Financial support during the Covid-19 pandemic - a proposal for a Crisis Minimum Income
The case for a Crisis Minimum Income
Citizens Advice helps people manage financial difficulties every day. Last year we helped 380,000 people with debt problems and a further 150,000 people navigate the welfare system. Our advisers see the impact on people’s lives when they can’t make ends meet.
From data we collect when providing that advice, we know the people we help need a certain amount of money to avoid getting into financial difficulty. The average amount for a single household is £960 a month, while for a couple with children it is £1,700.
As individuals, public services, and businesses change their behaviour to help delay the impact of coronavirus, the way people live (and so spend money), will change dramatically. Many people will not be able to go to work and will lose the ability to provide for themselves and their families. People’s needs will also change as they cut back on travel and spending outside of the home. Using the ONS’s Living Costs and Food Survey, we modelled plausible changes in people’s outgoings in the next three months, focusing on the bottom third of the income distribution.
Building on existing systems, the government can ensure people get this income by:
Setting Statutory Sick Pay at £180 per week, and extending SSP to people below the Lower Earnings Limit.
Extending SSP to people who have been recently laid off, are taking unpaid dependents’ leave or are socially distancing following government advice. This maintains the link with the employer and is the most straightforward route to providing financial support for these varied circumstances.
Using the benefits system to give people enhanced financial support, including by:
Speeding up payments in Universal Credit - either by turning advance payments into grants, or giving people guarantees that advance payment loans will be guaranteed on generous repayment terms.
Setting the standard allowance for a single person at the Crisis Minimum, or making the work allowance available to all claimants, not just those with responsibility for children or limited capability to work.
Pausing natural migration to UC during this period, and making similar adjustments across the benefits system to ensure people are paid the Crisis Minimum Income.
Introducing a three month council tax holiday where people cannot afford to make payments. These should be fully funded by the government.