New Starter Justice Research Report
This section answers the following questions: How effective have these schemes been in maintaining employment and reducing job losses?Where has Government support been too generous and where has it not been generous enough? How should the Government prioritise which continuing sectors and groups to support as time goes on and ongoing support is needed? What economic challenges may arise as the public health and social distancing policies are lifted and the economy begins to recover? What preparations can be made to manage these challenges? For example, could there be difficulty in restarting sectors of the economy quickly, a risk of a spike in inflation, or pressure on the UK balance of payments?
This section answers the following questions: What gaps in coverage still remain and are changes required to increase their effectiveness? How viable is it for the Job Protection Scheme and the Self-employment Income Support Scheme to be open for longer?
This section answers the following question: How successful has the Government been in plugging the gaps in the schemes?
This section answers the following question: Has the Government struck the right balance between targeting support and making it easy to access?
This section answers the following questions: How effective have these schemes been in maintaining employment and reducing job losses? What problems (if any) are individuals facing in claiming support from the Job Protection Scheme and the Self-employment Income Support Scheme? What gaps in coverage still remain and are changes required to increase their effectiveness? How viable is it for the Job Protection Scheme and the Self-employment Income Support Scheme to be open for longer?
This section answers the following question: How should the Government prioritise which continuing sectors and groups to support as time goes on and ongoing support is needed?
This section answers the following question: What problems (if any) are individuals facing in claiming support from the Job Protection Scheme and the Self-employment Income Support Scheme? How should the Government prioritise which continuing sectors and groups to support as time goes on and ongoing support is needed?
This section answers the following questions: What actions does the Government need to undertake to pursue to support a successful exit strategy? What gaps are there for businesses within the schemes? What economic challenges may arise as the public health and social distancing policies are lifted and the economy begins to recover? What preparations can be made to manage these challenges? For example, could there be difficulty in restarting sectors of the economy quickly, a risk of a spike in inflation, or pressure on the UK balance of payments?
New Starter Justice is a campaign which represents the needs and aims of new starters excluded from the Job Retention Scheme because they started (or were due to start) jobs as lockdown hit, and/or did not appear on the payroll at their new company before 19 March. Our aim is to secure furlough payments for all new starters with contractual proof of employment, regardless of RTI. We have 9,110 active members at the time of writing.
The New Starter Justice Demographic Survey was open from 16-19 May 2020. It was designed to provide insights into the issues affecting new starters—a group which has been excluded from the Government’s Coronavirus Job Retention Scheme (CJRS) because they started, or were due to start, a new job as Covid19 hit. It is the second phase of evidence submitted to the Treasury Committee by New Starter Justice. The survey was anonymously conducted by SurveyMonkey and had 1,031 total respondents. The survey shows the key demographics affected by the issue—including age, location and current employment status—as well as earnings and income; success of the proposed Government solutions; and alternative methods of proving employment. For clarity, the data has been visually summarised in this document, but the raw data is available upon request.
The New Starter Justice industry poll was carried out on 18 April 2020 and is the basis for New Starter Justice’s estimate that between 1.6 and 2.3 million people are affected by the CJRS loophole. New starters in the New Starter Justice Facebook group were asked to self-report the industry in which they were due to start work.
The New Starter Justice Universal Credit poll was carried out on 30 April 2020 in the New Starter Justice Facebook group. New starters were asked how much Universal Credit (UC) they qualified for in the month of April.
The New Starter Justice Case Studies were gathered from individuals within the New Starter Justice movement over the course of 26-28 May 2020.
New Starter Justice Research Report
This section is designed to give a clearer picture of who new starters are, so that the Treasury Committee can understand the demographics currently lacking support, as well as those who will be at a significant disadvantage as recovery from lockdown commences.
