Disregarding COVID-19 compensation payments as capital for benefit claimants would ‘diverge from principles of means-testing’, says Secretary of State

Payments are treated on a par with other death-in-service payments and to do otherwise would create 'inconsistent discrepancies', adds Dr Coffey

Disregarding COVID-19 compensation payments as capital for benefit claimants would 'diverge from the principles of means-testing', the Secretary of State for Work and Pensions Dr Thérèse Coffey has said.

In a letter to the Secretary of State (dated 26 October 2020 but published this week), the Chair of the Work and Pensions Committee Stephen Timms expresses his concern that some people who have received payments from the NHS & Social Care Coronavirus Life Assurance Scheme - which makes payments to close family members of frontline health and care workers who have died from coronavirus (COVID-19) - have been precluded from claiming universal credit as the payments are treated as capital and have taken them over the £16,000 capital limit.

Highlighting that payments under other government schemes, such as for those affected by the Windrush scandal and Grenfell Tower fire, are exempt from the capital limit rules, Mr Timms asks Dr Coffey why the government has taken a different approach for beneficiaries of the COVID-19 scheme.

However, in response, Dr Coffey says -

'The same treatment applies to any life assurance payment or death-in-service benefits paid from pension schemes, including payments from the NHS Pension Scheme and the Armed Forces scheme. Diverging from the principles of means-testing here would also create inconsistent discrepancies.

The Life Assurance Scheme, and other life assurance and death-in-service pension benefits, are distinct from the exceptional cases you reference where payments are disregarded for means-tested benefits. Such exemptions usually reflect the unique purpose of the payments in question. For example, the Windrush Compensation award is designed to compensate individuals who have suffered a loss in connection with being unable to demonstrate their lawful status in the United Kingdom, those instances where Government failure has been explicitly acknowledged. This is not attributable to the issue you raise, particularly as the NHS is a separate employer from Government.'

Mr Timms' letter and Dr Coffey's reply are available from parliament.uk