UNIVERSAL CREDIT rent arrears deductions have been suspended as the coronavirus (COVID-19) crisis continues, the Department for Work and Pensions (DWP) has confirmed today.
Claims for Universal Credit have surged in recent weeks, with more than one and a half million new claims having been made during the coronavirus (COVID-19) crisis. Today, the DWP announced temporary changes to the system, relating to third-party deductions. These deductions will be suspended and recommence on May 10.
It means that deductions from Universal Credit payments for rent arrears, service charge arrears, and Council Tax arrears have been suspended until May 10. These third-party deductions typically see claimants have money they owe being automatically taken from their monthly benefit allowance. However, direct payments for rent will continue and are not affected by this temporary pause.
The temporary measure is said to have been made amid the DWP “streamlining” operations as people try to cope in the current crisis.
A spokesperson for the DWP said: “We have received an unprecedented number of new benefit claims and have streamlined our operations to make sure people get the support they need during this time.
“As part of this, we have temporarily paused third-party deductions from UC – these will recommence on 10 May. “We are in the process of explaining the changes to claimants via their online journal and to third parties, including housing providers who collect arrears via this method.”
A Government spokesperson told Birmingham Live: “The Government has put in place unprecedented measures to support tenants from getting into financial hardship or rent arrears, including protecting millions of jobs up and down the country and increasing Universal Credit and housing allowances.
“Emergency legislation is now in place so no social or private renter can be forced out of their home – with landlords unable to start proceedings to evict tenants for at least the next three months. “We have the power to extend this if necessary.”
Responding to the news, Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “At such a difficult time the priority should be to do everything possible to prevent tenants getting into rent arrears in the first place by ensuring tenants are able to continue paying their rent in full.
“This means that the Government should ensure benefits cover the full cost of rents, end the five week wait for the first payment of Universal Credit and pay the housing element of the Credit directly to landlords.”
DWP guidance states that the “following APA are available to help claimants who need additional support:
Paying housing costs of Universal Credit as a Managed Payment (MP) direct to the landlord
More frequent than monthly payments
Split payment of an award between partners
Your payment can include an amount for housing, which you’ll usually need to pay to your landlord.”
The Department for Work and Pensions changed its mind after Derbyshire Live intervened
A Belper man who survived a stroke has finally won his fight for financial help. Carl Lowe was left stunned when a Government assessment found he was not eligible for benefits.
This is despite the 53-year-old having severe mobility problems after suffering a stroke as he underwent an operation in December. He now struggles to get around his home and has fallen on numerous occasions.
As a result of his poor health, he applied for personal independence payment (PIP) which helps with extra costs if a person has long-term health or disability. But to his amazement, his application was rejected following a face-to-face interview in February.
After Mr Lowe told Derbyshire Live about his predicament, we approached the Department for Work and Pensions to ask why he had not been given any credit for any of his living or mobility problems.
A few hours later, Mr Lowe, who lives alone, came back to Derbyshire Live to say that the DWP had been in touch and a decision had been made to award him his PIP and also to backdate it to last November. He said: “I could not believe it that as a result of Derbyshire Live contacting the DWP, the decision was reversed and it will not be re-assessed again for two years.
“It was definitely thanks to Derbyshire Live that I got a result – it rocks. I am hoping the arrears will help me to get the garden sorted so I can sit out in the better weather.”
The appeal was still pending when out of desperation he approached Derbyshire Live because he did not know how to get help, especially in the current coronavirus pandemic, which he says has made life “even more difficult” for him.
Mr Lowe says he was astonished to see that he had scored zero against each of the 12 criteria used by the Department for Work and pensions to decide mobility and living needs.
He said: “I literally suffered a stroke while under the surgeon’s knife on December 5. It has left me with problems down the left hand side of my body.
“This means I can hobble around but have fallen on numerous occasions. I don’t have much grip at all and I cannot get about without a stick or crutches and any distance has to be done via wheelchair.
“I have to have frames in the bathroom to help me balance, extra rails on the stair case and head for the toilet long before I need it in case of accidents. “I am much worse now than I was in the past when PIP was allowed back in 2013 for a while.”
Mr Lowe’s ill health began shortly after the death of his son, Lewis, in an accident in 2012 and he spiralled into depression. He last worked for his brother’s catering business at that time before ill-health overtook him. He said: “Within a short period of time I developed heart problems and had to have replacement valves to save my life. “After this, I was awarded PIP before being reassessed eventually and it was withdrawn.”
Mr Lowe once again had heart problems in 2015 and 2016 and then scans in 2017 at Glenfield Hospital in Leicester showed he needed another operation. He once again applied for PIP 14 months ago and that is still subject to an appeal.
Then last November Mr Lowe went into hospital for his operation and was told he would be in a couple of weeks and then out again.
He said: “I developed additional problems including water retention and ballooned to around 16 stones. When it was under control I eventually had my operation on December 5, which is when I had my stroke that has altered my lifestyle.
“I was in hospital for three months altogether – in Leicester and then in the Royal Derby Hospital stroke unit. I attended the face-to-face interview in February and was eventually told I would not be receiving PIP, which was a real blow.
“But it’s not even about the money really, or the pain I am in, but the fact that they think I don’t have these problems is completely awful.”
The situation for Mr Lowe, who lives alone, has been made worse because he is having to completely isolate as he is considered vulnerable as a result of his health condition. He said: “I struggle to make a meal and obviously I can’t go out so my nephew gets food in for me and a good friends drops things off also.
“I am struggling in the current situation with my mental health but I have nothing but praise for the NHS who saved my life on a couple of occasions. “I used to be a good darts player but now I cannot play. I cannot believe the DWP assessor said I had full mobility and that I did not need any extra financial help.”
Asked to comment on Mr Lowe’s case, a DWP spokesman said: “All decisions are made using information that’s available to us at the time, including that of a person’s GP or medical specialist, but if a decision is disputed then we will ask for further evidence to try and ensure that decisions are correct before going to appeal.
“We’ve spoken to Mr Lowe to get more detail about his needs and, as a result of the extra evidence, we have changed our decision and awarded him PIP. We will be paying all arrears due.”
Correct me if I’m wrong but I thought that you had to be a right-wing racist; disabled-hating, eugenicist that’s anti welfare state to get a job at the DWP? You only have to trawl through the DWP Atrocities category of this blog to see that it’s not a subtle comment I’m making. I know it sounds like a Monty Python sketch, but can you imagine the test for DWP applicants and the questions they’d ask? [Remember the ATOS exposure on BBC Panorama, where they said if you can press a button you are “fit” for work.]
