Two new reports out this week show how COVID-19 has affected the social security system, revealing that the claimant count has more than doubled since February.
Data from the Office for National Statistics (ONS) shows the impact of the COVID-19 on the jobseeker claimant count which has increased by 117%. In addition, research by a group of universities finds that new claimants are more likely to be young, BAME, male, not disabled, upper-middle class, graduates and owner-occupiers, compared to pre-COVID claimants.
The claimant count rose by 117% from February to August 2020
The headline statistic showing a 117% increase in jobseeker claimants masks huge variation across local authorities. The lowest increase was in Inverclyde (+46%) and the highest was in Surrey Heath (+296%).
The most striking observation is that areas with low unemployment before the pandemic appear to have seen the biggest rise in the claimant count. For example, Surrey Heath (+296), Hart (+279) and Woking (+266) saw claimants almost triple, albeit from a lower base.
The situation is likely to get worse, with the Office for Budget Responsibility (OBR) estimating that (in a best case scenario) 10% of people on furlough will face job loss. The self-employment income support scheme is also set to end at the same time in October, and the Minimum Income Floor set to be reinstated in November 2020, affecting self-employed people. This is expected to push unemployment up to 10% (from 4.1% in July) an increase of 2.1m (to 3.4m).
The challenge for these councils is whether they can handle a surge in demand for support, with many claimants needing help for the first time, and councils themselves adapting to new working practices. Our work has found that the benefit system can be difficult to navigate, and councils can better cater for this with the right support.
New claimants are less likely to be disabled, and from higher paying occupations
Welfare at a Social Distance, a project from the Economic and Social Research Council, are investigating the benefit system during COVID-19, bringing together researchers from Salford, Kent, Leeds and LSE Universities. Their findings were neatly summarised in a Tweet thread (@distantwelfare).
In summary, the research found that claimants are more likely to be young, BAME, male, not disabled, upper-middle class, graduates and owner-occupiers, compared to pre-COVID-19 claimants.
This mirrors our own analysis of benefits administration data from a group of councils using our LIFT Dashboard to deliver real-time analysis on the effects of COVID-19. We found that claimants are more likely to be disabled, single and out of work (i.e. not working part-time) than the pre-COVID-19 cohort.
We worked with Enfield Council and others to model the impact on caseload into 2021, and forecast the impacts on the cost of their council tax support scheme, demand for council services, and impacts on living standards locally.
- Watch the on-demand webinar: How viable is your council tax support scheme? with Enfield Council
- Register for the next webinar: How to predict the demand for your customer-facing services in April 2021
Councils face a funding crisis
The £500 million Hardship Fund included £262 per year of additional support towards the cost of Council Tax for all claimants. While councils could allocate this as they wished, the guidance was that each current claimant would get an additional £150 in council tax support, with an additional £112 per claimant (an uplift of 74%) available to support reduced bills for the expected increase in caseload due to COVID-19.
With the claimant count more than doubling, the level of additional support for council tax is almost certainly insufficient. Our analysis shows that if the number of Council Tax Reduction (CTR) scheme claims increased at the same ratio as the claimant count only 6 councils in England (Hart, Copeland, Stroud, Stockport, Barrow-in-Furness and Allerdale) would have sufficient remaining Hardship Funding to support new claims.
The situation is a little more nuanced. Initial analysis from Policy in Practice has found a smaller rise in council tax support claims than in overall Universal Credit claims, due to lower eligibility and a lack of awareness of entitlement. However, the figure is rising as we get more recent data from councils, and arrears balances for council tax increased by 54% in the months immediately after COVID.
In addition, the amount of funding remaining to support new claimants differs by local authority according to the generosity of their CTR scheme. Councils with more generous schemes will have more of the hardship fund remaining to support new claimants.
Even with this nuance, given the furlough scheme is still supporting many households, we see evidence of a severe funding shortfall for councils.
Councils will have to be very targeted with their support
Recent feedback from Policy in Practice’s webinar How viable is your council tax support scheme? showed that the most pressing concern of councils was how to target support to those in need.
Councils come to Policy in Practice for visibility over their low-income population to better forecast and plan for the increase in demand for their services.
Some are already using LIFT to identify people who are new to the benefit system and falling into arrears, and targeting support that includes telling people what benefits they may be missing out on and where they may be able to lower their utility bills.
Councils are using LIFT to identify people falling into arrears who are new to the benefit system, and delivering more rounded holistic support, referencing benefits people are missing out on, and opportunities to access lower cost utility bills in their collection activity.
View more about how LIFT can help councils deliver more effective support, and promote recovery here, and join our next webinar How to predict the demand for your customer-facing services in April 2021.
Councils and claimants must benefit from the Autumn budget
Councils across the country have seen an unprecedented increase in claimant count, council tax support claims, and ultimately an increase in demand for council services. This new demand comes on top of pre-existing financial pressures. Many have already ‘overspent’ in their frontline support due to the support they have given people affected by the pandemic, and the impact of COVID-19 on their income streams and commercial investments means they are now doubly-impacted.
We have shared this analysis with Treasury officials, arguing that it’s essential that the government respond to this in the forthcoming spending review, with the budget being prepared for November.
Most importantly, the increase in the claimant count highlights the growing financial pressure facing households.
We have called on the government to extend the COVID-19 recovery measures until the economy is back to the size it was in February. This includes the £20 uplift to Universal Credit and restoration of the Local Housing Allowance to 30% of market rents.
Help for organisations supporting households affected by COVID-19
Families whose income is affected by Coronavirus may be able to claim Sick Pay or benefits. View our up to date welfare support page for details. Our simple, free Benefits Calculator is listed on GOV.UK.
Organisations now on the frontline and supporting people through the pandemic include banks, utility companies, schools, GPs, Citizens Advice, landlords and of course councils. We help these organisations to advise their customers about what support they may be eligible for from the welfare system via our award-winning Benefit and Budgeting Calculator. Contact us to find out how to embed the calculator on your website here.
View more about how LIFT can help councils deliver more effective support, and promote recovery here and listen back to Clive Jones, Luton Borough Council, talk about how they use data for recovery, below.
Join our next webinars
- How to predict the demand for your customer-facing services in April 2021 on Wed 7 October at 10:30. Register here
- How to find the right debt solution for everyone on Wed 11 November at 10:30. Register here
- 2020: Policy review of the year, and forward look to 2021 on Wed 9 December at 10:30. Register here