FAQs on the Treasury's coronavirus support schemes

MPs have been sent the following briefing on the new Coronavirus Self-Employed Income Support Scheme - it includes some useful case studies to give constituents a better idea of how the scheme works as well as FAQs.

CORONAVIRUS SELF-EMPLOYED INCOME SUPPORT SCHEME (SEISS) 

 

The coronavirus outbreak is the biggest public health emergency in a generation. Our message to the public is clear: you must stay at home, in order to protect the NHS and save lives. 

 

The Government said we would do whatever it takes to protect people’s jobs and incomes – and we meant it. We know many self-employed people are deeply anxious about the support available for them. 

 

That is why the Chancellor has announced a new Self-Employed Income Support Scheme – helping many of our country’s self-employed workers: the musicians, the sound engineers, the plumbers, the electricians, the taxi drivers, the hairdressers, the childminders, the driving instructors, and many others.  

 

Through this scheme, the Government will pay self-employed people a grant worth 80 per cent of their average monthly profits over the last three years, up to £2,500 a month – that’s unlike almost any other country and makes our scheme one of the most generous in the world. 

 

We know there are challenging times ahead, but we are confident that the measures we have put in place will support millions of people, businesses and self-employed workers to get through this, and emerge on the other side both stronger and more united as a country. And we will get through this together.  

 

The scheme the Chancellor has announced today is fair. It is targeted at those who need it the most. And crucially, it is deliverable: 

 

  • We are launching the Self-Employed Income Support Scheme, to make sure people who work for themselves are getting the financial support they need. The Government will pay self-employed people across the whole UK who have been adversely affected by coronavirus a taxable grant worth 80 per cent of their average monthly profits over the last three years, up to £2,500 a month, for three months – but we will extend it for longer if necessary. 

 

  • We will make it simple for self-employed people to get the financial support they need. Self-employed people who are eligible will be contacted by HMRC directly, asked to fill out a simple online form, and HMRC will pay the grant directly into their bank account. We expect people to access the scheme by the beginning of June. 

 

  • We are ensuring our support reaches those self-employed people who are most in need of it. The scheme will only be open to those with trading profits up to £50,000, leaving 95 per cent of people who are majority self-employed eligible for the scheme. HMRC will also ask people to demonstrate that the majority of their income comes from self-employment, and, to minimise fraud, only those who are already in self-employment, and who have a tax return for 2019, will be able to apply. 

 

This builds on the support that is available to self-employed people: 

 

  • For self-employed people who are struggling now, we’ve also made sure that many will be able to access loans through the Coronavirus Business Interruption Loans Scheme. This scheme provides loans of up to £5 million, which will be interest free for twelve months.  

 

  • Supporting people through the welfare system so that nobody is penalised for doing the right thing. We will make it quicker and easier to access benefits. Those on contributory ESA will be able to claim from day 1, instead of day 8. And we are relaxing the requirement for anyone to physically attend a jobcentre – everything can be done by phone or online.  

 

  • Suspending the minimum income floor for twelve months – meaning self-employed people can now access, in full, Universal Credit at a rate that is equivalent to Statutory Sick Pay for employees.  

 

  • Deferring income tax self-assessment payments for July until the end of January 2021.  

 

We have introduced unprecedented measures to support our country through this time: 

 

Protecting our public services: 

 

  • We have pledged that whatever resources the NHS needs, it will get.  

 

Supporting businesses: 

 

  • Promised to pay 80 per cent of the wages of furloughed workers for three months. Any employer in the country who promises to retain their staff, can apply for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off. Government grants will cover 80 per cent of the salary of retained workers up to a total of £2,500 a month – above the median income. The cost of wages will be backdated to 1st March and will be open initially for at least three months – and we will extend the scheme for longer if necessary. 

 

  • Deferred more than £30 billion of tax payments until the end of the year. We are deferring the next three months of VAT tax, a direct injection of over £30 billion of cash to businesses, equivalent to 1.5 per cent of GDP. That means no business will pay any VAT from now until the end of June, and they will have until the end of the financial year to repay those bills. 

 

  • Agreed nearly 17,000 Time to Pay arrangements for businesses and individuals, helping businesses and self-employed workers with their tax affairs. 