The only thing about this person is: she was exposed and as with all right-wingers, you get thrown to the wolves, unless your name is Priti Patel [and her ilk]
Ex-DWP official who compared immigrants to terrorists loses unfair dismissal case – Civil Service World. Former UKIP functionary also suggested immigrants were treated preferentially by the benefits system
A former civil servant in the Department for Work and Pensions has lost a court case against her ex-employer after she was fired over a series of offensive tweets.
Paula Walters, who worked in the child benefit department and was previously chair of UKIP’s Wirral branch, was sacked in November after the Echo newspaper uncovered tweets comparing immigrants to terrorists and paedophiles.
DWP said the tweets, which also included claims that immigrants were given preferential treatment by the benefits system, had breached the Civil Service Code.
A statement Walters sent to the Echo in response to its reporting on her comments also breached the code, the tribunal found.
The two-page statement included a series of incorrect claims about immigrants benefiting disproportionately from public funds, and several offensive statements, such as “I can’t tell the difference between a migrant and a terrorist.”
Walters was dismissed from her administrative officer post following an investigation by the Government Internal Audit Agency Counter Fraud and Investigation department and a disciplinary process.
She had previously been dismissed in 2017 for standing for election without permission, in breach of the Civil Service Code, but was reinstated the same year with a final written warning.
The former official took her most recent case to an employment tribunal, claiming her dismissal was a result of discrimination against her due to her nationalist beliefs and opposition to political correctness.
However, the tribunal found she was fairly dismissed for gross misconduct and that discplinary procedures had been properly followed. “Her claims for direct discrimination and harassment on the protected characteristic of her philosophical beliefs are not well founded and fail,” the judgement said.
Walters’s views did not amount to a philosophical belief and were not therefore a protected characteristic, it added. She was “unable to define political correctness in a way that was cohesive in the sense of her beliefs being intelligible and capable of being understood”, the judgement said.
“The claimant’s belief that she should be able to say anything about anyone is not worthy of respect in a democratic society. Her belief put her in inevitable conflict with the fundamental rights of others, rights protected under the Equality Act 2010,” it added.
Tourette’s sufferer left penniless after cruel benefit bosses ruled he was fit for work. Simon Noonan, who lives with Tourette’s and OCD, has lost more than £600 per month – Daily Record
A man with an incurable neurological condition has had his benefits cut and now faces a long fight to claw back cash he says should never have been taken away.
Simon Noonan, who has Tourette’s Syndrome (TS) and battles with other conditions such as ADHD and OCD, was deemed unsuitable for Personal Independence Payment (PIP) money in February after a year of receiving the benefit. He and his partner Sarah Brodie, who live in Renfrew with Sarah’s two young children, have now lost £618 of their monthly income.
Simon has been told he must contest the decision made by the Department for Work and Pensions (DWP). His worried partner Sarah, 35, said the situation is taking its toll on their family and they fear it could be at least six months before they get the cash back.
She says losing the vital income is affecting both her and Simon’s mental health, especially during the uncertainty of the coronavirus crisis.
“The appointment only lasted five minutes and the report we received said that he was fine and did not present as showing any signs of Tourette’s. “But someone who knows about the condition would know that people with Tourette’s suppress their tics until they are in a place they feel comfortable.
“There is no cure – he will always have it. There doesn’t seem to be enough understanding of people who have hidden disabilities. “It is a lot more complex than a five-minute meeting.”
Simon and Sarah have now enlisted the help of charity Tourette Scotland to help them reverse the decision by the DWP.
They have 30 days to fill out an application for a mandatory consideration and then could have to take their appeal to the HM Courts and Tribunals Service.
Coronavirus has made it even easier to forget about disabled people.
Understanding that structural inequality means some will be hurt more than others is vital if we hope to slow this pandemic – The Guardian
As the weeks go on, it is becoming clear coronavirus is not an equal opportunity pandemic. Guardian analysis last week found ethnic minorities in England are dying in disproportionately high numbers compared with white people. And now research from the Office for National Statistics (ONS) shows the pandemic is having a disproportionate impact on disabled people’s lives.
More disabled adults said they were “very worried” about the effects of coronavirus on their lives than non-disabled adults (45.1% compared with 30.2%). Nearly two-thirds of disabled people said coronavirus-related concerns were affecting their wellbeing, from loneliness and problems at work, to worsening mental health.
This is all too predictable when you consider disabled people are more likely to be in low income and insecure work, isolated, and at higher risk from the virus itself (even more so if you’re disabled and BAME).
When I first argued that coronavirus would impact disabled and marginalised people hardest, some readers responded by pointing out a virus doesn’t check a victim’s bank balance before striking. But understanding that structural inequality means a pandemic will hurt some more than others is crucial if we hope to slow the impact of the virus.
Take the social security system. Universal credit has been increased by £20 since the lockdown to pay for the extra costs of the pandemic, but millions of disabled people on older out-of-work benefits such as the employment and support allowance (ESA) will not receive the extra financial support. Charities call it “discriminatory” and it’s hard to disagree. A survey by the Disability Consortium found nine out of 10 disabled people are struggling with additional food costs, with others unable to pay for medicine collections or their rising utility bills as they shield at home.
These are people who, by definition of being on ESA, are some of the most severely disabled or ill people in society and yet are being forgotten.
It’s no coincidence that this follows a decade of austerity that has made disabled people poorer and more isolated. The man on crutches who lost his Motability car after having his disability benefits removed now has no safe way to nip to the shops for supplies during lockdown.
Or consider access to healthcare. I recently reported concerns that disabled people would not be deemed a priority for treatment if they caught coronavirus, but getting help for existing health conditions in a pandemic can be just as difficult.
With the NHS working tirelessly to cope with the crisis, many disabled people have had appointments postponed or cancelled. A study by the Research Institute for Disabled Consumers (RiDC) shows almost half of disabled people are concerned about access to medicine. Two in five are “extremely concerned” about making medical appointments if they have to self-isolate for more than three months.
A government campaign has been launched to encourage people with acute non-Covid conditions such as heart attacks to seek help amid concerns some are avoiding hospitals, but this needs to include those with chronic illness too. Lockdown is a perfect storm for patients with long-term health conditions, where those who are at high risk of coronavirus are simultaneously more likely to be afraid of catching the virus in a hospital and more in need of seeing their doctors.
Or consider mental health. Disabled people are more used to dealing with restrictions on their social lives than most but this doesn’t make lockdown any easier. Indeed, it is considerably harder. One in 10 adults with a disability reported often or always feeling lonely in the last seven days, according to the ONS, compared with less than one in 20 non-disabled adults. Unlike the general population, many disabled people aren’t able to pop out for our hour of fresh air and exercise, while others can’t even access Facebook or Zoom; in a survey by Glasgow Disability Alliance only just over a third of disabled people reported having home broadband during the pandemic.
