking benefits, it's no surprise the Tories resisted publishing this analysis.
"It reveals how the Tories are failing to help people into decent well paid jobs".
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Liberal Democrat spokespwoman for Work and Pensions, Wendy Chamberlain said: “Benefit sanctions are not only cruel and harmful, but this report shows that they aren't helping people get back into better paid work either.
“Rather than persisting with this punishing and flawed system, it is time this Conservative Government pulled their head out of the sand and developed a system that gets people back into work."
Rachel Casey, a policy adviser at the Joseph Rowntree Foundation, said: “No amount of excuses can change the fact sanctions aren’t effective. The UK Government’s stubbornness in its efforts to divert and deflect from this fact is disrespectful to the people caught up in this punishing system."
She added the report shows "when people are sanctioned it does have a negative financial impact – it pushes them into destitution".
"It takes them longer to find a job, and those who do find a job after being sanctioned earn less than those who aren’t sanctioned.
“How many more people need to wear the mental and physical damage of this policy before the Government admits it doesn’t work?"
A DWP spokesperson said: “Being in work provides financial security and is the best way for people to get on in life, while growing the economy. That’s why we’re helping more people move into work – by removing barriers and increasing work coach support.
“Sanctions – 97.6% of which are applied when claimants fail to attend mandatory appointments – are measured and proportionate," they claimed.
"They ensure fairness runs through the system, both for claimants and the taxpayer, and it’s important to note this report does not assess sanctions’ deterrent effect.
“Conditionality is a cornerstone of our support with sanctions designed to encourage people to meet certain commitments, preparing them for workplace responsibilities. Most claimants agree this makes them more likely to look for work or take steps to prepare.”
The study was commissioned around four years ago - but was later blocked from release by Mel Stride's predecessors as Work and Pensions Secretary at the DWP.
In March the Information Commissioner's Office, however, r uled the Government must publish the report within 35 days - or risk legal action.
