Welfare benefit changes since Covid-19 An overview Diane Sechi 1 - - PowerPoint PPT Presentation

Welfare benefit changes since Covid-19 An overview

Diane Sechi

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An overvew

• Coronavirus has had a huge impact on the UK social security system which led to the need for

rapid reform. There was a speedy response by the government with the Chancellor announcing a package of measures to deal with the economic impacts for both businesses and individuals.

• This session will provide a general introduction to the key changes implemented following the

reforms including changes to the benefit system and the other measures adopted to cope with the crisis. This session will cover:-

• Changes to the main benefits such as Universal Credit
• Conditionality and benefit sanctions
• Changes to tax credits
• Changes to Statutory Sick pay
• The Job Retention Scheme and help for self-employed
• Local Housing Allowance rates
• Council tax and other support
• Changes to the assessment process of disability benefits
• Benefit appeals
• Areas of concern – the benefit cap, two child limit and other issues

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Universal Credit (UC)

• Universal credit was introduced in 2013. It is the main working-age benefit which combines

means-tested support for people on low incomes. UC replaces the following legacy benefits: Income based jobseekers allowance; Income-related Employment and Support allowance; Housing Benefit; child tax and working tax credit. It is paid on a monthly basis. There was a huge surge in UC claims as a result of the pandemic and by way of example, over 5.2m people claimed UC in May 2020, compared to just over 2m in May 2019.

• A maximum UC award is based on a basic standard allowance per household circumstances and

any additional elements which may apply. The amount of UC entitlement per claimant then depends on income levels.

• Capital must be less than £16,000 and UC entitlement will reduce gradually as earnings increase.
• The standard allowance is different depending on whether it is a single or joint claim. There is one

standard allowance per household. The changes due to coronavirus have seen the monthly standard rates uprated by £20 per week on a temporary basis for the tax period 2020-2021.

• The uprated standard allowance rates are now:-
• Single claimant aged under 25: £342.72 per month
• Single claimant aged 25 or over: £409.89 per month
• Joint claimants both aged under 25: £488.59 per month
• Joint claimants either aged 25 or over: £594.04 per month

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UC continued

In addition to the standard allowance, UC also offers extra help for various elements including:-

• The child element - where the claimant is responsible for a child or qualifying young person. The

child element will not be paid for a third or subsequent child born after 6 April 2017 unless an exception applies. This is known as the Two Child Limit.

• There are also additional disabled child elements – this can still apply for a third or subsequent child

even if the child element does not apply.

• Childcare costs element – paid to claimants who pay for registered childcare while they are working.
• Limited capability for work - no longer applies for claims after 3 April 2017 unless in receipt of a work

related activity component in ESA immediately before the claim.

• Limited capability for work-related activity
• Carer element - care provision for a severely disabled person for at least 35 hours per week
• Housing costs element - rent and service charges

Apart from the change to the standard allowance, there have been no further changes to the above elements due to coronavirus so the standard allowance plus any of the above elements which may apply, amount to a claimant’s maximum UC award.

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UC continued

• After calculating the maximum amount, any earned income is then taken into consideration.
• UC entitlement will reduce gradually as earnings increase. This is known as the UC earnings taper

and is currently 63%.

• Some earnings can be ignored where a claimant is also eligible for a ‘work allowance’.
• A work allowance is the amount that can be earned before a Universal Credit payment is affected.
• A claimant will be eligible for a work allowance if they or their partner, either have:
• responsibility for a child; or
• limited capability for work
• The current monthly work allowance is:

£292 – if the UC includes the housing element £512 – if the UC does not include the housing element

• For every £1 earned above the work allowance (if eligible for one) the UC will be reduced by 63p.

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UC continued – self employed

• UC includes a minimum income floor (MIF) for people who are self-employed and their business

has been running for 12 months. It is an assumed level of earnings even if the actual earnings are lower.

