Coronavirus Benefit Briefing

In the last few weeks, the government has declared various changes to the benefits system to try to adapt to the ongoing coronavirus crisis. It has arguably been the biggest change to welfare benefits since the welfare reform programme started nearly ten years ago. These changes have had two major aims – softening the blow of potential job losses and making the system of sickness benefits easier to access to discourage people from working if they are unwell.

While the aims are relatively clear, the speed with which the policy measures have been put in place have meant they are broad in their impact, affecting people beyond the intended target groups.

Some of the changes involve increases to some benefits, although not to all. There are also some changes in administration of benefits, especially in the requirement to attend interviews and appointments. It is helpful to look at the changes by grouping them according to their intended effects.

General changes to benefits

  • From the 6th of April, the standard allowance of Universal Credit and the basic element of Working Tax Credit were increased by £20 per week, as a temporary measure for one year. This brings the equivalent weekly amount of Universal Credit in line with Statutory Sick Pay, meaning many people who claim sick pay will be able to move onto benefits without losing any income.  This is a flat increase for every claim, so a single person living alone will get the same £20 per week increase as a couple with three children. This change is not reflected in other benefits, so people on benefits like Employment and Support Allowance or Carer’s Allowance and Income Support will not receive an equivalent increase.

This change is aimed at people who lose their jobs, reduce their hours or become sick and have to claim benefits. People already on Universal Credit will get the increase to their income though, no matter their circumstances. Likewise, people who move on to Universal Credit for reasons unconnected to coronavirus will also receive the increase to their entitlement. People on older benefits, may be tempted to move on to Universal Credit to gain from this increased entitlement, but should be wary of a drop in their income when the temporary increase ends which may reduce their income to levels lower than it is currently. They should seek benefits advice before considering this option.

  • From April the Local Housing Allowance was increased for private renters to 30% of the local market rent. This is the maximum amount that can be claimed in Housing Benefit and the Housing Costs element of Universal Credit if you rent privately. It has been set at 30% of market rents since 2011 but this amount was frozen in 2015 and has not increased since then. Housing Benefit rates have fallen well below local rents in many parts of the UK. This change reverses that freeze and makes a sudden move onto benefits more viable for people who were previously able to pay their rent without support.
  • Anyone making a claim for Universal Credit will not be required to attend or call the Jobcentre. There were around 1.5 million new claims to Universal Credit in the first three weeks after the lockdown measures were announced, which is around five times the record number of new claims for unemployment benefit since records began. This has put huge pressure on the Department for Work and Pensions which has tried to reduce the amount of contact needed with work coaches and back office staff. To this end, any claimant who needs to be interviewed will be called by the Jobcentre.
  • If you make a claim to Universal Credit and need an advance payment to support you during the initial five week wait for a first payment, this can also be arranged over the phone.
  • All DWP debt recovery has been suspended until July at the earliest. This includes recovery of benefit overpayments, social fund loans and tax credit debts. If the recover is automated, deducted from ongoing benefit payments for example, this will happen without the claimant having to do anything. Enforcement agents have been instructed not to pursue any action on benefit debts, including if the person is no longer receiving benefits. If the person makes payments directly to the DWP, by standing order, bank transfer or giro credit, they will have to stop those payments themselves if they want the recovery to pause.

The pause on debt recovery does not cover advance payments of Universal Credit. These will be recovered by deductions from ongoing payments in the usual fashion.

  • Anyone diagnosed with coronavirus or who is staying at home will not be sanctioned during this period.
  • Local authorities have been issued with a £500 million hardship fund to help support people on local Council Tax Support. It is up to councils how they use this money but it is expected that they provide a reduction in council tax bills of £150 to every household currently claiming Council Tax Support.

Jobseekers

  • All jobcentres are now closed.
  • Anyone who is required to stay at home will be treated as having a period of sickness and will not be required to be available for or searching for work. This is true for everyone until at least the end of June.

Sickness and disability benefits

  • If you need to claim Employment and Support Allowance or Universal Credit and you are unable to work because of illness or disability, you will not have to provide a fit note or an isolation note from NHS 111 Online. This is designed to make it easier to claim these payments if you become sick, so as to stop people working through illness.
  • Assessments for Employment and Support Allowance, Universal Credit and Personal Independence Payment have been suspended until at least the end of June. No one will not be required to attend an appointment during this time.
  • New claims for Employment and Support Allowance are not usually paid during the first seven days of a claim. This waiting period has been removed and claims will be paid from day one, encouraging people to claim immediately on becoming.

Workers

  • Statutory Sick Pay is payable to anyone self-isolating due to coronavirus, whether they have a diagnosis or not. Employers are encouraged to use discretion as to whether they need to get evidence of this.
  • If employers decide they do need evidence that someone has been advised to stay at home, NHS 111 Online can issue an “isolation note” that acts as sufficient evidence.
  • Statutory Sick Pay was previously only payable from the 4th day of sickness. It is now payable from the 1st day, to encourage people to stay off work immediately if they are sick.
  • To try to prevent workers being laid off by struggling companies, the government has announced a Job Retention Scheme for workers unable to work because of the coronavirus crisis. Employers can designate employees as furloughed and receive 80% of the person’s wages back as a grant from the government. Payments will be based on the employees PAYE income in February 2020. Furloughed workers still count as employed for benefits and can continue to receive Working Tax Credit based on their usual number of hours worked.

Self-employed people

  • Self employed people will not be required to pay any income tax until January 2021.
  • The Universal Credit Minimum Income Floor has been removed for self-employed people affected by the economic impacts of coronavirus. Universal Credit usually assumes self-employed people earn at least minimum wage for any hours that are required to work. Anyone who earns less than that is treated as if they had earned this amount and their benefits reduced based on this assumed income. With many self-employed people losing much of their earnings, this measure allows them to claim Universal Credit and declare their earnings as zero.
  • For people who were self-employed during the 2018/19 and submitted a tax return that year, the government will pay a one off grant from late May equivalent to their average monthly profit over the last three years. This will count as income from self-employment and will affect benefits accordingly, reducing entitlement to benefits once the payment is received.