On 28 October 2021, the House of Lords is scheduled to debate the following motion:

Lord Bird (Crossbench) to move that this House takes note of the combined impact of (1) the end of the Coronavirus Job Retention Scheme, (2) the reduction in Universal Credit, and (3) the upcoming rise in fuel prices, on people’s ability to afford to stay in their homes.

End of the Coronavirus Job Retention Scheme

What did the scheme do?

In response to the Coronavirus (Covid-19) pandemic, the Government introduced the Coronavirus Job Retention Scheme in March 2020. The scheme, also known as the furlough scheme, initially allowed employers to apply for a grant that covered 80 percent of an employee’s monthly wage (up to £2,500 a month). Although originally open until May 2020, the Coronavirus Job Retention Scheme was extended several times before ending on 30 September 2021.

A total of 11.7 million jobs on furlough had been supported by the scheme. According to HM Revenue and Customs, the cumulative amount claimed through the scheme has totalled £69.3 billion as of 14 September 2021.

What impact could ending the scheme have on housing payments?

Several organisations have argued that the pandemic has impacted people’s ability to afford to stay in their homes. In February 2021, the Resolution Foundation published the results of a study which considered the impact of the Covid-19 pandemic on housing arrears. It found that the end of the Coronavirus Job Retention Scheme “will strain family incomes further”. Using data from a representative survey of 6,389 working-age adults in the United Kingdom, the think tank estimated that in January 2021:

  • 9% (284,000) of private renters were behind on their rent;
  • 6% (280,000) of families in the social rented sector were behind with their housing payments; and
  • 2% (190,000) of mortgaged homeowners were behind on their payments.

The Resolution Foundation noted that rates of arrears across all tenures were “at least twice the level of arrears observed going into the crisis” by January 2021. It also found that approximately half of social renting and mortgaged home owning-families were in arrears, and close to a third of those that rented privately had dependent children. This was equivalent to 307,000 families, who would be “viewed as priority need by the state if they were made homeless”.

In February 2021, several charities, including Citizens Advice, Crisis and Shelter, published a joint statement calling on the Government to tackle rising rent arrears during the pandemic. The statement made several recommendations to the Government. For example, they suggested that it should introduce a targeted financial package to help private renters pay off arrears accumulated since lockdown measures were introduced in March 2020.

The House of Commons Housing, Communities and Local Government Committee published a report in March 2021 into the then Ministry of Housing, Communities and Local Government’s (MHCLG) response to the pandemic, with a specific focus on the homeless and private rented sector. In its report, the Committee called on MHCLG to introduce a “specific financial package” to support tenants to repay rent arrears caused by the pandemic, describing this as “one of the department’s top priorities”. Responding, the Government stated that it had provided an “unprecedented package of financial support to protect renters whose income has been affected” throughout the pandemic. For example, by increasing the Local Housing Allowance in April 2020 to the 30th percentile of local market rents in each area “at a cost of almost £1 billion”. The Government also noted that it would “continue to monitor the effectiveness of our extensive financial support in protecting tenants and landlords”.

Labour had previously called on the Government to provide financial support for people isolating as a result of Covid-19, in response to the furlough scheme being withdrawn. The party had warned that the situation had become “more urgent”. In response, the Secretary of State for Health and Social Care, Sajid Javid, stated that a lot of “extra funding” had “gone to people to support them financially if they are asked to isolate”, and that this was being “kept under review” by the Government.

In September 2021, the Government was asked for its assessment of the potential effect of the end of the Coronavirus Job Retention Scheme on the level of mortgage arrears. In response, John Glen, the Economic Secretary to the Treasury, said that the Government would “continue its efforts to support mortgage borrowers”. For example, he highlighted that it would continue to offer Support for Mortgage Interest (SMI) loans to homeowners in receipt of an income-related benefit to help prevent repossession. He also noted that Bank of England data (published in September 2021) showed that arrears levels “remain low”, with the proportion of total loan balances with arrears at 0.89%.

Reduction to the standard allowance of Universal Credit

What was the temporary uplift?

Universal Credit (UC) is a means-tested benefit available to those on either a low income or out of work. It is also available to those with a health condition or disability that prevents them from working or preparing for work. It comprises of a standard allowance and any extra amounts dependent on certain factors, such as whether a recipient has children and if they need help paying their rent.

On 20 March 2020, the Chancellor of the Exchequer, Rishi Sunak, announced a temporary increase (or uplift) to the standard allowance of UC. The increase amounted to an additional £1,000 per year (equivalent to approximately £20 per week). The uplift was initially intended to last 12 months and was due to expire in April 2021. However, in the March 2021 Budget, the Chancellor announced a further extension to the uplift. The temporary uplift ended on 6 October 2021.

In March 2020, approximately 3 million people were recipients of UC. By September 2021, (the latest month for available data), 5.8 million people were in receipt of the benefit.

What has been said about the removal of the uplift?

Politicians and organisations have criticised the decision not to extend the uplift. The Leader of the Opposition, Keir Starmer, argued that it would “drive families and children into poverty”. Mr Starmer also said that should he become Prime Minister, Labour would keep the uplift in place until it replaced UC with “something better”. Former Prime Minister Gordon Brown and former Conservative Party leader and Secretary of State at the Department for Work and Pensions Iain Duncan Smith had also called for the uplift to remain.

