The Resolution Foundation predicts that by next year, more than a fifth of the population will be living in absolute poverty.* Real household disposable incomes are due to fall by 10% this year and next – the sharpest decline in living standards in more than a century. Food banks are now handing out one emergency parcel of provisions every 13 seconds. As food prices and energy prices soar, low wages and pitiful benefits mean the poorest households will no longer face a choice between eating or heating their homes this coming winter but rather be unable to do either adequately. Meanwhile, millions more people are being pushed into hardship and debt. This is a crisis that is increasingly intolerable for the mass of the working class and cannot fail to drive resistance in the coming period. MARK MONCADA
Energy price cap: fuelling inequality
It was precisely the fear that a projected rise in annual energy bills by a further £1,500 in October could trigger social unrest on a massive scale that forced Prime Minister Liz Truss to concede a £150bn bailout package, capping energy bills at £2,500 for two years. Without this money – a direct subsidy to Britain’s privatised and bloated energy suppliers – average annual household bills were forecast to rise to an eyewatering £3,549; the End Fuel Poverty Coalition estimates this would have immediately tipped nine million more households into poverty. However, the main beneficiaries of the Energy Price Guarantee will be better-off households, in particular those the Conservative government sees as its key electorate. For the poor, £2,500 bills remain completely unaffordable, with nearly seven million households still facing fuel poverty over the winter. Many of these are households including vulnerable people who are elderly, disabled or have existing medical conditions, or those in damp, badly insulated housing which leaves children prone to serious respiratory diseases.
Meanwhile there will be no tax on the energy giants which continue to announce obscene profits, and no obligation for them to pay the money back. Centrica, which owns British Gas – the biggest British energy supplier – made first half profits in 2022 of £1.3bn and paid £59m to shareholders. BP made profits of £6.9bn between April and June – more than triple the same period last year. The costs of paying back this bailout will ultimately fall once again on the working class.
Already at the end of August, an Office for National Statistics (ONS) survey found that 45% of bill payers were struggling to pay energy bills. The one-off £400 government grant to every household to ostensibly help struggling families with energy bills is woefully inadequate. 6.9 million households – 16.4 million people – will face fuel poverty this winter, up from 4.6 million households last winter.
The Labour Party has pledged that if it were in power it would keep the cap at the April 2022 level of £1,971. This is still unpayable for millions of working class families as inflation soars and wages and benefits fail to keep pace.
Poverty and coercion: Britain’s benefits regime
The Resolution Foundation’s September report, In at the deep end, projects that the number of people in Britain living in absolute poverty will rise from 11 million in 2021/22 to 14 million in 2022/23 – 21% of the population. It states that relative child poverty is projected to reach its highest level since the 1990s. The Resolution Foundation points, too, at an increasingly unequal society, calculating that in the longer term, the wealthiest 10% of households will by 2023/2024 have netted £4,700 in 2023/24 in cost-of-living support – more than double the £2,200 received by the poorest 10%.
Deepening poverty has been driven by systemic cuts in benefits over the last 12 years (see ‘The age of austerity’, FRFI 289). Unemployment benefits in Britain are the lowest in northern Europe. Universal Credit is just 13% of the average wage. The government’s vicious cut last October of the £20-a-week ‘uplift’ introduced during the pandemic (itself a recognition that no one could afford to live on the level of UC on offer) left the poorest households £1,040 worse off. However, we should be clear that restoring it would still leave UC at just 16% of the average wage – against an EU average of 45%. The reality is that it is impossible for any household to live on the shockingly meagre benefits on offer in Britain today. 5.6 million people currently claim Universal Credit. The Social Metrics Commission states that an increase in UC of at least 10% would be needed to prevent 780,000 more people from being pushed into poverty. Who will fight for that? The Labour Party will not even pledge to restore the £20 uplift, inadequate though it is.
