Changes to social welfare provision as a result of COVID-19
Lucy Cadd discusses how changes to benefits amid the COVID-19 pandemic have affected particular groups of claimants
Posted on 12 May 2020
“We are all in this together” has often been cited as the motto of the pandemic. It suggests that we are all affected in the same way, whether rich or poor.
However, as the virus spreads, it is becoming increasingly clear that that this is simply not true.
Low-income households and those in receipt of benefits are disproportionately affected by the effects of the COVID-19 outbreak.
Those individuals are less likely to have the cash reserves to enable them to weather unemployment or the rising cost of living due to supply shortages.
They are more likely to live in densely populated neighbourhoods which allows the virus to spread more quickly. They are more likely to work in frontline services, meaning they are more exposed to the disease.
The analysis extends even further when considering how COVID-19 has had an impact on different ethnic groups, and the reasons for that. It is clear that “all in this together”, we are not.
Against the backdrop of the changes being made to welfare provision and the staggering number of new claims to universal credit (nearly a million new claims were made in the last two weeks of March 2020), BBC journalist Emily Maitlis rightly described COVID-19 as, “a health issue with huge ramifications for social welfare, and… a welfare issue with huge ramifications for public health”.
Those who have historically derided the welfare state as being a burden on the economy must now have to accept that it has a very real purpose.
Thankfully, with the Coronavirus Act 2020 the government has responded by bringing in a raft of measures intended to address the inherent inequality of the situation.
We have set out below the most prominent changes made to social welfare provision (both to the level of provision, as well as administrative changes to the delivery of benefits), but we will also consider whether those measures have gone far enough.
Changes to social welfare
Statutory Sick Pay is now paid from the first day of sickness, rather than the fourth, for those with coronavirus or symptoms of it (the requirement for medical certification has also been dispensed with). However, it is still only paid to employed people, the self-employed are required to claim universal credit.
Anyone making a new claim for a benefit, such as universal credit, will no longer be required to attend an appointment at a job centre to complete their application. Indeed, no benefit claimants will be required to attend face-to-face assessments reviews and reassessments for sickness and disability benefits, for three months.
Conditionality linked to work searches and jobseeking in universal credit and jobseeker’s allowance has also been suspended for three months from 30 March. Sanctions should therefore not be applied for failing to meet work-search requirements, but it is not clear whether sanctions might still be applied for other reasons.
On 30 March it was confirmed that the running of the managed migration ‘Move to UC’ pilot in Harrogate had been “temporarily” suspended.
Changes to the payment provisions in certain benefits
A widely publicised change to the system came in the announcement that both universal credit and working tax credits have been increased by £20 a week. Although this was styled as the ‘worker’s support package’ by the government, it in fact applies to everybody claiming universal credit in any capacity, not just workers. The increase is for one year only. Individuals on legacy benefits were not afforded the same uplift.
For the self-employed claiming universal credit, the minimum income floor has been suspended for the duration of the coronavirus outbreak. This means that the self-employed will now have access to and be paid universal credit even if they do not earn their required minimum income.
In addition, for people who receive financial assistance with their rent through housing benefit or universal credit, the local housing allowance rates have been increased to at least 30 per cent of market rents in each area.
Equally, a suspension on the recovery of overpayments, tax credit debts and social funds by the Department of Work and Pensions has been applied.
Has further inequality been introduced by these measures?
Whilst these measures are of course all welcome, it is not the case that everyone receiving benefits has been treated equally, even some particularly vulnerable groups appear to have been overlooked.
A stark example of this are those people who are in receipt of legacy benefits such as employment and support allowance, which has not been afforded the £20 per week uplift granted to those on universal credit and working tax credits.
Individuals who claim employment and support allowance are mostly unable to gain employment because of their ill-health or disability. Whilst some ESA (and other legacy) claimants do receive more than some individuals in receipt of universal credit, they generally do so because of the fact that being unwell or disabled has an associated cost. The disability charity, Scope, has found that on average, disabled people face extra costs of £583 a month. It also found that one in five disabled adults face extra costs of over £1,000 a month, even after they have received welfare payments designed to meet those costs.
The uplift to UC and working tax credits reflected the fact that the public health crisis is likely to increase the cost of living, which could be said to apply even more acutely to those who are in poor health or disabled. Whilst the government has been encouraged to apply the uplift across the board, they have not yet done so. Some suspect that the reason they have not done so is to incentivise those on legacy benefits to claim universal credit. It would be a matter of great concern if government might use such a tactic during a public health emergency.
A concerning consequence of the uplift to universal credit and working tax credits is that some individuals and families now find themselves subject to the benefit cap, meaning that they will not receive the full value of the uplift. This, we suggest, defeats the entire purpose of the stated uplift and lays bare the unfairness inherent in the benefit cap.
We are also concerned that individuals with disabilities who work and claim working tax credits to top up their income, might be forced to claim universal credit if they are made redundant during this time because redundancy would be regarded as a change in circumstance. If workers are forced to migrate onto universal credit, they will not receive transitional protection and are likely to experience a significant drop in their entitlement. We consider that government should afford this category of disabled workers protection against this occurrence.
In addition, the government has not given proper consideration to the needs of families with children. Households with children are more likely to be poor, a situation intensified when income levels drop and expenditure is increased as a result of children being at home rather than school.
The Child Poverty Action Group is currently campaigning for a £10 increase to child benefit which, according to its analysis, would reduce both child poverty and household poverty by a greater margin than the uplift which has been applied to universal credit and working tax credits.
CPAG, along with a number of other organisations, has also written a letter to the government urging it to discontinue the policies which cap the benefits of families outside London at £20,000, and which limit the provision of financial assistance to the first two children born into a family.
Another group of people who appear to have fallen through the cracks of the government overhaul of the welfare system are students who have lost part-time jobs, but who are ineligible to claim universal credit because of their status as being in full-time education.
The value of the welfare state is now even more self-evident. Whilst the government has responded to the initial stage of the crisis it is clear that further inequalities have been created by that response.
Those inequalities desperately need to be addressed before we enter into the recovery phase. That stage will present even more complex challenges for the country and therefore the welfare state.
The UN special rapporteur on extreme poverty and human rights, Philip Alston, has rightly called for “deep structural reforms that will protect populations as a whole and build resilience in the face of an uncertain future.”