Figure 1: New Starter Justice Industry Poll
New Starter Justice estimates that there are 1.6 million to 2.3 million new starters affected by the CJRS loophole. We arrived at this estimate using two datasets—the New Starter Justice Industry Poll (Figure 1), conducted on 18 April 2020, and UK Hospitality’s estimate that 350,000 – 500,000 hospitality workers are excluded from the CJRS. 1,252 members from 37 industries responded to our poll—22% were hospitality workers. We used the 37 percentages together with UK Hospitality’s figure to ratio out the other percentages, using the 22% hospitality figure as a base. If 350,00 hospitality workers are affected, and hospitality workers make up 22% of all new starters, then 1.6 million are affected in total. If 500,000 hospitality workers are affected, the total is 2.3 million.
Making up 22% of the sample, hospitality workers have been disproportionately affected by the CJRS loophole. This could further hinder the swift recovery of this sector after lockdown, with many businesses forced to terminate the employment of staff members who are ineligible for furlough. Also heavily affected are Construction (10%), Retail (7.7%), Travel/Tourism (6.7%) and Automotive (5.2%). Many of these are consumer-focused sectors. The spread of new starters across the remaining sectors is fairly even, suggesting the repercussions of CJRS loopholes could be widespread.
Figure 2:New Starter Justice Survey, Q1
Figure 3: New Starter Justice Survey, Q2
While media reports suggest that in general, Covid19-related unemployment is being felt strongly by young people, the New Starter Justice sample spans a broader age range, with the bulk of new starters aged between 25 and 44. While new starters are all affected by the same loophole, the way their exclusion manifests itself differs from one age group to the next; young people within our sample tend to be renters, with limited savings, and while older respondents did have savings to fall back on, many had the financial commitments associated with home ownership or parenthood.
New starters are heavily concentrated in the South of England and the capital, with a large proportion in the North West. Possible reasons could be the concentration of tourism in the South East and South West—March is typically the start of seasonal contracts in the sector. London’s high share of new starters can be put down to its high population and status as an epicentre for the law and finance sectors —and together with the North West, is host to one of the UK’s largest international airports.
Figure 4: New Starter Justice Survey, Q4
The above chart is the best indication of the current employment status of new starters. The most common descriptors for new starters are “unemployed” and “unpaid leave”. It is worth noting that within the New Starter Justice movement, many on unpaid leave are having their contracts cancelled as employers become aware of the complications of those new starters accruing holiday and annual leave. Those currently in temporary jobs also have no long-term job security, with many of their jobs being front-line roles introduced specifically for the duration of lockdown/Covid19. We expect that if the CJRS is not amended, the number of unemployed new starters will rise.
It is also worth noting that 1.75% of new starters are on reduced hours or pay. This was not an option in this survey question, but many respondents entered qualitative data detailing variants of this situation. Some new employers have responded to the CJRS loophole by agreeing to pay new starters a portion of their salary. Some of these portions are as low as 10%. The highest reported reduced pay was 60%. While some employers have acted out of good will, New Starter Justice is concerned that exploitation could possibly be occurring in cases where salaries are significantly lower than normal.
The overwhelming majority of respondents were due to start full-time contracts (Figure 6) and 57.80% are the primary earners in their household (Figure 5). This goes some way to indicating the wider implications of CJRS exclusion for new starters’ households. 75% of our sample expected to be in full-time work at this point, and over half bear the brunt of responsibility for their household’s income. Full-time employees in similar situations have been granted 80% of their wages under the CJRS—but no provisions have been made to support their new starter counterparts. This report expands further on the financial implications of this in Section 5.
Figure 7: New Starter Justice Survey, Q7 & Q14
It’s important to understand the previous and expected job levels of new starters for two reasons. Firstly, on a personal level 16% of new starters were entering a higher-level role than their previous one; if they are unable to retain their new jobs, they will find themselves in a highly competitive job market and may have to take a sideways or downward step when taking on a new role.
Secondly, when forecasting the path to economic recovery, the above chart represents the gaps left in businesses that were unable to retain part of their workforce due to CJRS loopholes. 46.34% of new starters were headed for an intermediate/experienced role—their future employers are unable to retain those new starters, which will in turn affect their wider business operations at an already precarious time.
