Chancellor Rishi Sunak has today announced that the Government will increase the “standard allowance” – £323.22 a month for single people and £507.37 a month for couples – of Universal Credit, putting and extra £1,000 a year into the pockets of low-income households.
Working Tax Credit will also be increased by the same amount to help those who have not yet moved over to Universal Credit.
The Chancellor said that whilst today’s announcement is only temporary, it would help around “four million of our most vulnerable households” as the country battles with the economic fallout of the Coronavirus pandemic.
He also announced that the Universal Credit ‘Minimum Income Floor’ will be lifted for self-employed people who are unable to work due to Covid-19, meaning that “every self employed person can access Universal Credit at rate equivalent to Statutory Sick Pay.”
“I’m strengthening the safety net for self-employed people too by suspending the minimum income floor for everyone affected by the economic impact of coronavirus,” he said.
The Chancellor also said that the value of Local Housing Allowance will be increased to cover 30% of market rents in a claimant’s local area.
However, the Chancellor said he couldn’t promise “that no one will face hardship in the weeks ahead”.
To help businesses retain staff and make it easier for them to bounce back once the Coronavirus pandemic has ended, the Government will make grants available for businesses to cover 80% of each worker’s wages.
“Any employer in the country, small or large, charitable or non profit, will be eligible for the scheme,” he said.
The scheme will cover all wages backdated from 1st March 2020 and remain in place for at least three months, and “covers everybody who is on the PAYE system through a company.”
Asked whether the new grant scheme will cover those on Zero-Hours contracts, he responded: “Zero-Hours covers a variety of situations, but it may well be you are on a PAYE scheme and have a set of regular earnings and it will be covered depending on your particular circumstance.
“I can’t generalise for every single person’s employment status, but in general our desire here is to cover as broad a range of people as possible.”
He concluded: “Taken together, I’m announcing nearly £7 billion of extra support through the welfare system to strengthen the safety net and protect people’s incomes.”
John McDonnell MP, Labour’s Shadow Chancellor, said: “The Chancellor has shifted direction but unfortunately not far enough or fast enough.
“The Government must give people the economic security to stay at home by lifting the level of Statutory Sick Pay, but it appears that the Government hasn’t done that today.
“Sick pay is being left at a level that the Health Secretary said he could not live on, yet this is what the self-employed are being asked to get by on.
“The Chancellor’s wage protection plan sets out no obligation for employers to keep staff on, and no commitment to full wages being paid, with the cap on incomes meaning that many people will take a significant pay cut.
“This will also take some weeks to roll out at a time when wages need to be guaranteed more urgently.
“Other benefits, including for carers, are not being lifted adequately.
“The Chancellor said he would do whatever it takes, but he can and should go further – and we will keep working constructively with Government to ensure the best possible response to the Coronavirus crisis.”
SNP Westminster Leader Ian Blackford MP said today’s measures “do not go as far as we would have liked”, but added that they will “provide significant support to protect people’s jobs and incomes.”
He added: “The SNP will continue to press the UK government to deliver more support for all our people so no one is left behind.
“In particular, we will seek further support for the self-employed, improved sick pay, and strengthened welfare protection for everyone.
“This is an unprecedented crisis – we must do everything we can to ensure that everyone has a guaranteed income and no one is left struggling to get by.”
Plaid Cymru’s Treasury Spokesperson, Ben Lake MP, said: “The comprehensive package presented by the Chancellor today is a very welcome and very significant step in ensuring that workers don’t lose out financially due to the Coronavirus crisis.
“However, the self-employed, freelancers, sole-traders, and workers in the gig economy must be given the same level of support as employed workers.
“Up to £2,500 must also be available for the self-employed who will stand to lose customers or won’t be able to work.
“We still need clarity on what happens if companies go out of business due to the crisis and whether workers employed by those companies would stand to lose the 80% of their salary provided by the government.
“Plaid Cymru’s call for a temporary emergency universal basic income would ensure that everyone has guaranteed financial security for the duration of the crisis.
“That said, this is, at first glance, a welcome intervention in the economy at this deeply uncertain times.”