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Recap of the major benefits changes and Coronavirus (COVID-19)


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As new measures to control Coronavirus (COVID-19) are introduced Policy in Practice's Head of Policy, Zoe Charlesworth, summarises the major changes to the welfare system.

As part of the support we've been providing we’ve answered hundreds of questions from people worried about the impact of Coronavirus on their income. Zoe shares of the common themes emerging and our thoughts on policy changes that could help. Zoe also shares highlights from the analysis we've done to show the impact of the new measures and how they will help households hit by Coronavirus (COVID-19).

Review the slides to learn:

- What benefits people in different situations might get
- How to get the most support for families and households
- Common questions people are asking, and our answers
- What the impact of the 3 main changes mean for households

Published in: Data & Analytics
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Recap of the major benefits changes and Coronavirus (COVID-19)

  1. 1. Recap of the major benefits changes and Coronavirus (COVID-19) Wednesday 8 April Policy in Practice webinar
  2. 2. Housekeeping ● Audio check ● Please ask questions ● Polls and a survey ● Aim to finish by 11:30 ● Slides and recording will follow
  3. 3. Today’s speakers Zoe Charlesworth Head of Policy Policy in Practice Louise Murphy Senior Policy and Data Analyst Policy in Practice Peter Carter Business Account Manager Policy in Practice
  4. 4. Give the best support you can to help people on their way
  5. 5. Agenda ● What policy measures have been put in place to protect people ● The impact of COVID-19 welfare measures ● What are the main concerns of people ● How organisations are responding ● Questions and answers
  6. 6. 666 Over to Zoe
  7. 7. Recap on measures put in place
  8. 8. Measure 1: Job Retention Scheme Coronavirus Job Retention Scheme (3 months from 1 March 2020) ● Employed on 28th February, paid through PAYE and with a UK bank account ● Grant for 80% of the salary, Or average of last years salary. Or pay equal to that in the same month in previous year. OR pro-rata pay. Up to £2,500, plus employers NI contribution and minimum pension contribution ● Can’t undertake work for that employer and furlough must last at least 3 wks ● The employer claims through HMRC with the first payments at the end of April
  9. 9. Measure 1: Job Retention Scheme Calculation is based on what the employer is obliged to pay (e.g. compulsory commission, contracted overtime etc) Those who have moved to another job or made redundant can be re-hired if that leave was after the 28th February (but further guidance will be issued) Those furloughed can include those who cannot work as they are vulnerable (NHS letter) or cannot work as they are caring for others (eg childcare) The scheme applied to those on zero-hours contracts, Directors paying themselves through PAYE, those with no recourse to public funds, apprentices, and students.
  10. 10. Measure 2: Self-employed Income Support Self-employed Income Support (3 Months from 1st March 2020) ● Open to those who have completed a self-employed tax return for 2018/19, are currently self-employed, intend to remain self-employed and have lost money due to COVID-19 ● Must have self-employed trading profits < £50,000 in 2018/19 and self- employment is > 50% of taxable income. Or over the last 3 years ● Average of 80% of trading profit calculated over the last 3 tax years, up to £2,500/month ● HMRC will invite claimants to apply ● The grant will be paid as a lump sum and count as business income for tax credit and UC purposes
  11. 11. Measure 2: Self-employed Income Support Other help for the self-employed includes deferment of VAT (March – June 2020) and tax (July 2020), business interruption Loan, Grant (£10,000 for small business exempt from rates through Small Business Rate Relief or Rural Relief)
  12. 12. Measure 3: Means-tested benefit changes 1. From April 2020 the basic allowance in Universal Credit and Tax Credits increased by £20/week (no change to IS/ESA/JSA) 2. To help private renters the cap on rental costs, the Local Housing Allowance (the LHA), was increased to align with the 30th percentile of local rents 3. To support the self-employed, Universal Credit awards are based on actual income rather than a notional income (the Minimum Income Floor) 4. Tax Credit hours and self-employed rules are suspended for 8 weeks Additional changes ● DWP overpayment recovery suspended ● Change to claim procedure - telephone and online ● WCA suspended ● Sanctions suspended ● Free School Meals extended over Easter