Amid great uncertainty, what is clear is that it will be a long while yet before we return to any sense of normalcy. This is especially true for marginalised groups. Over the coming weeks, shut behind closed doors in more ways than one, disabled people will be all too easy to forget. The only thing more dangerous than inequality is when that inequality is invisible.
The government hasn’t ‘ended homelessness’, no matter what it says On the streets a bleak situation is unfolding, while crowded hostels aid the spread of coronavirus. – The Guardian
In March, the Treasury had a whip-round and cobbled together £3.2m for British councils to spend on rough sleeping. The government promised to instantly eradicate street homelessness during the pandemic, with homeless people housed, for their safety and the safety of the general public.
There was only one problem. Based on recent council data that showed 25,000 people slept rough on our streets in 2019, the £3.2m works out at a measly £128 per head; more an act of contempt than compassion. Yet again the government appeared to be prioritising saving money over saving lives. And now the facts are beginning to bear that out.
According to the Observer, at least six people linked to homeless hostels in London have died from coronavirus since March. While most rough sleepers have been moved into hotels, B&Bs and other temporary accommodation, up to 35,000 people may still be crammed together in crowded hostels where physical distancing is simply an impossibility.
The government claims to have temporarily sheltered 90% of Britain’s rough sleepers but many are still slipping through the net – often highly vulnerable people, most of them with long-term mental health and dependency issues. Getting them into a hotel is the easy thing. Keeping them there, looking after them, making sure their needs are met, is another.
Last month Boris Johnson also pledged to provide all necessary accommodation and support for destitute migrants with no recourse to public funds, but this promise does not seem to have been kept. A range of organisations including Crisis, Public Interest Law Centre, Migrants Rights Network and Project 17 say destitute migrants continue to sleep on the streets, either because councils have turned them away or because they do not know how to go about getting support. Many also choose to stay hidden for fear of deportation.
The homelessness charity St Mungo’s, which last year apologised for sharing information about migrant rough sleepers with the Home Office, recently suggested that the pandemic could lead to a significant reduction in rough sleeper numbers when the lockdown ends. “It’s a silver lining in a very grey sky,” said CEO Howard Sinclair. The premise is that while they are isolating, their addictions and mental health problems can be addressed.
One project in Edinburgh is offering heroin users the opportunity to switch to methadone immediately, and is ensuring that medication is delivered to hotels, with GPs present to provide support. But such initiatives seem to be the exception rather than the rule. In London, some local councils are re-introducing local connection rules (whereby only homeless people who live/work/have close family in the area qualify for support), which are in direct conflict with the government’s pledge to house all rough sleepers.
Shockingly, a week after the government pledged the £3.2m to house the homeless, two Britannia hotels in Manchester evicted 100 single homeless people, despite its agreement with the council to house them. And on Monday, the Guardian revealed that around a quarter of the homeless people put up in Manchester hotels for lockdown (47 out of approximately 200) have left – some were evicted, some chose to leave. Meanwhile, we have also heard about homeless people in Manchester being thrown out of hotels for smoking cannabis.
Many rough sleepers abuse class A drugs, and here they are being evicted over a spliff. Are we really expecting their problems to go away just because they’re isolated in a hotel room? According to one outreach worker, who wants to remain anonymous, the city centre has come to resemble “God’s waiting room”. He estimates there are still dozens of rough sleepers living on the streets, strung out on drugs or paralytic on cheap booze, unable to wash and change clothes.
In Birmingham a similarly bleak situation is unfolding. Outreach worker pastor Colin Rankine continues to hand out food parcels to rough sleepers in the city centre. Rankine and his volunteers, clad in hazmat suits and face masks, are also filming some of the rough sleepers they encounter for their Facebook page. A homeless woman called Faye, huddled in her sleeping bag, tells Rankine that she’s not been offered any emergency accommodation. Another, wearing no shoes, claims she was told she’d receive a fine for being in the city centre.
Rough sleepers with dependency issues often rely on begging and shoplifting to fund their addictions. Both of those avenues are now closed to them. Now could indeed be a golden opportunity to help these people, but only if the political will, money and support staff are there. For homeless addicts forced to detox because they can’t access their regular supplies, they need far more support than ever.
This support would normally come from the charities and third-sector organisations now facing collapse – it has been estimated that charities will miss out on at least £4.3bn of income over a 12-week period because of a shortfall in fundraising and the closure of their shops. This is of course terrible, but perhaps the pandemic will force us to accept that charities are not the solution to chronic social problems. However well intentioned homelessness charities are, they are compromised from the start – without homelessness, they won’t exist. You could make the same argument about hospitals and sick people of course, but only if you think homelessness is as inescapable as illness.
The obvious alternative is to have all these services under one public umbrella so that their clients’ needs – housing, substance abuse, mental health and employment – can be addressed simultaneously.
Although the causes of homelessness are varied and wildly complex, the solutions are relatively simple. What homeless people need are homes – homes for life that are secure, affordable and safe. When in their homes they also need support that is tailored specifically to their needs.
St Mungo’s is right when it says a real opportunity now exists to eradicate the problem – but in order to do so, we need a change of mindset. The government’s approach to the homelessness crisis – during the pandemic and long before – has been like dressing a shotgun wound with gaffer tape.
And that simply won’t do. We have to be more radical, or more homeless people will continue to needlessly lose their lives.
Coronavirus: Matt Hancock refuses to apologise to relatives of elderly residents who died in care homes. Authorities have done ‘enormous’ amount to support homes, says health secretary as deaths top 5,000
Health secretary Matt Hancock has refused to apologise to the relatives of elderly residents who died of coronavirus in care homes, as fresh figures showed more than 5,000 fatalities in England alone.
The new figures from the Office for National Statistics and Care Quality Commission put the UK on track for a higher overall death toll than Italy, Spain or France, lagging only behind the US. And experts warned that deaths in care homes may not yet have reached their peak, with one suggesting that they could be running at as much as 400 a day – around the same as are occurring in hospitals.
Mr Hancock announced a dramatic expansion of testing availability for all care home residents and staff, as well as for over-65s and their families in the community who show symptoms of Covid-19.
And he announced that from Wednesday, daily tallies of deaths in care homes will be announced alongside the statistics on hospital fatalities, rather than being released on a weekly basis some 10 or 11 days after the event.
But he told the daily Downing Street briefing on the outbreak that it was “unreasonable” for a reporter to ask if he would apologise to the families of those who have died. “I think that’s unreasonable as a question,” said the health secretary.
Mr Hancock insisted the authorities had done an “enormous” amount of work from as early as January monitoring the situation in care homes and protecting residents and staff. “Making sure that care homes have the support they need has been absolutely at front of mind right from the start,” he said. “We’ve been testing in care homes right from the start and right through the crisis.”
