The furlough scheme introduced at the start of the first lockdown in March 2020 ends completely on 1 October 2021. By the end of August, at least 1.6 million people were still furloughed, with tens of thousands facing the prospect of redundancy when the scheme is withdrawn. Almost simultaneously, on 6 October, the £20 per week uplift to Universal Credit payments is also due to be removed – the biggest benefit cut since the Second World War. Both measures were introduced near the beginning of the first lockdown in an attempt to avoid social upheaval. Now, this two-pronged attack will force thousands more working class households into poverty.
The end to both measures is a stark reflection of capitalism in crisis as it accelerates the transfer of wealth from the poor to the rich. It is an acute indication of the government’s determination to reverse the unprecedented state intervention that was necessary to keep British capitalism afloat during the period of lockdowns. The poorest sections of the working class and the significant numbers of first-time benefit claimants beginning to join their ranks are being left out in the cold.
Furlough
The government tells us that anyone made redundant when furlough is scrapped will land on their feet as from May to July 2021 there were a record 953,000 job vacancies, the highest since records began in 2001, and up 43.8% on the previous quarter. This has been driven by the lifting of coronavirus restrictions, with a massive 163.7% increase in job vacancies in accommodation and food service activities. However, in the same period there were also already 1.6 million people unemployed, 94,000 people made redundant and 8.7 million people classed as economically inactive. When the government reduced furlough payments to 60%, raising employers’ contributions to 20% in August 2021, 18% of businesses told the Chamber of Commerce they were likely to make staff redundant in response; 25% said they would aim to reduce hours or move staff to part-time working patterns. In March 2021 the Office for Budget Responsibility forecast that the unemployment rate would soar to 6.5% in the fourth quarter of 2021 after furlough is ended.
On top of this, from April to June, 917,000 people in employment were on zero-hours contracts – 2.8% of all people in employment. This is up from 108,000 and 0.4% respectively in 2004 – a huge increase. From April to June 2021 there were over three million people who were underemployed: they want more hours but these are not available.
Universal Credit
There are currently 5.9 million Universal Credit claimants. The cut of £20 a week will push them and their families over the cliff edge. This includes more than three million children. These families simply will not be able to keep their heads above the water. The Joseph Rowntree Foundation has estimated that the cut will drag a further 500,000 people below the poverty line. Analysis by Citizens Advice found that £20 a week is equivalent to six days of energy costs or three days of food costs for a low-income family. A lot more people will be going cold and hungry this winter.
The Resolution Foundation has found that claimants who are in work would need to work an extra nine hours just to offset the cut. This in part is based on the fact that those who work additional hours see their benefits reduced – for every £1 they earn, the Universal Credit payment falls by 63p, effectively a marginal tax rate of 63%. That’s without taking into account the extra costs of childcare – the cut will affect six out of every ten single-parent families – and assuming additional employment hours are even available. These facts make a mockery of the claim by Work and Pensions Secretary Therese Coffey that people facing the cut to Universal Credit just need to work two more hours a week.
The pandemic has acted as a catalyst in the trend of increasing poverty in Britain – there were up to 14.5 million people living in poverty before the pandemic even hit. The number of Universal Credit claimants has doubled over this period from three million on 12 March 2020, the last count date before the pandemic, to six million. The majority of new claimants lost jobs or hours during the pandemic and many will not have claimed before April 2020. More than a third of those who will be hit by the cut are already in employment. Single people under 25 face the biggest proportional drop in the benefit. These figures do not include the two million people still on the legacy benefits, such as Job Seekers Allowance, that Universal Credit is replacing. They were not granted the uplift in the first place.
On 15 September, the Labour Party called an entirely symbolic vote in parliament on cancelling the cut to Universal Credit. It won 253-0, with Conservative MPs largely abstaining. However, the vote is non-binding and changes nothing: the government will continue with its ruthless cut, and the Labour Party will continue to make meaningless gestures from the sidelines. Meanwhile millions of people, who are amongst the poorest in Britain, will be cut adrift.
Mark Moncada
Fight Racism! Fight Imperialism! No 284, October/November 2021
