Income Support and Social Security Policy Responses to Covid-19 (Part One)

PPR’s policy and research officer, Paige Jennings, outlines key income and social security policy developments introduced by both the Westminster and Stormont administrations in response to Covid-19. Paige Jennings  |  Mon Jun 22 2020
Pre-Covid welfare reforms created poverty and insecurity

In March, as Covid-19 was already spreading through the UK, the authorities announced unprecedented measures to support people in work whose incomes were threatened by lockdown. The programmes – for both employees and the self-employed - were set up through the central revenue and customs department (HMRC), using existing wage and tax mechanisms, covering 80% of a worker’s pre-Covid earnings.

By 7 June, a total of 9m jobs had been furloughed and 2.6m claims had been made by self-employed people, totaling over £27 billion across the two schemes. For the Tory administration, who lay claim to generating unprecedented levels of low unemployment, this sudden and unplanned plunge brought millions into a threatened state of precarity already experienced by millions across our societies as a result of over a decade of austerity policies. According to the UN Special Rapporteur on Extreme Poverty:

the United Kingdom, the world’s fifth largest economy, is a leading centre of global finance, boasts a “fundamentally strong” economy and currently enjoys record low levels of unemployment. But despite such prosperity, one fifth of its population (14 million people) live in poverty. Four million of those are more than 50 per cent below the poverty line and 1.5 million experienced destitution in 2017, unable to afford basic essentials.

The picture in Northern Ireland is no different. May’s NI Labour Force Survey reported the pre-Covid unemployment rate at 2.4% - lower than that in the UK as a whole, Ireland and the European Union. At the same time, official pre-Covid figures published by the Department for Communities indicated that 24% of children in NI – 107,000 of them – were growing up in poverty. This was a rise of 5% from 2017/18, when the reported figure was 19%.

What this means is that for the millions of working people already living in poverty in the UK, the 80% of pre-Covid earnings provided under the two HMRC income support schemes – as massive as those programmes are – only deepens their existing deprivation; employment is no guarantee of prosperity or security. Other households, living above the poverty line before the pandemic, will have slipped beneath it with the loss of 20% of their income. The next round of poverty statistics, when they eventually come, will show the grim reality that too many households are living through right now.

Rising demand for benefits alongside the income support schemes

In the face of this situation, increasing numbers of employees enrolled in one or the other of the two income support schemes have been forced to apply for additional support under Universal Credit (the government’s flagship benefits programme, designed by the UK Department for Work and Pensions and administered here by the Department for Communities). PPR’s Right2Work campaign is among those documenting the failures of the Universal Credit system and recommending concrete ways to address it structural failure of protect fundamental rights.

The self-employed were officially directed to apply for Universal Credit while waiting for their income support system to come onstream, as they received their first payments only in late May - up to 9 weeks from the start of lockdown. People who had lost their jobs due to Covid, and those, such as many artists and musicians, who had been working in the cash economy before the lockdown and therefore did not meet the requirements for the self-employed scheme, were also advised to apply for Universal Credit (more on this below). These groups now joined the existing ranks of people whose physical and mental health, disabilities or circumstances made them reliant on social security to live.

By 26 April, the NI Universal Credit caseload had risen to 126,000, an increase of 65,700 in eight weeks.

In the second half of March alone, there were reportedly 33,000 new claims to Universal Credit here, ten times the normal rate. Over roughly the same period, Job Seekers Allowance and Employment Support Allowance intake doubled and demand for Discretionary Support tripled, with almost 10,000 calls per day reported by the Department for Communities. By 26 April, the NI Universal Credit caseload had risen to 126,000, an increase of 65,700 in eight weeks.

Impact of the benefit system on recipients

As with the income replacement schemes for those in work, the government has found the funds to meet this unprecedented increase in demand for benefits. But there are deep concerns about the welfare of the people now dependent on a system which has been consistently criticised, both domestically and internationally, for providing insufficient levels of support:

benefits reductions since 2010 have saved money for the Government but undermined the capacity of beneficiaries to escape from the grip of poverty... the imposition and subsequent intensification of a cap on benefits for working-age households and limiting benefits to two children per family, have made it much harder for people to make ends meet and stymied progress in reducing poverty.

An overview of income support policy changes in the context of Covid-19 will be presented in part two of this series. However, in brief, the changes to the level of benefits people are set to receive during this period amounts to a small increase of £20 a week for Universal Credit/Working Tax Credit claimants. This was announced as a way to help people meet the higher costs of food and energy during the lockdown - and a temporary suspension of the practice of automatically deducting past penalties and repayments from their regular awards.

For many, this falls well short of ensuring an adequate standard of living. The additional £20 a week measure has even prompted a legal challenge from a recipient whose award was pushed over the benefit cap limit by the rise, triggering automatic reductions that left her and her family worse off than before. Here, cross-border workers have faced contradictory advice, threats of re-collection of benefits and additional hurdles in accessing the support to which they are entitled.

In May, the Institute for Fiscal Studies reported recent research findings that:

although new UC [Universal Credit] claimants have, on average, higher earnings and more savings than existing benefit recipients, 36% are having trouble keeping up with bill payments, 42% have cut back on spending to prioritise housing costs, and over half have already dipped into their savings.

In terms of implementation, some of the most highly criticised features of the way the benefits system is implemented – such as assessments that fail to meet basic human rights and due process standards, or punitive financial sanctions for failing to meet strict conditions - have reportedly been waived during the lockdown. Others, however, remain, such as gaps and delays in coverage that leave people bewildered as well as unprotected. The minimum 5-week wait for Universal Credit claims to be processed still causes hardship for applicants despite advance payments, as these are later recouped through deductions in later months’ already scant payments. The ‘digital by default’ nature of the programme continues to automatically exclude those without access to technology, reliable internet connection or sufficient digital literacy.

Tomorrow, in part two of this series, Paige Jennings will outline the details of the income support policy changes introduced during the Covid-19 crisis.

Paige Jennings is a policy officer for PPR. She has worked in human rights and development roles in Africa, Latin America and the Caribbean, for a range of local, international and United Nations organisations. She has been an Amnesty International researcher and has written for Minority Rights Group, Child Soldiers International, UNDP and UNHCR.