Category Archives: Austerity
Richard Murphy of Tax Justice, has drawn attention to some key sections of the report by Philip Alston, the UN’s Special Rapporteur (below), highlighted by Scottish think tank CommonSpace.
“It might seem to some observers that the Department of Work and Pensions has been tasked with designing a digital and sanitised version of the nineteenth century workhouse, made infamous by Charles Dickens, rather than seeking to respond creatively and compassionately to the real needs of those facing widespread economic insecurity in an age of deep and rapid transformation brought about by automation, zero-hour contracts and rapidly growing inequality.”
Employment is no escape from poverty
“Almost 60 per cent of those in poverty in the United Kingdom are in families where someone works, and a shocking 2.9 million people are in poverty in families where all adults work full-time. According to the Equalities and Human Rights Commission, 10 per cent of workers over 16 are in insecure employment. And 10 years after the 2008 financial crisis, employees’ median real earnings are, remarkably, still below pre-crisis levels.”
Eat or heat
“People said they had to choose either to eat or heat their homes. Children are showing up at school with empty stomachs, and schools are collecting food and sending it home because teachers know their students will otherwise go hungry. And 2.5 million people in the United Kingdom survive with incomes no more than 10 per cent above the poverty line –just one crisis away from falling into poverty.”
“In England, homelessness rose 60 per cent between 2011 and 2017 and rough sleeping rose 165 per cent from 2010 to 2018. The charity Shelter estimates that 320,000 people in Britain are now homeless, and recent research by Crisis suggests that 24,000 people are sleeping rough or on public transportation –more than twice government estimates. Almost 600 people died homeless in England and Wales in 2017 alone, a 24 per cent increase in the past five years.26There were 1.2 million people on the social housing waiting list in 2017, but less than 6,000 homes were built that year.”
The disappearing safety net
“The Special Rapporteur heard time and again about important public programmes being pared down, the loss of institutions that previously protected vulnerable people, social care services at a breaking point, and local government and devolved administrations stretched far too thin. Considering the significant resources available in the country and the sustained and widespread cuts to social support, which have resulted in significantly worse outcomes, the policies pursued since 2010 amount to retrogressive measures in clear violation of the country’s human rights obligations.”
Ideological, not economic
“The ideological rather than economic motivation for the cutbacks is demonstrated by the fact that the United Kingdom spends £78 billion per year to reduce or alleviate poverty, quite apart from the cost of benefits; £1 in every £5 spent on public services goes to repair what poverty has done to people’s lives.40Cuts to preventive services mean that needs go unmet and people in crisis are pushed toward services that cannot turn them away but cost far more, like emergency rooms and expensive temporary housing.”
Harm done by Universal Credit
“The Special Rapporteur heard countless stories of severe hardships suffered under UC. These reports are corroborated by an increasing body of research that suggests UC is being implemented in ways that negatively impact claimants’ mental health, finances and work prospects. Where UC has fully rolled out, food bank demand has increased, a link belatedly acknowledged by the Work and Pensions Secretary in February 2019.”
“One of the key features of UC involves the imposition of strict conditions enforced by draconian sanctions for even minor infringements. As the system grows older, some penalties will last years. The Special Rapporteur reviewed seemingly endless evidence illustrating the harsh and arbitrary nature of some sanctions, as well as the devastating effects of losing access to benefits for weeks or months at a time.”
Women and poverty
“Given the structural disadvantages faced by women, it is particularly disturbing that so many policy changes since 2010 have taken a greater toll on them. Changes to tax and benefit policies made since May 2010 will by 2021–2022 have reduced support for women far more than for men. Reductions in social care services translate to an increased burden on primary caregivers, who are disproportionately women. Under UC, single payments to an entire household, which are the default arrangement, can entrench problematic and often gendered interpersonal dynamics, including by giving control of payments to a financially or physically abusive partner.”
The ‘Report of the Special Rapporteur on extreme poverty and human rights on his visit to the United Kingdom of Great Britain and Northern Ireland’ may be read in full here.
In an earlier post Political Concern reported that 2.6 million women born in the 1950s will ‘lose out’ because of changes to pension law: “while corporations and the richest individuals receive tax breaks.“
“Governments are balancing budgets on the backs of the poor”- (lawyer/novelist John Grisham)
One, the Chorley Supporters Group, is denouncing the government who arbitrarily told them to work for several extra years before they can claim their state pensions, causing them to lose income and peace of mind and obliging many to continue to work at a time of life when caring duties increase and energy levels start to fall. Read more in the Lancashire Evening Post.
