SOCIAL INSECURITY: how the outbreak has affected your cases
April 2020 edition of CPAG's Early Warning System e-bulletin for England & Wales
TELL US ABOUT A CASE
CPAG collates case studies in our Early Warning System to demonstrate the impact of changes in the social security system on the wellbeing of children, their families and the communities and services that support them. If you have a case that shows how changes affect your clients, click "Tell us about a case" above. We won't ask for any identifying details.
COVID-19 CASES IN THE EARLY WARNING SYSTEM
Since the coronavirus disease (covid-19) was declared a pandemic, we have seen a marked shift in the type of cases logged in our Early Warning System. Cases submitted to us now concern a larger proportion of workers than ever before. For the first time, we are seeing fewer cases concerning delays and errors, and more concerning new rules and processes.
In this e-bulletin, we detail the most common queries raised by advisers over recent weeks, starting with the most prevalent.
Advisers have been asking us about the Coronavirus Job Retention Scheme which was announced on 20 March 2020 and directed by HM Treasury on 15 April 2020. You can check what support is available to clients who were working using our Support for workers during COVID-19 tool on the AskCPAG website.
Our Early Warning System tells us you’ve been asking:
Can employees claim universal credit (UC) whilst waiting for furlough to be paid?
Employees may claim UC whilst they are waiting for their furlough to be paid.
The wait for the first payment of UC may be longer than the wait for wages. Furloughed employees may be able to access a UC advance while waiting for their first UC payment.
Employers were previously waiting for the furlough scheme to be set up and for payments to be processed. The "Claim for wages through the coronavirus job retention scheme" page of the gov.uk website states that HMRC is now able to pay employers within 6 days of their claim for furlough.
How will furlough pay be treated in UC?
Furlough pay counts as earned income for UC, and will be treated in the same way as wages usually are.
Workers with low earnings may find that their wages are not enough to exempt them from the benefit cap.
Backdated furlough pay will not be apportioned over previous assessment periods, and will be treated as earnings in the assessment period in which HMRC is notified that the claimant is paid. If the total pay received in an assessment period is £2,500 over the amount that brings UC entitlement to £0, the claimant may be subject to surplus earnings rules (where the surplus earnings carry over into the next assessment period).
Should furloughed workers say they are currently working in the UC claim?
Furloughed workers should answer “yes” to the UC claim question “are you currently working?” This will ensure they are flagged for the appropriate work allowance, benefit cap exemption and link their claim to HMRC Real Time Information data.
Can people who live with someone who is shielding due to vulnerability access the furlough scheme?
Government guidance on employees who may be covered by the Job Retention Scheme includes people who are shielding and people who have to stay home with someone who is shielding.
What happens if my employer is refusing to furlough me?
The Early Warning System has received a number of cases concerning employees who are worried about going to work but have been refused furlough by their employer. They feel that they must choose to continue working or lose their job.
Cases include care and factory staff working in close quarters. Some were told that they couldn’t be furloughed yet because the Job Retention Scheme was not yet in place (before 20 April 2020). Others, including asthma sufferers, were told that they couldn’t be furloughed at all because they were not vulnerable enough. We are hearing that risk assessments may advise employers to use the scheme but such advice, which is non-statutory, is not enforceable by the Health and Safety Executive.
People who stop working may start a UC claim.
Someone who ceases paid work voluntarily without good reason prior to claiming UC would usually be at risk of sanction [Section 26(2)(d) of the Welfare Reform Act 2012 and regulation 102 of the Universal Credit Regulations 2013]. The rules governing sanctions for ceasing work are not affected by the three month suspension of work search and availability requirements [brought in on 30 March 2020 by regulation 6 of the Social Security (Coronavirus) (Further Measures) Regulations 2020] but it’s unclear what’s happening in practice.
2. HABITUAL RESIDENCE TEST
The Early Warning System continues to receive a high number of cases concerning eligibility to claim UC as an EU citizen. Families who have no income and cannot claim UC become destitute immediately, and at this time, do not have the option of returning to their country of origin.
Work stopped due to outbreak
EEA nationals who were working prior to the outbreak may retain their worker or self-employed status when work stopped.