• MIF is set broadly at the level of the national minimum wage and at the number of hours one

would be expected to work so this will differ from person to person. It only applies to those in the ‘all-work-related requirement group’.

• Where earnings are above the minimum income floor the actual earnings figure will be used to

determine entitlement. The more one earns above the minimum income floor the less UC they’ll

• get. Basic rule is for every extra £1 earned, the UC will reduce by 63p.
• Where earnings are below the minimum income floor the minimum income level will be used to

work out the amount of benefit entitlement instead of any earnings figure. This could result in a lower payment than expected.

• So, the MIF for self-employed is being temporarily relaxed for the self employed applying for UC

due to the impact of coronavirus; as from 13 March 2020 for new applicants and as from 6 April 2020 for existing self-employed UC claimants so as to support those who lose income as a result

• f coronavirus. Plus, instead of applying to those in the ‘all-work related requirement group’, it

also applies to those who need to self isolate or those affected by coronavirus.

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‘New style’ Employment and Support Allowance (ESA)

• Employment and Support allowance is a benefit for people of working age who, for reason of

illness or condition are unable to work. Income based ESA is now being replaced by UC but it is still possible to claim the New style contributory based ESA.

• New style ESA can be claimed by people who have paid sufficient National Insurance

contributions over the last 2-3 years.

• Coronavirus has seen the rules change and the contributory new style ESA is now paid from the

first day removing the ‘waiting day’ rule so that people are able to claim from the first day of sickness rather than the eighth. This is for people affected by coronavirus (anyone having Covid- 19 or required to self isolate or looking after a child of such a person).

• The changes also means that people receive payment after two weeks rather than the usual three

weeks.

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Conditionality and Sanctions

• Entitlement to benefits such as JSA, ESA and UC is subject to conditionality conditions (e,g. attend

appointments, undertake work searches, undertake work preparation etc). Failure to adhere to these conditions can lead to a benefit sanction where the amount a person receives is reduced or stopped for a period of time.

• From March 2020 there was a freeze for 90 days on conditionality requirements and the

government paused the need for claimants to actively look for work or make themselves available for work. Sanctions were also paused for the same period.

• Jobcentres were mostly closed to the public and there was a suspension of face to face meetings

at the jobcentre unless directed to do so for an exceptional purpose. This was considered consistent with Public Health England guidance and to free up work coaches to deal with new claims processing.

• However, the above measures are being removed with the Work and Pension Secretary Therese

Coffey saying that the return of "claimant commitment" rules was "essential“ and that there would be a reinstatement of the labour market conditionality from 1 July 2020.

• Jobcentres are also reopening across England from the beginning of July 2020 so people will be

expected to attend to sign on and meet their other commitments.

• Note – recovery of overpayments (debt recovery) for benefits, including tax credits and social

fund loans were put on hold from 4 April 2020. The government has announced that these will be starting again.

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Tax Credits

• Working tax credit is administered by HMRC and is being replaced by UC but is still being paid to

those already receiving tax credits and for those who receive the Severe Disability Premium (an extra amount included in some means-tested benefits to help with the cost of a disability).

• Working tax credit is used to provide additional income for working people on low incomes who

work full time – although this varies according to different situations and applies to those employed and self employed.

• Due to coronavirus, many people have been unable to work as usual or have been furloughed.

However, HMCTS will continue to treat people as working their usual hours for as long as the furlough scheme or self employed income support scheme are in place.

• However, redundancy, loss of job or ceasing trading must be reported within one month; or

within 3 months where the claimant is a key worker.

• The government also announced that the basic element of working tax credit will be increased by

up to £20.00 per week (this is on top of the previously agreed annual uprating).

• To prevent the additional £20.00 being taken as additional income, for other benefits such as

Housing Benefit, there was an increase to the earnings disregard meaning that more income can be ignored so that the additional amount does not get swallowed up elsewhere.

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Statutory sick pay (SSP)

• Statutory sick pay is paid to employees who are unwell and unable to work. To be eligible, an

employees earnings must be at least £120 per week.