At the same time, more repressive measures are being introduced for claimants. On 26 September, around 116,000 UC claimants are being moved from a ‘light touch regime’ to the ‘intensive work search scheme’, as the earnings threshold qualifying people for the ‘light touch group’ is increased from £355 to £494 per month for a single claimant and £567 to £782 per month for a couple. These claimants will be expected to spend more time looking for work, or if in work to increase their hours and to have more meetings with ‘work coaches’. This will inevitably lead to more punitive benefit sanctions, which are already arbitrarily enforced for the slightest breach of stringent rules. Sanctions dramatically reduce benefit payments or stop them completely. 98.9% of sanctions are given for missing a ‘work-focused interview’ at the job centre. This, along with the five-week wait for the first UC payment and debt repayments taken directly from UC payments, are the main reasons why people are driven to use food banks. In September, the Department for Work and Pensions (DWP) rejected cross-party calls to pause debt repayments on UC allowance as it was not ‘in the claimant’s best interest’.
DWP figures published in August show that benefit sanctions are continuing to rise above pre-pandemic levels. A record 59,000 UC sanctions were imposed in March – a 160% increase on the pre-pandemic peak of July 2019. Sanctions are aimed at forcing people into whatever low-paid work is available or destitution. Removing benefits leads to health problems, hunger and even death. This is the price the government is willing to pay in its ideological offensive against claimants. Therese Coffey, former work and pensions secretary and current deputy prime minister, has attempted to keep this insidious truth under wraps by refusing to publish seven reports and research papers on: the impact of the overall benefit cap; deaths of benefit claimants; the impact of UC; benefit sanctions; unpaid carers and work capability assessments. The reality is that the entire benefits system is utterly devoid of humanity, premised as it is entirely on disciplining and punishing the working class, corralling it into the low-paid and insecure work the capitalist system demands.
Work does not pay
According to Office of National Statistics’s analysis of average wages in Britain (September 2022), growth in pay fell in real terms on the year in May to July 2022, at 2.6% for total pay and 2.8% for regular pay. While slightly lower that the record fall of 3.0% for the previous month, the ONS says this remains among the largest falls in growth since comparable records began in 2001. TUC figures for May 2022 show that 57% of people in poverty (8.3 million people) live in a working household. That rises to 75% for children in poverty – a record high. A Joseph Rowntree Foundation report published in September found that for a majority of poorer households, support payments do next to nothing to alleviate the increase in the cost of living: ‘A couple with two children and one parent working full-time on the National Living Wage, the other not working, reach 76% of the Minimum Income Standard (MIS) without the cost-of-living support payments; the same family only reach 79% of MIS with the payments.’ As real wages continue to fall in the face of rising inflation, it is the lowest-paid workers who are suffering the most.
Going hungry
Food inflation hit a new record of 12.4% in August – rising at the fastest rate in 14 years and increasing average food bills by £571 a year. Basic food items are increasing in price every week, which is quickly absorbing the government’s meagre one-off cost-of-living support payments of £650 to about eight million households in receipt of benefits, plus an extra £150 to those on disability benefits.
The Trussell Trust, one of Britain’s major food bank foundations, has found that 40% of people on UC – more than two million adults – skipped meals over the summer because they could not afford food; 21% did not cook hot food because they could not afford the fuel costs; 23% missed work, doctors’ appointments or the school run because they could not afford public transport or fuel. Trussell Trust food banks have provided 50% more food parcels to people in recent months than they did before the pandemic.
An August survey by the Independent Food Aid Network warned that food banks are critically running out of food, with increases in demand and decreases in donations; they fear they will not be able to give food parcels to everyone who needs them this winter. One in five independent food banks has already reduced the size of its food parcels since April. There are more and more first-time users of food banks and people turning up in worse situations: it is no longer portion sizes they are cutting down on or one meal a day they are missing – many are going without any food whatsoever for several days. This is happening in the sixth richest country in the world. The British state was happy to fork out tens of millions of pounds for a pageant to mark the death of one of the richest women in the world; it is gung-ho about lifting the cap on bonuses for bankers, promising contemptuously that the wealth will ‘trickle down’ to the poorest. Meanwhile more than two and a half million children in Britain are going hungry every day – a figure that will only increase over the coming months. We need to fight back against this obscene system.
* Absolute poverty in Britain is defined as having a household income of less than 60% of the 2010-2011 median income.
Fight Racism! Fight Imperialism! No 290, October/November 2022