For more details on who can retain their worker status, see “Retaining worker or self-employed status” in CPAG’s Welfare Benefits and Tax Credits Handbook (Part 11: Immigration and residence rules for benefits and tax credits > Chapter 68: Coming from abroad: residence rules > 5. Who has a right to reside available here on AskCPAG).
The three month suspension of work search and availability requirements in UC and New-Style JSA [brought in on 30 March 2020 by regulation 6 of the Social Security (Coronavirus) (Further Measures) Regulations 2020] has not changed the rules regarding right to reside. We may nonetheless see less rigidity in Habitual Residence Test decisions, particularly with regard to seeking employment and having a genuine chance of being engaged.
Family member of worker
EEA nationals without their own worker or retained worker status may rely on the status of a family member.
You can read details about who counts as family member in CPAG’s Welfare Benefits and Tax Credits Handbook (see under “Family members” in Part 11: Immigration and residence rules for benefits and tax credits > Chapter 68: Coming from abroad: residence rules > 5. Who has a right to reside available here on AskCPAG).
Pre-settled status only
Pre-settled status can be granted to EEA nationals who do not yet have 5 years continuous residence in the UK. The DWP does not currently accept that this status satisfies the Habitual Residence Test, although this is subject to challenge. Read about CPAG’s legal challenge on the EU pre-settled status test case page of the CPAG website.
People with pre-settled status should check whether they have any other right to reside which will permit them to claim UC. Otherwise, they may want to challenge the DWP’s decision to refuse their claim. Use CPAG’s tool for drafting the mandatory reconsideration request on AskCPAG and when you receive a decision, lodge an appeal. Your appeal is likely to be stayed behind the legal decision above, but this will protect your client's position.
3, SELF-EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)
Most of the cases that the Early Warning System has received about SEISS mirror the most common queries about furlough. You can check what support is available to clients who were working using our Support for workers during COVID-19 tool on the AskCPAG website.
Can self-employed people claim UC whilst waiting for the SEISS?
The SEISS is not yet open to applications. The government guidance on how to claim from the SEISS states “You cannot make a claim yet. HMRC will aim to contact you by mid May 2020 if you’re eligible for the scheme, and invite you to claim using the GOV.UK online service.”
Self-employed people may claim UC whilst they are waiting for the SEISS to be set up and paid.
How will SEISS funds be treated by UC?
SEISS funds count as earned income for UC, and will be treated in the same way as earnings usually are.
Self-employed people waiting for payment may be subject to the benefit cap.
Backdated SEISS funds will not be apportioned over previous assessment periods, and will be treated as earnings in the assessment period in which HMRC is notified that the claimant is paid. If the total pay received in an assessment period is £2,500 over the amount that reduces UC entitlement to £0, the claimant may be subject to surplus earnings rules (where the surplus earnings carry over into the next assessment period).
What happens if I can't access the SEISS?
We have been hearing about self-employed people who already know they will not be able to access the scheme, for example:
- Those who have not been self-employed long enough because applicants need to have filed a tax return for 2018-19
- Self-employed directors who have incorporated their businesses and pay themselves a wage. These people are legally employed but cannot furlough themselves because they need to work to keep their business running. Many are ineligible for the Small Business Grant Fund too because they do not pay business rates (e.g. their business is based at home).
Self-employed people can claim UC as long as their current earnings and capital are low enough.
What capital is counted for UC?
Some self-employed people are unable to claim UC because their capital is over £16,000.
Savings count as capital but the DWP has confirmed that funds set aside for tax or national insurance liabilities may be ignored. They need to be held in a business account or the claimant may need to prove that the funds are for business purposes.
Business assets do not count as capital for self-employed people. Companies or shares in companies count as capital, which may affect self-employed directors.
Check CPAG’s Welfare Benefits and Tax Credit Handbook for more detail about what counts as capital (Part 2: Universal Credit > Chapter 8: Capital > 3. What counts as capital and 4. Disregarded capital available here on Ask CPAG).
4. NEW-STYLE EMPLOYMENT AND SUPPORT ALLOWANCE
Advisers have been asking about eligibility and the claim process for New-Style ESA..
Can New-Style ESA be claimed by people who are shielding because they are vulnerable?
The Early Warning System was alerted to some confusion about eligibility for New-Style ESA.
