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11 March 2020updated 25 Jul 2021 10:05am

How does the Budget change sick pay and benefits?

Can you afford to take time off during the coronavirus outbreak?

By Anoosh Chakelian

In his Budget, the Chancellor, Rishi Sunak, addressed workers set to lose out from missing work and staying at home owing to the coronavirus. Measures included extending statutory sick pay for those advised to self-isolate, and those caring for others self-isolating, as well as greater support through the welfare system for workers who cannot claim statutory sick pay. Sunak also announced a hardship fund to be distributed by local authorities.

The announcements sound positive, but many workers will continue to miss out – and could still end up venturing into work despite feeling ill. The government has already announced that statutory sick pay will be paid from day one, instead of from day four. It’s now broadened this out for all workers advised to self-isolate, and those caring for others who self-isolate, even if they’re not showing symptoms.

It will also be easier to obtain a sick note, which individuals can now receive through the NHS 111 helpline rather than having to see a doctor in person. Employees eligible for sick pay – ie those who earn an average of at least £118 a week and are employed directly – will benefit.

However, millions of people who are either self-employed or work for agencies and in the gig economy as contractors are not eligible for sick pay or other employment benefits. They are more likely to go into work despite being advised to self-isolate because they simply can’t afford to take time off and lose pay. This, of course, is dangerous for them and the people they work with.

After all, many work in industries vulnerable to a spreading virus (such as hospitality, health service and care work, and cleaning). In 2019, there were 131,000 outsourced workers paid less than the living wage working in the NHS – and such private contractors often do not offer full sick pay either.

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This Budget is the first time the government has announced measures directed at such workers in light of coronavirus, which feels rather late in the virus’s containment. There will be changes in the welfare system to support them as they take time off, including:

An ability to claim the contributory Employment and Support Allowance from day one (instead of the usual day eight) – the benefit usually accessed by injured or ill contractors, or employees who don’t get covered by their employer.

A removal of the usual minimum income floor applied to Universal Credit for the self-employed (which means there will be no expectation of a certain income, so your UC payments should be higher).

There will no longer be a requirement to attend a Jobcentre in order to claim benefits.

This will help many, but it’s worth remembering that statutory sick pay itself is deemed difficult to live on. It is only £94.25 a week – putting workers in the position of choosing between a significant reduction in wages (which could mean falling behind on bills and rent) or struggling into work when they should stay at home.

Statutory sick pay has neither been increased nor extended to those earning beneath £118 a week, and the five-week waiting time for Universal Credit has not been reduced, so low-paid workers and contractors will still face a dilemma. 

“Statutory sick pay won’t stop people working,” says Lola McEvoy, a GMB union organiser for the NHS, who warns that health and care workers cannot afford to self-isolate even if they receive the statutory amount or the equivalent in benefits. She advocates for full pay for these workers to help them afford to stop working temporarily.

There will also be a new “hardship fund” of £500m for local authorities “to directly support vulnerable people in their local area”. This is a small amount relative to the number of local authorities, and an overall funding gap of almost £6.5bn by 2025 for councils in England. While discounted loans for local infrastructure such as housing, and a pothole fund, will be welcomed in local government, there is still no new funding model. As ever, the sector will have to await the Spending Review later this year.

The absence of announcements on restructuring social care (just £1bn of additional funding, which was announced last year) mean that, yet again, the country is waiting for the government to “begin building cross-party consensus on reform”.

This is a significant problem in terms of the future of the public realm (while trying to meet the costs of social care after a decade of cuts, councils are unable to afford other local services), NHS capacity (poor social care provision in the community blocks up hospital beds), and care itself. Low-paid agency care workers are some of the least likely to be able to afford time off, even with the new measures in place.

The defining question will be whether these emergency changes to our welfare system meet the challenges of modern work – and therefore evolve and become permanent.

“Support for low paid self-employed and gig workers” is essential, says Alan Lockey, the head of the Royal Society of Arts Future Work Centre. “More broadly, this [budget] shows why we need a fundamental reform of the welfare state for modern work.

“Fluctuating incomes and flexible working patterns are an important part of the 21st-century labour market, but we are still trapped in the 20th-century mindset which sees a small group of socially excluded people with low but stable incomes as the only target group for support.”

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