October will be a month of terror for too many people in the UK. This is when six million of the poorest households will lose £ 20 per week due to reduced benefits. The Job Retention Scheme, better known as leave, is ending. In addition, the fixed cap comes from energy prices. Unfortunately, some of the most vulnerable people will be affected by the three strokes. Problems with fuel supplies, potential food shortages and Brexit will undoubtedly increase the rate of inflation. And it does not improve next spring.
Earlier this year, when the £ 20 benefit cut was to take place for the first time, there had been strong opposition from some backbench Tory MPs. Recent Cabinet changes, lots of strong guns by government whips, veiled threats of marginal seats not receiving ‘leveling’ funds (what we used to call the pork barrel policy), mean that this is the case. likely to pass, no matter how much Marcus Rashford and other activists continue to oppose. This has particular implications for the North East and child poverty.
The benefits are complex and unless we are trapped in their horrible world, we try to isolate and separate ourselves from it. So when we hear Therese Coffey, the Secretary of State for Work and Pensions, claim that the £ 20 reduction in Universal Credit (UC) can be offset by claimants working two extra hours a week, it doesn’t seem to be. the case. Wrong. However, this indicates either enormous ignorance or a deliberate intention to deceive. Only two in five people who claim UC have a job; of those who are working, most will be paid the minimum wage of £ 8.91 (for those over 23) and even for those who are working, there is a reduction of 63 pence for every pound earned. There are also deductions for national insurance, income tax and pension contributions for some, as well as childcare costs. The Resolution Foundation has calculated that some job seekers would have to work nine extra hours a week to make up for the £ 20 reduction.
Devastating impact on the North East
Make no mistake, this cut will have a devastating impact here in the North East. The Northeast Child Poverty Commission noted that:
“Some 208,470 households in the region benefited from UC…. and that 162,478 children in our region live in families benefiting from UC ”(May 2021).
Research conducted by Loughborough University for the End Child Poverty Coalition found that the overall rate of child poverty in the North East increased by a third (from 26% to 37%) from 2015 to 2020, a times housing costs, and the North East has the second highest level of child poverty after London.
A study released last month by the Joseph Rowntree Foundation illustrates the impact on individual parliamentary constituencies. 21% of all working-age families will experience a reduction of £ 1,040 per year in their income from 6 October. They pretend :
“This cut will impose the largest overnight cut in the basic social security rate since the founding of the modern welfare state.”
Where I live in Newcastle Central there are 14,550 families receiving tax or work credits (WTC), half of which (7,280) have children. This means 31% of families in Newcastle Central claim UC or WTC. In the Northeast, 46% of all working-age families with children in the North will be affected by this reduction. The North East economy will need £ 5.36million per week.
The end of the leave plan
The leave plan ends September 30 and employers will have to make tough decisions about the future and viability of many jobs. Some companies were supported artificially throughout the leave. For others, rising costs, changing markets and external pressures mean that many jobs are no longer sustainable and cannot be sustained without external support.
Since March 2020, 11.6 million British workers have been put on leave due to Covid-19. In August 2021, that figure was 1.6 million people. The Office for National Statistics reports about 953,000 job openings from May to July 2021; a record. However, not all of the people who are made redundant will fit perfectly into one of these vacant roles. A study from the LSE Innovation and Outreach Program released in August 2021 noted that one million workers are employed at companies fearful of closure. Inevitably, some sectors are disproportionately affected by the impact of Covid-19, with the entertainment, retail and travel industries relying more on support on leave.
Rising prices and inflation
No one can have failed to predict the price increase with the energy cap changes on October 1, except the government apparently. However, the massive international increase in gas prices (although the UK has some of the highest gas market prices in Europe), the rapid collapse of small energy suppliers, the depletion of reserves of gas and the inability to rapidly develop green energy and invest in a sustainable home insulation program will result in an increase in energy costs of up to 40%. This price increase will plunge half a million more people into fuel poverty.
Over the past week, as the delivery driver crisis worsened, we have seen more empty shelves in supermarkets and inevitable shortages at some gas stations. All of these uncertainties will lead to higher inflation, at a time when our poorest households face significant benefit cuts. British inflation made its biggest jump ever recorded in August 2021 (3.2% in August against 2% in July). The wage freeze in the public sector (teachers, municipal staff, firefighters, civilian police services and armed forces) imposed in November 2020 on 1.3 million workers means for them a reduction during the year; while the 3% wage deal for NHS workers is more than wiped out by this jump in inflation.
People have been looking forward to a better future, but April 2022 will lead to a 1.25% increase in national employee insurance and a 1.25% increase in national employer insurance, a freeze on thresholds for income tax, the (temporary) removal of the triple pension lockdown and another review of the energy price cap.
Make no mistake, these are not an unrelated and unfortunate set of circumstances, but indicate the structural and political unrest within the UK government. It reacts separately to individual crises and refuses to recognize the links between the climate emergency, poverty and the impacts of Covid-19. It was the interventionist approaches where the state was forced to take measures, such as time off, that worked and provided protection.
It will be interesting to see how it all bounces back politically and will it be gasoline, rather than poverty or prices that will prove toxic to the current government?
But winter is coming and there will be too many people outside the castle walls.
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