Prior to 16 April 2020, there was some disparity between public health guidance and the benefit entitlement. Official guidance required people to isolate if they had symptoms of the virus, lived with someone who had symptoms or were extremely vulnerable to the virus. Statutory Sick Pay and New-Style ESA rules were amended to be payable from day one for the former two groups but not the latter.
The Statutory Sick Pay (General) (Coronavirus Amendment) (No.3) Regulations 2020 rectified the discrepancy, from 16 April 2020 onwards. People who have a medical letter advising them to remain home for 12 weeks may now qualify for SSP and New-Style ESA from day one of their claim.
Can New-Style ESA be claimed without starting a UC claim?
Advisers continue to tell us that people who want to claim New-Style ESA without starting a UC claim are being told by DWP staff that this is impossible. Many people will be better off proceeding without claiming UC because they are already in receipt of legacy benefits or tax credits.
New-Style ESA is a separate benefit to UC and can be claimed in isolation. A claim for New-Style ESA may be started separately to UC online on the Apply for New-Style ESA section of the government website.
How is New-Style ESA affected by SEISS?
New-Style ESA is a contributory benefit and should not be affected by income, such as money received from the SEISS. The SEISS awards are based on trading profits in previous tax years and should also not be affected by other income in the current tax year.
However, it is worth bearing in mind that claimants must have limited capability for work to claim New-Style ESA, and income from self-employment may indicate that a claimant does not have limited capability for work. Read more about the work you can do whilst claiming ESA in CPAG’s Welfare Benefits and Tax Credits Handbook (Part 7: National insurance, work and work-related rules > Chapter 45: Limited capability for work > 4. Work you can do while claiming employment and support allowance available here on AskCPAG).
5. BETTER OFF ON UC?
Early Warning System cases indicate that some claimants are reluctant to claim UC because they may lose their current legacy benefits or tax credits, and others have moved onto UC without realising that they would be worse off. Submit a case or email the Early Warning System if your clients are unsure about whether they will be better off on UC.
6, ID VERIFICATION
Reports of problems with ID verification in UC claims spiked at the end of March. Recent measures taken by the DWP include the redeployment of substantial numbers of staff to deal with new claims, implementing a “don’t call us – we’ll call you" policy and permitting claimants to verify their identity through the Government Gateway.
7. MINIMUM INCOME FLOOR
Advisers sought clarification about whether the minimum income floor (MIF) would be applied to self-employed UC claimants. Prior to 30 March 2020, the MIF applied to all self-employed claimants who were not within a grace period. On 27 March 2020, regulation 2(1)(a) of the Social Security (Coronavirus) (Further Measures) Regulations 2020 came into force and allows suspension or reduction of the MIF at the discretion of the DWP from 30 March 2020.
The existing grace period available for newly self-employed people for the first 12 months of their self-employment remains in place. The grace period is due to be extended in September 2020 to cover the first twelve months of new UC claims for all self-employed people.
8. MEDICAL NOTES
The Early Warning System has been told that some people are struggling to retrieve the medical evidence they need to claim benefits or to be furloughed. The Statutory Sick Pay (General) (Coronavirus Amendment) (No.3) Regulations 2020 have gone some way to remedying this, as people who need to shield for 12 weeks will now be eligible for SSP and ESA from day one of their isolation, from 16 April 2020 onwards.
Other cases have concerned people who have not received a letter advising them to shield, despite their vulnerabilities. We’ve also received cases demonstrating that claimants are having difficulty obtaining DS1500s to assist them to claim under special rules for terminal illness. Submit a case or email the Early Warning System about problems obtaining medical notes to help us raise awareness of these issues.
DO YOU HAVE SOMETHING TO TELL US?
Hearing about your cases has a profound impact on our work. If you have a case which shows how changes in social security affect you or your clients, please let us know.
Topics we are looking out for:
- Two Child Limit – is it affecting your clients?
- Benefit cap – do we need to keep pushing for the cap to be lifted?
- Bereavement gaps – are people falling through the gaps in bereavement protection?
- Childcare loss – are childcare places being lost due to failure to pay retainers or closure of nurseries?
- Your service – how are you coping with the changes?
DO YOU NEED CPAG'S ADVICE?
Our staff are working remotely so you can still access our services:
Advice by telephone
020 7812 5231 Monday-Friday 10am-12 and 2pm-4pm
Advice by email