Policy review of the year and forward look to 2021

Policy in Practice
2020: A policy review of
the year, and look forward
to 2021

Housekeeping
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A team of professionals with extensive knowledge of the welfare
system. We’re passionate about making social policy work
We help over 100 local authorities use their household level
data to identify vulnerable households, target support and track
their interventions
Our benefit calculator engages over 10,000 people each day.
We identify the steps people can take to increase their income,
lower their costs and build their financial resilience
Policy in Practice: What we do

Today’s speakers
Zoe Charlesworth
Director of Policy and
Operations
Policy in Practice
@zoecharleswort1
Paul Howarth
Policy Consultant
Policy in Practice
Duncan Hatfield
Senior Policy and Data
Analyst
Policy in Practice
@drh000
Deven Ghelani
Director and Founder
Policy in Practice
@deven_ghelani

Agenda
www.policyinpractice.co.uk/policy
● A brief recap of the demand on the welfare system in 2020, and the policy
changes that were introduced
● Understanding the implications through our research and analysis
○ Universal Credit in Wales
○ Local Housing Allowance and homelessness
○ Introduction of COVID-19 measures
○ Local Housing Allowance and the benefit cap
○ Sick pay and Test and Trace
○ Free School Meals
● A looking to what the future may hold

A brief recap of 2020
More people now need the support of the welfare system
● 5.7m people receiving Universal Credit, 90% increase (Mar - Sept)
● 1.6 m people unemployed and looking for work, 117% increase (Mar - Aug)
● 7.5 m furloughed workers (August)
● 800,000 job losses since February (estimated will be 2m by April 2021)
There has been an increase in debt
● 6 million adults have fallen behind on at least one bill during the pandemic
● 2.8 million households have missed a council tax payment
Sources: ONS, OBR, DWP, Citizens Advice

The government’s response
● Coronavirus Job Retention Scheme (furlough scheme)
○ Up to 80% of wages (up to £2,500) until the end of March 2021
○ Must be on PAYE payroll on 30 Oct. Ex-employees on the payroll on 23
Sept can be re-employed and furloughed
● Self employed grant extended
○ 3 months from Nov to Jan 2021 with a further grant from Feb - April 2021
○ 80% of trading profits (up to £2,500 a month)
● LHA increased to the 30th percentile (retained to 2021 and frozen thereafter)
● Benefit increases: MIF suspension and £20 uplift to UC and WTC
● Grants for businesses
● Payment holidays (up to a total of 6 months) and eviction protections
● £170m to councils to provide Christmas support with bills
● Spending Review (Nov 20) provided support to councils for CTR (£670M)
and CT debt (£762m)

But many people fall through the gaps
● Employed and self-employed not eligible for support schemes
● Households not eligible for UC
○ partner’s income
○ over £16,000 capital
○ No Recourse to Public Funds
○ Students
● People who do not benefit from Covid benefit uplift
○ legacy benefits and should not move
○ benefit capped
● Discretionary support has tried to plug the gaps (e.g. DHPs, Winter
Support Fund, food banks)

Frontline organisations have been
incredible
Our clients have dealt with big
logistical challenges coupled with
huge increases in demand
They’ve responded speedily and
effectively, often with little notice
And supported many people who
are new to the benefits system

A look at some findings from 2020
www.policyinpractice.co.uk/policy
Paul Howarth
• The impact of Universal Credit in Wales
Zoe Charlesworth
• The link between the LHA freeze and homelessness
• How April’s uplift helped households hit by Coronavirus (COVID-19)
• The interaction of the LHA and the benefit cap
Duncan Hatfield
• How low sick pay may undermine Test and Trace
• The implications for households of covering holiday meals

Over to Paul

Four key lessons learned
www.policyinpractice.co.uk/wales
We set out to provide the evidence to inform the Welsh
Government’s choice of their CTR scheme.
1. A generous CTR scheme pays off
2. Universal Credit has resulted in council tax (and rent)
arrears
3. Awareness of CTR, and take-up, are still too low
4. The impact of Universal Credit on CTR can be
mitigated

