Universal Credit in the Time of Covid-19
This isn’t the first time that the failure and cruelty of the benefits system has been laid bare by a catastrophe, in this case by the Covid-19 pandemic. It last happened in 1940 when the old poor law system collided with the Nazi bombing blitz. Then large numbers of people suddenly found out for themselves what a vicious system others had long had to cope with. The incompetence, petty bureaucracy and inhumanity were exposed. Now it looks as though the failings of Universal Credit and other expressions of welfare reform are similarly going to be laid bare by the consequences of the Coronavirus as many more have to resort to them.
Over 1 million people have now applied for Universal Credit (UC) since the lockdown of the UK economy at the end of March. Beyond this figure we know very little as the mainstream media is not reporting on peoples’ experiences. What we do know is that new claimants will get the shock of their lives when applying for UC on just how little they are entitled to and the pitiful level of support.
This is what we know from the rollout so far:
· New claimants will have to wait 5 weeks for their first payment
· Many of those registering will not be eligible because they breach the savings threshold – if you have £16,000 or more you cannot make a claim.
· Those above the savings threshold are eligible to claim Job Seekers Allowance (JSA) of £74.35 a week – as opposed to £94 a week for a single person on UC
· Those in financial hardship will be offered a loan (advance) which will have to be paid back when UC payments begin, putting people in debt and leaving them without enough to live on and pay bills, rent, etc
· If you have a mortgage and don’t have any earnings you will only get a pitiful 2.61% of your outstanding mortgage made as a monthly payment, but this does nor become payable until you have been claiming benefits and not earning for nine months. This payment is a loan that accrues interest and has to be paid back, either before or when the house is sold.
The UC system, which was designed for the precariat, is not fit for their needs, let alone for members of a workforce not used to subsistence existence. As one former Thomas Cook employee put it:
“Universal Credit is a shambles of a system – having to constantly battle to get what you’re entitled to, and when you go to a job centre you’re made to feel like a criminal. It’s degrading. I was relying on friends and family – it was so embarrassing. It was a struggle every day, and I just had to keep going for my son’s sake.”
This crisis is sucking millions of workers into this condition of precarious existence without predictability or security with its resulting impact on their material and psychological welfare. It is a system designed for a capitalist system in crisis, post 2008 financial crash. It is designed to maximise profits through delivering a fearful and compliant slave wage workforce to businesses which exploit our liberalised economy and its lack of worker protections. This was beautifully illustrated in January when Greggs paid their workers a bonus. Many of the Greggs employees are part-time and on minimum wages and are therefore claiming child and working tax credits with increasing numbers through UC. Because of the UC formula applied to earned income, the Government took 60% of this bonus and left Greggs workers with only 40%. As the Guardian noted:
“Greggs announced last week that its 25,000 workers would receive a windfall of up to £300 under a £7m reward scheme linked in part to the success of the company’s vegan sausage rolls. However, benefits experts have pointed out that some staff who are on universal credit will keep as little as £75 after tax and national insurance (NI) are paid and bonus earnings clawed back by the government at a rate of 63p in the pound.”
They have George Osborne to thank for this. He flipped the amount people can keep from earned income from 60% to 40% - so much for UC making work pay!
The cornerstones of UC – the 5 weeks wait, the sanctioning regime, the claimant contract for job searching and a requirement to seek work of 35 hours a week, often across several part-time jobs, are all designed to force people into minimum wage employment through fear of losing their benefits. UC is a perfect solution for ruling class and proves if proof were needed that we are not “all in it together” and that Universal Credit has to be scrapped.
The grim failure of Universal Credit isn’t just due to its intended nastiness either. The political concern to attack people receiving benefits has underpinned Universal Credit. But it has also been affected by the degrading and run-down of the benefits system itself, as its organization, administration and workforce have been cut back and its competence reduced. Well before the Covid-19 crisis we were seeing increasing delays and difficulties in sorting out people’s benefits even where they were judged bona fide by the Department of Work and Pensions (DWP): longer and longer waits on the phone, more and more claims getting lost, turn-round times changing from weeks to months.
And that raises two other issues which have compromised UC from the start. Despite the pretence that you can phone, in reality you can only access Universal Credit on line. The truth is very many people still either don’t have access to the internet, are not confident with it for one reason or other, or live in areas where it is not adequately available. The fantasy non-computer literate policymakers accepted hook line and sinker was that computerization made it possible to simplify benefits systems that are meant to manage the unique and diverse needs of millions. Guess what, they can’t.
Many in our movement and beyond also bought the lie that it was a way of streamlining the benefits system by combining six benefits into one and making ‘work pay’. UC architect and recently knighted Iain Duncan Smith had no such benign intentions. His focus was on the values of the Poor Laws and Thatcherite notions. From the outset it was designed deliver a fearful and compliant workforce to capitalist enterprises paying below subsistence wages and offshoring super profits in elaborate tax avoidance and evasion schemes. The gig economy relies on zero hours contracts, non-unionised workers who have few rights or protections and will work as demanded by employers under fear of sanction. The passionate desire by the right wing of the Tory Party to crash out of the EU with no deal is partly so they can rip up the basic but minimal protections afforded to workers in the European Union. The Tory think tanks are already targeting the scrapping of maternity leave, bank holidays and raising the pension age further in a post Brexit Britain.
With the election of a Johnson Government the task now for the Labour movement is to conceptualise a system of support that is socialist and puts the needs of people before the profits of business. This means removing neo-liberal conditionality from the benefits system. This is essential because large parts of the country do not have employment opportunities for people to ‘compete’ for. The creation of a reserve army of labour punishes people for the failings in the capitalist economy which cannot sustain a healthy and prosperous community. In the areas of the country where traditional industries have closed and not been replaced with an alternative the population is increasingly living below minimal levels of existence as exemplified by the explosion of food bank use. The new system must also take into account the complex relationship between work and disability/ill health. This requires a radical shift in our approach to welfare and benefits that is based on 21st century socialist values.
But we can’t wait for a future Labour Government, particularly one led by the new centrist cabinet under Keir Starmer. What’s more all the low paid workers, unemployed and trade unionists caught up in the UC vortex can’t wait. That’s why it is essential for us to build a grassroots movement that unites benefits claimants and low paid workers – resisting the traditional divide and rule tactics of driving a wedge between the employed and the unemployed. Capitalism will exploit the ‘reserve army of labour’ to beat down wages and conditions. The Tories proposals to create freeports and their intention to crash out of the EU with no deal signals their intention to further erode the rights and living standards of working people. It is urgent the trade unions and the TUC take this issue seriously and start to educate shop stewards and workplace representatives so they can effectively support and defend their members. It is also necessary they agitate and organise against Universal Credit. It is also urgent we build a social movement in every community, town and city across the UK to stop and scrap UC. Hundreds of thousands are now going to experience for themselves the truths of welfare reform as they struggle to manage in the face of the impoverishment of Universal Credit. Each one will be a potential new ally both in the struggle to end it and for a renewed politics.
Join Scrap Universal Credit Alliance today! www.suca.org.uk
Peter Beresford and Mark Harrison April 2020
(This is an updated version of an article/guest blog, February 2020, Labour Briefing)
