The standard of living for much of the working class is being reduced to long-term destitution, stripping people of hope, of dignity, of the very day-to-day means of survival. This acute penury is termed the ‘cost of living crisis’. It is a crisis thrust upon the poor by the rich in their efforts to ring-fence profits in the face of the deepening economic crisis of capitalism. It leaves the poorest sections of the working class facing a daily struggle to find the means to stave off hunger and fend off the cold. MARK MONCADA reports.
The most recent attack is the brutal Way to Work campaign, launched by the government in January, with the stated aim of moving ‘half a million people into jobs by the end of June’. Universal Credit (UC) claimants will have just four weeks (down from three months) to find work in their preferred sector; after that, if they turn down any job, in any sector, offered by the Jobcentre, their benefits will be cut. Ostensibly this policy is designed to fill hundreds of thousands of vacancies in sectors from social care to construction. Because of the five-week wait, new claimants could be sanctioned before they even receive their first UC payment. This will dramatically increase sanctions and force more people into insecure, part-time, poorly paid work – in a context where in-work poverty is at an all-time high.
Companies like Amazon are rubbing their hands at the prospect of a new pool of cheap labour. Jonatan Gal, the company’s UK Vice President for Customer Fulfilment, stated: ‘Amazon is proud to offer excellent career opportunities for job-seekers, as well as great pay and benefits. Working collaboratively with the DWP, both locally and at a national level, has enabled us to find great candidates the length and breadth of the UK.’ Amazon is on record for threatening and spying on warehouse workers who try to set up unions to fight for better conditions. At the same time, the company pays staff to write positive reviews about it on social media to attract the workers it needs to achieve continual growth.
In January the Joseph Rowntree Foundation (JRF) released a new report, UK Poverty 2022: The essential guide to understanding poverty in the UK. It tells us that in Britain, there are 14.5 million people living in poverty – that is 22% of the population, roughly one in every five people. This includes one in three children (4.3 million) and almost one in five pensioners (2.1 million).
Every indicator – fuel poverty, food price inflation, in-work poverty and benefit cuts – is at its highest levels since records began. Industry leaders say they have never seen anything like this in their entire careers.
Inflation and the energy crisis
The rising global price of energy has pushed inflation up by 5.4% in the 12 months to December 2021. It is predicted to reach 7% by April this year. Prices have gone up at the fastest rate in 30 years, most notably with huge increases in the cost of fuel, gas, electricity and food. The prices of many basic food items have increased by 50%, 100%, 150% and more. Average pay cannot keep up: real wages fell 1% in November compared with the same month the previous year.
Between 27 January 2021 and 18 January 2022 a total of 27 energy companies in Britain went bust. This is more than half, leaving 22. The latest supplier was Together Energy which supplied 176,000 households. The company was part owned by Labour-run Warrington borough council which could lose £52m it held in equity, loans and guarantees to the company. The 1.7 million households supplied by Bulb Energy – one of the largest companies – which stopped trading on 22 November 2021 have still not been allocated a new supplier. This situation is being driven by the fact that global wholesale gas prices are three times higher than the levels of previous winters. The knock-on effect on transport, raw materials and food results in costs the working class is being made to bear.
The Office of Gas and Electricity Markets (Ofgem) is the government regulator for the electricity and natural gas markets in Britain. In an effort to protect the profits of private energy companies it is expected to raise the energy price cap by £700 to around £2,000 in April, and to £2,400 in October. This is up from £1,277 in October 2021, a near doubling of the cost of household energy bills in the space of a year. This will impact on 22 million or three-quarters of all households, up from 15 million in August. Clearly the price cap offers no real protection for the working class. Emma Pinchbeck, chief executive of trade body Energy UK (which represents energy suppliers) stated, ‘We haven’t seen anything like this, not in my career or that of any of the people who sit on my board.’ The April increase will come into effect at the same time as a 1.25% increase in National Insurance payments. This utterly regressive tax will hit lower-income workers earning just over the £184 a week threshold the hardest, while leaving anyone earning over £50,000 relatively unscathed. At the same time, a majority of councils will increase council tax by the maximum 2.99% in April. Rail fairs are also due to rise by 3.8% in March – the biggest increase for almost a decade.
In 2021 claimants spent 18% of their unemployment benefits on energy bills. By October 2022 it is estimated it will be 37%. In the last quarter of 2021 Citizens Advice helped one person every 40 seconds with a fuel debt issue, up 40% compared to the same period in 2020. Nicola Duffy, Energy and Consumer team leader at Citizens Advice Newcastle, stated: ‘In over 20 years of advising, this is the worst it’s ever been. We’re seeing people ration their fuel, or have their emergency prepayment meter run out when they’re at least a week away from their next benefit payment.’
In-work poverty
The Office for National Statistics reported that the unemployment rate fell to 4.1% (close to pre-pandemic levels) and that job vacancies soared to a record high of 1.24 million between October and December, with vacancies 462,000 higher compared with the three months before the pandemic. Yet at the same time the percentage of ‘economically inactive’ people rose to 21.3%. These are working-age people who are not looking for work or cannot be available for work such the long-term sick, carers, those in education or people who have taken early retirement.
The employment figures ignore the huge numbers of people underemployed and the levels of in-work poverty. More than two million people on UC are in work. That is 40% of all UC claimants. The JRF research has shown that 68% of working-age adults in poverty live in a household where at least one adult is in work. This is the highest level since records began.
One of the main drivers behind in-work poverty is part-time work and insufficient hours. The poverty rate of part-time workers has been steadily on the increase. Part-time work is an indication of insecure work and now one in ten workers in Britain is classed as having insecure work. Falling unemployment clearly does not correspond with a reduction in poverty and actually many people are being forced to accept work that keeps them in a state of hunger. The JRF report states that, ‘It is becoming more and more evident that in many households, all individuals in them must be working full-time hours to avoid falling into poverty.’ This situation will be exacerbated when the punitive ‘Way to Work’ policy is introduced.
Benefits offer significantly less support now than they did in 2010. Since then £14bn has been cut from the welfare system. The four-year benefit freeze which came into effect in 2016 (keeping benefits at 2015 levels rather than rising with inflation) wiped 8% off the value of benefits in just three years and other benefit cuts have taken place on top of that. JRF states that the basic real-term rate of out-of-work benefits is at its lowest level for 30 years. On 12 January, an Institute for Fiscal Studies report stated, ‘The pattern of rising inflation would mean a 3% real cut in benefits year on year’. This is without taking benefit cuts into account.
Not for much longer will the poor put up with being forced to live in freezing homes with no food in the cupboards. A struggle against the ruling class will emerge and for its success it is essential we have a fighting organisation with enough committed members to take up the task. If you see the need for change and you agree with our analysis then join Fight Racism! Fight Imperialism! We all have a part to play.
Fight Racism! Fight Imperialism! No 286, February/March 2022
