Economic attacks expose the fraud of “levelling up”

For some time now the Tory government has been presenting itself as the “People’s Government”, committed to a programme of “levelling up”, of improving the lot of those sectors of the working class who have been “left behind” by an economic crisis which is blamed not on the capitalist system but on “globalisation” (as if there could be a capitalism which didn’t seek to globalise itself) and its most visible institutional forms, mainly of course the European Union.

This populist world view is being revealed in all its poverty and mendacity by the very measures being taken by the government to face up to an economic crisis which has been severely aggravated by the impact of the Covid pandemic.

Social benefits, wage levels, and job security are all under attack. As always, the bourgeoisie has no choice but to make the exploited pay for the crisis of its social system.

The end of the furlough and cuts in the social wage

The furlough system introduced during the first lockdown was scrapped at the end of September and replaced by the Job Support Scheme (JSS). At the end of the scheme, nearly a million workers (down from a peak of nearly nine million in May 2020) still relied on furlough, so this meant that they were set to lose their jobs. Under the new JSS, employers are to pay for hours worked, but only 5% for hours not worked, with the government paying 75% of wages for unworked hours. This means that workers who retain their jobs (for how long?), but with a 25% wage cut, still face a 20% cut in overall wages.

It is important to note that although the government provided a furlough subsidy, this was beneficial primarily to ensure that firms could stay open. The new scheme amounts to a direct attack on the living standards of the working class in the coming winter months. It spells poverty for working class families and their children.

The Universal Credit (UC) system was introduced by Iain Duncan Smith in 2016 to ‘streamline’ the benefit system, which meant the effective abolition of some benefits and a capped UC. If you claimed UC, then you were cut off from other benefits. The introduction of UC in itself was already a reduction in the social wage. 

The government decision to cut the £20 Covid furlough subsidy and return to the basic £118 a week UC payment on 6 October means a further massive assault on the lowest paid workers and claimants. It will cost as many as 6 million families £1,502 a year. Planned rises in income tax, national insurance and the UC taper mean that claimants receive only 37 pence for every £1 earned – as little as £2.24 per hour. As a result, someone working full time on the minimum wage would have to work an extra day’s work a week to make up the shortfall, according to the Resolution Foundation, pushing 800,000 low paid and unemployed workers below the poverty line. An illustration of this fall in living standards: before the period of the pandemic 700,000 people in Britain were using food banks. In 2021 approximately 2.5 million people used a food bank in the United Kingdom.

The chancellor, Rishi Sunak, said the figures “underline the scale of the challenge we’re facing”, adding: “I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected”. But even a number of senior Conservatives have not been “reassured” by Sunak’s promise, warning that the cut will immediately undermine Johnson’s pledge to “level up” the country – a sinister claim repeated after his reshuffle at the beginning of September and repeated just on the eve of the Tory Party Conference. A potential backbench revolt has forced some senior Tory ex-ministers to look at other options but plans to tweak the UC taper means that the planned £6 billion cut would only be reduced to £5 billion.

Wages getting cheaper….

"More than 2 million UK employees earned less than the statutory minimum wage in April [2020] because the lowest paid were the most likely to be furloughed. The annual survey of pay and earnings by the Office for National Statistics (ONS) gives a stark illustration of the immediate impact the first Coronavirus lockdown has had on living standards, choking off growth in private sector pay and hitting young, part-time workers in particular. Average annual pay for full-time employees — a measure that was largely unaffected by the pandemic — was £31,461 in the tax year to April 2020, 3.6 per cent higher than the previous year, the ONS said. But in April 2020 during the first lockdown when 8.8m were furloughed, and many more were working reduced hours; average weekly pay across all jobs was 0.9 per cent lower than a year earlier after adjusting for inflation." (Financial Times 3/11/20). There is also a lock on the Public Sector pay rises of 1% which specifically affects health workers and care workers, the much clapped “lockdown heroes”. This means that even before the pandemic took its devastating effects the attacks were already underway.

 …Prices getting steeper

The combination of product shortages, labour shortages and energy price rises, coming on top of gigantic state debts incurred during the pandemic, will combine to push inflation above 4% for the first time since 2013, according to the Bank of England’s monetary policy committee. In March of this year, the rate stood at 0.7% but now it has been raised to 4.7%. Interest rates remain at an all-time low of 0.1%, but even a small rise could be ruinous for millions of people – the average debt burden per household is £62,705, according to The Money Charity. This will further reduce the spending power of workers and their ability to borrow money in response.

Unemployment and shortage of labour power

Demand for workers is at a record high, with 223,000 new job ads posted in the week ending 19 September, according to the Recruitment and Employment Confederation. But even with labour shortages, there is likely to be a mismatch between any newly unemployed people and their skills for available jobs. The opening for jobs has mainly been in the transport industry (50,000 lorry drivers are needed), or in the low paid food industries or crop picking in the South East. This may seem to contradict the perspective of growing unemployment created by the Covid-19 crisis, but if we look at the devastation wrought on the UK and the world economy, we can see a persistent trend with many firms going bust and furloughed enterprises in particular going to the wall.

Unemployment reached 5.1 per cent in the three months to December 2020 - the highest figure for five years. If we look at the figures for 2020, we can see that unemployment is an important manifestation of this crisis. “The UK unemployment rate rose to 4.8 per cent in the three months to September, driven by the largest quarterly number of redundancies on record, official data showed on Tuesday. The figures reflect a wave of job cuts made by employers as they prepared for the phasing out of the government’s furlough scheme.” (Financial Times, 10.11.2020).

In January 2021 2.6 million people were either claiming Jobseeker’s Allowance or Universal Credit because they were looking for work. The figure in March 2020 was 1.4 million.

More than a third of all claims ever made for UC have been made during the pandemic. And things will get worse; those aged 25 to 34 face the biggest risk of losing their jobs. In the three months to November 2020, people in that age group had a redundancy rate of 16.2 per 1,000 - a fivefold increase on the same period a year earlier.

Overall, some 1.72 million were officially jobless, also the highest level in five years. And this is while the furlough scheme is still in place. The ending of the furlough scheme will put hundreds of thousands of jobs at risk.

No choice but to fight

The coming winter months of 2021-22 will see the possibility of a new outbreak of a Covid variant. But, with or without a new lockdown, the attacks on workers’ living and working conditions will undoubtedly increase. This is an international problem for the working class and Britain is not an exception[1]: indeed, the plunge in living standards in Britain will be even more marked given the specific impact of Brexit and the increasingly obvious incompetence of a government mired in populist delusions.  

For many years now we have seen a significant retreat in workers’ struggles, in particular from the very low paid, the most vulnerable sectors of the working class. However, these past months have seen struggles in the Uber transport and delivery industries, in the postal sector, in the universities and elsewhere. Although small and generally isolated from each other, they might represent a beginning of the wider and deeper struggle of the class in defence of its living conditions in the face of a system which has no future to offer us. In this struggle the class can only count on its own forces.

M & A 7/10/21

[1] See the Report on the Economic Crisis from the ICC’s 24th Congress