Context

The UK Government announced in March 2020 that they would provide a package of assistance to protect the livelihoods of those whose earned incomes had been directly affected by the COVID-19 pandemic. This included two schemes: the Coronavirus Job Retention Scheme (CJRS, also known as the furlough scheme) to support the jobs of people who would otherwise be unable to work because of the lockdown rules, and the Self-employment Income Support Scheme (SEISS) to provide financial support in the form of a grant to eligible self-employed people whose earnings had fallen as a direct result of the lockdown rules. This report looks at how well these schemes have protected households that have suffered a loss of earned income as a direct result of the COVID-19 pandemic, drawing on data from a regular tracker survey monitoring the impact of the COVID-19 crisis on household finances.

The study

Standard Life Foundation, an independent charitable foundation focused on improving the lives of people on low-to-middle incomes in the UK, runs a regular survey to track the effects of the COVID-19 pandemic on the incomes and financial circumstances of UK households.

This study is based on the second of these surveys, conducted online by YouGov between 11 and 15 May 2020, which included 5,794 householders. It includes booster samples for Scotland, Wales and Northern Ireland, which have been weighted back to their correct proportions.

At the time of the second survey, the CJRS had been running for three weeks and 7.5 million jobs were being supported through it. The SEISS had only just opened, but during the time of the fieldwork over one million claims were made.

The base for analysis is people who are responsible for their household finances – this excludes people who are responsible only for their own personal finances. Households in the sample are segmented according to whether they have been eligible for, and benefited from, either or both of the two government schemes. They are also assigned a score, using principal component analysis, for how exposed they are to current and future financial difficulties.

Key findings

Households were split into four groups, as follows:

• – had suffered no income loss and did not have (or expect to have) earned income covered by either of the Government schemes.
• – had (or expected to have) earned income covered by one of the Government’s support schemes and had not had a fall in their income. Almost all had been (or expected to be) furloughed and, it seems likely that their employer was covering the remainder of their salary.
• – had (or expected to have) earned income covered by Government support but had seen a fall in their household income. Three quarters had been (or expected to be) furloughed. Four in ten had made (or intended to make) a claim from the SEISS (a small number were covered by both).
• – reported a fall in income and did not have (or expect to have) earned income covered by either of the Government schemes. Four in ten of them were self-employed before the lockdown.

The study showed that the current financial situation of the Protected households reflected that for all UK households, and they were no more, but also no less, likely to be showing signs of financial strain. As might be expected, it was the Partially Protected and Unprotected households where the financial strain was most evident. More unexpectedly, the level of strain did not differ that much between them.

This current situation was mirrored in the future financial prospects for all three groups of households that had had their livelihoods affected by the COVID-19 pandemic. The greatest stability in future financial prospects was among the Unaffected households.

Points to consider

• The paper doesn’t give details of sample quotas or weighting, other than to say that booster samples in Scotland, Wales, and Northern Ireland were corrected in the analysis. The assumption is that the survey is representative of the UK population.
  • The data relies on self-reporting of financial circumstances; respondents also self-reported whether the household had benefited from either of the schemes. As the survey took place during the early stages of the pandemic, it is likely that the government support was fresh in the minds of the respondents, so they may have been able to answer more accurately than at a later date.
• The report is highly topical and relevant as the impact of coronavirus continues into 2021 and beyond.
• The report is specific to the adult population in the UK, and to UK government interventions and can’t be generalised to other markets.
  • The report is applicable to anyone with an interest in the impact of coronavirus on finances, or in families who are at risk of financial hardship, such as government, support agencies, policy makers, policy implementers or regulators.