Out of the new starters that came from a position of employment, 16% were moving up a level in their new role, 69% stayed the same, and 15% moved down. The majority of the sample were previously at an intermediate or experienced level of employment—this is consistent in the new roles new starters were due to embark upon.
Figure 8: New Starter Justice Survey, Q7
Figure 9: New Starter Justice Survey, Q14
In this section, we are able to provide more detail about how an estimated 1.6 million people have been excluded from government support. Ultimately, our research shows that being a “new starter” goes far beyond being someone who changed jobs in March—circumstances are more varied and as you will see, the date ranges of those affected span almost a year. Based on this, a cut-off date for a scheme of this nature would always have been exclusionary to some.
The dates below also indicate that many have been left without support for a significant period of time. It is infeasible to taper out the furlough scheme without extending some support—whether via backdated inclusion or a new scheme—to those who have been without it now for three months.
Figure 10: New Starter Justice Survey, Q5
A common misconception is that all new starters were in the process of moving from one job to the next when Covid 19 hit. This does not speak to the experience of those who were unemployed, self-employed, or about to embark on a seasonal contract. While 75.65% of new starters do have a previous employer, 20.08% were unemployed prior to securing their new job. All of these people would have been in the workforce and stimulating the economy, were it not for Covid 19. It is also important to understand where new starters came from because it proves the inefficacy of “solutions” such as asking previous employers to rehire and furlough.
Figure 11: New Starter Justice Survey, Q8
Figure 11 depicts the last day at previous jobs among the 75.65% of previously-employed new starters. We then looked specifically at last working days for new starters who had specified they are now either unemployed or on unpaid leave (Figure 4), calculating how many days each of them had been on unpaid leave or unemployed for, from their last employed day to the day they completed the survey. Based on the CJRS’s current projected run time—until the end of October—this is how long new starters on unpaid leave or unemployed could be without a salary for.
Average days without salary among unemployed/unpaid new starters
Figure 12: New Starter Justice Survey, Q4, Q8
When considering how feasible it is for the CJRS to continue in its current form, it’s important to consider how its continued existence would affect those unemployed and on unpaid leave as a result of being unable to qualify—especially when the final date for admissions, 10 June, passes. If employers receive graduated help in returning furloughed employees to work, those on unpaid leave or unemployed will be the lowest priority for employers, who will be unable to support them in a gradual return to work. It is highly likely that without support from an amended CJRS, employees on unpaid leave will have their contracts cancelled or be left until last when it comes to the return to work. Those who are unemployed may never be granted the chance to resume their employment—furloughed workers will be prioritised due to the financial benefits of flexible furloughing, and those left out of the scheme will continue to experience the disadvantages of not qualifying for months.
To further illuminate what this might look like, we calculated the average salary lost by unemployed/unpaid new starters so far, and the average salary they could expect to lose if they remain unemployed/unpaid and excluded from the scheme until October.
Median salary range for unpaid/unemployed new starters: £1,501-£2,500.
(Source: New Starter Justice Survey Q22)
Average salary loss among unemployed/unpaid new starters
Figure 13: New Starter Justice Survey, Q8, Q22
If the scheme continues until October in its existing form, unpaid/unemployed new starters could lose out on £11,871.41—£19,772.50, on average. Aside from the wide-ranging personal consequences of this, new starters will have little or no disposable income and will be less able to contribute to the economy than they would normally. We elaborate further on the financial implications of CJRS loopholes in Section 5.
Figure 14: New Starter Justice Survey, Q17
Figure 16: New Starter Justice, Q19
When looking at the typical dates on which new starters took key action related to their employment—specifically, the day they left their jobs, the day they received a new job offer, the day they signed a contract and the day started a new job—there are a few key points to note.
28 February is the most common date for new starters to leave their old job, and also the most common date upon which they received job offers. 2 March is the most common date to sign a contract, and—by a long way—the most common start date for new starters.
In figures 14 and 15, you will notice that the date ranges are greater, with some offers made and contracts signed as early as summer 2019. It could be assumed that those particular contracts were seasonal; often secured months in advance ahead of the next years’ season.
