Coronavirus in Scotland: Demand for Chancellor to introduce 'crisis income'

A leading anti-poverty charity has urged the Chancellor to introduce a “crisis income” and temporarily suspend utility bill costs for those who have been financially hit by the coronavirus outbreak.
CAS has written to the Chancellor demanding a crisis income for people financially impacted by coronavirus.CAS has written to the Chancellor demanding a crisis income for people financially impacted by coronavirus.
CAS has written to the Chancellor demanding a crisis income for people financially impacted by coronavirus.

Citizens Advice Scotland (CAS) has written to Rishi Sunak, urging him to make a series of emergency measures to protect household incomes during the coronavirus crisis.

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The charity is backing a temporary suspension of utility bills and a boost to Universal Credit and Statutory Sick Pay as well as the mortgage payment holiday principle extended to other forms of debt, including credit cards.

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It also wants to see a freeze on overdraft interest rates and a proposal for a ‘Crisis Minimum Income’ of £180 per week.

The demands come as MPs have today raised questions with Treasury ministers over a “lack of action” around financial help for people who are suddenly out of work.

Former Work and Pensions Minister Iain Duncan Smith has urged the government to pull “three basic levers” of Universal Credit “to help people who are in work” which “could be done today”.

Former business secretary Greg Clark has also said the loan scheme announced by the Chancellor is not enough to prevent businesses from laying off staff and if the “government does not act immediately, large numbers of people will be unemployed”.

Treasury economic secretary John Glen said he is looking at “all options”.

Former Prime Minister and Chancellor Gordon Brown has also urged Rishi Sunak to do "considerably more" to protect people's jobs by the weekend.

In his letter to the Chancellor, Chair of Citizens Advice Scotland Rory Mair CBE, also urged the Treasury to do more to help pople who already “struggle from one pay day to the next” and those who will be newly placed in financial crisis as a result of coronavirus.

“Previous research for CAS suggests a third of people are unable to cover an unexpected expense of £500,” he said. “With that in mind, we believe radical steps must be taken and taken as quickly as possible, to protect household incomes.

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“Our colleagues at Citizens Advice England and Wales have outlined a proposal for a ‘Crisis Minimum Income’ of £180 per week. This is a proposal that has the full support of Citizens Advice Scotland.

“The announcement of a three-month mortgage holiday is welcome, and the same principles should apply to other forms of borrowing and debt, such as credit cards, loans and utilities. Many people will be unable to pay their debts in months to come through sickness or loss of income. It is imperative that they are accorded the same opportunities for rehabilitation as homeowners.

“We would also suggest a three month freeze on interest to apply to overdrafts in anticipation of the new rules coming into force in April.”

His letter also outlined emergency reforms to Universal Credit including the scrapping the minimum income floor for all self-employed workers not just those who have to self-isolate; introducing an immediate non-repayable grant for new claimants to replace the current loan; and changes to the work allowance.

He added: “The current rate and eligibility criteria for Statutory Sick Pay will not give sufficient protection to working people. Boosting and broadening the payment is a measure the government should be able to implement quickly that helps a significant amount of people.

“The government may wish to broaden SSP sufficiently or introduce a new payment to employers to protect the income of people in sectors at risk of redundancy in at risk sectors, like retail, tourism and hospitality. These are often insecure, low income jobs at the best of times.

“Alternatively the government may wish to follow the example of other countries in Europe which are electing to cover a percentage of a worker’s salary when employer's loss of income means they cannot cover wage bills.

“Our view is that finding a payment system to essentially retain workers in their current roles is preferable than increasing strain on the welfare system through spikes to unemployment and the associated claims that will come with that.”

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On utilities he urges the Chancellor to follow New Zealand’s lead where the government has announced a doubling of the Winter Energy Payment, but also to consider expanding the Warm Homes Discount. “This £140 discount currently applies to qualifying households, this scope could be broadened to cut bills for more households later this year.

“France earlier this week also announced a suspension of rent and utility bills owed by small companies. A similar proposal, along the lines of the already announced three month mortgage holidays, could apply to help people struggling with bills.”

CAS research last year revealed one in 10 working people were struggling to pay fuel bills and the advice network has seen examples of people in debt or in insecure incomes self-disconnecting from their energy supply altogether.

He added: “These are not an exhaustive list of proposals. Citizens Advice Scotland will engage with industry, the Scottish government and Scottish local authorities with proposals with their remit which we believe could ease the financial pressure on people.”