 

  • Made available £330 billion of loans and guarantees – that’s equivalent to 15 per cent of our GDP. And if demand is greater than the initial £330 billion, we will go further and provide as much capacity as required. That means any business, small or large, in financial difficulty who needs access to cash to pay their rent, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms. 

 

  • Abolished business rates altogether this year for all retail, hospitality and leisure businesses. All businesses in this sector are exempt from business rates for 12 months – that’s every single shop, pub, theatre, music venue, restaurant, and any other business in the retail, hospitality or leisure sectors.  

 

  • Introduced cash grants of up to £25,000 for small business properties in the retail, hospitality and leisure sectors. Any business with a rateable value of less than £51,000 can now get access to a government grant. 

 

  • Covered the cost of statutory sick pay for small business. We are supporting small and medium-sized businesses to cope with the extra costs of paying Statutory Sick Pay (SSP) by refunding eligible SSP costs. 

 

Helping families: 

 

  • Lifted the incomes of over four million households with a £7 billion boost to the welfare system. We are increasing Universal Credit and Working Tax Credit by £1,000 a year for the next 12 months – a cash injection of nearly £7 billion in the welfare system.  

 

  • Introduced three month mortgage holidays and £1 billion more support for renters. The mortgage holiday will be available for those who are in difficulty due to coronavirus. We are also providing nearly £1 billion of support for renters, by increasing the generosity of housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30 per cent of market rents in local areas.  

 

CASE STUDIES 

 

  • Scenario 1:  Bilal is a full-time self-employed florist. Bilal had average trading profits of £18,000 in the 3 years from 2016-17 - 2018/19.  Under the Self-Employed Income Support Scheme, Bilal will be eligible for a grant of £1,200 per month. Assuming activity is channelled through a business account, Ben may be eligible to receive a loan from an accredited CBILS lender of up to £5 million supported by the Coronavirus Business Interruption Loan Scheme, with government covering the first 12 months of interest payments. 

 

  • Scenario 2: Nicole is a self-employed London taxi driver. Nicole had average trading profits of £30,000 in the 3 years from 2016-17 - 2018/19. Under the Self-Employed Income Support Scheme, Nicole will be eligible for a grant of £2,000 per month. Assuming activity is channelled through a business account, Nicole may be eligible to receive a loan from an accredited CBILS lender of up to £5 million supported by the Coronavirus Business Interruption Loan Scheme, with government covering the first 12 months of interest payments. 

 

Why has this package taken longer to announce?  

  • Providing such unprecedented support for self-employed people is operationally very challenging. The self-employed are a very diverse population. They have a wide mix of different levels of income, which even in normal times can vary hugely from month to month. 

  • We have engaged with bodies representing or which involve large numbers of self-employed people in designing this scheme. 

 

Why is support not available until June? 

  • HMRC are working day and night to get this scheme up and running. HMRC are also delivering other key schemes to a similar timescale, including the Coronavirus Job Retention Scheme and the Statutory Sick Pay rebate for employers. The Self-Employed Income Support Scheme also allows late tax filers a month to get their 2018-19 tax returns in within 4 weeks of the announcement of the scheme, which also creates some delay. 

 

Why is this scheme more/less generous than what is available to employees? 

  • This scheme aims to support self-employed individuals whose profits have fallen as a result of Covid-19. 

  • However, given the nature of self-employed work and how profits are reported, as well as the need to ensure fairness, this scheme differs from the job retention scheme, for example by being based on average profits from previous years. 

 

Why does this scheme have an income cap when the CJRS doesn’t? 

  • The CJRS is designed to prevent businesses laying off staff. This is about supporting the living standards of the self-employed. That is why it is right to target this scheme in a fair way. 

  • In addition, unlike under the CJRS, individuals are still able to work. 

 

What about the 5% who aren’t eligible? 

  • The average income of the 5% who aren’t eligible is over £200,000. 

 

Why is it fair that self-employed individuals can carry on working and receive this grant but employees have to be furloughed? 

  • This scheme aims to support self-employed individuals whose profits have fallen as a result of Covid-19. 

  • The CJRS is designed to prevent employers making staff redundant and instead put employees on furlough. 

