In a bid to prevent crisis the government introduced a number of measures to support people from the financial impact of the pandemic.
This support, which is set to come to an end this Autumn, included:
- a ban on all evictions
- a £20 weekly uplift to Universal Credit and working tax credit payments
- suspension of the Minimum Income Floor for self-employed households in receipt of Universal Credit
- the Self Employed Income Support Scheme (SEISS)
- the Coronavirus Job Retention Scheme (CJRS)
Five changes to COVID-19 income support
- Self Employment Income Support Scheme (SEISS) and Coronavirus Job Retention Scheme (CJRS, more commonly known as furlough) will come to an end in September 2021. Currently, 11.6 million jobs have been furloughed and 2.3 million people are receiving SEISS.
- Minimum Income Floor will be reinstated at the end of August 2021
- £20 uplift to Universal Credit payments will end in September and October 2021, depending on your assessment period dates
- Some households are starting to be affected by end of grace periods protecting them from to the Minimum Income Floor and the benefit cap
- The end of the eviction ban took place in May 2021
The Office for Budget Responsibility (OBR) reduced their initial unemployment forecasts by 340,000, suggesting that despite income support measures coming to an end, the economy is opening up at the same time and the two should counter one another.
However, the impact of the latest rise in Coronavirus cases calls this into question and the OECD predicts that the greatest economic shock in the UK is yet to come. They predict that the UK economy will face greater economic damage than other G7 nations because of the combined impact of COVID-19 and Brexit.
Families will begin to feel these economic shockwaves as the coronavirus support schemes come to an end and grace periods for some of the most restrictive measures within Universal Credit end. For households affected this will be a significant income shock.
The income shock will be significant
For households facing redundancy following the removal of the Coronavirus Job Retention Scheme and the Self Employed Income Support Scheme, the income shock will be huge. These households can currently receive up to £2,500 per month, so a couple could be receiving £5,000 per month.
The move to Universal Credit will see a substantial drop in household income as means-tested benefits are at their lowest historic level at only 12-18% of average earnings. These households will also be new to the benefit system, possibly never having claimed before, which will further complicate their access to the welfare system, a system that can be notoriously difficult to navigate for first-time claimants.
We also know that debt is rising. Our analysis of Council Tax Reduction shows that those moving onto Universal Credit for the first time are starting benefits with higher debt. This reflects both the time taken to navigate the benefit system and delay in application.
Debt and lack of savings were barriers before the pandemic, with many households unprepared for income shock that COVID-19 brought. At the start of 2020:
- 44% of those in debt found it burdensome
- 41% of households don’t have enough savings to live for a month without income
As the impact of COVID-19 becomes more apparent on a household’s financial resilience, Citizens Advice estimates that:
- 7.3 million UK adults were behind on their household bills
- 1 in 3 households have lost income because of coronavirus
- 36% of people who have lost income have run down their savings
- 45% of people with children have lost household income
Policy in Practice helps frontline organisations to prevent crisis
The benefit system is complex and confusing for people to understand. Some households just need up-to-date information, some will need support as they face income shock, whilst more still will need support around homelessness and debt.
The role of front-line organisations is more important than ever before as they can offer holistic support to their residents and prevent them from falling into crisis.
At Policy in Practice we can help local authorities to offer this wrap-around, holistic support through our Benefit and Budgeting Calculator and Low Income Family Tracker (LIFT) platform.
- The Benefit and Budgeting Calculator gives advisors information they can trust. They can easily explain complex benefit changes and give people the advice they need to make decisions.
- The LIFT platform shows how individual households are impacted by policy changes, now and in the future. The information can be used to identify the most vulnerable families, target support to them, and track the change.
How Redbridge Council is preparing for the end of COVID-19 support
The importance of immediate support to prevent crisis from occurring can not be overlooked.
Redbridge Council is one of a number of local authorities who are leading the way by using their administrative data to identify vulnerability and target holistic, preventative support where it is most needed in order to reach residents before they hit a crisis point.
The Welfare Benefit team, employment support team Work Redbridge, and the housing team have all been working together to offer inter-departmental, holistic support to their residents.
- The Welfare Benefit Team administers timely payments of Housing Benefit, Council Tax Reduction and debt recovery including housing benefit overpayments. So far, this year, they have maximised their resident’s income by £500,000
- The Work Redbridge team helps people back into work and feeds back into the local economy by supporting the employment of residents. Work Redbridge has supported over 800 residents, helping 260 people into work and a further 89 into training or education
- The Housing team works to prevent at-risk people from falling further into financial crisis by awarding discretionary housing payments. This year, the Housing Team has worked with 2,487 households to prevent them from becoming homeless
Recent studies have shown that the more in financial crisis a person is, the less likely they are able to engage with employment support. Redbridge’s approach is fundamental in combating this issue as the three teams work in unison with one another to help a person reach financial stability, thus providing a much stronger foundation to work towards employment and benefit support. The importance of this immediate prevention work will be vital as we begin to see the full extent of the financial repercussions the pandemic created.
There are other opportunities for councils to prevent crisis
Councils are realising they can do more with data. The Department for Work and Pensions is making moves to share more Universal Credit data with councils and Policy in Practice is starting to work with full Universal Credit datasets to provide insights to councils for their immediate action. This approach will be hugely beneficial in tackling poverty and preventing crisis; timely analysis of Universal Credit data has the potential to unlock key insights to help better targeting of support, at the right time.
We are also seeing a revival of the job market and councils are well placed to assist households to work with their employment support schemes and help people access employment.
To make the most of these opportunities, the importance of fast and immediate support to help people navigate and prevent crises cannot be overstated and frontline organisations are the key to this success.
Hear directly from Redbridge Council about their use of data
To hear directly from Redbridge Council about the innovative work they are doing with their data to prevent crisis join us on Wednesday 21 July for our free webinar Back to normal: coping when Covid-19 welfare support is withdrawn. Details and registration here