Earlier in the day, Mr Hancock refused to accept mistakes had been made in the provision of personal protective equipment (PPE) after he was challenged by the son of hospital consultant Abdul Mabud Chowdhury, who died just days after issuing a plea for more kit to keep medics safe.
When Intisar Chowdhury asked on an LBC radio phone-in why the government did not heed his father’s warning, Mr Hancock replied: “We took very, very seriously what your father said and we’ve been working around the clock to ensure that there is enough protective equipment.”
During the pandemic, 82 NHS staff and 16 social care workers have lost their lives after being infected with Covid-19. According to the latest statistics published by the ONS, there have been a total of 2,906 deaths involving the novel infection in English care homes up to 17 April. And data from the CQC showed an additional 2,375 coronavirus-related care home deaths between 18 and 24 April, bringing the total to 5,281.
This comes on top of the 21,678 fatalities recorded in hospitals, after 586 deaths were reported on Tuesday, bringing the total UK tally to at least 26,959. Chief scientific adviser Sir Patrick Vallance said early in the outbreak that a death toll of 20,000 would represent “a good outcome”.
Professor Sir David Spiegelhalter, chair of the Winton Centre for Risk and Evidence Communication at the University of Cambridge, said the latest data also revealed 5,000 excess deaths in the community that were not listed as Covid-19 compared to the five-year average.
He said: “I would not like to say there has been a peak in care homes and care homes are running at about 300 or 400 deaths a day. Given what we saw with English hospitals running at about 450 deaths at the end of last week, I would push my neck out and say it is plausible that there are now as many Covid-19 labelled deaths occurring out of hospital as in in hospitals in England.”
Earlier in the outbreak as part of efforts to free up NHS beds, care homes were told they would have to take hospital patients even if they tested positive.
Carl Heneghan, director of the Centre for Evidence-Based Medicine and a practising GP, said he could not understand the clinical reason for that and warned care homes may have been “seeded” with coronavirus.
“The nature of this disease shows that it is very hard to eradicate in areas where you’ve got active transmission. I suggest it will be very hard to eradicate it from nursing homes.
“There has to be a clear message to hospitals that nobody with active infection should be discharged from a hospital into a nursing home.”
He described Covid-19 in care homes as a “perfect storm” with staff having only poor quality protective equipment leading to a “cascade” of infections.
“It is incredibly important not to seed the infection in there, ie to put a patient from a hospital into a nursing home with active infection. I just cannot think of a clinical or medical reason why, anybody would do that. It’s incredibly important to understand the vulnerability of people in nursing homes.”
Data from Public Health England last week showed more than 650 care homes were now declaring outbreaks of coronavirus.
The chief executive of the Nursing and Midwifery Council, Andrea Sutcliffe, said the figures shone a “devastating spotlight” on the impact of Covid-19 on vulnerable people outside hospitals.
“This pandemic has exacerbated the many issues that care homes, social care nursing and community services were already battling, including high vacancies, increased demand and the impact of a fragmented, disconnected system,” said Ms Sutcliffe.
“It’s clear that social care is just as much the front line of Covid-19 as the NHS. And that means, as we’ve always known at the NMC, the contribution of nurses and nursing associates working in social care is critical and the right support and recognition are absolutely vital.”
The health secretary defended the decision not to restrict access to care homes sooner. Mr Hancock said: “The critical thing is that in a care home having visitors also has a positive impact both against the loneliness of the residents but also on their longevity and their mental health.
“So these are difficult judgements and there are no easy recommendations to make. “We were guided by that clinical advice and when it was necessary to make that change, which is quite a firm change, then we did so.”
Labour’s social care spokesperson Liz Kendall welcomed the move to extend testing in care homes and release daily death figures.
But she said: “Further action is urgently required to reduce the spread of the virus and keep care users and staff safe. More needs to be done to ensure all care staff get the PPE they need and to ensure social care is properly funded to deal with the extra costs of the pandemic. The government must also introduce a strategy for intermediate care, to prevent the spread of Covid-19 by people who are discharged from hospital and help struggling care homes.”
And acting Liberal Democrat leader Sir Ed Davey said: “The government’s failure to make adequate preparations adds to the mounting evidence demonstrating the need for an inquiry into the handling of Covid-19. The government must commit now to holding a future inquiry to restore waning confidence.”
DWP accused of ‘discriminating’ against disabled people in coronavirus pandemic100 organisations want a £20-a-week Universal Credit rise to be extended to all claimants – including up to 2million sick and disabled people on ESA.
The government has been accused of “discriminating” against disabled people by leaving up to 2million out of a coronavirus welfare boost.
Tory ministers raised Universal Credit by £20 a week in 2020/21 to help people cope with the costs of the virus. Tax Credits were due to rise too. But the same rise was not applied to “legacy” benefits Jobseekers’ Allowance, Income Support and Employment Support Allowance.
Now a campaign by 100 organisations, including charities, argues this is discrimination against the disabled. The Disability Benefits Consortium is calling for all “legacy” out-of-work benefits to be increased, not just Universal Credit.
The most recent official figures last August show there were still 1.98million people on ESA, which is worth £74.35 a week for the sick and disabled.
People who are forced to claim benefits for the first time due to coronavirus will not be put on ESA.
But the Disability Benefits Consortium (DBC), a network of more than 100 organisations, called the situation “discriminatory”.
Co-chair Ella Abraham, of the welfare charity Z2K, said: “The Government are discriminating against millions of disabled people on other benefits by choosing to only ‘focus on new claimants’ on Universal Credit.
“We stand with the hundreds of disability charities and activists demanding the Government immediately give all benefits the same COVID-19 emergency £20 increase that Universal Credit has seen to ensure the safety of everyone.”
The DBC surveyed 224 disabled people of which 95% said they’ve seen an increase in their costs as a result of Covid-19.
One said: “I cannot carry shopping home, due to a chronic illness impacting my spine. “As online orders from supermarkets are completely booked, I have had to find alternative shops to order from for home delivery, all of which are considerably more expensive.”
Another said: “Electric and gas charges are way up. My father is paying for some of my energy charges out of his pension. This isn’t right.”
Anastasia Berry of the MS Society said many people on out-of-work benefit were already struggling before the pandemic.
She added: “Now, hit with extra costs to survive the pandemic, the Government’s decision to only increase Universal Credit means they are discriminating against the people who need support most.
“MS is relentless, painful and disabling, and we know around a third living with the condition rely on ESA because they are unable to work.
“We urgently need to see an increase in ESA and other legacy benefits so people with MS, and other disabled people, aren’t left behind.”
Basic rate jobseekers’ allowance and ESA each rose at the start of April by £1.25 a week, to £74.35 for over-25s, as almost a decade of freezes and caps ended.
This is the equivalent of £322 a month. But the standard allowance in Universal Credit rose from £318 to £410 for singles over 25.
