Covid-19 and Budget 2020: what they mean for financial wellbeing

As well as a threat to our physical health, Covid-19 (novel coronavirus) is a serious threat to the financial wellbeing of people across Britain. 

11.5 million people across the UK have less than £100 in savings – more than a fifth of the adult population. For this group, the loss of a few days’ pay can be the difference between paying the bills, and falling behind. And if you’re living with little to spare, once you fall behind it can be nearly impossible to catch up. 

In yesterday’s Budget, the Chancellor set out significant steps to address the financial impact of for workers and for businesses. 

He confirmed that employees who need to take sick leave because of the virus will be paid Statutory Sick Pay (SSP) from the first day of their absence from work, rather than having to wait until their fourth day off. SSP will also be paid to people who are unable to work because they have been advised to stay at home. 

Not everyone is eligible for Statutory Sick Pay, which only covers employees earning more than £118 a week on average. But employees earning less, particularly those in part-time employment, and people who are self-employed haven’t been forgotten. The government has also promised changes to benefits to ensure that people in this situation who become unwell or need to self-isolate after being exposed to the new virus can claim Employment and Support Allowance (ESA) from the first day (previously they would have had to wait seven days). 

The rules about how much self-employed people must earn to claim Universal Credit will also be relaxed, to ensure people who work less to look after themselves in the coming weeks won’t be penalised financially.

These are all sensible moves. Money and Mental Health research into sickness absence and mental health shows that financial pressures are a common reason for returning to work early. That’s worrying when people are experiencing mental health problems, when returning to work too soon can cause additional stress, and reduce someone’s chances of making a full recovery. With an infectious illness, there’s also the risk that returning to work early affects other people’s health, whether that’s our colleagues or people we encounter on our commute. 

By promising to reimburse small businesses for the cost of Statutory Sick Pay, the government should also remove some of the pressure from employers for people to return to work quicker than would be ideal.

But it is a shame that it has taken a pandemic for the government to take these steps. 

For years, Money and Mental Health and other mental health charities have been calling on the government to improve sick pay provision to help those on the lowest incomes, who are self-employed, or who need to take preventative time off work to stop their mental health problems getting worse. 

I hope that, having seen the necessity of offering people more support in this crisis, the government will think twice before reversing these emergency measures. They should also go further, and increase the initial ‘assessment’ rate paid to people claiming ESA to match the rate of Statutory Sick Pay — currently it is £20 lower (you can read more about this here). 

Being able to afford to take time off when we are unwell shouldn’t be a luxury.