Low sick pay may undermine test and trace isolation

New research by Policy in Practice shows that people on low incomes could lose £100’s of pounds if they are asked to self isolate due to Test and Trace.

Some households who are asked to self-isolate will struggle to bear the immediate financial costs of relying on Statutory Sick Pay. If their loss of earnings is too great, they may feel they need to return to work, and thereby risk spreading COVID-19.

The research suggests low-income households could face a hefty financial penalty if they are asked to self-isolate. The need to rely on very low levels of Sick Pay may discourage households from self-isolating when requested to.

Sick Pay of just £95 per week could mean 155,000 low-income households across England and Wales feel unable to self-isolate without entering debt, and higher earners could potentially face even bigger losses.

Whilst over 450,000 low-income households would not even be eligible for Statutory Sick Pay if asked to self-isolate because neither main worker earns over £120 per week. These households would therefore lose all of their usual earnings. Though Universal Credit might make some of this up, many would already be earning under their work allowance, and so may receive no increase in benefits to compensate their lost earnings. Given these losses, many households may feel unable to safely self-isolate and instead feel the need to return to work, where they may spread the virus.

If people asked to self-isolate, current sick pay levels mean the average low-income household stands to lose £176 in earnings over two weeks, more than half of their take home pay (58%). There may be over 47,000 households in England and Wales who would lose more than £400 in earnings meaning that 1.3 million low-income households could stand to lose at least some of their earnings.

Although Universal Credit could replace up to two-thirds of lost earnings for some households, households who are asked to self-isolate will inevitably face a financial penalty for trying to protect their community from COVID-19, unless Sick Pay is increased.

Deven Ghelani, Director and founder of Policy in Practice, said “As we emerge from lockdown we all want to do the right thing by self-isolating to protect the health of ourselves and our families. It’s not right that the worry of low sick pay may make some of us choose between our health or our finances. The government should consider raising Sick Pay levels until we are out of the woods.”