All four charts show a clear “spike”—but they span months, rather than days. Not only does this explain why moving the cut-off date of the scheme to 19 March was largely unsuccessful, it also proves the inadequacy of having a cut-off date in general—for every cut-off date announced, there will be a new set of people falling just after it.
Figure 17: New Starter Justice Survey, Qs 17-19
The three key cornerstones of securing a new job—receiving an offer, signing a contract and ultimately starting that job—were for the most part completed by respondents prior to 19 March. This is particularly significant when considering how eligibility for the CJRS has been determined. Of the 83.12% of new starters who signed contracts, 95% did so on or before 19 March—the day lockdown was announced, and the day before the CJRS was announced. These respondents have a signed legal document which predates the CJRS itself—and with it, received a job offer (typically time-stamped). The scheme not only failed to account for these new starters but invalidated their legal job contracts.
The government has proposed a number of “solutions” to new starters and it is on this basis that it appears to justify its decision to close the scheme to new entrants after 10 June. Here, we shed some light on how successful those solutions were for our respondents, to give the Treasury Committee as sense of how well the gaps in the schemes have been plugged.
The 19 March cutoff date
Figure 18 shows the percentage of respondents who were made eligible for furlough when the cut-off date was moved to 19 March. The vast majority—90.55%—were not made eligible by this date change, and in fact 4.93% of people were actually made ineligible by the new date change and RTI stipulation. This has raised questions among new starters about the true intentions of a widely publicised “date change” with a less-publicised RTI stipulation—especially when within the sample, it made more people ineligible than it made eligible.
Further interrogation of this matter suggests that an RTI stipulation with a mid-month cut-off date would never have helped the majority. 88% of new starters are paid monthly (Figure 19)—and for most UK employees paid monthly, payday falls at the end of the month. RTI information for monthly-paid employees would only ever appear after 19 March. The RTI stipulation does, indeed, have scope to help those paid weekly—around 8% of the sample—but New Starter Justice suggests that a 4.5% success rate is not enough to deem the 19 March cut-off date a successful instance of plugging the gap.
Asking previous employers to rehire and furlough
This was presented as an early solution for new starters who could not be furloughed by their current employer. Before considering the percentage of previous employers who would not or could not do this, it is important to reiterate that 20.08% were unemployed prior to securing their new job, and 4.27% were self-employed (Figure 10). At least 24.35% of new starters did not have an employer to ask.
New Starter Justice Research Report
Of those who did ask their previous employer to rehire and furlough them (Figure 20), 97% were told “no” (Figure 21). New Starter Justice is now concerned that the 3% of employees who were rehired and furloughed by previous employers will soon be facing redundancy, given that employers will be expected to contribute to the CJRS from July onwards.
Figure 22: New Starter Justice Survey, Q12
As figure 22 shows, there were a variety of reasons given as to why employers would not rehire and furlough previous staff. 7.68% did not know enough about the scheme and 15.79% did not believe it was legal to rehire and furlough previous staff. This points to a lack of available information about the scheme, which has contributed in part to the high percentage of new starters left without support.
However, given that the overwhelming majority of new starters were refused by their previous employers—sometimes after asking multiple times in lengthy exchanges—we can only conclude that a scheme that provides individuals with income to see them through an unprecedented health emergency should never have been controlled by employers to the extent that it has. It should have been directly provided by the Government without the involvement of a “middle agent”.
Based on Figures 20 and 21, New Starter Justice suggests that as a measure designed to plug gaps in the CJRS, asking employers to rehire and furlough staff had a success rate of less than 3%, given the percentage of our sample who did not have a previous employer to ask.
Universal Credit and Jobseekers Allowance
In his briefing on 29 May, Chancellor Rishi Sunak reminded those left behind by schemes that Universal Credit (UC) had been made more generous in light of Covid 19 job losses. Many new starters within our movement have been pointed in the direction of UC by their MPs.
Our poll of 851 members within our Facebook group on 30 April revealed that 83% (703) of respondents received a payment of £0 after applying for UC in April.