DWP Permanent Secretary Peter Schofield said last month that the rate of legacy benefits could not be changed quickly due to older computer systems.
He told MPs: “This goes back to what we were saying earlier about the agile nature of Universal Credit – we could introduce it in two weeks. “We cannot change the standard rates in the legacy benefits in anything like that amount of time.”
A DWP spokesperson said when we last asked about the issue: “Universal Credit is delivering in these unprecedented times. “With such a huge increase in claims there are pressures on our services, but the system is standing up well to these and our dedicated staff are working flat out to get people the support they need.
“We’re taking urgent action to boost capacity – we’ve moved 10,000 existing staff to help on the front line and we’re recruiting more.”
Having just read this through, I must say it’s an excellent article on capitalism and I recommend you read it too.
Chomsky and Pollin: To Heal From COVID-19, We Must Imagine a Different World
The coronavirus disease (COVID-19) caught the world unprepared, and the economic, social and political consequences of the pandemic are expected to be dramatic, in spite of recent pledges by leaders of the Group of 20 (G20) major economies to inject $5 trillion into the global economy in order to spur economic recovery.
But what lessons can we learn from this pandemic? Will the coronavirus crisis lead to a new way of organizing society — one that conceives of a social and political order where profits are not above people?
In this exclusive interview with Truthout, public intellectual Noam Chomsky and economist Robert Pollin tackle these questions.
Noam Chomsky: Pandemics have been predicted by scientists for a long time, particularly since the 2003 SARS pandemic, which was caused by a coronavirus similar to COVID-19. They also predict that there will be further and probably worse pandemics. If we hope to prevent the next ones, we should therefore ask how this happened, and change what went wrong. The lessons arise at many levels, from the roots of the catastrophe to issues specific to particular countries. I’ll focus on the U.S., though that’s misleading since it is at the bottom of the barrel in competence of response to the crisis.
The basic factors are clear enough. The damage was rooted in a colossal market failure, exacerbated by the capitalism of the neoliberal era. There are particularities in the U.S., ranging from its disastrous health system and weak social justice ranking — near the bottom of the OECD — to the wrecking ball that has taken over the federal government.
The virus responsible for SARS was quickly identified. Vaccines were developed, but were not carried through the testing phase. Drug companies showed little interest: They respond to market signals, and there’s little profit in devoting resources to staving off some anticipated catastrophe. The general failure is illustrated dramatically by the most severe immediate problem: lack of ventilators, a lethal failure, forcing doctors and nurses to make the agonizing decision of who to kill.
The Obama administration had recognized the potential problem. It ordered high-quality low-cost ventilators from a small company that was then bought by a large corporation, Covidien, which shelved the project, apparently because the products might compete with its own high-cost ventilators. It then informed the government that it wanted to cancel the contract because it was not profitable enough.
So far, normal capitalist logic. But at that point the neoliberal pathology delivered another hammer blow. The government could have stepped in, but that’s barred by the reigning doctrine pronounced by Ronald Reagan: Government is the problem, not the solution. So nothing could be done.
We should pause for a moment to consider the meaning of the formula. In practice, it means that government is not the solution when the welfare of the population is at stake, but it very definitely is the solution for the problems of private wealth and corporate power. The record is ample under Reagan and since, and there should be no need to review it. The mantra “Government bad” is similar to the vaunted “free market” — easily skewed to accommodate exorbitant claims of capital.
Neoliberal doctrines entered for the private sector too. The business model requires “efficiency,” meaning maximal profit, consequences be damned. For the privatized health system, it means no spare capacity: just enough to get by in normal circumstances, and even then, bare bones, with severe cost to patients but a good balance sheet (and rich rewards for management). When something unexpected happens, tough luck.
These standard business principles have plenty of effects throughout the economy. The most severe of these concern the climate crisis, which overshadows the current virus crisis in its import. Fossil fuel corporations are in business to maximize profits, not to allow human society to survive, a matter of indifference. They are constantly seeking new oil fields to exploit. They do not waste resources on sustainable energy and dismantle profitable sustainable energy projects because they can make more money by accelerating mass destruction.
The White House, in the hands of an extraordinary collection of gangsters, pours fuel on the fire by its dedication to maximizing fossil fuel use and dismantling regulations that hinder the race to the abyss in which they proudly take the lead.
The reaction of the Davos crowd — the “masters of the universe” as they are called — is instructive. They dislike Trump’s vulgarity, which contaminates the image of civilized humanism they seek to project. But they applaud him vigorously when he rants away as keynote speaker, recognizing that he has a clear understanding of how to fill the right pockets.
These are the times we live in, and unless there is a radical change of direction, what we are seeing now is a bare foretaste of what is to come.
Returning to the pandemic, there was ample evidence that it was coming. Trump responded in his characteristic manner. Throughout his term, budgets for health-related components of government were slashed. With exquisite timing, “Two months before the novel coronavirus is thought to have begun its deadly advance in Wuhan, China, the Trump administration ended a $200 million pandemic early-warning program aimed at training scientists in China and other countries to detect and respond to such a threat” — a precursor to Trump’s fanning “Yellow Peril” flames to deflect attention from his catastrophic performance.
The defunding process continued, astonishingly, after the pandemic had struck with full force. On February 10, the White House released its new budget, with further reductions for the beleaguered health care system (indeed anything that might benefit the population) but “the budget promotes a fossil fuel ‘energy boom’ in the United States, including an increase in the production of natural gas and crude oil.”
Perhaps there are words that can capture the systematic malevolence. I can’t find them.
The American people are also a target of Trumpian values. Despite repeated pleas from Congress and the medical profession, Trump did not invoke the Defense Production Act to order companies to produce badly needed equipment, claiming that it is a “break the glass” last resort and that to invoke the Defense Production Act for the pandemic would be to turn the country into Venezuela. But in fact, TheNew York Times points out that the Defense Production Act “has been invoked hundreds of thousands of times in the Trump years” for the military. Somehow the country survived this assault on the “free enterprise system.”
It was not enough to refuse to take measures to procure the required medical equipment. The White House also made sure that stocks would be depleted. A study of government trade data by Congresswoman Katie Porter found that the value of U.S. ventilator exports rose 22.7 percent from January to February and that in February 2020, “the value of U.S. mask exports to China was 1094 [percent] higher than the 2019 monthly average.”
The study continues:
As recently as March 2, the Trump Administration was encouraging American businesses to increase exports of medical supplies, especially to China. Yet, during this period, the U.S. government was well aware of the harms of COVID-19, including a likely need for additional respirators and masks.
Writing in The American Prospect, David Dayen comments: “So manufacturers and middlemen made money in the first two months of the year shipping medical supplies out of the country, and now they’re making more money in the next two months shipping them back in. The trade imbalance took precedence over self-sufficiency and resiliency.”
