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Government raises Universal Credit and puts ‘no limit’ on new job retention scheme

Chancellor Rishi Sunak has announced a further wave of emergency measures, including an increase to Universal Credit, and “no limit” on the grant available through a new scheme to pay up to 80 per cent of wages for retained workers.

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Picture: Getty
Picture: Getty

Rish Sunak increases Universal Credit allowances and puts “no limit” on job retention scheme #ukhousing #socialhousingfinance #universalcredit #coronavirus

Chancellor Rishi Sunak: “no limit” on the grant available in a scheme to pay up to 80 per cent of wages for retained workers during the #coronavirus outbreak #socialhousingfinance #universalcredit

Government increases Universal Credit allowances and raises LHA to cover “at least 30 per cent of market rents” #socialhousingfinance #universalcredit #coronavirus

The measures come after the government on Wednesday banned evictions of any social or private sector renters falling into arrears during the coronavirus crisis.


Speaking this afternoon at the government’s daily briefing, Mr Sunak said that the standard allowance for Universal Credit would be increased by £1,000 per year for the next 12 months.


The Working Tax Credit basic element of the scheme will also increase by the same amount.


“Together these measures will benefit over four million of our most vulnerable households”, the chancellor said.


Local Housing Allowance will now cover at least 30 per cent (that is, the lowest 30th percentile) of market rents in individual areas, he said.


Other announcements included a commitment to “suspending the minimum income floor for everyone impacted by the economic impact of coronavirus”.


“That means self-employed people can now access in full Universal Credit at a rate equivalent to statutory sick pay for employees.


“Taken together, I am announcing nearly £7bn of extra support through the welfare system to strengthen the safety net and protect people’s incomes and to support the self-employed through the tax system,” Mr Sunak said.


Where tax for self-employed workers is concerned, self-assessment payments will also now be deferred until January 2020.

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Business support


A new ‘coronavirus job retention scheme’, announced today, will be backdated to 1 March, providing grant to cover “most of the wages of people who are not working but are furloughed and kept on payroll rather than being laid off”.


Any employer, “small or large, charitable or non-profit”, will be eligible for the scheme, which will be open for an initial minimum term of three months and would be extended further if necessary, Mr Sunak said.


He said that he was placing “no limit” on the amount of funding available for the scheme, and added that it would be open “within weeks”.


The grants will cover 80 per cent of the salary of retained workers, up to a total of £2,500 per worker a month.

Mr Sunak also announced that a previously announced business interruption scheme for small and medium-sized businesses, to be facilitated by the British Business Bank, would now be interest-free for 12 months, rather than six.


Finally, Mr Sunak said that VAT payments would be deferred for the next quarter until the end of June, with businesses having “until the end of the financial year” to repay those bills.


“That is a direct injection of over £30bn of cash to businesses, equivalent to 1.5 per cent of GDP,” Mr Sunak said.


Mr Sunak said that the measures were “unprecedented” in the history of the British state.


“Our plan for people’s jobs and incomes will protect people’s jobs, offer more generous support to those who are without employments, strengthen the safety net for those who work for themselves and help people stay in their homes.”


Sector reaction


A representative for London Councils, which yesterday called on ministers to prevent homelessness during the crisis through a number of methods, including raising the Local Housing Allowance (LHA), has welcomed the government’s move today.


The spokesperson said: “The government has made the right call. Raising Local Housing Allowance is a big step forward in preventing homelessness.


“Boroughs are concerned the combination of COVID-19’s economic impact and London’s severe housing pressures still threatens a spike in homelessness – but this decision will help keep many Londoners secure in their homes.


“In London, we face the worst homelessness crisis in the country and inadequate LHA rates have been a key factor behind growing numbers of private sector tenants falling into arrears and losing their homes.”


Richard Watts, chair of the Local Government Association’s (LGA) resources board, said: “The LGA has long called for a lifting of Local Housing Allowance rates to address the growing gap between income and rents. It is great the chancellor has acted today.


“Restoring LHA rates to cover at least the lowest third of market rents will deliver more of the security that tenants need during this coronavirus crisis and support households who need help to meet their housing costs.


“Alongside the additional resources that have been announced for Universal Credit and the welfare benefits system, this will play an important role in relieving pressure on local services and hardship support at this crucial time.”

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