We have seen a significant government response to the financial hit many have faced because of the coronavirus – from the job retention scheme and self-employed income support scheme to the increase in universal credit (UC) and tax credits. While many families will have benefited from the stability and certainty these welcome interventions have given them, they have not been comprehensive. We are always most worried about the people who fall through the gaps – denied the support (whether by design or error) they need from the system that exists to support us all. For the past 18 weeks we have been monitoring and reporting on these gaps through our Early Warning System (EWS). This is what we have found.
1. Universal credit – the main benefit available to low-income families – is not available to everyone, even though working is now much more difficult for many.
Because it’s a household benefit, in couples where one person has lost their job but their partner has their own income or savings the person who is now without earnings may not be able to claim UC. Students also can’t claim UC unless they are disabled or have dependent children. They might normally supplement their student income with casual work, but the irregular nature of this work means that many have not been furloughed, so have no replacement income. Many will not receive any further student income until September.
Large numbers of migrants have no recourse to public funds, but are unable to financially support themselves through work at a time when many workplaces remain closed and vacancies are few. EU nationals without a right to reside can’t claim means-tested benefits, but we also know of those who should be able to claim but are being denied support. This becomes even more urgent when the person denied support is a victim of domestic violence having to ‘choose’ between surviving on little or no financial support, or returning to their abuser through financial necessity.
2. There has been no financial support for children (other than free school meal vouchers for a minority).
Families have struggled with the additional costs of children being at home due to school closures. Some parents have experienced a sudden loss of income due to job losses or not being able to work as a result of childcare responsibilities. Children need a Covid-19 bonus.
3. The benefit cap is affecting more and more families.
Increasing the UC standard allowance by £20 a week and local housing allowance rates to the 30th percentile will mean that families close to the level of being capped will now be capped. The increases in benefits – brought in in response to the crisis – will therefore not go to these households, even though they face the same financial pressures as other claimants. Families who were previously claiming benefits but were working a sufficient number of hours to escape the cap may find themselves newly capped if they have lost a job or their hours have dropped. Some of these workers will be protected by the ‘grace period’ which means claimants will not be capped for the first nine months if they are newly unemployed, however this relies on a consistent work history over the past year which many claimants may not have. Some families claiming benefits for the first time will have been hit by the cap too.
4. Ill and disabled claimants are losing out due to delays in work capability assessments.
We have seen some claimants losing out on significant amounts of financial support each month because of a delay in being assessed to determine their eligibility for this additional support.
Some of these claimants were subject to the benefit cap while they were waiting for an assessment that would result in them being awarded an ‘exempting benefit’ – which would prevent them from being affected by the cap – for example claimants who are awaiting, receiving, or recovering from cancer treatment. The EWS continues to receive case studies concerning claimants who are being subject to the cap for long periods while they wait for exempting benefits to be correctly applied to their claim
5. Claimants in receipt of severe disability premium (SDP) are transitioning on to UC in error.
We have heard about claimants who are in receipt of severe disability premium (SDP), and therefore should not claim UC, being advised to or making a UC claim in error. Claimants may also be struggling to access independent welfare rights advice (which has reduced over recent years and become even more difficult to get in the pandemic). For claimants who have made a claim for UC in error and are financially worse off as a result, they are likely to face significant delays and administrative hurdles to rectify the situation.
6. Families have been left worse off after moving onto universal credit without realising they’d lose their previous benefits.
Amid the confusion about entitlement with new rules and new forms of support, and with less access to independent welfare rights advice, many families claiming legacy benefits made a claim for UC and then found they could not return to their previous benefits and tax credits. UC offers less support to some groups, for example some families with disabled children will be worse off on UC, and by moving in this way rather than through managed migration these families won’t get a transitional payment to ensure they’re not worse off. Some may have been tempted to move to UC given the increase – legacy benefits such as employment and support allowance have not been increased by £20 a week – without realising this is an irreversible decision which may leave them worse off overall. The DWP has since taken steps to warn tax credit claimants before they make a claim for UC, but for many this is too little too late
7. There are gaps in financial protection for some bereaved claimants.
The pandemic has already claimed tens of thousands of lives and many of those affected will have been in receipt of legacy benefits. People who claim UC for the first time because their existing benefits stopped after the death of their partner or family member are not receiving the same protection as other claimants because bereavement protection doesn't apply in legacy benefits when the deceased partner was the lead claimant. They are suddenly losing their benefit entitlement after the death of a loved one – hitting people with financial worries at the worst possible time.
8. There have been problems with the job retention scheme.
We have heard that some eligible workers have been refused requests to be furloughed. With schools and childcare providers closed, many parents have been unable to work. Guidance for the Job Retention Scheme states that employees who need to look after children can be furloughed, but some employers have been reluctant to use the scheme if the work is still available, expecting parents to take unpaid leave instead, with disastrous effects on families’ incomes. This is particularly affecting lone parents.
9. Debt recovery, conditionality and sanctions have restarted even though the crisis continues.
July saw benefit-related debt recovery re-start. We know from evidence before the pandemic that people having repayments taken from their subsistence benefits can then face hardship. The suspension of benefit debt recovery at the start of the pandemic had provided some temporary relief for families who are struggling financially. It is disappointing that the DWP has deemed it necessary to re-start benefit debt recovery at a time when many claimants are unemployed with little prospect of finding a job in an extremely challenging labour market, and with many childcare facilities remaining closed. The job market and childcare are also reasons why sanctions and conditionality should not have returned. And if a sanction forces a claimant to take a hardship payment, that causes yet more debt. The DWP has said that they are taking a phased approach to the re-introduction of conditionality, and that claimant commitments will be tailored to the ‘new normal’ taking into account local job markets and personal circumstances in order to prepare claimants for getting back into work, but we need reassurance that this will be the case in reality.
The Chancellor’s response to the pandemic and lockdown has proved that we can be ambitious about how we support people through difficult times. But it’s vital that support is there for all of us when we need it. The government needs to address these gaps to ensure that everyone can always benefit from stability and certainty – whether during a global crisis on the scale of Covid-19 or because they’re facing life-changing events such as illness or bereavement whenever they happen.