  • Given the nature of self-employed work and how profits are reported, as well as the need to ensure fairness, this scheme differs from the job retention scheme. 

 

How is it fair that the self-employed get the same level of grant when they pay less National Insurance Contributions? 

  • This scheme will provide support to those who need it most. 

  • As the Chancellor said, we may need to consider whether the inconsistency between the rates paid by employers and the self-employed remains defensible. 

 

Why are you breaking your manifesto commitment? 

  • In these times of crisis, it is important that we come together and support everyone who needs it. And this is an unprecedented level of support. 

  • But the more we look to extend the safety net to cover everyone, the more we will need to consider the case for asking everyone to contribute towards it. 

  • Self-employed people pay a lower rate of National Insurance than employees, despite receiving almost the same benefits, including the New State Pension. 

  • In time, as we look to rebuild our country, we may need to consider whether that inconsistency remains defensible. 

 

Why is it fair that someone who earned £50,001 in 18/19 gets no help, but someone who earned £50,000 gets £2,500 a month? 

  • Not all those in self-employment will need extra support. 

  • 95% of people who receive the majority of their income from self-employment will be eligible for this scheme. 

  • Those who are not eligible for this scheme may be able to receive support from other sources, such as Universal Credit and the Coronavirus Job Retention Scheme. 

  • Self-employed individuals are already benefitting from a series of measures announced by the Chancellor to boost household incomes and will be able to access these while the new scheme is being rolled out. 

  • These include a strengthening of the welfare safety-net with a £7bn boost to Universal Credit, income tax and VAT deferrals, £1bn more support for renters and access to three-month mortgage holidays. 

 

What about those who haven’t filed their 2018/19 tax return yet? 

  • The scheme is for those who have filed a tax return to report income from self-employment in the tax year 2018-19. 

  • For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the announcement to file ensure they are eligible for SEISS. 

 

Can people work and claim this grant? 

  • Yes, self employed individuals can still work, however, we know that many self-employed individuals have seen a big fall in demand for their services as a result of Coronavirus. 

  • This scheme aims to provide financial support to those who rely on self-employment as their main source of income. 

 

What about those who aren’t covered by this or CJRS? 

  • You can now more easily make a claim for Universal Credit (UC) or new style Employment and Support Allowance. 

  • Some may also be able to access support through the temporary Coronavirus Business Interruption Loan Scheme. 

 

CORONAVIRUS JOB RETENTION SCHEME (CJRS) 

 

  • Any large or small employer can apply to put workers on temporary leave or “furloughed” status. The government will then pay them cash grants of 80 per cent of their wages up to a cap of £2,500, providing they keep the worker employed.  

  • They will receive the grant from HMRC. All UK organisations can self-certify that it has furloughed employees. The scheme will cover the cost of wages backdated to March 1. All UK-wide employers with a PAYE scheme will be eligible, including the public sector, local authorities and charities. 

  • The scheme will be open initially for at least 3 months. But we will extend it for longer if necessary. There is no limit on the amount of funding available for the scheme. 

  • We expect the first grants to be paid within weeks. HMRC are working night and day to get the scheme up and running and we’re aiming to get it done before the end of April. Existing systems are not set up to facilitate payments to employers. 

 

Do individuals still have to pay tax on this? 

  • Yes – individuals will pay Income Tax and National Insurance on any payments received through this scheme as they are replacement for income in line with normal practise for benefits or grants that replace income. 

 

Will this cover the cost of employer National Insurance contributions and employer pension contributions? 

  • Yes – employers will be able to apply for a grant to cover the Employer National Insurance contributions and minimum automatic enrolment pension contributions on paying the lower of 80% of regular salary or £2,500 per month. 

 

How will this work for those on zero-hour/flexible contracts/agency workers? 

  • This scheme aims to support all those employed through the PAYE system regardless of their employment contract, including those on zero-hour contracts or agency workers. 

  • Zero-hour and flexible contracts can cover a whole range of working arrangements. 

  • The 80% grant is applied to the higher of: (1) the earnings in the same pay period in the previous year; or (2) the average earnings in the whole previous 12 months (or fewer if they have worked for less time than this, including a part month calculation if they were taken in February). 

