Join Hafta-Ichi to Research the article “What Tories fear about Marcus Rashford: he’s made the case for decent welfare | Universal credit”
Do you have your very own natural swimming lake in the garden? Funnily enough, me neither. But along with hot tubs and garden offices, they’ve supposedly become lockdown must-haves for people with money to burn and nothing else to spend it on, what with never leaving home any more. The Beckhams had one dug during the first lockdown, which means it’s probably only a matter of time before they’re two-a-penny in the Cotswolds.
The paradox of lockdown is that the more comfortably off Britons were at the beginning of it, the more likely they are to emerge with an unexpected bonus: savings racked up by months of not commuting, eating out, buying clothes or going on holiday. In parliament this week, the chancellor, Rishi Sunak, described the resulting record levels of household savings as a hopeful sign of economic resilience. Yet for those most in need of a windfall, as research from Resolution Foundation spelled out this week, the opposite is true.
It found that lower-earning families whose wages are eaten up almost entirely by the basics were twice as likely to see their outgoings rise over summer and autumn than to see them fall. With everyone home and raiding the fridge, they spent more on food, heating, or mobile data for kids trying to follow lessons on a phone. Meanwhile, lockdown cut them off from survival strategies, such as buying clothes from charity shops. (Higher earners also spent more on food and heating, but that was far outweighed by what they saved on pleasures suddenly denied them.)
Half of adults with less than £1,000 savings also raided them, which is hardly surprising given nearly a third of lower earners lost their jobs or were furloughed in the first wave, compared with just a tenth of higher earners. But it leaves them with less to fall back on this time. And that’s the context against which Sunak ducked subsequent questions from MPs about whether he still plans to go ahead with cutting the incomes of struggling households – many of them working – by more than £1,000 a year, from April.
The planned cut stems from a Treasury deadline set last spring for clawing back the emergency £20 a week added to universal credit and working tax credit during the first lockdown. Back then, Boris Johnson was claiming Britain could “send coronavirus packing” in 12 weeks. Now, 10 months on, it’s not even clear whether schools will be open again by Easter.
But timing isn’t the only problem here. The footballer and food poverty campaigner Marcus Rashford is among those calling for the April cut to be reversed, a recognition that food parcels are merely sticking plasters over the deeper and more enduring problem of not having enough money to live on. Given Rashford’s campaign record, the Treasury might as well give up now. But if it doesn’t, it’s likely to come under increasing pressure from some of the newer Tory MPs sitting on relatively fragile majorities, worrying about how to explain this income cut to many of their constituents.
So perhaps Sunak is merely holding back – cruel as the uncertainty is for families whose money worries keep them awake at night – because he wants to announce a reprieve as part of a balanced spring budget. But until he says otherwise, the suspicion remains that the government is digging in for the same reason it’s been so unwilling to raise statutory sick pay, even though ensuring people can afford to self-isolate is critical to controlling Covid: it doesn’t want more generous welfare to become the norm.
It doesn’t want the widespread understanding that benefits don’t cover living costs in a pandemic to grow into a realisation that they’re not enough in normal life either. It doesn’t want to own the legacy of a five-year benefit freeze pre-Covid, nor perhaps to admit how long a post-Covid recovery may take.
Economists are speculating about the risk of a recovery shaped not like a V or W but a rotated K, with higher earners roaring back to where they were, while lower earners flatline. Imagine the post-crash decade all over again, but this time with the lingering effects of “long Covid” hampering some people’s ability to work, and the virus stubbornly taking hold in neighbourhoods where endemic poverty gives it greater opportunities to spread. It would be a recipe not just for individual distress, but social unrest and the politics of desperation.
For Sunak, who likes to see himself as a pragmatist willing to do whatever it takes, waiving the April cut should be the easy bit. But it’s not enough to be a chancellor who, in extremis, proves willing to spend money. It’s what, and who, you spend it on in the long term that counts.
Source: The Guardian
Keyword: What Tories fear about Marcus Rashford: he’s made the case for decent welfare | Universal credit