Welfare benefit changes since Covid-19 An overview Diane Sechi 1
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 2
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 3
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. 4
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. 5
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 of 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. 6
‘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. 7
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. 8
Recommend
More recommend
