The coronavirus job retention scheme and self-employed income support schemes are together supporting 10m jobs and paying out more than £17bn, supporting nearly one-third of British jobs. There have been more than 1.5m new claims for universal credit (UC) since the lockdown began, with UC now supporting more than four million people.
Despite this unprecedented support, there is concern that for many households reduced income may not be enough to cover their household bills. Policy in Practice has found that councils need to be proactive to prevent households relying on benefits from falling through the cracks.
In evidence to the Work and Pensions Select Committee, we found that three in every four people applying for benefits are coming into contact with the system for the first time. People are confused about what support they can access, and how to claim it.
The Government increased support for those in receipt of UC or tax credits by increasing personal allowances by £20 a week. It also raised the maximum support available to private renters by aligning local housing allowance rates to the cheapest 30% of local rents, and suspended hours rules for tax credits and the minimum income floor for self-employed people in receipt of UC.
The benefit system is complex and many people need to receive personalised advice before moving onto UC. Many of those on tax credits have made a claim for UC assuming they had to, and have seen their tax credits stopped – leading to at least one legal challenge against the Government. Others need to be signposted to apply for contributory benefits alongside, or instead of, UC.
The Government has allocated £500m to councils through the coronavirus hardship fund. This is intended to assist low-income households, primarily through help with council tax bills. The Government set out guidance on how they intended this fund to be distributed to residents. Policy in Practice has analysed how much of the fund is required at each local authority to support low-income households, using council caseloads and their individual council tax support schemes, to identify the amount of funds each council will have remaining for discretionary use. We are making this available as a free resource for councils.
Councils with more generous council tax support schemes will have more money left over for discretionary support to help households facing crisis.
They will need it – the increased generosity of benefit support won't be evenly spread. Policy in Practice's analysis for the Greater London Authority (GLA) finds that people living in high rent areas and with larger families are much more likely to be benefit capped. Capped private renters in London gain £100 per month less than those that aren't capped.
To plug the gaps and reach those newly vulnerable, councils will have to take a proactive, forward-looking approach.
Some councils explicitly fund hardship support for certain groups, such as those with no recourse to public funds who may have nowhere else to turn other than the local authority.
In addition to targeting specific groups, councils can use their revenues and benefits data to understand the impact of COVID-19 policy changes on individual families, and identify the most effective ways to target discretionary funds among their residents, tracking impacts over time.
Greenwich RLBC has been using data to maximise benefit eligibility well before the crisis and has written to the Department for Work and Pensions about the importance of making UC data available to councils, so they can help people get the support they need now, and get the economy moving faster.
The Office for Budget Responsibility and the National Institute of Economic and Social Research estimate that unemployment is set to rise to between 2.5m and 5m households (an increase of between 190% and 500%). Councils won't be able to support everyone. Croydon LBC's Gateway service is modelling the economic and housing impacts locally, taking into account their sectoral mix.
The impacts of this crisis will be felt differently across different councils and regions, and will require a locally tailored approach. Councils need to rely on detailed household-level forecasting to plan and prioritise support.
By being proactive, they can use limited funding to target income-oriented campaigns that can make a real difference to residents facing crisis, as well as protect the council from further costs associated with homelessness and debt.
Deven Ghelani is the founder of Policy in Practice, a policy-led software analytics company
