For more than a decade, the poor have been hounded, sanctioned, vilified and criminalised in an attempt to restore the profitability of British capitalism. Despite this sustained attempt to make the working class pay for a crisis not of its making, the economy remains in utter turmoil. The effects of the coronavirus pandemic, Brexit and the global wholesale energy crisis have sent the prices of raw materials, production, transport and commodities soaring. There has been no real recovery from the 2008 financial crash. Meanwhile, ever-wider sections of the working class are being driven into poverty or even destitution. MARK MONCADA reports.
Following the 2008 crash, a ruthless ideological assault on public sector borrowing was orchestrated and within just two weeks the media and politicians of all persuasions had changed the narrative so that all of a sudden the most dangerous threat to the British economy was not the bloated financial sector, but rather public sector debt.
Over the following 14 years, Labour and Conservative governments competed over how savage their cuts to public spending would be. In March 2010, ahead of that year’s general election, then Labour chancellor Alistair Darling pledged that if Labour were re-elected, it would make cuts tougher and deeper than under the Thatcher government. It was the Labour government that in 2008 had bailed out the banks to the tune of £500bn. The situation was exacerbated by the election of the Conservative/Liberal Democrat coalition in 2010, which used the financial crisis as a pretext to wage a wholescale offensive against public services and benefits, and to systematically force the poorest sections of the working class into low paid, insecure work on a mass scale. Between 2010 and 2021, an estimated £37bn was cut from benefit spending, while between 2010 and 2020 the value of child benefit plummeted by nearly a quarter.
War on the poor: a decade of the 2012 Welfare Reform Act
The Con-Dem government’s plans for its war on the poor were laid out in the 2012 Welfare Reform Act, a raft of measures that have devastated benefits and living conditions for the last ten years – on the vicious pretext that this would reduce ‘welfare dependency’. The Act built on attacks from the previous Labour government and continues to be an integral part of the British state’s never-ending programme of austerity. It has never faced any serious challenge from the Labour Party, which warned the poor ahead of the 2015 election that there would be no reprieve in the event of a Labour victory. The then Shadow Work and Pensions Secretary, Rachel Reeves, put it bluntly, in a clear appeal to the most reactionary sections of the electorate: ‘We are not the party of people on benefits. We don’t want to be seen [as], and we’re not, the party to represent those who are out of work.’
The effects of the Welfare Reform Act, rolled out over subsequent years, have been brutal.
2013: Universal Credit (UC)
This rolled six legacy benefits into one. Claimants are purposefully kept waiting at least five weeks for initial payments so that their finances are decimated. The government knows full well the appalling level of hardship this creates. It is a calculated attack to deter people from ever claiming benefits and, if they do, to make the experience so gruelling that they will face little choice but to accept whatever scrap of work is thrown their way. This five-week wait has plunged countless people into debt and rent arrears only to be saved from hunger by food banks. In 2018, there was an average 52% increase in food bank usage in areas that had had UC for at least 12 months, compared with 13% in areas that had not. The £20 per week uplift to UC, introduced when nearly three million more people were forced onto UC during the coronavirus pandemic, was a tacit admission that no one could live on such miserly payments. The ending of the ‘uplift’ in October 2021 plunged at least five million households into even greater poverty. It had, in any case, never been extended to those on disability and other ‘legacy’ benefits.
2013: Bedroom Tax
The government (many members of which have mansions, country estates or second homes) punishes the poor if it determines they have too much of a roof over their head. So-called ‘spare bedrooms’ lead to a cut in the housing benefit portion of UC, dramatically increasing how much rent has to be paid. When it was first introduced, it sparked outrage and resistance. Now it has become normalised as just another callous attack on the poor and continues to be a major factor in keeping people in a long-term state of poverty. When the number of people claiming UC during the pandemic shot up, thousands more people suddenly found themselves subject to bedroom tax, with the number rising by 40% between March and November 2020 to 238,748.
2013: Personal Independence Payments (PIP)
This replaced Disability Living Allowance (DLA). In 2010, 71% of claimants received DLA for an indefinite period. Between April 2013 and April 2018 only 18.1% of PIP awards were for an indefinite period. This is a stark example of the constant pressure from the government to force as many people off benefits as possible, no matter their health conditions.
2013: Overall Benefit Cap
This places a limit on the amount of benefits most people can claim, making it impossible for the housing benefit element of UC to cover soaring rent payments. With the dearth of council housing, the cut means that the poor are being forced into slum, overcrowded housing in the private sector, with few rights. During the pandemic, the number of claimants whose benefits had at some point been capped rose from 310,000 in March 2020 to 560,000 in August 2021 – an 80% increase. In February 2022, 120,000 people were subject to the cap. The Supreme Court ruled in 2019 that no household should be expected to use the personal allowance component of any means-tested benefit to cover a gap between rent and housing support. On this basis, lone parents or couples affected by the overall benefit cap and who have more than two children cannot afford to rent privately anywhere in Britain.