Writing to the Financial Times they say: “It is about time the spotlight was turned on this government, which has effectively stolen the security net of millions of women by raising the state pension age far quicker than planned, with no personal notification”.
On the BBC’s World at One programme one of many testimonies was given:
Stella Taylor: “I was born in 1955, I had worked all of my life and, when I became unwell at just about the age of 58 I then discovered, quite accidentally, that my State Pension, which I was expecting to receive at 60, had been moved six whole years to sixty-six. And, like so many women in this movement, we were just aghast. We thought there must be a mistake. Had I received my pension at sixty, when I had expected to, I wouldn’t have been wealthy by anybody’s standards, but I wouldn’t have been in the depths of poverty that I now am. At the moment, because I am still unable to work due to ill health, I receive seventy three pounds and ten pence per week in Employment Support Allowance. Living, and paying all your household bills, out of that £73 a week is impossible. There are times when I have needed to use my local food bank because I haven’t been able to afford groceries.” More testimonies here.
On February 10ththe BBC reported the warning of Amber Rudd, the pensions secretary, which should be extended to her own department:
”If you chronically mismanage a pension scheme . . . we’re coming for you.”
After pointing out that a freedom of information request has revealed recent research findings that the government reneged on their contributions to the national insurance fund over many years and redirected that money towards paying off the national debt, the Chorley Supporters Group asks:
“How government can expect other public or private institutions in this country to play fair with pension funds when it is not doing so itself”.
On February 11th, the government published a research briefing on the legislation increasing the State Pension age for women born in the 1950s. up
This unexpected rise in the state pension age will now “save” the Treasury an estimated £8bn by impoverishing 1950s women.
MP Grahame Morris pointed out that the Labour Party, Liberal Democrats, SNP, Plaid Cymru, the DUP and 50 Conservative MPs support the Waspi campaign.
He added that Landman Economics’ report gives the figure of £8bn savings to government and suggests that this sum should be seen in the wider context of current or planned government finance. Some examples follow: (Ed: links added):
- The refurbishing of the palace of Westminster, which will cost the taxpayer some £7bn.
- HS2 – total cost, including rolling stock, £55.7 billion in 2015 prices – 2018 parliamentary research briefing.
- Britain’s six-hour bombing airstrikes in Syria, which each cost £508,000 or a year’s average salary for 18 junior doctors.
- An estimated £8.7bn of the health service budget which went to non-NHS providers of care in 2017-18.
- Billions of pounds which were lost to government following its progressive cuts to the bank levy.
FT Adviser reports that SNP MP Mhairi Black earlier pointed out that the National Insurance Fund is projected to have a substantial surplus at the end of 2017 to 2018 and the HMRC’s report confirms that the National Insurance Fund balance at 31 March 2018 was £24.2 billion and is expected to increase in the following year.
Morris ends: “In this context, finding the money for Waspi women seems a sensible price to pay to give these women justice . . . We know and we can see that it isn’t equal, it isn’t fair and it isn’t justifiable – it’s driving down the incomes and the quality of life of countless women”.
Next June the government faces a judicial review in the High Court to determine whether these recent increases to women’s state pension age are lawful and the Chorley Supporters Group, Chrissie Fuller, Jane Morwood, Betty Ann Tucker, Riley Ann Rochester, Beverley Cordwell, Lea Butler and Lesley Kirkham end by warning that they will not rest until justice is done.
If the economy ‘tanks’ post-Brexit, will shopping mall and carpark revenues be enough to compensate for government cuts?
“Years of chronic underfunding have left local government ‘on life support’ “
123 of England’s 353 councils sent information to the 2019 State of Local Government Finance survey, conducted by the Local Government Information Unit and Municipal Journal. Chris Tighe (possible paywall) reports that Jonathan Carr-West, chief executive of the LGIU, has warned of a future in which care for the elderly and for vulnerable children could be funded from shopping centre investments and car parks – “a significant risk if the economy ‘tanks’ “.
Survey findings include:
- More than half of English councils will eat into their reserves.
- Four out of five are investing in commercial developments to supplement their revenue this year to compensate for central government funding cuts.
- Nearly half of the local authorities are planning to cut services.
- Most will raise council tax this year and increase charges to stay afloat.
- A quarter said planned cuts to services in the coming year would be noticed by the public.
- 10 local authorities said they were concerned they would be unable to deliver the legal minimum service for residents.
- Last year, Northamptonshire county council was given special permission to sell its head office and rent it back after running out of money.
- Several other authorities have warned they are close to collapse.
- 8 in 10 senior council decision makers believed the current system for council funding was unsustainable.