A generous CTR scheme pays off
● Welsh Government funded 10% budget cut in 2012-13
● CTR scheme covers all 22 authorities in Wales
● All awards based on 100% liability
● Collection rates and council tax arrears have remained
broadly constant
● Consistent with other studies we have done

Universal Credit resulted in council
tax (and rent) arrears
● Council tax arrears more prevalent amongst households in receipt of
Universal Credit
● Amongst those with arrears, Universal Credit is associated with a higher level
of council tax arrears compared to legacy benefits
● Most households that are not in council tax arrears under legacy benefits
remained with no arrears under Universal Credit
● Council tax arrears were more likely to increase under Universal Credit than
legacy benefits
● Reasons: lower benefit amounts, five week wait and monthly budgeting

Awareness and take up of CTR
are still too low
● Take-up of CTR estimated to be around
60% in Wales
● Welsh Government mounting an active
campaign
● Targeted interventions work best
● Our survey showed some people thought
CTR was part of Universal Credit
● Others didn’t know whether they were
receiving CTR
● And some were not applying for fear of
overpayment recoveries

The impact of Universal Credit
on CTR can be mitigated
● Policy decisions can be made to mitigate
the impact of Universal Credit on CTR
● Reduce taper rate
● Don’t carry forward two-child limit or
Minimum Income Floor into CTR

Project extended: The impact of
Covid-19 on CTR in Wales
● Understanding the impact of the economic consequences of COVID-19 on
CTRS to date
● Monitoring and evaluating the impact of changing caseloads to March 2021
● Forecasting impact on future CTRS caseload
● Forecasting impact on arrears and council tax collection rates

Poll 1: Are you expecting cuts to your
budget?

Over to Zoe

Local Housing Allowance
freeze and homelessness
Finding 1. Housing benefit doesn’t cover the rent of most private sector
renters who receive it
● Pre April 2020 LHA rates sat at the 13th percentile of market rents
● Six local authorities in the UK showed 100% of private rented dwellings with
rents above the LHA
Finding 2. The gap between LHA and rent is proven to drive homelessness
● For every 10% increase in households experiencing a rent gap the proportion
in temporary accommodation will increase 1%
● For every 1,000 households experiencing a shortfall, 44 will require temporary
accommodation

Finding 3. Restoring the LHA rate to 2016 levels would reduce
homelessness
● The average council would see 650 fewer households with rent below the
LHA and 300 fewer households in temporary accommodation
● The average gross cost of temporary accommodation for a council would
reduce by between £1.4m and by £3m
Finding 4. Spending savings from reduced Temporary Accomodation cost
on prevention would see nearly 1,000 families avoid homelessness
● It would support around 2,500 additional prevention and relief cases
● It would prevent an additional 975 households becoming homeless
Local Housing Allowance
freeze and homelessness

April’s uplift helped households
hit by COVID-19
From April 2020 the basic allowance in Universal Credit and Tax Credits
was increased by £20 a week
● A single claimant aged over 25, and not working, will see their Universal
Credit increase from £317 to £410 a month from April 2020, or from £499 to
£595 a month for a couple. This is an increase of over £90 a month or 29%
● This rise more than covers the loss in real income caused by the benefits
freeze for the standard allowance but doesn’t apply to other elements of
Universal Credit which have been frozen from April 2016 to April 2020,
introduced as part of austerity measures

To support private renters, the cap on rental costs, the Local Housing
Allowance was increased to align with the 30th percentile of local rents
● The increase in benefit support will vary across local authorities. For
example, rental support will increase by 21% in Manchester and 2% in
Sunderland
● On average, private renters will see awards increase by an average of £123
a month (8.4%)
● The proportion of private renters with Universal Credit awards that are less
than their outgoings falls from 13% to 7%
hit by COVID-19

To support self-employed people, Universal Credit awards will be based
on actual income rather than notional income (Minimum Income Floor)
● On average, self-employed households will see a significant increase in
awards of £398 a month (28%)
● The proportion of self-employed households with Universal Credit awards
that are less than outgoings falls from 44% to 7%
hit by COVID-19

Interaction of the LHA and
benefit cap
The April 2020 COVID-19 benefit increases have not fully reached the
households who should benefit the most because of the benefit cap
● Households who were already capped have not received increases worth
£219 a month, on average
● Private sector renters with children who were already capped will not
receive increases worth £431 a month, on average
● Households who have become capped will not receive increases worth
£185 a month, on average
● Private sector renters with children who have become capped will not
receive increases worth £400 a month, on average