 

Can a business furlough someone after hearing the announcement and then claim back to March 1st even though they had been working that whole time? 

  • No – the scheme is backdated to March 1st with a view to covering those who have already been made redundant as a result of the coronavirus. 

 

What about employees taken on after 1 March?  

  • They are excluded from the scheme.  

 

To qualify, does the business need to be ‘essential’? 

  • No, all businesses which employ and pay workers through the PAYE system are eligible. 

 

Why are you not supporting me if my hours are reduced? 

  • The scheme is designed to help those who otherwise would have been made unemployed. 

  • We recognise that some people will work fewer hours. 

  • We have strengthened the welfare system to support those whose hours change including an increase to the UC standard allowance and the working tax credit basic element. 

  • This builds on the initial package announced at Budget including enhancements to contributory employment support allowance, which will now be available from day 1and making advances for all new UC claimants available online with no requirement to attend a job centre.  

 

Why isn’t this supporting part-time working? 

  • The scheme is designed to help those who otherwise would have been made unemployed. 

 

 Can directors/sole directors of a company furlough themselves? 

  • If a director is paid through a PAYE scheme, they will be covered. This is because the scheme is providing support for those needing to furlough when the business is unable to provide services to their customers during the outbreak. 

  • But if they take a small salary and the rest through dividends, then any remuneration from dividends wouldn’t be covered. 

  • This is primarily designed for employees who would otherwise be made redundant. 

 

Can my employer top this up? 

  • Yes. In order to qualify for the scheme, employers must pay their staff at least 80% of wages, up to the cap of £2,500 per month. It is up to them if they wish to top up the additional 20 per cent. 

 

Does furloughing just cover basic pay – what about bonuses/commissions? 

  • The grant covers wages, worth 80% of regular salary up to £2.500 per month. Bonuses and commissions aren’t covered. 

 

What about employees that have already been made redundant? 

  • The scheme will be back dated to March 1 with a view to covering those who have already been made redundant due to the Coronavirus outbreak. 

  • If firms re-employ staff made redundant after March 1st, they are eligible to then be furloughed and the employer would qualify for the grant. 

 

Can my employer sack me while I’m on furlough? Is my employer allowed to sack me as soon as the furlough scheme comes to an end?  

  • Yes, you can still be made redundant while on furlough or immediately after. There is no requirement to bring the employee back to work after the period of furlough. If an employee is made redundant during the period of furlough then grant payments will cease.  

  • However, in both cases normal redundancy rules and protections will apply. 

  • Where a business feels that redundancy is the only option, this must still follow the rules which include giving a notice period and consulting staff before a final decision is reached.  

  • More information on redundancy can be found at: https://www.gov.uk/redundancy-your-rights

 

Can I be furloughed for a short period of time, e.g. a week or a couple of days, and then re-employed?  

  • A worker must be furloughed for a minimum of 3 weeks for their employer to be eligible to claim under this scheme. 

  • This is consistent with the public health guidance seeking to minimise the number of people outside of their homes on a regular basis. The scheme supports employers asking the maximum number of employees to remain at home during the coronavirus outbreak. 

  • A clear minimum period also aids a clear definition of who is and who is not furloughed. 

 

Can I volunteer or do training whilst furloughed? 

  • If you are furloughed you cannot work for your employer during this period. 

  • You can volunteer or train, provided that this does not involve the manufacture or creation of an item or part thereof than can yield revenue for the company, the provisions of services to the company, or the provision of any service that can yield revenue for the company. Firms can require workers to undertake training from home, provided it meets the above. 

  • Furloughed employees can volunteer for the NHS/foodbanks during the coronavirus outbreak. 

 

What is available to someone who has been told by the government they are vulnerable and need to shield for 12 weeks? 

  • Employers are encouraged to do the right thing. 

  • Employers can furlough employees who are subject to social shielding, though the employee may need to agree to it first, depending on the nature of their contract. Employers are also unrestricted in their ability to hire new staff, including on a temporary basis to provide cover for furloughed workers that are subjected to social shielding. 

  • Furlough is what employers do to keep someone on payroll if they would otherwise be laid off; SSP is for someone who they plan to keep on payroll but is sick. Furlough is obviously more generous, and there is ultimately no way to stop firms from putting staff on furlough when they should actually be on SSP. 