• The changes made due to coronavirus means that as of 13 March 2020, SSP can now be paid from

the first day of sickness rather than the fourth day for people who have COVID-19 or have had to self isolate.

• In addition, employees unable to work due to shielding are also entitled to SSP. This applied from

16 April 2020.

• Evidence to support a claim for SSP can be provided by obtaining an online isolation note through

NHS 111 rather than having to provide a sick note from the GP.

• Statutory sick pay can be paid for a period of 28 weeks by the employer and the statutory rate is

£95.85 per week.

• An employee can get more than the statutory amount if the employer operates an occupational

scheme.

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Coronavirus Job Retention scheme

• A job retention scheme was announced on 20 March allowing employers to claim a grant from

HMRC to cover 80% of wages of ‘furloughed workers’ up to a maximum of £2,500 per month.

• The scheme in its current form will run until the end of July and in August the government will

continue to pay 80% but employers will need to pay the national insurance and pension contributions.

• In September the government will pay 70% of wages up to a cap of £2,187.50 with the employer

paying the additional 10% to make up to the 80% and also paying the NI and pension contributions.

• In October the government will pay 60% of wages up to a cap of £1,875 with employers making

up the 20% and also paying the NIC’s and pensions contributions.

• The above phasing is to allow furloughed workers to work reduced hours and enable them to

return to the labour market.

• There were some additional measures announced by the Chancellor on 7 July 2020 regarding the

winding down of the furlough scheme beyond the end of October. These were aimed at assisting employers retain staff brought back from furlough so as to avoid redundancies.

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Self Employment Income Support Scheme (SEISS)

• On the 26 March 2020, the government announced a support package for the self employed who

had lost income due to Covid-19.

• The SEISS pays direct cash grants to self-employed individuals worth 80% of their profits up to

£2,500 per month (in-line with the job retention scheme) from 1 March for three months but with grants not being paid until 1 June 2020. The scheme was opened for applications on 13 May 2020.

• The scheme was available to anyone with an income up to £50,000 and where at least half of the

income was from self employment. There were other criteria such as meeting the requirement to have submitted a tax return and the intention to continue to trade and that trade was adversely affected by coronavirus.

• Individuals can still apply for the first SEISS grant up until 13 July 2020.
• Applications for a second grant announced on 20 May 2020 and will open in August. This will be a

final grant worth 70% of average monthly trading profits but capped at £6,570.

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Local Housing Allowance

• Local Housing Allowance rates (LHA) operate in the private rented sector and determine the

maximum amount of housing costs support a tenant can obtain.

• LHA applies to both housing benefit and the housing element of UC.
• The maximum rent that is eligible for LHA is capped at the 30th percentile of local area market
• levels. This was frozen by the 2015 budget.
• As part of the coronavirus support package, the government announced that LHA rates would be

reset to the 30th percentile meaning that at least 30% of market rents in any given area would be covered.

• This means that claimants of housing benefit or the housing element of UC may be able to get

more money towards their rent thus maximising their income.

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Council Tax scheme

• As part of the response to COVID-19 the government announced that it would provide local

authorities in England with £500 million of new grant funding to support economically vulnerable people and households in their local area.

• The focus of the grant funding was the Council Tax hardship scheme to provide Council Tax relief

to working age tax payers who were in receipt of local Council Tax support.

• Where a person of working age was already getting help paying Council Tax through the Council

Tax Reduction scheme they received an extra £150 towards their Council Tax bill for 2020/21.

• The £150 was to be applied to the Council Tax account automatically.
• There has been criticism of the focus on Council Tax as many people need more support with

essential items during the crisis.

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Local Welfare assistance schemes

• Local Welfare assistance schemes where introduced to replace a system of emergency grants and

loans referred to as the Social Fund.

• Although the £500 million hardship fund was focused on Council Tax relief, it was up to local

authorities to use this to create funding for local welfare assistance.

