***Information provided by the House of Commons Library***
Coronavirus may create significant new demands on the benefits system. People who become sick or are suspected of being sick, as well as those who care for them, may not be able to work.
Earlier this month, the Government advised that those who are not entitled to Statutory Sick Pay (SSP) should claim ‘New Style’ Employment Support Allowance (ESA) and Universal Credit (UC). But this prompted questions about the practical difficulties of claiming these benefits during periods of ‘self-isolation’.
In response, as part of the 2020 Budget, the Government announced a series of measures to ease and speed up access to certain benefits for those who are affected, and provided extra discretionary funds to local authorities.
This Insight outlines these measures. It should be read as accurate at the time of publication. The Government has signalled that it is open to further action if necessary.
What is the situation for those self-employed?
Many employees will be entitled to Statutory Sick Pay if they fall ill. Recent changes have been made to make this payable from the first day of illness.
The Government has advised people who are not entitled to SSP, including those who are self-employed, to claim Universal Credit (UC) or contributory ‘New Style’ Employment Support Allowance (ESA).
‘New Style’ ESA may be payable to people, whether employed or self-employed, who have a disability or a health condition which affects how much they can work (such as coronavirus). This is as long as they have paid enough national insurance contributions in the last two to three years.
For most self-employed UC claimants, after they have been self-employed for a certain period (usually 12 months, with certain exemptions) awards are calculated as if they earn national minimum wage for the number of hours they are supposed to work. This is even if their actual income is lower than this.
This is known as the ‘Minimum Income Floor’ (MIF). If their earnings fluctuate over the year, this can result in self-employed people receiving considerably less than an employee with exactly the same annual income.
Chancellor lifts Middle Income Floor for those affected by coronavirus
On 4 March, the Chair of the Work and Pensions Committee, Stephen Timms MP, wrote to Thérèse Coffey, Secretary of State for Work and Pensions noting that self-employed people who make a claim for UC as a result of being unable to work due to coronavirus, “risk being disadvantaged” by the MIF. This is “if their income decreases (or stops) as a result of their inability to work.”
As part of the Budget, the Chancellor Rishi Sunak, announced he was: “temporarily removing the minimum income floor in Universal Credit.” The Budget document clarified that this applied to those “directly affected by COVID-19 or self-isolating according to government advice” and this would be the case “for the duration of the outbreak.” It said this would ensure self-employed claimants are compensated for losses in income.
Will there still be face-to-face meetings for benefit claims?
Before most UC claimants receive their first payment, or get an advance payment to tide them through the initial five-week-wait, most have to attend a face-to-face meeting.
These Jobcentre interviews have two main purposes: to check identity, and to have a conversation with a work coach about UC and any relevant conditions to claiming. In the Budget, the Government promised measures to remove these requirements for those who are advised to self-isolate. It said:
“People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.”
Normally, new claimants completing claim forms for ‘New Style’ ESA have to book a ‘new claim appointment’ at their Jobcentre in order to complete their claim. There have been no Government announcements relating directly to the appointment at the time of writing.
Temporary regulations have made changes so that those affected can be treated as having limited capability for work. This does not require any medical evidence or having to undergo a work capability assessment.
Will claimants avoid a benefits sanction if they are self-isolating?
Many benefit claimants, particularly those with work-related requirements, have regular meetings in Jobcentres with a work coach. Attending these is often a condition of the claim, and missing them can result in sanctions.
The Government has asked DWP staff to use discretion so that those affected by coronavirus will not be sanctioned. The Secretary of State for Work and Pensions, told the Commons on 9 March: “[claimants] will not be sanctioned as long as they let us know before the appointment.”
The DWP’s Understanding Universal Credit webpage on Coronavirus (accessed 12 March) provides instructions for what claimants should do if they are given medical advice to self-isolate. It says:
- If you can’t attend a jobcentre appointment because you need to self-isolate, don’t worry.
- Tell us as soon as possible to avoid a sanction.
- Contact your work coach via your online journal or by phone to explain your situation.
When will new benefit claimants receive their first payment?
Claimants are not usually entitled to ESA for the first seven days of their claim. It is also paid every two weeks in arrears, meaning the first payment is usually made within three weeks.
In his 4 March letter, Stephen Timms asked if the DWP could set out how claims for ‘New Style’ ESA would work for people required to self-isolate.
In the Budget, the Chancellor announced that ESA would be, “payable for people directly affected by COVID-19 or self-isolating… from the first day of sickness, rather than the eighth day.” Given that payments are made fortnightly in arrears, claimants who meet these criteria should receive their first payment after around two weeks.
No changes have been announced concerning UC waiting times, so new claimants will usually have to wait around five weeks before receiving their first monthly payment. They can apply to receive a repayable advance on their first payment in the days immediately following their claim.
Has the Government offered any additional support?
The Budget included a £500 million ‘hardship fund’ available to local authorities to help them support vulnerable people during the outbreak. The additional support will boost local Council Tax relief schemes as well as “complimentary reliefs,” which may refer to the flexible support offered through Local Welfare Assistance schemes.
The Ministry of Housing, Communities and Local Government will provide further detail on this funding, including allocations.
In his Budget statement, Rishi Sunak described the Government’s package of measures as “comprehensive action,” but noted that more action would be taken if needed.
Support for those affected by Covid-19, HM Treasury, Budget 2020: 11 March 2020.
Understanding Universal Credit Coronavirus page, Department for Work and Pensions.
Coronavirus: Employment rights and sick pay, House of Commons Library, 10 March 2020.