The furlough payment via the CJRS was set at 80% to minimise disruption as much as possible—paying employees the majority of their salaries ensures they can afford food and essentials and minimises payment holidays which could in turn have an impact on the wider economy.
From our Universal Credit Poll and two questions about income and outgoings in our survey, we were able to calculate the average expected salary, average monthly outgoings and average Universal Credit payments among new starters.
Firstly, our calculations around expected salary and average outgoings indicate a trend consistent across our dataset: our sample is not prone to taking risks. On average, expected income was within the same range of expected outgoings.
Secondly, the average UC payment of £250-£300 is far less than the expected wage new starters would be earning if they’d been able to retain their jobs under the CJRS. It also falls well below the average outgoings.
UC is not an acceptable substitute for the CJRS. Theoretically, an employee who started work in February could be earning 80% of his salary during lockdown, while someone who started in March is receiving the equivalent of 10% of his salary in UC payments.
JSA is another option that, on the whole, has been more successful for unemployed new starters. However, for those who have been placed on unpaid leave by their new employer, JSA is not an option—many within the New Starter Justice community applied and were rejected on these grounds in early April.
But JSA is not an acceptable substitute for the CJRS, with maximum payments per week of £57.90 for under 25s, and £73.10 for 25 and over.
Figure 24: New Starter Justice Survey, Q32
When considering if the Government has struck the right balance between making the schemes easy to access and offering targeted support, the question of new starter eligibility is paramount. The argument for excluding new starters has, thus far, been that the fraud risk of admitting employees to the scheme without RTI would be too great.
Given that TUPE business employees are admitted to support schemes without RTI, and the Self Employed are able to use their existing tax records as proof, this simply cannot be true. In asking for targeted support for new starters, we are not proposing a venture that has not been done before in the short history of Covid 19 schemes.
As the focus of the CJRS rotates from fully supporting businesses in retaining employees through lockdown to gradually restarting the workforce, it is crucial that provisions are made for new starters. While no more employees can be added to the CJRS beyond June 10, the Chancellor has announced that “flexible furloughing” will be an option until October. That flexibility can be extended to new starters. This section outlines the proof of employment that employers can submit on behalf of new starters (in the event that the CJRS is expanded to include them) or that new starters can directly submit (in the event that the Government includes new starters in direct measures of support).
Did you sign a contract of employment with your new employer?
Figure 25: New Starter Justice Survey, Q18
Reprint of Figure 15: New Starter Justice, Q18
Figures 25 and 15 show that 83.12% of new starters signed a contract of employment with their new employer—as standard, contracts are date-stamped, and for online contracts the date and time of signature and creation can be verified via the contract software used.
95% of new starters signed their contract on or before 19 March—the day before the CJRS was announced. 95% of new starters, therefore, had a valid legal document in place in advance of Covid19’s repercussions, and the CJRS—designed to retain jobs—instead invalidated them.
Given that a contract of employment is usually sufficient to hold both employers and employees to account, and is usually held with the utmost legal regard, holding precedent at legal tribunals and dictating the nuanced terms of employment, New Starter Justice feels that such a document is sufficient proof of genuine employment.
Started new job
Within the sample, 81.40% of respondents were able to start their new jobs (a statistic consistent with the timeline in Figure 17). With this in mind, those respondents will have been paid for the days they worked in their new job and will have other forms of proof associated with starting a job. Some members of the New Starter Justice group have CCTV proof of themselves attending work.
This is a clear example where targeted support is essential—the evidence that 81.40% of people worked in a new job before lockdown is obtainable, but the current scheme renders it invalid.
Proof of employment: a comprehensive guide
When asked to declare which types of proof of employment they could provide, 89% of our sample indicated that they had at least one form of proof. New Starter Justice recognises that a single document might be insufficient to prove employment but believes that submission of two to three pieces of evidence—to be corroborated against each other—would be more than sufficient. Alternatively, a similar situation to the one in place for TUPEd workers could be a successful way to diminish fraud risk. Based on the even spread of multiple answers displayed in Figure 28, New Starter Justice strongly advocates for an evidence-based system of furloughing. With the scheme set to continue until October 2020, there is ample time for such a system to be implemented or adapted.