- 82% were considering commercialising council services to raise extra money
- and 57% wanted to sell council assets.
- Children’s services and education were the top immediate financial pressures, for the second year running.
- Adult social care is still under severe strain
Four out of five English councils are investing in commercial developments to supplement their revenue this year to compensate for central government funding cuts.
The government’s annual funding settlement for local authorities, outlined in December, assumed that every council in England would implement the maximum 4.99% council tax increase, including 2% ringfenced for adult social care, in 2019-20. Analysts say that would add around £80 to the annual average bill for a Band D, mid-market, home — currently £1,671. An additional £24 can be added to the charge to fund the local police force.
But the Local Government Association said the tax rise would not be enough to prevent service and job cuts after eight years of austerity. It said councils would have lost almost 60% of their central government funding between 2010 and 2020 and face an overall funding gap of £3.2bn in 2019/20.
Jonathan Carr-West warned: “In the future, care for the elderly and vulnerable children could be funded from shopping centre investments and car parks, which carries significant risk if the economy tanks.” This year’s government spending review would, the survey warned, be “make or break” for vital local services.
As the media was focussing on Tuesday’s Brexit vote in the Commons, this morning only subscribers to the New Statesman read about the written statement by the secretary of state for housing, communities and local government, James Brokenshire.
In what the writer, Anoosh Chakelian (right), said is becoming a bleak pattern, the government chose Theresa May’s second attempt to pass her Brexit deal on which to publish its statement on local government finance.
A reassuringly generous set of dispensations?
The statement by James Brokenshire (left) opens with eight substantial paragraphs detailing increased funding in a wide range of sectors, summarised in the New Statesman:
“As first announced in the Budget, the government is releasing extra chunks of funding for social care and potholes, as well as more money for high streets. The government calculates that its settlement adds up to a rise in core spending power for councils from £45.1bn in 2018-19 to £46.4bn in 2019-20: a 2.8% cash increase. (It has also reiterated the £56.5m across 2018-19 and 2019-20 to help councils prepare for Brexit, which we can’t really count as extra funding as it’s to fill a Brexit-shaped hole.)”
Councils are to be awarded £56.5 million across 2018-19 and 2019-20 to help prepare for EU Exit. It lists “a broad package of measures and confirms that Core Spending Power is forecast to increase from £45.1 billion in 2018-19 to £46.4 billion in 2019-20”.
This information is meaningless to the general public. Are they going only to the 117 largest councils listed here, or should district councils and London boroughs be included? And will they be distributed according to need, population, or other criteria?
Anoosh Chakelian’s verdict: Far from generous. She points out that after eight years of austerity, cash-strapped councils will still face a funding gap of more than £3bn this year, according to the Local Government Association.
She adds that the pressure to set legal budgets, with an average 49% drop in real terms spending power since 2010 and rising social care demands, means that councils need substantially more than a 2.8% rise.
Decisions on business rates retention and a fair funding formula for local government have been postponed, despite the planned consultations having taken place and their findings published.
Noting that the long promised green paper on adult social care has not appeared and the funding announced is ’a short-term one-off’, she quotes the head of the National Audit Office, Amyas Morse, who said last March: “Current funding for local authorities is characterised by one-off and short-term fixes, many of which come with centrally driven conditions.”
Though James Brokenshire asserts that this settlement answers calls for additional funding in 2019-20, and paves the way for a more self-sufficient and reinvigorated system of local government, Anoosh Chakelian concludes: “This means councils will continue to operate in a financial void, unable to fund public services properly, while waiting for something to change in the promised Spending Review later this year”.
MPs ask how ‘the other England’ can be strengthened so that fellow citizens are not “pushed into destitution”
A Bournville reader draws attention to an article about Heidi Allen, Conservative MP for South Cambridgeshire, and former Labour MP Frank Field, now a backbencher. They are touring the poorest areas of Leicester Newcastle, Glasgow, Morecambe and Cornwall. Frank Field said they want to know “how the soft underbelly of our society – ‘the other England’ – can be strengthened so that none of our fellow citizens are pushed into destitution”.
Robert Booth, Social Affairs correspondent for the Guardian, reports that their widely publicised inquiry began in London where testimonials from those with first-hand experience of food poverty exposed the barriers that people face in securing support from the government, when faced with extreme life hardships and personal difficulties.
“Unless we blow the lid off it, my lot are not going to listen”
He explains that Heidi Allen had asked Frank Field if he would join her on a tour of the UK to show the government the “other England” shaped by the austerity policies pioneered by Allen’s party. She added: “Unless we blow the lid off it, my lot are not going to listen.” This is not a new concern: in her 2015 maiden speech Heidi Allen gave a detailed criticism of proposed cuts to tax credits, saying, ‘today I can sit on my hands no longer’.
