During the coronavirus pandemic, central banks around the world injected nine trillion dollars into the global economy in a desperate attempt to keep it afloat. Yet it is clear little, if any, of those eyewatering sums went to help the working class worldwide, who have borne the brunt of the crisis and will continue to pay its costs for decades to come. On the contrary, the pandemic has served to accelerate the division between rich and poor; this trend, an inevitable consequence of capitalism in crisis that has been in evidence since the 1970s, now exists on an obscene scale. Most of the financial stimulus went, as the Financial Times puts it, ‘into financial markets, and from there into the net worth of the ultra-rich. The total wealth of billionaires worldwide rose by $5tn to $13tn in 12 months, the most dramatic surge ever registered’ (Financial Times, 14 May 2021). The number of billionaires also increased vastly, now numbering more than 2,700 – the highest number in history – with those billionaires involved in health care doing particularly well. Meanwhile, the poor got poorer. Globally, workers lost $3.7 trillion in earnings during the pandemic. By the end of this year there will be an estimated 750 million people living in extreme poverty – up 150 million on the previous year. The division is clear both between rich and poor countries, and between the ruling class and the poorest sections of the working class within countries.
In Britain, a recent report on hunger* shows how, in the fifth richest country in the world, an increasing number of households are going hungry, the results of a benefits system deliberately designed to corrall and discipline the working class in an endless cycle of debt and deprivation. How can it be that the Department of Work and Pensions should today be one of the biggest creditors in the land? The report found that 47% of all those referred to a food bank and 41% of disabled people referred to a food bank were in debt to the DWP. Key to this is the way the Universal Credit (UC) benefit operates: ‘having to wait five weeks for the first UC payment, very low rate of UC standard allowance, deductions from UC to repay UC advances and other debts, low Local Housing Allowance (LHA) rates and LHA caps, ‘bedroom tax’, and the structure and process of the Personal Independence Payment (PIP) assessment.’
Households referred to a food bank before the pandemic had extremely low average weekly income after housing costs – just 13% of the national average. This was around £57, or £8 per day for a couple without children, before paying energy bills and council tax. 95% were living in relative poverty. The uplift of £20 a week introduced at the start of the pandemic, which is relied on by six million people, is set to be removed on 1 October, meaning that even more people will be plunged into severe deprivation. The uplift was in any case never applied to other benefits such as Job Seeker’s Allowance, Employment Support Allowance and Income Support. Had it been, the Trussell Trust estimates it would have reduced the number of food parcels distributed in 2020/21 by around 30%.
Just one month into the pandemic, in April 2020, the number of food parcels distributed by the Trussell Trust was 84% higher than in February the same year. The situation for the poorest has continued to deteriorate, with the number of children on free school meals in England soaring to 1.7 million in January this year, an increase of over 20% in just 12 months. A fifth of all children in England are now entitled to free school meals – a marker of poverty. The 370,000 households supported by a food bank in the Trussell Trust network in 2019/20 included 320,000 children – a 49% increase on the year before. Two in three households included one or more disabled people. The proportion of people born outside Europe needing to attend food banks increased from 7% in early 2020 to 18% in mid-2020, reflecting the fact that the immigration status of many people in this category means they have no recourse to public funds. Even full-time work provided no automatic protection from hunger: 6% of food bank users were people in full time work.
A perfect storm is on the horizon for the poorest sections of the working class, as the furlough scheme, which protected some workers from unemployment during the pandemic, comes to an end, the evictions moratorium is lifted and the £20 uplift on UC removed. Hundreds of thousands more people will be plunged into ever greater destitution. This storm cannot be weathered. It must be resisted.
Mark Moncada
* Trussell Trust State of Hunger 2021
Fight Racism! Fight Imperialism! No 283, August/September 2021