  13. 13. Measures: Gaps in provision Those not meeting the new scheme provisions ● If under £16,000 savings then directed to UC, CTR, FSM, food vouchers No Recourse to Public Funds ● Cannot claim UC (but are eligible for Covid support schemes and NI contributory benefits), but partner can claim based on single person entitlement ● If sick with Covid19, can get medical support (no immigration status checking) ● Government issued guidelines to LAs to include within homelessness support Students without parental support ● Cannot claim UC (but are eligible for Covid support schemes and NI contributory benefits) ● LA homelessness support
  14. 14. Impact:1) UC claims
  15. 15. Impact 1: Universal Credit changes Data analysis on a representational dataset showed that as a result of the UC measures: ● Households in receipt of Universal Credit whose bills are higher than their monthly income will fall from 16% of households to 10% ● The average increase in Universal Credit awards as a result of changes coming into effect from April 2020 will be £98/month, an increase of 7.3%
  16. 16. Impact 2: Legacy vs Universal Credit
  17. 17. Impact 3: Tax Credits vs Universal Credit For those in receipt of WTC and awaiting a grant, the decision will rest on an individual assessment and consideration of circumstances ● £16,000 savings? ● Better off in the long run? ● Self employed and re-introduction of minimum income floor after 1 year? ● 5-week wait vs lower ongoing support? If claimants stay on Tax Credits, then inform HMRC of revised 2020/21 income
  18. 18. Impact 4: Benefit Cap Outside London In London
  19. 19. Impact 4: Benefit Cap continued Does the Benefit Cap now meet the initial objective? ● The justification for the benefit cap was fairness between those working and those not working, does this still hold true given that furloughed claims are also not working? How much does the Government think is needed to support households? ● Treasury minimum of £2,500/month ● DWP maximum of £1,917/month (London) or £1,667/month outside London Impact on local authorities ● DHPs - can LA support these additional claims? ● Welfare support for children ● Impact on homelessness - meeting the LHA is linked to homelessness
  20. 20. Impact 5: Two parallel welfare schemes ● Two parallel schemes create inequitable welfare support ● The new schemes are not targeted or means-tested. A couple both qualifying for the new schemes can receive £60,000/annum. A similar couple on UC could receive £7,128
  21. 21. Case study Jack Lone parent with 2 children Private rent at LHA Earnings £30,000 / annum Furloughed Jill Lone parent with 2 children Private rent at LHA Earnings £30,000 / annum Made redundant
  22. 22. Case study
  23. 23. Case study
  24. 24. Impact 6: Differences in CT support Inequitable Council Tax support LA with 100% CTRS and CT charge of £100/month ● Claimant pays no Council Tax. ● LA retains the majority of the Government funding for discretionary welfare LA with 40% basic scheme and CT charge of £100/month ● Claimant still pays £27.50/month ● LA has little left for discretionary support although the claimants need the most support Welfare organisations need to understand the specific local situation
  25. 25. Impact 7: Surplus earnings Single person self-employed income is now 0, receives £1,000 UC/month Nil UC threshold = (£1,000*0.63)+ WA 0 + threshold £2,500 = £3130/month From March – September this claimant receives £12,103. Without the grant they would have received £7,000. So, the grant is worth £5,103 (not £7,500) There are implications for advisors due to complexity Implications for the claimant as they need to know to reclaim
  26. 26. Finally: future provision? What happens after the 3 month schemes run out? ● Extend grant schemes ? - retains duality of welfare provision (not promoting fairness) - simple method to support millions of workers - shares burden between DWP and HMRC ● End grant schemes ? - leave UC support as it is or increase it? - could DWP cope with the influx of cases? - implications for LAs plugging the gaps in support
  27. 27. 272727 Poll 1: What is your immediate concern?
  28. 28. 282828 Over to Louise What are people’s main concerns?
  29. 29. How does the job retention scheme work? ● The employer has to apply for the job retention scheme, leaving some employees feeling powerless/ confused. It’s a fundamentally different process to applying for benefits. ● Employers must confirm in writing that an employee has been furloughed to be eligible to claim the grant. The employee must agree. ● If the employer is not paying what the employee is entitled to, this is a matter for the Advisory, Conciliation and Arbitration Service (ACAS).
