What does Covid-19 mean for people restricted by poverty?

Posted on 23 Mar 2020 Categories: Blog, Coronavirus, Cross-posts Related Tags: Joseph Rowntree Foundation

by Helen Barnard

As we come to terms with what Coronavirus could mean for us and our families, we urge the Government to keep people who are restricted by low incomes front of mind.

In a just and compassionate society, we all rely on one another for support in difficult times, within communities, and when acting together through national and local government, as well as charitable responses.

People locked in poverty face particular challenges staying afloat in the face of rising costs and income loss that will come as a result of the Coronavirus outbreak. They are also more likely to be in poor health, disabled, and to be caring for others. In addition, people stuck in poverty are more likely to experience anxiety, depression and other mental health difficulties. The services on which people on low incomes rely are also at risk of disruption, such as food banks and advice teams. The millions of workers trapped in poverty are more likely to have insecure jobs, with fewer rights and employee benefits, and they are less likely to have savings to help cover additional unplanned costs or gaps in income. It is vital that the Government and other organisations in the UK take all possible action to reduce both financial pressure and increased anxiety.

The Government has rightly announced a significant package of help for business. It has also begun to take steps to support individuals and families, with the promise of more to come. It is vital to quickly bring forward much greater help for people who are restricted by low incomes and at high risk of being pulled into even greater hardship by the effects of Covid-19, and by wider economic impacts. We will be working with our partners over the coming weeks and months to understand how the unfolding Covid-19 situation is affecting people on low incomes, and what we believe is the right response from governments and other organisations. These responses must cover at least the following areas:

1. Fast and effective social security support as an anchor in these difficult times

The Government has taken welcome steps to speed up and strengthen the support available through our public service social security system, including:

Earlier payment of Statutory sick pay and some benefits.
Not requiring a fit note to access benefits.
Removing the minimum income self-employed people must earn to get Universal Credit (this should be applied to all self-employed people during this period, not only those who are ill or self-isolating).
More funding for Council Tax support.

The Government has also announced that there will be greater flexibility, in relation to not sanctioning people who cannot attend appointments, and work-related conditions. However, we believe that the Government should go further to support people who may be pulled deeper into hardship by loss of income from work, and increasing costs.

We will be bringing forward a detailed set of recommendations shortly. Next steps should include:

Extending Statutory sick pay to low earners.
Putting in place a mechanism to give people immediate support whilst they apply for Universal Credit to keep them afloat during the five week wait (without pulling them into debt which may lengthen financial hardship).
Suspending debt deductions from all benefit payments.
Pausing all financial sanctions, and ensuring all work coaches are empowered to be highly flexible in agreeing work search and other requirements, so that claimants feel confident that these are reasonable and feel manageable for them.

If some or all schools are forced to close, the Government should be ready to provide additional financial support for families who are likely to have received free school meals and now have to meet the additional food costs while children are out of school.

2. Support for renters

The Chancellor has confirmed that banks will offer help for people with mortgages, with three month ‘holidays’ for those affected by Coronavirus. This is a good first step for homeowners, especially for the one-in-five working-age adults in poverty who have a mortgage. However, renters are also very likely to be pulled into difficulties. Social and private housing providers must support people who may struggle to keep up with the rent. They should, at a minimum, avoid evictions and make sure people are not pulled into homelessness due to increasing rent arrears. The Government must work with landlords to ensure they are able and willing to take this action.

3. Increase local welfare assistance

Local authorities already have schemes to help people who face financial crises. However, these schemes are very variable across the country and have generally been underfunded to meet existing demand. This demand may well increase in the coming weeks and months. Local and national government should increase the funding and coverage of local welfare assistance schemes to help people affected by Covid-19 directly and through its economic impacts.

4. Help coping with utility bills

Utility companies have established methods of identifying and supporting vulnerable customers. In the current situation, customers who were not vulnerable in normal times, may struggle to pay bills. Higher numbers of people staying at home may increase usage, with income loss and higher prices in the shops reducing people’s ability to cover the bills. Utility companies should ensure that their staff are equipped to identify customers who would not usually be viewed as vulnerable but are struggling due to the social and economic impacts of the Coronavirus. They should put the right support in place to help with immediate financial challenges and to reduce anxiety about paying bills and getting into debt.

5. Employer support for workers

Businesses are under increasing pressure and many are already doing a great deal to support their staff. It is vital that all employers do as much as possible, including ensuring that temporary and insecure workers have access to sick pay if they are ill or self-isolating. Over time, more workers may need to provide additional care for their children or family members if schools and care providers have to close or reduce their services. This will be challenging for both families and businesses. Employers should aim to respond supportively, enabling workers to work as flexibly as possible and trying to avoid penalising those employees who need to work less for a period of time due to caring responsibilities. Working from home is an important part of our national response, but is not available to all workers, especially those on low incomes. It is important for our national response to this challenge that we to consider carefully the constraints faced by those on low incomes, who have fewer options to adapt to new restrictions.

Our country’s response to this will be a test of our values as a nation. We must ensure that people on low incomes do not suffer the injustice of being discriminated against due to a restricted set of options and circumstances. We are calling for a compassionate response that ensures we are all protected from any increased risk and harm.

We will be developing further recommendations to meet the social and economic impacts of Covid-19 and the response to it, considering both short-term and medium-term impacts on individuals, communities and our economy.

This was originally published on the Joseph Rowntree Foundation blog on 18th March 2020.

Read our coverage of the coronavirus pandemic here.