Unemployment and poverty set to rise as furlough ends and benefits are cut
A brutal shock is in store for many workers as the temporary multi-tiered unemployment support system is slashed back to the bone.
If chancellor Rishi Sunak goes ahead with his plan to end the £20 a week temporary supplement to universal credit (UC), whilst simultaneously winding down the jobs retention furlough scheme, thousands of families in Britain will be subjected to a brutal bout of economic shock therapy.
Rather than enjoying the promised post-Covid relaxation, workers are going to be faced with the worsening reality of mass unemployment, impoverishment, a privatised health service and deterioration of public services. Cutting the £20 UC supplement and axing the furlough scheme amount to a declaration of open class war against workers.
Assuming that Rishi Sunak, prime minister Boris Johnson and work and pensions secretary Thérèse Coffey do not blink, but stick by their guns, the likely consequences in terms of social unrest are already giving some establishment circles the jitters.
No less than six former Tory welfare secretaries have signed a collective letter to Sunak begging him to relent over UC, writing: “As former secretaries of state for work and pensions, we are writing with one voice to support those individuals and families that are struggling most in the wake of the pandemic, and to ask that the current funding envelope for individuals on universal credit be kept at the current level.”
Whilst nobody could accuse Amber Rudd and the rest of the crew for a moment of sympathising with the plight of benefit claimants, the fact that the number of claimants has doubled from three to six million since the Covid crisis kicked off must have given these worthies pause for thought. Especially, warns the centre-right Centre for Social Justice, when for that new three million strong cohort of claimants the ‘temporary’ £20 is not experienced as “a temporary uplift but the only level of welfare payment they have ever known”.
It is the fear of a backlash from the working class that has triggered this sudden awakening of social conscience: the spectre of pitchforks.
Long-term unemployment is now growing at its fastest rate since 2010, and many of the worst affected are young workers. Among UC claimants there are a disproportionate number of young people with a lot of energy and no future under capitalism.
Under-25s were five times more likely than the rest of the working population to lose their jobs in the first lockdown, and it is the young that are bearing the brunt of the present economic crisis. They also have less to lose.
The £20 UC supplement is due to be withdrawn at the end of September; so is the furlough scheme. Roughly a third of all employers have staff on furlough. From July, the scheme is already winding down: from 1 July the government pays only 70 percent of the wages, shrinking further to 60 percent in August and September.
According to the Institute for Fiscal Studies, the bill for employers keeping a member of staff on furlough will rise from £155 a month in June, to £322 in July and £489 in August and September. The end of furlough, unless the government reneges on its commitment and offers yet another extension, will encourage employers to shed workers and put downward pressure on the wages and conditions of those remaining.
It will also encourage employers to strongarm workers into returning to unsafe working environments.
The £20 cut in UC benefits and the end of the furlough scheme need to be seen in the context of the 19 July ‘relaxation’ deadline, telling employers to ‘encourage’ workers to return to their workplaces whilst at the same time removing the legal requirement to implement Covid-safe arrangements like the wearing of masks.
If Sunak’s writ runs, it could be a warm winter.
