Budget update March 2020

March 12, 2020 – Wendy Alcock
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After a cancellation due to dates clashing with last year’s snap election, and an uncomfortably close change of chancellor, I’m sure I wasn’t the only one to be wondering if yesterday’s budget would take place as planned. But take place it did.

With coronavirus leading the headlines on a daily basis, it was a perfect opportunity for the government to answer many of the fiscal concerns the problematic pandemic has raised for people across the country. However, there were also a few other benefit-based announcements hidden away in the published reports.

Read on for our summary of the welfare-based changes announced by the Chancellor, with dates and details known at the time of writing.

Support for people affected by COVID-19

The budget confirmed a couple of areas we already knew were being put into place for people who are unable to work due to coronavirus and it also added a little more detail. The current situation is as follows:

Statutory Sick Pay (SSP) will temporarily be extended so that people who are advised to self-isolate will be paid from the first day of sickness absence, rather than the fourth day. It will also be available for people caring for those within the same household who display COVID-19 symptoms and have been told to self-isolate.

Employers are being advised to use their discretion not to require a GP fit note for COVID-19 related absences. The government will be introducing a temporary alternative to the fit note in the coming weeks which can be obtained by calling the NHS111 line rather than going to see a GP.

Where someone isn’t working or isn’t eligible to claim SSP (for example the self-employed or people below the Lower Earnings Limit) they will be able to claim ‘new style’ Employment and Support Allowance (ESA) and Universal Credit (UC). To aid this process a few rules will be changed:

  • The current eight waiting days before a new style ESA payment commences will become one day.
  • When claiming UC people will not need to go into a job centre to get access to an advance payment.
  • The minimum income floor will be temporarily relaxed for a period of time while someone is required to self-isolate or is ill as a result of COVID-19. New self-employed UC claimants who are required to self-isolate or are ill as a result of COVID-19 will be treated as having Limited Capability for Work and will not have a Minimum Income Floor applied.
  • [Update 12 March: The Minister for Disabled People, Health and Work Justin Tomlinson confirmed today that everyone who is infected with COVID-19, or who is required to self-isolate, will be treated as having limited capability for work for both ESA and UC without the requirement for medical evidence or undergoing a Work Capability Assessment].

The government will also be providing Local Authorities in England with £500 million of new grant funding to support economically vulnerable people and households in their local area, which it expects will mostly be used to provide council tax relief. The Ministry of Housing, Communities and Local Government will be releasing more information on this fund shorty.

We believe all of these changes will be included in the new COVID-19 Bill, which will be started next week, but have asked the DWP for confirmation.

Universal Credit advances and deductions

From October 2021, the period over which Universal Credit advances will be recovered will increase up to 24 months. This was due to be increased to 16 months on this date from the current 12. From the same date the maximum rate at which deductions can be made from a Universal Credit award will reduce from 30% to 25% of the standard allowance.

Personal Independence Payments

From June 2020, the frequency of health assessments required for people receiving Personal Independence Payment will be reduced and a minimum review award length of 18 months will be applied to claimants whose condition is unlikely to change.

Extra help for parents of sick or premature babies

From April 2023, a new entitlement to Neonatal Leave and Pay will be created for employees whose babies spend an extended period of time in neonatal care, providing up to 12 weeks paid leave so that parents do not have to choose between returning to work and taking care of their vulnerable newborn.

Extending exemptions for the Shared Accommodation Rate

From October 2023, exemptions to the shared accommodation rate for Housing Benefit and housing costs in Universal Credit will be extended to rough sleepers aged 16-24 (this currently covers 25-34 year olds), care leavers up to the age of 25 (currently this covers people aged under 22) and two new exemptions will apply to victims of domestic abuse and human trafficking

Enhancing Housing Benefit compliance

The Budget provides further investment of up to £12 million per year in local authority resource to maximise their capacity to tackle Housing Benefit fraud and error.

National Living Wage

The government has asked the Low Pay Commission (LPC) to make recommendations with the view of reaching a National Living Wage (NLW) of two-thirds of median earnings by 2024, provided economic conditions allow. The LPC are expected to report back in October 2020.

Following recommendations already made by the LPC, the NLW will apply to workers aged 23 and over in April 2021, with a target for it to apply to workers aged 21 and over by 2024.

Confirmation of a few changes we already knew about

From January 2021, access to non-contributory benefits for EEA migrants arriving in the UK under the new immigration system will be aligned with those for non-EEA nationals.

From January 2021, Child Benefit payments will be stopped for children living overseas for EEA migrants arriving in the UK under the new immigration system.

From next month there will be a delay to the reduction of the Universal Credit surplus earnings threshold, so that only large income spikes above £2,500 will be taken into account. The threshold will be reduced to £300 in April 2021.

Funding will be made available to ensure claimants do not experience a gap in their benefit entitlement when moving from Universal Credit to Pension Credit.

Funding will be made available to increase the rate of transitional payments for claimants in receipt of Severe Disability Premium when they move to Universal Credit.

Responsibility will be transferred to the Scottish Government for around £3 billion of disability benefits in April 2020.

The 3-year sanction from Universal Credit and Jobseeker’s Allowance is being removed bringing the high-level sanction to 13 weeks for the first failure to comply with conditionality or work search requirements and 26 weeks for each subsequent failure, making 26 weeks the duration of the longest single sanction in Universal Credit and Jobseeker’s Allowance.

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We hope you found this a useful summary. Where needed, all our tools will be updated to factor in the changes and if we find more detail on any of the announcements we’ll post them on our social media channels, so please do follow us on Twitter, Facebook and LinkedIn.

Sources:

https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/871948/Budget_2020_policy_costings.pdf  

https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19

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