On 6 October the government officially ended the £20 weekly uplift to Universal Credit it had introduced at the beginning of the Covid pandemic, arguing that it had been a temporary measure to support households in the depths of the crisis that is not longer necessary with the economy returning to a more normal state and in view of the need to repair the public finances after the huge expenditure on Covid-related measures.
Nevertheless, the move was widely condemned by both anti-poverty campaigners and many mainstream economists. The UK already compares badly to other Northern European countries in terms of generosity of benefits, and a report issued last week by the Joseph Rowntree Foundation showed that nearly a third of low income households were in arrears on their housing costs, bills or debt repayments even before the Universal Credit cut.
Taking money from those on the lowest income is also economically unwise, given that lower income people spend more of their money (rather than saving it) and therefore help support demand in a fragile economy trying to recover. Around 40 per cent of those claiming the benefit are in work, contradicting the popular assumption that Universal Credit is exclusively an unemployment benefit.
London will be particularly badly hit by the cut. Prior to the pandemic, the percentage of Universal Credit claimants in the capital was around the national average. But according to the latest figures from the Department for Work and Pensions, the capital now has the highest percentage of people claiming Universal Credit in the UK. Covid has had a devastating effect on the city’s employment levels because of its disproportionate dependence on hospitality, entertainment and tourism, all of which were decimated during the pandemic.
Out of the 20 local authorities with the highest numbers of Universal Credit claimants in Great Britain, 14 are London Boroughs, including Newham, which has the highest percentage of claimants of all. The near-simultaneous ending of the furlough scheme has also hit London disproportionately, with the Institute for Fiscal Studies finding that Londoners are less likely to have found a job after being made redundant.
Most Covid restrictions were ended in the summer, and since then many people have resumed their normal pre-pandemic activities. This has exposed labour shortages, particularly in hospitality, as bars and restaurants start to fill up with customers again. Some of those who were unemployed and claiming Universal Credit will be able to go back into employment.
Nevertheless Google Mobility reports based on mobile phone data show that in mid-October there was 23 per cent less footfall in London’s retail and recreation locations than before the pandemic, while public transport use was down by 27 per cent. This compares to a milder fall of 12 per cent in activity in retail and recreation across the UK as a whole. While most Londoners have returned to pre-pandemic behaviour, there is a significant minority – either through reluctance or necessity, if they are clinically vulnerable – who have not, and this has implications for jobs and businesses in the capital.
Meanwhile, Covid rates in the UK are still high at around 45,000 new cases per day. Due to the vaccine, these no longer translate into the devastating death tolls that we saw in January, when there were similar rates of infection. Yet we are still seeing well over 100 deaths per day, the education of schoolchildren is being disrupted again, and the NHS – which still has a backlog of five million elective operations to clear– is struggling to cope.
The chief executive of the NHS Confederation has already called for some measures to be re-implemented to “avoid a profound crisis” and some members of the government’s SAGE committee have agreed. While a return to full lockdown is highly unlikely, we may well see a return of measures such as indoor mask-wearing and a work from home recommendation, as well as the possible introduction of Covid passports to access crowded venues. This would inevitably have a dampening effect on the recovery of the hospitality and entertainment sectors, but this time the government has turned its back and businesses and individuals will be left to deal with the impact on their own.
At least £261 billion has been spent on Covid-related measures already, so perhaps it is not surprising that a Conservative Chancellor is uncomfortable with continuing to provide high levels of support. But it is worth noting that the biggest single element in the DWP’s budget is not working-age benefits, but pensions.
The value of pensions rose throughout the period of austerity, and that has continued during the pandemic due to the “triple lock”, despite it being suspended for a year. The focus on preserving the value of retirement-age benefits while cutting working-age benefits yet again, disadvantages London, which has a much younger average age than any other region in the UK – only 10 per cent of Londoners claim a state pension compared to a national average of 17 per cent.
The ominous conjunction of the cut in Universal Credit, the end of the furlough scheme and higher food and energy bills, mean that low income Londoners are facing a grim and uncertain winter. There is an irony that London has the largest proportion of people who have been able to work from home, many of whom have built up considerable savings during the pandemic. House prices have risen, helping those who own their own homes, but offering no benefit to the disproportionate number of renters in the city.
Yet there is no mechanism to redistribute any of this wealth within the capital. Instead, we are stuck with the familiar scenario of a Conservative government enacting policies that – whether deliberately or not – end up particularly disadvantaging poorer people in London. The needs of a city with the capital’s peculiar economy and demographics which has been affected by the pandemic in different ways from much of the rest of the country, are not being met by central government. Now more than ever, London needs greater autonomy to look after all its residents, rich and poor.
Christabel Cooper is a data analyst and a Labour councillor in Hammersmith & Fulham. Follow Christabel on Twitter.
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