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

Recap of the major
benefits changes and
Coronavirus (COVID-19)
Wednesday 8 April
Policy in Practice
webinar

Housekeeping
www.policyinpractice.co.uk
● Audio check
● Please ask questions
● Polls and a survey
● Aim to finish by 11:30
● Slides and recording will follow

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

Give the best support
you can to help people
on their way

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

666
Over to Zoe

Recap on measures put in place
www.policyinpractice.co.uk/coronavirus

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

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.

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

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)

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

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

Impact:1) UC claims

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%

Impact 2: Legacy vs Universal Credit

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

Impact 4: Benefit Cap
Outside London In London

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

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

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

Case study

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

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

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

272727
Poll 1: What is your immediate
concern?

282828 www.policyinpractice.co.uk
Over to Louise
What are people’s main concerns?

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).

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?

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?

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.

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.

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.

353535
Over to Peter

Who are your vulnerable groups?

Identify Engage Track
People who need your
support the most
Your residents with
targeted support
The impact of policy
and effectiveness of
interventions

Show the situation in the calculator

Should I move to Universal Credit?

What happens when my circumstances change?

Self-serve Benefits and Budgeting
Calculator to triage customer support

Use a benefits calculator with eligibility
built in

494949
Questions and answers

● For up to date information on the welfare support available see
www.policyinpractice.co.uk/your-income-and-coronavirus-covid-19/
● Our basic Benefits Calculator is listed on Gov.uk 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

515151
Thank you
Zoe Charlesworth
Louise Murphy
Peter Carter
Policy in Practice
hello@policyinpractice.co.uk
0330 088 9242

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

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