Evidence from Leicester which they will be presenting includes accounts of:
- an illiterate man sanctioned so often under universal credit that he lives on £5 a week;
- a man who had sold all but the clothes he was wearing;
- someone told to walk 44 miles to attend a job interview, despite having had a stroke, to save the state the cost of a £15 bus ticket;
- a surge in referrals to food banks from 5% since the introduction of universal credit in June, to 29%;
- an elderly person – after her son, who had suffered a stroke, had been sanctioned 15 times – said, “The system needs more caring people. They are like little Hitlers”;
- another was expecting the bailiffs to take back her two-bed council house because she was in arrears, including on bedroom tax. Her second bedroom is used by her granddaughter five nights a week, so her son can work, but that doesn’t count – only children qualify’
The bureaucratic struggle to claim benefits is a big problem, carefully and accurately portrayed in Ken Loach’s internationally acclaimed award-winning film, I Daniel Blake (snapshot and link to brief video below). 65% of the most vulnerable people who come to Leicester council for help have never used a computer and don’t have a smart phone or an email address, needed to fill out forms.
A brief extract from the film – those who have seen it will remember that the computer session becomes far more stressful and eventually – as often happens – aborts for no fault of the ‘client’.
According to Feeding Britain, a charity set up by Field which now includes Allen among its trustees, after housing costs, 41% of children in Leicester – more than 34,000 – are living in poverty. The Leicester South parliamentary constituency was in the poorest 2% of constituencies in the UK in 2018. Over the last two summer holidays, in the most deprived parts of the city, over 15,000 meals were served to almost 1,650 children, using government funds.
In the Leicester Mercury, Leicester South MP Jon Ashworth said after reading the latest research findings: “These shocking statistics show high levels of child poverty in Leicester South. It is clear that the Government is failing working families, and cuts to Universal Credit will make child poverty even worse. It is appalling that since 2010 the number of children living in poverty has reached four million under this Government, and the Government is still maintaining the benefit freeze.”
Today, Times columnist Clare Foges, a former member of Boris Johnson’s mayoral team and then David Cameron’s speech writer, challenges the narrative that Brexit is down, in large part, to a high-handed and callous establishment’s neglect of the “left behind”, deploring the belief that:
”Those in poor northern constituencies and bleak coastal towns were left trailing in the gold-flecked dust thrown up by the golden chariots that bore the wealthy, the Londoners, the elite onwards — throwing back their heads to laugh heartily and pour some more Bolly down their gullets while failing to give a monkey’s about those in their wake”.
Truly, those in poor northern constituencies and bleak coastal towns were and are left trailing – but the elite do not spend time laughing at them – those people are neglected because they are simply of no interest.
She asserts that the deindustrialised towns have suffered because of globalisation or automation, not because those in government sat on their hands.
But the elite constructed, fostered and continue to be enriched by globalisation and automation – the system which impoverishes many is necessary to their lifestyle. Clare admits that “When you know that you are on the lower rungs of a socio-economic ladder that reaches, at its heights, into the realm of millionaires and sports cars and Maldivian holidays, you may well feel resentful. It must be profoundly demoralising to see swathes of your countrymen and women enjoying seemingly easy success while you struggle”.
She also concedes, “Of course there is serious poverty and inequality in our country, but over the past 20 years in particular governments have tried a thousand different policies to reduce them” but fails to mention the ways – under recent Conservative governments – in which people on low incomes and those in poor health have been harassed, ‘sanctioned’ and deprived of their due allowances, in order to make derisory savings. She adds:
“I don’t deny that the Brexit vote may have been driven in part by resentment. Yet here is the crucial point: just because people have felt cruelly neglected by the powers that be, it doesn’t mean that they actually were . . . Let us not mistake a failure to revive left-behind areas with wilful neglect. For the most part the much-traduced “establishment” has been well-meaning and hardworking in pursuit of a fairer country.”
Yes, wilful neglect does imply a degree of awareness – the correct term is indifference; ‘left-behind’ people are simply not on the radar of the affluent, preoccupied by “sports cars and Maldivian holidays”. She ends with more burlesque:
“With a more benign and interventionist establishment at the helm, the taxes of rich people could be spread thickly all over the country with no fear that wealth will flee; billions could be borrowed for major infrastructure projects with no damage to our economy; the streets of Grimsby and Oldham would be paved with gold. By giving this impression, we are inviting people to vote for Jeremy Corbyn and his fantasy economics”.
