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Government to pay wages of those not working and boost benefits in sweeping new coronavirus measures

Government to pay wages of those not working and boost benefits in sweeping new coronavirus measures

Chancellor Rishi Sunak has announced a new package of far-reaching measures to help people's finances during the coronavirus pandemic – such as increasing benefits and housing allowance, and paying 80% of employees' wages if businesses are struggling.

The measures were announced as the Government ordered all pubs, restaurants, theatres, cinemas, gyms and leisure centres to close as soon as possible, in a bid to fight the spread of the virus.

For full and constantly-updated info on the financial effects of coronavirus, see our Coronavirus Financial Help & Rights guide and our Coronavirus help for employees.

What new measures have been announced?

Here's a summary of the things the Chancellor said that the Government will do to help personal finances:

  • Pay 80% of employees' wages if they're not working due to coronavirus. The Government will cover 80% of the wages of 'retained' employees, ie, those who would otherwise have been laid off due to the knock-on effects of the coronavirus pandemic. The amount paid will be capped at a maximum of £2,500/month per employee, and the money will be issued through grants which can be paid out to any employer.

    The Chancellor says the scheme will be open "before the end of April", and wages will be paid backdated to 1 March 2020.

  • Increase the standard universal credit allowance by around £1,000/year for 12 months. The normal universal credit allowance depends on your individual circumstances, but if you're single and 25 or older you can get a monthly standard allowance of up to £317.82. Over a year, that's £3,813.

    From Monday 6 April, all new and existing claimants will have their standard allowance increased by £20/week for 12 months. This is in addition to planned annual increases (which haven't been announced yet).

    Of course, any universal credit you do get is dependent on your earnings, whether you've got children, and other factors.

    One of these factors is the amount of savings you've got. If you (or your partner) have savings over £6,000 you'll get less universal credit, and if you've got savings of £16,000 or over you won't be eligible for universal credit at all.

  • Increase the working tax credit basic element by around £1,000/year for 12 months. Working tax credit has been replaced by universal credit for most people. The only people still eligible are those who receive the severe disability premium, or have received it in the past month and are still eligible for it.

    Currently, the basic allowance for working tax credit is up to £1,960/year (though what you get depends on your circumstances).

    From Monday 6 April, this will also be increased by £20/week for one year for all existing claims – again, this is on top of planned annual increases.

  • Allow self-employed people to claim universal credit at a rate which is equivalent to statutory sick pay. Universal credit is designed to provide people with a safety net if they're unable to work, or top up incomes for those in work, though how much you actually get is subject to means testing.

    The Chancellor confirmed – as trailed in the Budget last week – that he will be suspending the 'minimum income floor'. That's the amount usually used to work out your benefit payment – if you earn more than the minimum income floor you get less universal credit, while if you earn less than the minimum income floor you currently don't get any extra money to make up the difference.

    The self-employed will now be able to access universal credit at a rate equivalent to statutory sick pay, which is currently £94.25 per week. We're asking the Treasury for more details of how this will work, including how the self-employed can claim this amount, and will update this story when we hear more.
  • Delay the next set of self-assessment tax payments to January 2021, in a bid to help the self-employed. If you pay the majority of your tax via self-assessment, then usually you make two payments each year to pay off the previous year's tax bill, one by 31 January (when your tax return is due) and one by 31 July.

    The Chancellor has announced there will be no payment due by July this tax year, allowing people more time to pay their tax bill.

    We've asked the Treasury whether this only applies to the self-employed, or anyone who fills in a self-assessment form and is waiting to hear back. But it's likely that if your main income is taxed through employment and you need to fill in a return to declare other, smaller sources of income, you pay the tax bill on that in one go in January and so won't be affected by this.

  • Help renters by increasing universal credit and housing benefit so that the local housing allowance will cover at least the bottom 30% of market rents in the recipient's area. The Chancellor said this is expected to represent almost £1 billion of additional help in total.

    The amount you can currently get in local housing allowance depends on where you live and what kind of accommodation you live in. You can check current local housing allowance rates for your area using this DirectGov tool. Local housing allowance has been frozen for several years, but today's announcement means that your local housing allowance will cover at least the bottom 30% of market rents in your area, according to your housing type.

'Unprecedented measures for unprecedented times'

The Chancellor said it was the first time in history the Government would step in and pay people's wages, calling the plans "unprecedented measures for unprecedented times" – though he said he couldn't guarantee that no one would face hardship in the coming months.

He said: "The actions I've taken today represent an unprecedented economic intervention to support the jobs and incomes of the British people.

"Now more than at any time in our history, we will be judged by our capacity for compassion. Our ability to come through this won't just be down to what Government or businesses do, but the individual acts of kindness that we show each other."

We'll be digging into the detail of the measures announced today and providing full analysis in the coming days, as well as updating our Coronavirus Financial Help & Rights guide.