  • Some of the 1.5m people shielding will already receive support through the welfare system (e.g. disability benefits, UC (if of working age), pension credit). 

 

CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS) 

 

  • The government will provide an 80 per cent guarantee on loans of up to £5 million. This will help ensure that eligible businesses facing short-term cash flow difficulties can continue to access finance as they respond to the coronavirus. And the government will provide as much capacity as required for this scheme. 

  • We will not charge businesses for this guarantee. And to provide additional support, we will also cover interest and fees for the first 12 months charged to the business by the lender. 

  • These form part of £330 billion of guaranteed loans for businesses – equivalent to 15 per cent of GDP. This support is delivered through this scheme, and the Coronavirus Corporate Financing Facility, delivered by the Bank of England and which applies to larger businesses. 

 

Who does this measure help? 

  • This measure is targeted towards SMEs. All viable UK-based businesses with a turnover of less than £45m will be eligible to apply for a loan. 

  • We welcome the statement by UK Finance on behalf of the sector which announced that banks, building societies and credit card providers are committed to supporting their business customers in continuing to trade, and would encourage businesses to speak to their lender if they need finance. 

 

What about firms which are too big for the CBILS but too small for the CFFS? 

  • We are aware that not all important companies are eligible for these schemes. 

  • The government is working at pace to ensure that firms which play an important role in the UK’s long-term economic prosperity can secure access to finance.  

  • Companies in need of financing should talk to their lenders in the first instance.  

 

Do these include personal guarantees which banks/lenders are demanding? 

  • A lender is not allowed to take a personal guarantee against a borrower's home (principle residence) under the Business Interruption Loan Scheme. 

  • The Chancellor, Bank of England Governor and head of the Financial Conduct Authority wrote to the CEOs of the major banks yesterday to emphasise that lenders must pass through government support to businesses and individuals. 

  • The Bank of England and the FCA will be monitoring the situation closely and will be in regular contact to discuss developments and issues emerging.   

 

VAT DEFERRAL 

 

  • The government is deferring VAT payments for the next quarter. That means businesses will not pay any VAT from now through to the end of June.  

  • Businesses will have until the end of the financial year to pay back any deferred taxes. This is to help support businesses with their cash flows, and support individuals’ employment. 

  • Over a million businesses of different size and sector are expected to benefit. This is an automatic offer with no applications required. 

 

How does it work? 

  • These are automatic offers using HMRC’s existing systems with no applications required. No penalties or interest for late payment will be charged.  

 

Who are we helping? 

  • No business will have to make a VAT payment to HMRC in that period. This benefits VAT-registered businesses of all size and sector. 

  • Millions of self-employed taxpayers would benefit from the Income Tax Self-Assessment deferral. Those with significant amounts of income from dividends and property income will also benefit. 

 

When will the deferral apply? 

  • For the self-employed, the deferral will apply for ITSA payments due in July. 

  • VAT for all companies in the UK will be deferred immediately until mid-June – with no business having to make a VAT payment during this period. Companies will then have until the end of the tax year to pay the tax owed, allowing them time to recover.   

 

How much cash benefit will businesses get from this? 

  • The cash benefit will vary depending on the size of individual businesses payroll, but it is expected to provide a short-term cash flow boost to those businesses that have been impacted by COVID-19. 

 

What happens after the VAT deferral ends? 

  • Businesses will be given until the end of the 2020-21 financial year to pay off the debts they have accrued. 

 

You’re deferring tax, not voiding it – companies will still have to pay this tax back. Isn’t this just another loan? 

  • This will help alleviate the immediate, temporary pressures businesses are facing. We are confident the economy and businesses will bounce back from this in time. To help them do that, we will give them the time needed to pay back deferred tax. Businesses will have until the end of the FY to make these repayments. 

  • HMRC are also delivering an enhanced Time to Pay offer to fit the specific impacts of Covid-19. Time to Pay is available to all firms and individuals who are in temporary financial distress as a result of Covid-19 and are unable to pay their tax on time or have existing liabilities. HMRC have set up a dedicated helpline to enable those eligible to get practical help and advice. 