There was no doubt about the coming dangers. In October, a high-level study revealed the nature of the pandemic threats. On December 31, China informed the World Health organization of an outbreak of pneumonia-like symptoms. A week later, it reported that scientists had identified the source as a coronavirus and sequenced the genome, again providing the information to the general public. For several weeks, China did not reveal the scale of the crisis, claiming later that the delay had been caused by failure of local bureaucrats to inform the central authorities, a claim confirmed by U.S. analysts.
What was happening in China was well-known. In particular, to U.S. intelligence, which through January and February was beating on the doors of the White House trying to reach the President. To no avail. He was either playing golf or praising himself on TV for having done more than anyone in the world to stem the threat.
Intelligence was not alone in trying to get the White House to wake up. As The New York Times reports, “A top White House adviser [Peter Navarro] starkly warned Trump administration officials in late January that the coronavirus crisis could cost the United States trillions of dollars and put millions of Americans at risk of illness or death … imperiling the lives of millions of Americans [as shown by] the information coming from China.”
To no avail. Months were lost while the Dear Leader flipped up and back from one tale to another — ominously, with the adoring Republican voting base lustily cheering every step.
When the facts finally became undeniable, Trump assured the world that he was the first person to have discovered the pandemic and his firm hand had everything under control. Throughout, the performance was loyally parroted by the sycophants with whom he has surrounded himself, and by his echo chamber at Fox News — which also seems to serve as his source for information and ideas, in an interesting dialogue.
None of this was inevitable. It was not only U.S. intelligence that understood the early information that China provided. Countries on China’s periphery reacted at once, very effectively in Taiwan, also in South Korea, Hong Kong and Singapore. New Zealand instituted a lockdown at once, and seems to have virtually eliminated the epidemic.
Most of Europe dithered, but better organized societies reacted. Germany has the world’s lowest reported death rate, benefiting from spare capacity in reserve. The same seems to be true of Norway and some others. The European Union revealed its level of civilization by the refusal of the better-off countries to help others. But fortunately, they could count on Cuba to come to their rescue, providing doctors, while China provided medical equipment.
Throughout, there are many lessons to learn, crucially, about the suicidal features of unconstrained capitalism and the extra damage caused by the neoliberal plague. The crisis shines a bright light on the perils of transferring decision-making to unaccountable private institutions dedicated solely to greed, their solemn duty, so Milton Friedman and other luminaries have explained, invoking the laws of sound economics.
For the U.S. there are special lessons. As already noted, the U.S. ranks near the bottom of the Organisation for Economic Co-operation and Development in social justice measures. Its privatized for-profit health care system, pursuing business models of efficiency, is a disaster, with twice the per-capita costs of comparable countries and some of the worst outcomes. There is no reason to live with that. Surely the time has come to rise to the level of other countries and institute a humane and efficient universal health care system.
There are other simple steps that can be taken at once. Corporations are again rushing to the nanny state for bailouts. If granted, strict conditions should be imposed: no bonuses and pay for executives for the duration of the crisis; permanent ban on stock buybacks and resort to tax havens, modes of robbery of the public that run to tens of trillions of dollars, not small change. Is that feasible? Clearly so. That was the law, and was enforced, until Reagan opened the spigot. They should also be required to have worker representation in management and to adhere to a living wage, among conditions that quickly come to mind
There are many further short-range steps that are quite feasible and could expand. But beyond that, the crisis offers an opportunity to rethink and reshape our world. The masters are dedicating themselves to the task, and if they are not countered and overwhelmed by engaged popular forces, we will be entering a much uglier world — one that may not long survive.
The masters are uneasy. As the peasants are picking up their pitchforks, the tune in corporate headquarters is changing. High-level executives have joined to show that they are such nice guys that the well-being and security of all is assured if left in their caring hands. It’s time for corporate culture and practice to become more caring, they proclaim, concerned not just with returns to shareholders (mostly very wealthy), but with stakeholders — workers and community. It was a leading theme of the last Davos conference in January.
They aren’t reminding us that we’ve heard this song before. In the 1950s the phrase was “the soulful corporation.” How soulful, it did not take long to discover.
C. J. Polychroniou: Bob, can you help us understand the economic shock of coronavirus? How severe will the socioeconomic impact be, and who is likely to be most affected?
Robert Pollin: The breakneck speed of the economic collapse resulting from COVID-19 is without historic precedent.
Over the week of April 4, 6.6 million people filed initial claims to receive unemployment insurance. This is after 6.9 million people filed the previous week, and 3.3 filed the week before that. Prior to these three weeks, the highest number of people filing claims was in October 1982, during the severe Ronald Reagan double-dip recession. At that time, the record number of claims added up to 650,000. This disparity between 1982 and today is eye-popping, even after one takes account of the relative size of the U.S. labor force today versus in 1982. Thus, in 1982, the 650,000 unemployment insurance claims amounted to 0.6 percent of the U.S. labor force. The 6.6 million people who filed claims in the first week of April and 6.9 million the week before both equaled fully 4 percent of the U.S. labor force. So as a percentage of the labor force, these weekly filings for unemployment claims were 7 times higher than the previous record from 1982. Adding up the past three weeks of unemployment insurance claims gets us to 16.8 million people newly unemployed people, amounting to over 10 percent of the U.S. labor force. The expectation is that this figure is going to keep rising for many more weeks to come, potentially pushing unemployment in the range of 20 percent, a figure unseen since the depths of the 1930s Great Depression.
The situation for unemployed people in the U.S. is worse still because a large share of them had health insurance coverage through their employers. That insurance is now gone. The stimulus bill that Trump signed into law on March 27 provides no funds for treating people who are infected. The Peterson-Kaiser Family Foundation estimated that treatment could cost up to $20,000, and that even people with health insurance coverage through their employer could end up with $1,300 in out-of-pocket bills. Thus, fully in the spirit of our corporate-dominated and egregiously unfair U.S. health care system, COVID-19 will hit millions of people with major medical bills at exactly when they are most vulnerable. If Medicare for All were operating in the U.S. today, everyone would be covered in full as a matter of course.
In addition to the situation for people losing their jobs, we also need to recognize conditions for people working in front-line essential occupations. These people are putting themselves at high risk by showing up at work. A report by Hye Jin Rho, Hayley Brown and Shawn Fremstad of the Center for Economic and Policy Research shows that more than 30 million U.S. workers (nearly 20 percent of the entire U.S. workforce) are employed in six broad industries that are now on the front lines of the response. These workers include grocery store clerks, nurses, cleaners, warehouse workers and bus drivers, among others. Fully 65 percent of these workers are women. A disproportionate share of them are also low-paid and lack health insurance. These essential workers are putting themselves at high risks of infection, and if they do become infected, they will face the prospect of a severe financial crisis on top of their health crisis.