Additionally, the charity StepChange called for the uplift to return, warning that the pandemic combined with a reduction to the UC standard allowance “threatens to leave hundreds of thousands of tenants facing long-term housing insecurity and problem debt”. Using representative data from a survey of 8,613 adults in September 2021, StepChange had estimated that 558,000 UC claimants in rent arrears would “struggle to pay existing rent debts over the next 12 months” because of the removal of the uplift. In addition, the charity’s polling estimated that 10% (450,000) of all private renters were in arrears, with 5% (225,000) stating that rent debts accumulated during the pandemic have meant that “they will ‘probably’ or ‘almost certainly’ lose their home”.

In September 2021, more than 40 charities, including Centrepoint and End Youth Homelessness, wrote a joint letter to the Chancellor calling on the Government to not remove the temporary uplift. In the letter, the charities described the uplift as a “lifeline” for “vulnerable” young people, with many claimants now left “facing an impossible choice” between paying bills and buying food. The organisations argued that this could leave many young UC claimants “at risk of repeated homelessness”.

In the same month, the Government was asked in a written question what estimate it had made on the impact of the removal of the uplift on the levels of homelessness. In response, Baroness Stedman-Scott, the then Parliamentary Under-Secretary of State at the Department for Work and Pensions, said that no impact assessments had been made. However, she set out a number of the Government’s initiatives. For example, she noted that the Government had made £140 million available in Discretionary Housing Payments funding for local authorities in England and Wales for 2021–22 and highlighted that the Government had already extended the exemptions from the shared accommodation rate of Local Housing Allowance for care leavers and those who have spent at least three months in a homeless hostel.

Increasing fuel prices

Why have fuel prices increased?

Several contributing factors have led to gas prices increasing worldwide. This includes colder weather leading to increasing pressure on existing supplies and global liquefied natural gas production being unable to keep up with demand. As a result, wholesale gas prices have risen by nearly 250%. This has also increased the price of electricity, as gas is used to generate electricity.

On 1 October 2021, the energy price cap, which limits the impact of rising energy prices on households in England, Scotland, and Wales, was raised by 12% to account for the increase to wholesale gas prices. This means that for a household with typical consumption on a dual electricity and gas bill, on default tariffs and who pay by direct debit, their energy bills will see an increase of £139 from £1,138 to £1,277. In addition, prepayment customers will see their bills increase by £153 from £1,156 to £1,309. Further to these increases, Ofgem, the energy regulator, has warned that the price cap could rise further if wholesale gas prices continue to increase. The next review is reported to take place in February 2022 and will come into practice in April 2022.

How could this affect households?

Several politicians, analysts and organisations have contended that increasing energy prices could push more households into fuel poverty, whereby a household is “unable to afford to heat their home to an adequate temperature”.

Cornwall Insight, who are energy market analysts, estimated that increasing energy prices could result in consumers paying a further £400–£600 on their annual energy bills. The charity National Energy Action has warned that the increase to energy prices will push an additional 500,000 households into fuel poverty. Similarly, Simon Francis, co-ordinator for the End Fuel Poverty Coalition, has argued that the increase to energy bills “comes at the worst possible time for millions of households across the country” and that it was “difficult to put into words just how devastating this news will be for people”.

Jonny Marshall, senior economist at the Resolution Foundation, also warned that the combined impact of increasing fuel prices and the removal of the temporary uplift to Universal Credit meant that low income families would be “facing a cost-of-living crunch on several fronts”. He argued that increasing energy bills would be “particularly acute” for low-income families on UC, as they were four times as likely as the rest of the population to be on pre-payment meters, and therefore “face even bigger increases to bills”. Consequently, he called on the Government to make schemes like the Warm Homes Discount more widely available and to maintain the uplift to UC.

The Labour Party has also been critical of the Government for its response to increasing fuel prices. In response to an urgent question in the House of Commons on gas prices on 23 September 2021, the Shadow Secretary of State for Business, Energy and Industrial Strategy, Edward Miliband, said that the Government was “complacent about the crisis in the market; complacent about the impact on families; and complacent about the cost-of-living crisis”. Mr Miliband also called on the Government to cancel its plans to remove the uplift on the standard allowance of UC. Responding, the Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, denied that the Government had been complacent. Turning to calls for the Government to reverse its decision to remove the uplift, Mr Kwarteng stated that it was a “matter across Government in terms of budgetary responsibility” and that “there will be plenty of time to discuss that” following the next Budget at the end of October 2021.

In September 2021, the Government was asked what support it would be providing to low-income households when energy and gas household bills were set to increase on 1 October 2021. In response, the Minister of State at the Department for Business, Energy and Industrial Strategy, Greg Hands, stated that the Government had continued to support low income and fuel poor households with its energy bills through the Warm Homes Discount, which “provides eligible households with £140 off their bills”. Further, Mr Hands said that Winter Fuel Payments and Cold Weather Payments would ensure that “those most vulnerable are better able to heat their homes over the colder months”.

The following month, the Government announced the launch of the Household Support Fund, which would provide £421 million to support vulnerable people in England and would run until March 2022. The fund would be available to councils and would primarily be used to support households in need with food, energy and water costs. The Government stated that in cases of “genuine emergency”, the fund could also be used to support housing costs, with at least 50% of the funding reserved for households with children and up to 50% of funding available for vulnerable households without children, including individuals.

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Cover image by Tierra Mallorca on Unsplash.