  30. 30. Q: I started a new job after 28th Feb - am I eligible? A: With your new employer, no. It is possible for your old employer to re-employ you and place you on furlough. The decision rests with the old employer. (Will this happen much in practice?) Q: I’m on a zero-hours contract - am I eligible? A: Yes, as long are you’re on a PAYE payroll. The 80% will be based on an average of your regular monthly wages Q: What is the 80%? Gross or net? A: 80% of your gross wage. Income Tax, National Insurance, Student Loan repayments and pension contributions will be deducted as normal. Q: Can I work another job whilst on furlough? A: Yes - as long as there’s nothing in your contract preventing you from working a second job. How does the job retention scheme work?
  31. 31. Q: I’m shielding for at least 12 weeks due to an underlying health condition. What am I eligible for? You will not be eligible for SSP or New Style ESA. These are only an option for people who are self-isolating due to suspected Coronavirus in the household - not for people who are shielding. You will be eligible for the Job Retention scheme if their employer agrees to place them on furlough. If this is not possible, check eligibility for UC, CTS and free school meals. I’m shielding, what support can I claim?
  32. 32. I’m receiving WTC, will I be moved onto UC? Q: I’m receiving WTC and my hours have dropped - will I be moved onto UC? If this is a temporary change due to Coronavirus, HMRC will ignore this change in working hours for at least the next 8 weeks. If you are self-employed and have temporarily reduced your hours/ stopped trading, this will also be ignored. Tax credits will continue to be paid based on your old working hours. If this a permanent change, you’ll need to inform HMRC and move to UC (if eligible). Consider making a claim for CTS - this won’t trigger a move to UC. Some households may be better off choosing to move to UC - but each household should do a benefit check before claiming. Bear in mind the five week wait, future MIF for self-employed households, etc.
  33. 33. I don’t qualify for the self-employment scheme Q: I don’t qualify for the self-employment scheme - what support can I claim? People who don’t qualify include: those whose self-employed income makes up less than half of their taxable income, have profits over £50,000, weren’t self- employed in the 2018-19 tax year. Self-employed people aren’t eligible for New Style JSA - this requires you to have worked and paid Class 1 National Insurance contributions (different to New Style ESA). Check eligibility for UC and CTS if savings are under £16,000. Other support mentioned earlier, e.g. business interruption loan.
  34. 34. I don’t qualify for any support Q: I’ve got no recourse to public funds and don’t qualify for Universal Credit. What can I claim? Some people won’t be eligible for most support - the two groups we’re hearing from most are students and those with no recourse to public funds. Both of these groups are eligible for the Job Retention Scheme/ Self-employment Income Support Scheme and New Style JSA/ESA. Students may be eligible for UC if their partner is eligible. People with no recourse to public funds may be eligible for UC if their partner may be eligible for UC (but only a single person allowance). They can get medical care if ill with COVID-19. As of April 2020, EEA nationals will need settled status to claim CTS. Local authorities may be able to help - people with no recourse to public funds can now get LA homelessness support. LAs may also be able to signpost to local charities and mutual aid groups.
  35. 35. 353535 Over to Peter
  36. 36. Who are your vulnerable groups?
  37. 37. Identify Engage Track People who need your support the most Your residents with targeted support The impact of policy and effectiveness of interventions
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  42. 42. Show the situation in the calculator
  43. 43. Should I move to Universal Credit?
  44. 44. What happens when my circumstances change?
  45. 45. Self-serve Benefits and Budgeting Calculator to triage customer support
  46. 46. Use a benefits calculator with eligibility built in
  47. 47. 494949 Questions and answers
  48. 48. ● For up to date information on the welfare support available see ● Our basic Benefits Calculator is listed on and is free. Whilst it doesn't have the built-in features to help all frontline advisors give the best support they can, it is as accurate and simple to use. Access the free Benefits Calculator ● Self-serve calculator to triage customer support ● Follow up email with webinar recording and slides, with links ● Short survey to follow ● Next webinar: Coronavirus: stories from the frontline on Wed 22 April at 10:30 Tools that can help
  49. 49. 515151 Thank you Zoe Charlesworth Louise Murphy Peter Carter Policy in Practice 0330 088 9242