Outside London In London
Interaction of the LHA and benefit cap

Over to Duncan

Low sick pay and Test and Trace
● In June, we estimated the average working low-income household would lose
58% of their usual fortnightly take-home pay if self-isolation meant they had to
rely on sick pay alone. That’s a loss of £176 in just two weeks
● Many households are not even eligible for Statutory Sick Pay
● We found that self-isolation would push 16% of working low-income
households into a cash shortfall
● The impact of this potentially even worse for households not on benefits who
earn more, and therefore have even more to lose during isolation

A clear disincentive to isolate

The government’s response
● September: Government announced a £500 grant for people receiving benefits
● Evidence and anecdotes suggest very low uptake so far, which means the
disincentive we identified is still having an effect
● Widespread vaccination should end the pandemic but questions over whether
further investment in Sick Pay would pay for itself remain

Free school meals
● 20% of families (1 in 5) in
receipt of free school meals are
unable to meet costs in school
holidays without extra support
● 4% of families (an estimated
33,000 across England) who get
free school meals in term time,
and can meet their costs, are
pushed into cash shortfall in
school holidays as a result of
extra food costs

FSMs cost parents far more than the
government
● The Covid Winter Grant Scheme is now in place up to March 2021
● We are working with councils to help target that support where it is most
needed, but our research shows a long-term package of support over school
holidays is also still required

Longer-term solutions
● Both Sick Pay and FSMs have required emergency action from the government
this year - but these problems will not disappear as the pandemic fades
● Sustainable, long-term policies which help local councils to address issues
around child poverty and hardship are required
● Longer-term solutions also need to consider how FSMs impacted families with
more children, and how that interacts with the benefit cap and the two child
limit, so we recommend:
○ increasing or removing the benefit cap, particularly during the pandemic
when households may not have the option to work
○ scrapping the 2-child limit, at least for as long as other Covid measures are
in place

Over to Deven

Poll 2: What are your priorities for
2021?

Sunlit uplands?
● We have a vaccine
● Brexit: Deal or No Deal?
● Deficit: Austerity mark II, or spending to
promote growth?
Will government recognise it needs to invest in
social security and supporting people?
● £20 uplift to Universal Credit is uncertain
● £2.9bn Restart Scheme and expansion of JCP
● £10bn reduction in departmental budgets
The outlook for 2021

● Analysis on the recovery from COVID-19 and on the impacts of Brexit on
employment, caseloads and financial resilience presented to Brexit APPG,
and carried out for clients including Adur and Worthing, Greenwich and Luton
● Join our January 2021 council tax support webinar: model changes to your
support schemes to account for caseload changes and policy impacts
● Work with us to unlock the value of your data so you can target the right
support your residents early, before problems get out of hand
We help organisations plan for the future

Opportunity to make longer term change
Universal Credit has shown that it can deliver benefits to people at scale, and
cope with the pandemic where the legacy system would not have been
However, there is still room to improve UC:
● Introduce greater flexibility into Universal Credit, e.g. backdating, consent,
payment flexibility and next months UC
● Making the most of Universal Credit data
○ Roundtable tomorrow for local authorities wanting to learn more
○ A clear role for local authorities in provide holistic support
● Revisit and reverse austerity measures and help the economy and society
recover in an inclusive way

Practical tools that can help
● Benefit and Budgeting Calculator
● LIFT Dashboard
● Coming soon: Nesta - Next month’s UC and app for consumers
● Stay updated on policy changes with Policy in Practice:
○ www.policyinpractice.co.uk/coronavirus
○ Monthly newsletter
○ Free monthly webinars:
Wed 27 Jan: Flexible collections policies

Questions and discussion

Thank you
Zoe Charlesworth, Director of Policy and Operations
Paul Howarth, Policy Consultant
Duncan Hatfield, Policy and Data Analyst
Deven Ghelani, Director and Founder
hello@policyinpractice.co.uk
@policy_practice
0330 088 9242

Policy review of the year and forward look to 2021

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