By 2016, these attacks were consolidated in the even more savage Welfare Reform and Work Act. Its provisions included a further sharp reduction in the overall cap on benefits and a four-year freeze on benefits. This real-term value of benefits was cut by 6%, affecting 30 million people and pushing 400,000 into poverty. It left the average poor couple with children £580 a year worse off and meant the country’s poorest seven million families each lost out on an estimated £2,000 over that period. The Act also ushered in the viciously reactionary ‘two-child’ limit in 2017, in which the government took it upon itself to dictate the size of working class families by scrapping state support for third and subsequent children. This robs larger families in receipt of UC of £250 a month (£3,000 a year) and has become the single biggest driver of child poverty. The most recent figures, for 2020/2021, put child poverty at 3.9 million – around a quarter of all children growing up in Britain. 46% of children from black and minority ethnic groups are in poverty, compared with 26% of children in white British families. Then interim Labour leader Harriet Harman instructed MPs not to vote against the Welfare Reform and Work Bill in 2015 and specifically not against the two-child policy.
Benefit sanctions
Punitive sanctions on jobseekers were introduced in 2012 under the concept of ‘conditionality’. They have been steadily tightened ever since. They empower jobcentre staff to arbitrarily stop or reduce benefit payments, for up to six months, to claimants deemed somehow to have breached their ‘conditions’ – this could be something as trivial as being five minutes late to a jobcentre interview, mislaying a form or not applying for any job you are offered. They are a way of coercing and corralling the working class into accepting low-paid and often entirely unsuitable jobs. Benefit sanctions were mostly suspended at the beginning of the pandemic, falling to 488 in January 2021, but have been steadily climbing ever since, reaching around 16,000 by July 2021 and 38,244 by January this year.
Unemployment replaced with in-work poverty
Real wages have fallen by 2.8% – the fastest pace since records began over two decades ago. Almost half of the people working in the country are living in poverty. This is known as in-work poverty. Most people in poverty now live in a household where at least one person has a job. The drive is for every adult in the household to be in work, regardless of access and affordability of childcare, health and availability of suitable jobs.
The attack on benefits is having the desired effect of forcing people not just into low paid jobs, but also into work that is part-time, casualised and precarious. May’s unemployment rate was 3.8% – slightly below pre-pandemic levels. The employment rate is 75.9%. Job vacancies are at near record highs, rising by 1.3 million between April and June 2022. There are almost two million more women and one million more disabled people in work compared to 2010. But these figures mask a grim reality of poverty and insecurity.
The Trades Union Congress’s July 2022 analysis of Labour Force Survey data shows that 3.7 million people are in insecure work – one in nine of the workforce. It includes those on zero-hour contracts (935,000) up by more than 400,000 from late 2013; agency, casual and seasonal workers who are not on fixed-term contracts (952,000); and the low-paid self-employed who earn less than the minimum wage (1.9m). Almost a fifth of people in low-paid jobs say they would like to work more hours than they can find – they are the underemployed. BAME workers are particularly hard hit, with 14.6% likely to be in insecure work compared to 11.1% of white British workers.
Cost-of-living crisis
On top of all this comes the cost-of-living crisis. Living standards have dropped at a record rate. More than half of the poorest families have less than a month’s savings, while an estimated 13% of adults have no savings at all. Average food bills have increased by £454 a year as food inflation nears a 14-year high. In August, it is expected to reach the highest level since at least 2008, after rising to almost 10% in July. In March this year, according to the BBC, an estimated 6.7m people – more than 10% of the population – were using a food bank or food charity to help them eat. In May, it was revealed that six NHS trusts had set up their own food banks or developed food voucher schemes to help staff cope with the cost-of living-crisis.
The rocketing cost of gas and electricity is set to drive millions more into poverty. The one-off energy grant payments from the government are a drop in the ocean in the face of energy prices predicted to rise still further, taking the average annual household bill to £3,850 in 2023. At the end of July, two of Britain’s largest energy suppliers, Shell and Centrica, posted unprecedented profits. Shell’s earnings of nearly £10bn will result in a pay-out of £6.5bn to shareholders; Centrica, with operating profits of £1.5bn for the first quarter of 2022, expects to pay out £59m in dividends. This is obscene, when millions of families this winter will literally be forced to choose between heating and eating. It is time to fight back.
FIGHT RACISM! FIGHT IMPERIALISM! 289 August/September 2022