  • These tax deferrals are just part of the package the government is announcing to support businesses. The government has also announced a comprehensive wage subsidy scheme. Tax deferral will help businesses with cashflow in the meantime. 

 

Why are you not also deferring corporation tax? 

  • Paying Corporation Tax is conditional on making trading profits. The reality of the situation is that many businesses will not make profits in the next months but will have ongoing costs related to wages. VAT deferral will help address this and provide the much-needed liquidity to businesses. 

 

WELFARE 

 

  • This government is committed to doing whatever it takes to support families through this crisis. To support people through the outbreak we are announcing a package of temporary safety-net measures. Taken together, these measures and those announced at Budget provide over £6.5 billion of additional support through the welfare system for people affected by COVID-19: 

  • A £20 per week increase to the Universal Credit standard allowance and Working Tax Credit basic element. This means that for a single UC claimant (25 or over), the standard allowance will increase from £317.82 to £409.89 per month. 

  • An increase in the Local Housing Allowance rates for Universal Credit and Housing Benefit claimants so that it covers the cheapest third of local rents. 

  • A relaxation of earnings rules for self-employed Universal Credit claimants affected by the economic impacts of Covid-19. 

  • This builds on the initial package for individuals and families announced at Budget: 

  • Extension of Statutory Sick Pay to self-isolators and those in the same household caring for self-isolators - payable from day 1 not day 4. 

  • Contributory Employment and Support Allowance will be now be available from Day 1 not Day 8 for eligible people unable to work because they are directly affected by COVID-19 or self-isolating. 

  • Advances for all new UC claimants are now available online / via phone, with no requirement to attend a job centre. 

  • Earnings rules for self-employed UC claimants have already been temporarily relaxed for those who are sick or self-isolating. 

 

How long will the measures announced today be in effect for? 

  • The government is committed to helping families get through this crisis.  

  • Changes to the generosity of UC, WTC and LHA rates will be in place for the 20/21 financial year. 

 

Why aren’t you removing the five week wait in UC? People need support now! 

  • No one who loses their job or sees their income fall will have to wait five weeks for financial support. Advance payments are available from day one to ensure that families have money to support them through this period. 

  • We have made advances available online/over the phone, ensuring claimants don’t need to attend a job centre. 

 

It’s unfair that furloughed workers get to receive 80% of their salary whilst individuals self-isolating only get Statutory Sick Pay, which at £94.25 per week, is only 20% of median earnings.  

  • The government is committed to supporting individuals through this difficult time. That is why we have extended Statutory Sick Pay to self-isolaters and made it payable from Day 1. This is in parallel to changes to the benefit system to support the most vulnerable, such as today’s increase to the Universal Credit standard allowance. 

  • It is important to note that Statutory Sick Pay is the minimum amount an employee is entitled to but many people receive much more – a 2014 DWP survey found that 68% of employees received more than the statutory minimum. 

  • Most people on SSP will also only be off work for 14 days (the self-isolation period) whereas furloughed workers may be unable to work for considerably longer. 

  • We are conscious that Statutory Sick Pay is directly paid by employers, many of whom are facing unprecedented strain due to Covid-19, and that is why we are focusing our interventions on changes which Government is funding. 

 

Why haven’t you scrapped the £118 pw lower earnings limit for statutory sick pay? The CBI and TUC have both called for it and not removing it means the most vulnerable won’t receive any statutory sick pay. 

  • Employers are responsible for paying statutory sick pay to employees who earn above the lower earnings limit of £118 per week (equivalent to 13.5 hours at the national living wage for someone aged 25 or over).   

  • The government is committed to helping the lowest paid through this Coronavirus outbreak. Our welfare system is best placed to provide this support and lower earners who already claim Universal Credit will automatically see their benefits adjust to compensate for lower earnings. Today we are also announcing extra support to those who will have to rely on the welfare system by increasing the 2020-21 UC standard allowance, WTC basic element, and LHA rates.  

  • Removing the Lower Earnings Limit could lead to a situation where employers have to pay more to people when they are sick than when they are working – suddenly removing it risks disincentivising employers from continuing to employ some of the lowest earning part-time workers in society.  

  • Many businesses will also have to adapt to a short-term drop in demand for products and services and it is right that we take this into account when deciding what burden they can bear during this time.  