For new starters, benefitting from the CJRS is a two-step process. Firstly, the Government needs to make the necessary changes. Secondly, new employers would need to agree to furlough new starters. Figure 29 shows that the majority of employers have categorically said they would furlough new starters using an amended CJRS.
Figure 28: New Starter Justice Survey, Q21
*(for example, setting up interview, job offer, start date) **(for example, LinkedIn or Reed messages)
Figure 29: New Starter Justice Survey, Q38
This section shows the financial implications of new starters currently excluded from the CJRS. Not only are the short-term effects of such exclusion a concern, but the long-term recovery of new starters’ financial positions could have lasting implications on the economy until October and beyond.
Figure 30: New Starter Justice Survey, Q22
Figure 31: New Starter Justice Survey, Q23
Figure 32: New Starter Justice Survey, Q24
Figure 33: New Starter Justice Survey, Qs 24-25
Figures 31-33 show the typical incomes in new starter households, compared to the incomes new starter households are receiving due to having one (or more) household member who is ineligible for furlough. Across our sample (excluding those who selected “prefer not to say” for one or both questions), 94% have seen an income decrease due to being ineligible for furlough. 47% of new starter households are surviving on less than 50% of their usual income. 5% have maintained their income, and 1% have increased their income.
Figures 32 and 33 depict the percentage of new starter households currently receiving £0 income: 22.2%. An income of nothing looks different across our sample: when asked for qualitative descriptions of how they were managing on £0 income, some new starters reported using savings, but others reported having to use food banks and vouchers, among other measures. It is certain that surviving on £0 income is not a sustainable option if the CJRS continues to run, unamended, until October 31.
Figure 34: New Starter Justice Survey, Q25
Figure 35: New Starter Justice, Qs 24-25
Figure 36: New Starter Justice Survey, Q26
Examining the usual outgoings of new starters helps to demonstrate why UC and JSA are not viable as income replacements for our sample. The median household outgoings (£1,501-£2,500) is lower than the median household income (£2,501-£3,500), indicating that new starters typically live well within their means. It goes further to demonstrate that respondents do not, on the whole, take financial risks. Further comparisons between usual household outgoings and current household income (Figure 35) goes further to highlight that respondents’ current situations are not financially sustainable, with 67% of respondents currently reporting their income is less than their usual essential outgoings. In this sample, essential outgoings can be defined as the options shown in Figure 36. Without the means to pay these outgoings, the economic consequences could be felt across a broad range of sectors, including housing, automotive, utility companies and more—not to mention the cancellation of outgoings deemed non-essential by our sample, such as media subscriptions, holidays and more.
Figures 37 and 38 show the percentage of new starters who expected to earn more per month in their new job, as well as the expected monthly pay increase for those it applies to. For those expecting a pay rise, the average expected pay rise was £200-£299 pcm.
Given the high proportion of new starters for which UC is not sufficient, New Starter Justice wanted to find out what support our respondents are relying on—in addition to Government support, as well as in place of it for those who do not qualify.
Figure 39: New Starter Justice Survey, Q33
Figure 40: New Starter Justice Survey, Q33, filtered to those who answered that they are not receiving UC (determined in Q31)
Figure 40 shows that nearly 60% of those not receiving UC are instead surviving on their savings. Although this means that they are not facing immediate poverty, they are likely to be worse affected long-term, having used a finite amount of money to fund their current outgoings.
Our qualitative research also shows that savings were, by and large, intended for a specific purpose. This could have a knock-on effect to the wider economy as house purchases, weddings and other large financial commitments will be put on hold due to lack of savings.
Figure 40 also shows that nearly 37% are relying on help from friends and family. The incomes of friends and family are likely to be reduced as a consequence of this (and possibly because of other factors pertaining to Covid 19). This shows that the number of people impacted by exclusion from the CJRS goes beyond the households of new starters themselves.