The coronavirus is also hitting low-income African American communities in the U.S. most brutally. Thus, in Illinois, African Americans account for more than half of all deaths from COVID-19, even while they account for only 14 percent of the state’s population. In Louisiana, 70 percent of those who have died thus far are African American, while the African American share of the population is 32 percent. Comparable patterns are emerging in other states. These figures reflect the simple fact that lower-income African Americans do not have the same means to protect themselves through social distancing and staying home from their jobs.
As severe as conditions are now for people in the U.S. and other advanced economies, they are going to seem mild once the virus begins to spread, as it almost certainly will, with catastrophic impacts, in the low-income countries of Africa, Asia, Latin America and the Caribbean. To begin with, the strategies of social distancing and self-isolation that have been relatively effective in high-income countries in slowing down the infection rate will be mostly impossible to implement in the poor neighborhoods of, say, Delhi, Nairobi or Lima, since people in these communities are mostly living in very tight quarters. They also largely have to rely on crowded public transportation to get anyplace, including to their jobs, since they cannot afford to stay home from work. This problem is compounded by the conditions of work in these jobs. In most low-income countries, about 70 percent of all employment is informal, meaning workers do not receive benefits, including paid sick leave, provided by their employers. As the Indian economists C.P. Chandrasekhar and Jayati Ghosh write, these workers and their families “are clearly the most vulnerable to any economic downturn. When such a downturn comes in the wake of an unprecedented public health calamity, the concerns are obviously multiplied.”
In addition, most low-income countries have extremely limited public health budgets to begin with. They have also been hard-hit by the collapse of tourism as well as sharp declines in their export revenues and remittances. Thus, in recent weeks, 85 countries have already approached the International Monetary Fund for short-term emergency assistance, roughly double the number that made such requests in the aftermath of the 2008 financial crisis. The situation is likely to get worse very quickly.
C. J. Polychroniou: Noam, will coronavirus kill globalization?
Noam Chomsky: Globalization in some form goes back to the earliest recorded history — in fact, beyond. And it will continue. The question is: in what form? Suppose, for example, that a question arises as to whether to transfer some enterprise from Indiana to northern Mexico. Who decides? Bankers in New York or Chicago? Or perhaps the workforce and the community, perhaps even in coordination with Mexican counterparts. There are all sorts of associations among people — and conflicts of interest among them — that do not coincide with colors on maps. The sordid spectacle of states competing when cooperation is needed to combat a global crisis highlights the need to dismantle profit-based globalization and to construct true internationalism, if we hope to avoid extinction. The crisis is offering many opportunities to liberate ourselves from ideological chains, to envision a very different world, and to move on to create it.
The coronavirus is likely to change the highly fragile international economy that has been constructed in recent years, profit-driven and dismissive of externalized costs such as the huge destruction of the environment caused by transactions within complex supply chains, not to speak of the destruction of lives and communities. It’s likely that all of this will be reshaped, but again we should ask, and answer, the question of whose will be the guiding hands.
Similar efforts can take many forms. Unions are still called “internationals,” reminiscent of dreams that do not have to be idle. And sometimes are not. Longshoremen have refused to unload cargo in acts of international solidarity. There have been many impressive examples of international solidarity at state and popular levels. At the state level, nothing compares with Cuban internationalism — from Cuba’s extraordinary role in the liberation of southern Africa, described in depth by Piero Gleijeses, to the work of its doctors in Pakistan after the devastating 2005 earthquake, to overcoming the failures of the European Union today.
At the level of people, I know of nothing to compare with the flow of Americans to Central America in the 1980s to help victims of Reagan’s terrorist wars and the state terrorism that he supported, from all walks of life, some of the most dedicated and effective from church groups in rural America. There has been nothing like that in the prior history of imperialism, to my knowledge.
Without proceeding, there are many kinds of global interaction and integration. Some of them are highly meritorious and should be actively pursued.
C. J. Polychroniou: Governments around the world are responding to the coronavirus economic fallout with massive stimulus measures. In the U.S., the Trump administration is prepared to spend $2 trillion of stimulus money approved by Congress. Bob, is this enough? And will it test the limits of how much more debt the U.S. can bear?
Robert Pollin: The stimulus program that Trump signed into law in March is the largest such measure in U.S. history. At $2 trillion, it amounts to roughly 10 percent of U.S. gross domestic product (GDP), which the government aims to distribute quickly in the coming months. By contrast, the 2009 Obama fiscal stimulus was budgeted at $800 billion over two years, or about 3 percent of GDP per year over the two years.
Despite its unprecedented magnitude, it is easy to see that the current stimulus program is too small, and will therefore deliver too little, in most of the ways that matter. This is while recognizing that, adding everything up, the stimulus provides massive giveaways to big U.S. corporations and Wall Street — i.e. the same people who benefited the most only 11 years ago from the Obama stimulus and corresponding Wall Street bailout. I noted above the fact that the stimulus provides no health care support for people infected by COVID-19. It also offers minimal additional support for both hospitals fighting the virus on the front lines as well as for state and local governments. State and local governments are going to experience sharp falls in their tax revenues — from income taxes, sales taxes and property taxes — as the recession takes hold. During the 2007-09 Great Recession, state and local tax revenues fell by 13 percent. We can expect a drop now of at least equal severity. Absent a large-scale injection of funds from the federal government — i.e. an injection of roughly three times what has been allocated thus far through the stimulus — state and local governments will be forced to undertake large-scale budget cuts and layoffs, including for school teachers, health care workers and police officers who, in combination, represent the bulk of their payroll spending.
Even the Trump administration appears to recognize that the stimulus bill is far too small. That is why both Trump and the congressional Democrats are already talking about another stimulus bill that could amount to another $2 trillion. The U.S. does have the capacity to maintain borrowing these enormous sums. Among other considerations, as was true during the 2007-09 Great Recession, U.S. government bonds will be recognized as the safest assets available on the global financial market. This will place a premium on U.S. bonds relative to every other credit instrument on the global market. The Federal Reserve also has the capacity, as needed, to buy up and effectively retire U.S. government bonds if the debt burden becomes excessive. No other country, or entity of any sort, enjoys anything like this privileged financial status.
Working from this position of extreme privilege, the Fed has now committed to providing basically unlimited and unconditional support for U.S. corporations and Wall Street firms. Indeed, between March 18 and 31 alone, the Fed purchased $1.14 trillion in Treasury and corporate bonds, at a rate of over $1 million per second. The Financial Times reports projections that the Fed’s asset holdings could reach $12 trillion by June — i.e. 60 percent of U.S. GDP — with further increases to follow. By comparison, just prior to the 2007 -2009 financial crisis, the Fed’s bond holdings were at $1 trillion. They then spiked to $2 trillion during the crisis — a figure equal to only about 1/5 where the Fed’s interventions are heading over the next couple of months.