But would those in government circles – who benefit from corporate sinecures, stock exchange speculation and commodity trading – be willing to change the globalised system for one in which government invests in strengthening the economy through regional production and supply chains? Or will they oppose such changes with all their might, to maintain their current privileges?
Universal credit is NOT an incentive to work for the single able-bodied: 63p of every pound earned is clawed back
Focussing on undue delays causing hardship, highlighted on this site, The Times and the FT in 2017 asked ‘is universal credit – to date – a disaster?’
The FT today says “Universal credit is a plum example of how not to reform public services. The theory was broadly sound: the simplicity and real time data of the universal credit would ensure people were always better off in work. The reality, however, has proved calamitous”.
Conservative and Labour politicians, such as Jacob Rees-Mogg, Johnny Mercer, Gordon Brown and Frank Field, are now demanding that the government reconsiders the national rollout.
John Major has warned that UC could lead to a repeat of the poll tax debacle of the early 1990s, which saw riots against the then Conservative government.
A reader with a postgraduate degree was asked to look at these sections on a government-recommended benefits calculations site:
Work allowance for Universal Credit (Ed: able-bodied & childless need not apply)
If you/and or your partner are in paid work, you might be able to earn a certain amount before your Universal Credit is affected, this is called the work allowance. Your work allowance will depend on whether you are single or part of a couple and whether your Universal Credit includes amounts for housing costs, children and/or limited capability for work. The table below shows the different levels of monthly work allowance.
The Universal Credit earnings taper is a reduction to your Universal Credit based on your earned income. The taper rate sets the amount of benefits a claimant loses for each pound they earn. The earnings taper rate is currently 63%. This means for every pound you earn over your work allowance your Universal Credit will be reduced by 63 pence. To work out the earnings taper that applies to your award:
- Take your total monthly earnings figure after tax, National Insurance and relevant pension contributions have been taken off
- Deduct your monthly work allowance, which is the amount you can earn without your benefit being affected (if you are eligible for one)
- Apply the taper rate by multiplying the remaining earnings by 0.63
This is the amount that will be taken from your Universal Credit maximum amount when calculating your award.
Even the post-graduate reader found these instructions ‘far from simple’ and in no way producing a simpler and more effective system.
Esther McVey, the work and pensions secretary in charge of the scheme, confirmed last week that families will be poorer under UC. She did not deny reports that millions of families could be up to £200 a month worse off when it is fully rolled out.
The chairman of the Commons work and pensions select committee has described the project – running well behind schedule – as a “shambles, leaving a trail of destruction” and in its assessment this year, the National Audit Office doubted whether the system would ever deliver value for money.
The current Universal Credit system is NOT ‘fit for purpose’
Keep Our NHS Public Birmingham (KONP) says, “It looks like we’ve won our campaign for a publicly-funded (non-PFI) Midland Metropolitan Hospital in Smethwick/West Birmingham!”
The construction of the Midland Metropolitan Hospital in Smethwick collapsed after Carillion crashed spectacularly in Jan 2018 leaving the hospital half built. Then the bankers behind the ‘private finance initiative’ pulled the plug on the deal.
KONP Birmingham immediately organised a protest outside the hospital site demanding that the Treasury, health ministers and the Government should fully fund the hospital and run it properly under government and NHS control! Supporters included Birmingham TUC (BTUC), Unite the Union West Midlands, Unite the Community Birmingham, West Midlands Pensioners Convention and Birmingham Against the Cuts.
A month later, the Sandwell and West Birmingham Hospitals Trust Board voted to tell the Government that the only viable option for the completion was direct government funding, a full vindication of the KONP Birmingham campaign argument.
The Government and Hospital Trust has now reached an agreement to finish construction work with the Government providing funding for the remainder of the building work at Midland Metropolitan Hospital – which will see the new hospital built by 2022.
Birmingham Against The Cuts (BATC) says: “We believe that the Midland Met fiasco is a final nail in the coffin of successive governments’ love affair with PFI /2”
BATC gives a very cautious welcome for a publicly funded Midland Met Hospital in Smethwick/West B’ham (no PFI!) and expresses its continuing concerns:
Firstly, there is a delay in starting completion until early summer 2019, partly because the half built hospital was rotting away without any protection for 6 months and an additional £20m worth of work will have to be done from this September.
Additionally, the Hospital’s Trust Board Chief Executive has been dropping in phrases to his announcements such as “making cost improvement programmes above national norms”, “limited reconfigurations”, etc, which reflect the concern in Dr John Lister’s 2016 review (right) of the privately financed hospital published by KONPB and BTUC when the Midland Met was first mooted.