 

Is the government admitting UC is not generous enough currently?  

  • It is right that we look to do everything we can to support people during this difficult time – with the state acting as a safety net for those who need it. UC to date has been successful at getting people into work, but it is sensible that we look at the support available during this unprecedented period of economic uncertainty. 

  • What I am announcing today is a temporary increase in overall generosity to reflect the current situation, to provide additional support for those who need it most. 

 

Why did you decide on increasing the UC Standard Allowance by £20 - surely this isn’t enough to make a tangible difference if someone has lost their job and has a family to feed? 

  • The measures announced today total over £6bn of additional spending on welfare to support those affected. 

  • It is providing extra support for existing claimants, as well as people who are having to make a new claim to UC because their earnings have reduced, or they have lost their job. Claimants may be eligible for other elements of UC, including for children and housing. 

 

Why aren’t you replacing UC advances with grants?  

  • We have announced measures that can be quickly and effectively operationalised, and that benefit as many disadvantaged families as possible. DWP are experiencing significant increased demand and the government has to prioritise the safety and stability of the benefits system overall. 

  • Advance repayments are made gradually over 12 months, and deductions are capped at 30% of claimants’ standard allowance. For claimants who find themselves in unexpected hardship, advance repayments can be deferred for up to three months in certain cases. 

 

Increasing the UC standard allowance will just increase the amount of debt deducted from people. Why aren’t you pausing / reducing deductions so claimants can properly benefit? 

  • New claimants can access up to 100% of their standard allowance on day one, and this is repaid gradually through their awards over 12 months. Deductions for advances are capped at 30% of claimants’ standard allowance. For claimants who find themselves in unexpected hardship, advance repayments can be deferred for up to three months in certain cases. 

  • Budget already announced that claimants will be able to access advances via phone or online, instead of having to attend the jobcentre. 

  • We have announced measures that can be quickly and effectively operationalised, benefiting as many families as possible, quickly.  DWP are experiencing significant increased demand and the government has to prioritise the safety and stability of the benefits system overall. 

  • For those claimants with debt, deductions are capped. Everyone will be better off as a result of the measures announced today. 

 

You should suspend UC sanctions during this crisis. 

  • We have announced measures that can be quickly and effectively operationalised, and that benefit as many disadvantaged families as possible. 

  • We are continuing to work with DWP to ensure business continuity and support our most vulnerable claimants. 

 

Won’t allowing people to claim UC advances over the phone lead to another explosion in fraud? The NAO has just revealed £150m was stolen from UC last year. 

  • The vast majority of claims for UC, and for advances, are legitimate.  However, DWP takes benefit fraud very seriously is committed to preventing fraud in the first place and detecting and investigating existing fraud. 

  • DWP acted decisively last year, creating a dedicated team of investigators to tackle this issue, deploying tough financial penalties and working with the CPS to prosecute the perpetrators. 

  • DWP remains very vigilant to the fraud risk, however given the public health advice it is right that people should be able to claim Universal Credit and receive an advance without the need to attend a jobcentre. 

 

A Universal Basic Income would be the best way to get support to everyone, why aren’t you doing this? 

  • There are fundamental problems with the realities of a UBI.  

  • A flat rate UBI does not consider the additional needs and costs faced by some individuals. Therefore, it has the potential to markedly increase inequality. 

  • Any practical implementation would also be difficult to operationalise at this time. The Government believes alternative measures are better placed to respond to the Covid-19 outbreak. 

 

What are you doing to support people with no recourse to public funds? 

  • The Home Office has put in place a range of measures to support those affected by the covid-19 outbreak. We continue to monitor the situation closely and may adjust requirements where necessary. 

  • COVID19 has been added to the list of communicable diseases so anyone experiencing symptoms, regardless of their immigration status will be treated for free. 

  • Our policy on recourse to public funds allows for individuals with leave under the partner, parent and private life routes, and when granting leave outside the private life rules and under ECHR Article 8 on the basis of exceptional circumstances, to apply for a “change of conditions” if the NRPF condition has been applied to their leave, and there is a subsequent change in their financial circumstances. Providing appropriate evidence is supplied, these applicants can have the NRPF condition lifted. 