• The schemes are intended to help people who are struggling to meet household demands and for

those without recourse to public funds.

• These schemes vary greatly but enable local authorities to provide families with cash and other

grant support so as to prevent hardship.

• On June 11, an additional £63 million of funding for local welfare assistance was announced by

the government to assist people facing severe financial difficulty and this would be administered by local authorities.

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Disability benefits

• Disability benefits such as Personal Independence Payment, Disability Living Allowance,

Attendance Allowance and Industrial Injuries Disablement Benefit are subject to reviews and reassessments as is the work related capability under ESA and UC.

• The DWP have though suspended these reviews from 24 March 2020 and face to face

assessments have been put on hold. This was to protect vulnerable people from risk of exposure to coronavirus.

• Where benefit awards were due to expire, the end dates were extended so that people could

continue to receive their existing level of support.

• For new claimants, the terminally ill and those at risk, the DWP said that they would seek to carry
• ut telephone and paper based assessments.
• For those people receiving Carers Allowance for looking after people already receiving a

qualifying disability benefit, this will still be paid if a person has a temporary break from caring due to coronavirus or self isolation. This applies for period of eight months from 13 March 2020. Plus, emotional support can also count towards the 35 hours a week that a person spends caring.

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Benefit appeals

• New tribunal procedural rules have been introduced as a result of coronavirus to deal

with welfare benefit appeals. Face to face appeals have been halted.

• Where possible, a tribunal judge will assess the case without a hearing and make the

decision on the papers. The temporary rule changes also mean that in some cases a judge can consider the case alone rather than use a panel (3 panel member for PIP and 2 panel member for ESA, UC).

• The tribunal are making every effort to continue to deal with appeals and where it is not

possible to consider the case on the papers then a telephone or video hearing will be listed.

• Cases are being triaged along the above lines and where a decision is made on the

papers then the tribunal will send out a provisional decision which if agreed to, will be binding.

• It is advisable to send as much evidence as possible to the tribunal so that they may be

able to determine the appeal without the need for a hearing.

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Issues – the Benefit cap

• The benefit cap is the overall limit on the amount of benefits working age people

can get. The cap is £23,000 for the London area and £20,000 outside of London. It does not apply to all people, for instance, those claiming working tax credit.

• The amount of money a person can get in benefits before the Benefit Cap applies

depends on considerations such as:

• where a person lives
• Whether a person is single or part of a couple
• Whether there are children in the household
• Where it applies, the housing benefit or UC award will be reduced so that the

amount of money a claimant gets does not go above the cap.

• This means that the £20 additional money from the increase in UC, tax credits

and the changes to the LHA rate may take many families above the benefit cap so effectively, they don’t actually receive the help as intended.

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Issues - Two child limit

• The two child limit means that from 6 April 2017, families having a third or subsequent child are

no longer entitled to any additional support either through child tax credit or UC.

• However, Covid-19 has seen many families with children either lose jobs or have reduced income.

This has meant less money coming into the household.

• Where these families are reliant on benefits and tax credits, there has been no lifting of the two

child limit meaning that many more families are struggling.

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Other issues

• Although the government support package assisted many, there are gaps to financial assistance

for some; including:

• Students – they are not eligible for UC unless they have a disability or children and many have lost

jobs due to Covid-19.

• People with savings above £16,000 as they won’t be able to claim UC.
• People with no recourse to public funds. This is a condition imposed on someone due to their

immigration status and they are not entitled to claim benefits.

• EU nationals who are deemed not to have a right to reside. The right to reside test applies to EU

nationals and is a qualifying criteria for many benefits such as UC, JSA, ESA and Housing Benefit.

• Legacy benefits such as Income Support, Income based JSA and income related ESA have not been

uprated in line with the uplift to UC.

• Although the pause on disability related benefits is welcome, it does mean that some may be

losing out on vital income. For instance, those claiming the limited capability for work element of UC will not get the additional work allowance amount within their claim until they are assessed.

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