The U.S. and global economy do need a gigantic bailout now to prevent suffering by innocent people resulting from both the pandemic and economic collapse. But the bailout needs to be focused, in the immediate, on delivering to everyone the health care provisions that they need and to keeping people financially whole.
Taking a broader structural perspective, we also need to stop squandering the enormous financial privileges enjoyed by the U.S. on propping up the neoliberal edifice that has denominated economic life in the U.S. and the world for the past 40 years. The fact that the U.S. government has the financial wherewithal to bail out giant corporations and Wall Street twice within the past 11 years means that it also has the capacity to take control over some of the most dysfunctional and anti-social private enterprises. We could start by replacing the private health insurance industry with Medicare for All. The federal government could also take a controlling interest in the fossil fuel industry that must be put out of business, in any case, over the next 30 years. Other targets for at least partial nationalizations should include the airlines that face desperate straits now, but that squandered 96 percent of their cash on buybacks over the past decade. The Wall Street operators that helped engineer such financial practices need to face both strong regulations and competition from large-scale public development banks capable of financing, for example, the Green New Deal.
In short, the U.S. economy that will emerge out of the present crisis cannot be permitted to return to the neoliberal status quo. It was clear during the Great Recession that some of the biggest U.S. corporations and Wall Street firms could not survive without government life supports. Now, only 11 years later, we are about to rerun the same movie, only this time on a jumbotron screen. Forty years’ worth of neoliberal indoctrination has pampered big business and Wall Street into believing that corporate socialism will always be theirs for the asking — that they can hoard profits for themselves at will while foisting their risks, as needed, onto everybody else. At this moment especially, if businesses want to insist that they exist only to maximize profits for their owners, then the federal government needs to sever their lifelines. Progressives should keep fighting hard for these principles.
C. J. Polychroniou: Noam, coronavirus seems to be producing an uplift in solidarity among common people in many parts of the world, and perhaps even the realization that we are all global citizens. Obviously, coronavirus itself won’t defeat neoliberalism and the resulting atomization of social life that we have been witnessing since its advent, but do you expect a shift in economic and political thinking? Perhaps the return of the social state?
Noam Chomsky: Those possibilities should remind us of the powerful wave of radical democracy that that swept over much of the world under the impact of the Great Depression and the anti-fascist war — and of the steps taken by the masters to contain or crush such hopes. A history that yields many lessons for today.
The pandemic should shock people to an appreciation of genuine internationalism, to recognition of the need to cure ailing societies of the neoliberal plague, then on to more radical reconstruction directed to the roots of contemporary disorder.
Americans in particular should awaken to the cruelty of the weak social justice system. Not a simple matter. It is, for example, quite odd to see that even at the left end of mainstream opinion, programs such as those advocated by Bernie Sanders are considered “too radical” for Americans. His two major programs call for universal health care and free higher education, normal in developed societies and poorer ones as well.
The pandemic should awaken us to the realization that in a just world, social fetters should be replaced by social bonds, ideals that trace back to the Enlightenment and classical liberalism. Ideals that we see realized in many ways. The remarkable courage and selflessness of health workers is an inspiring tribute to the resources of the human spirit. In many places, communities of mutual aid are being formed to provide food for the needy and help and support for the elderly and disabled.
There is indeed “an uplift in solidarity among common people in many parts of the world, and perhaps even the realization that we are all global citizens.” The challenges are clear. They can be met. At this grim moment of human history, they must be met, or history will come to an inglorious end.
The ongoing coronavirus pandemic is continuing to have a serious impact on the economy. However, as official statistics tend to take some time be released, most of the data is yet to show the scale of this impact.
This doesn’t mean that we have no way of seeing the current state of the economy. The analysis below is based on such data as we can see in official statistics, some lesser-used (but more timely) data, and projections from some of the institutions most involved in the economy.
Unemployment to rise as businesses close
The latest figures from 21 April seem to show the labour market in good health, with the employment rate at a record high. However, as we explained in a recent briefing, this is about to change rapidly.
In a survey of businesses conducted by the Office for National Statistics (ONS), an average 21% of the workforce in businesses that continue to trade had been furloughed between 23 March and 5 April. 41% of businesses are also making redundancies.
Although the official unemployment figures have yet to show this, there are signs they may do before long. In particular, Universal Credit declarations increased sharply towards the end of March. The number of declarations in the six weeks to 12 April 2020 was almost five times higher than in the equivalent period last year.
The latest IHS Markit Purchasing Managers’ Index figures also show sharp reductions in business activity, with both services and manufacturing experiencing the fastest decline since comparable records began two decades ago.
Inflation drops back as retail and oil prices fall
With the country in lockdown, retail sales volumes have dropped rapidly. Figures for March show the largest monthly fall (5.1%) since records began. However, the proportion of purchases taking place online grew to its highest ever level, as customers stayed home and switched to online shopping.
Consumer confidence has declined sharply, with market research institute GfK’s latest report showing that its Consumer Confidence Index dropped by 25 points between March and April. The last time it fell this steeply was during the 2008 financial crisis.
Oil prices have also fallen. This is due to reduced demand during the coronavirus pandemic and a price war among producers. While Brent crude prices, the European benchmark, have not entered negative territory, as they briefly did in the US, they are still lower than they have been in two decades.
In recent months the CPI inflation rate had been heading back upwards towards the Bank of England’s 2% target. However, it has now fallen for two months in a row. The most recent decrease in March (down from 1.7% in February to 1.5%) is mostly due to the factors mentioned above. Clothing and footwear retailers put more of their products on sale in an attempt to boost flagging sales, while the rapidly falling oil prices have led to lower costs in transportation.
A shrinking economy
On 14 April, the Office for Budget Responsibility (OBR) produced a ‘reference scenario,’ looking at the possible impact of coronavirus on the public finances.
The OBR was careful not to call this a ‘forecast’; it was instead positioned as a possible illustrative ‘scenario’ to form a baseline for other work. Nevertheless, it provides a realistic picture of how the economy might look over the next few months.
The OBR’s scenario shows the economy shrinking by about 35% in the second quarter of this year. It assumes there will be no lasting damage to the economy, so this decrease is then followed by a fairly quick rebound. This would result in public borrowing (also known as the deficit) increasing sharply in 2020/21, from its current level of around 2% of GDP to 14%. This would be higher than the level of borrowing during the financial crisis. In fact, it would be higher than at any time since the end of the Second World War.
Andrew Bailey, the Governor of the Bank of England, said this scenario is plausible. However, he also warned there could be longer-term scarring to the economy, caused by businesses failing and higher unemployment.