  • Exceptional circumstances in which the NRPF restriction may be lifted include the risk of destitution or the welfare of a child at stake. 

 

Many people won’t be able to get UC support because they have too many savings, including the self-employed who need to put money aside for their tax bill. Why aren’t you removing the capital limits, instead of penalising those who do the right thing? 

  • UC is a means tested benefit and it rightly assumes that people with significantly above average levels of savings will draw down this support before receiving government help. Households with savings below £16,000 are eligible to claim UC and this is significantly above average savings levels. 

  • People with savings and who also have a sufficient NI record will be able to claim contributory Jobseekers’ Allowance (if they become unemployed) or Employment and Support Allowance (if they are sick or self-isolating). 

 

 

Why aren’t you increasing the rate for contributory/new style Employment and Support Allowance, when you are for UC? Is this not unfair on people who have made national insurance contributions? 

  • Many people eligible for new style ESA will also be eligible for UC if their savings are smaller than £16,000. These people will benefit from the UC increases announced tonight. It is right that we focus our support on those who are most vulnerable in society and have the lowest savings. 

 

Why can only existing WTC claimants benefit from this increase? 

  • WTC is part of the legacy benefit system being replaced by UC and is closed to the majority of new claimants – people who require support should apply for UC instead. We are increasing the standard allowance / the basic element by an equivalent amount in UC and WTC. 

 

Will you guarantee paid parental leave for one primary carer for the duration of school closures, with government reimbursement for employers? Will you protect parents who take this leave from unfair treatment or dismissal? 

  • The government is committed to supporting individuals through this difficult time, including as far as possible supporting people through existing systems. The Chancellor announced a substantial package of measures at Budget and again this week and today to support businesses and individuals. 

  • Employees are entitled to time off to deal with an emergency involving a dependent, This would apply to situations related to coronavirus (COVID-19), including if they have children they need to look after or arrange childcare for because their school has closed. We encourage employers to support parents who choose to take leave, and those who choose to work flexibly. 

  • Parents’ employment rights are protected whilst taking existing leave entitlements or sick pay. 

 

How many people do you expect will benefit from these changes to LHA rates? 

  • Up to 1.2 million existing claimants will benefit from increased housing support as will additional UC claimants over the next few months. Local authorities also have £180m in Discretionary Housing Payments for 2020/21 to further support households on housing benefit or Universal Credit.  

 

Why don’t you just replace the LEL immediately with proper statutory sick pay, linked to earnings? DWP recently consulted on introducing sick pay at 80% of earnings for employees below the LEL. 

  • DWP consulted on this issue in their recent “Health is Everybody’s Business” consultation and will publish a response in due course. However, making this change now would be a significant change to employers’ obligations, and not something we should seek to implement overnight – particularly as the administrative burdens of introducing a new system would fall on employers at an already difficult time. Our immediate approach is focused on making the existing system fit for current circumstances through the recently announced measures. 

 

What happens to the hard-working person who has multiple employments below £118 per week, but won’t receive SSP for any of them? 

  • People with multiple employments below £118pw will be eligible for support through the benefits system if they are unable to work. Employees who have paid sufficient NICs contributions, even through multiple jobs, will also be entitled to new style ESA.  If they haven’t made sufficient contributions, they can apply for UC. 

  • As announced today and at Budget, we have made both benefits more generous and accessible – increasing the UC standard allowance and housing element, removing the 7 waiting day requirement in contributory Employment and Support Allowance, and making UC and new style ESA claims accessible via phone and online, with no requirement to attend the jobcentre. 

 

Statutory sick pay doesn’t cover self-employed people – why aren’t you extending SSP instead of tinkering with benefits?  

  • As well as accessing SSP, self-employed people are able to access support through the welfare system when they are unable to work. If they have accumulated two years of National Insurance contributions, they can claim “new style” Employment and Support Allowance. If they haven’t made sufficient contributions, they can apply for Universal Credit. 

  • As announced today and at Budget, we have made both benefits more generous and accessible – increasing the UC standard allowance and housing element, removing the 7 waiting day requirement in contributory Employment and Support Allowance, and making UC and new style ESA claims accessible via phone and online, with no requirement to attend the jobcentre.