Tag: Living wage

Budget 2021: a missed opportunity to make permanent the £20 increase to Universal Credit

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Posted: 03 Mar 2021 09:50 AM PST

Ruth Patrick, Kayleigh Garthwaite, Geoff Page, Maddy Power, and Katie Pybus comment on the government’s decision to extend the £20 uplift to Universal Credit by six months only. They argue that the increase should be a permanent one, as part of a broader commitment to reforming the social security system.

We’ve learned a lot over the past 12 months of the pandemic. About ourselves, our children, our local areas, but also, inevitably, about our politicians and government. We’ve learned that our government is sometimes willing to make bold policy decisions, such as the recent announcement of the extension of furlough into the autumn. As part of the 2021 Budget, Rishi Sunak promised that he would ‘do everything it takes’ to protect ‘lives and livelihoods’. His government’s budgetary measures simply did not live up to these words.

The decision Sunak announced to extend the £20 uplift to Universal Credit by justsix months is testament to this. Not only has the government missed the opportunity to properly invest in social security into the longer term, but they have also failed to extend the support provided through the £20 Universal Credit uplift to an estimated 2.5 million legacy benefit recipients. They have further failed by not acting to make those subject to the Benefit Cap eligible for support through the £20 uplift.

These failures on the budget are part of a broader narrative emanating from this government on ‘welfare’, which continues to rely on divisions between ‘deserving’ and ‘undeserving’ populations, and shows an unwillingness to retire old (and arguably ineffective) policy tools, such as welfare conditionality. Both Sunak and Johnson have also shown an unwillingness to think more ambitiously and structurally about the social security system. They have been unprepared to delivery long overdue reform to address issues tied to adequacy and eligibility to social security support, whilst they have also failed to address the design limitations with Universal Credit, which negatively impact on the experiences of existing claimants, and the millions of households who have claimed as a direct result of the pandemic.

Through the Nuffield Foundation funded COVID Realities research programme, we are working in partnership with over 100 parents and carers living on a low-income, who are documenting their everyday experiences in online diaries and by responding to weekly video questions. The parents are also meeting up together in virtual discussion groups. In these monthly meetings, parents work with us to develop recommendations for change, recommendations which are rooted in their own experiences, that are all too often of insecurity, of poverty, and of a social security system that is failing them.

After the budget, some of the parents we have been working with gave their reactions to the decision on Universal Credit. Dorothy, a single parent to two children, one of whom is disabled, told us:

I am a bit relieved that they have extended the £20 UC payment, but I’m disappointed it is only for six months because I don’t think the pandemic is going to go away within six months. The cost of living went up so much from the pandemic and from having children at home. In my eyes, the pandemic is no way near over and the £20 just did not go far enough.

Aurora, a widowed single parent, spoke for many who do not receive the £20 uplift at all:

We as the poorest members of society cannot understand why we’ve been overlooked yet again. Why have we been ignored? We have already bared the brunt of austerity and continue to do so. That extra £20 would’ve been going towards feeding us or ensuring we were able to meet the increased costs the pandemic has inflicted on our lives. But we don’t receive it at all because our benefits are capped. I’m just thankful to Covid realities for giving us a voice when no one cared.

The Universal Credit decision extends and perhaps makes permanent the insecurity and anxiety that social security claimants face. Now, Universal Credit claimants must wait till the autumn to find out what will become of their £20 a week, which for many is the difference between keeping their heads above water, and finding it simply impossible to get through the week. Winter explained what this feels like and the difference the £20 currently makes to her family:

The proposed change [removing the £20 uplift] is the difference between paying our bills and not being able to pay some of them. And if [a] one off expenses crop up (like new shoes for kids etc) then you can’t cover it. Amy changes to benefits are very stressful.

From our work with parents and carers, we know how this financial insecurity intersects with, and is compounded by, the insecurity that we all face because of the conditions that the pandemic creates. We also know that the £20 uplift is not a panacea, and it is not enough: families with children urgently need help with the costs of their children, and to address the stubbornly high levels of child poverty. Lexie, who receives the £20 uplift explained:

The £20 is the bare minimum of help to be honest. I know that sounds ungrateful but £20 doesn’t cover much these days. By the end of the month, we are still choosing between eating and heating. We have always aimed to do better by our children than what we had but it’s almost impossible. No one in today’s day and age should be choosing between eating and heating.

As analysis by the Institute for Fiscal Studies has shown, the £20 uplift to Universal Credit represents the first significant real increase in benefit levels in the last half century for families without children. However, and this is especially important, while a sizeable and significant increase, it has made ‘barely a dent’ in the decline in the real value of the social security safety net (excluding housing) for childless families as a faction of earnings levels, which has fallen almost continually for the last 50 years. The picture for families with children, the focus of our COVID Realities work, is more complicated; but there is a broader message that the £20 uplift is only a partial and limited corrective for decades of decline in the real value of social security, which hastened under the 2010-2019 Conservative-led governments, especially due to the freezing of benefit levels. Against this context, it was especially important to make the £20 increase a permanent one as part of a broader commitment to the social security system in the UK.

We have seen the possibility in their pandemic response for the government to be bold, to spend money, and to intervene to protect livelihoods. But there has been a failure to do this on social security, and this failure needs to be writ large in all the analysis of this budget, in the weeks and months ahead. It is a failure of ambition and a failure to do what our society so urgently needs.

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Note: The project on which the above draws has been funded by the Nuffield Foundation, but the views expressed are those of the authors and not necessarily the Foundation.

About the Authors

Ruth Patrick is Lecturer in Social Policy at the University of York.

Kayleigh Garthwaite is a Birmingham Fellow in the Department of Social Policy, Sociology and Criminology at the University of Birmingham.

Geoff Page is Research Associate at the University of York.

Maddy Power is a Research Fellow at the University of York.

Katie Pybus is a Research Fellow at the University of York.

https://blogs.lse.ac.uk/politicsandpolicy/budget-2021-20-uplift/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+LSEGeneralElectionBlog+%28General+Election+2015%29

Paid work is never enough: we need to pay attention to the quality as well as the quantity of jobs created

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Getting people into employment will not on its own ensure decent living standards and reduce poverty, finds Peter Taylor-Gooby. His research shows that, while higher employment is associated with lower poverty, other factors are more important. The most important factor in reducing poverty levels across the countries looked at was the strength of contractual rights, and other policies, such as access to child care, policies to reduce discrimination against women were also significant.

Most people think paid work is the royal road to a better life for people of working age. The value of work is at the centre of policy thinking across the board, from Labour’s Compulsory Jobs Guarantee to UKIP’s commitment to ‘enroll unemployed welfare claimants onto community schemes or retraining workfare programmes’. Ian Duncan Smith’s Universal Credit puts work ‘at the centre of our welfare system’. The EU’s 2020 Growth Strategy ‘is about more jobs and better lives.’ And so on.

The idea that getting people into work will solve the problem of achieving decent living standards for those of working age was given extra impetus as unemployment rose from about 5 to over 8 per cent between 2008 and 2012, paralleled with a rise in working-age poverty. Now unemployment is falling back towards pre-crisis levels but, as IFS analysis shows, poverty among working age adults is failing to respond. The poor quality of many of the new jobs indicates short-comings in the case for paid work as the foundation of welfare.

Most of those in poverty live in working households. Among families the proportion in households with at least one member in work rose from 50 to 68 per cent between 1996 and 2013 according to the DWP’s Households Below Average Incomes statistics. The job market started to recover from its low point in 2012 but many of the jobs on offer are far from satisfactory. The number of part-time workers rose from 7.2 million to 8.2 million between the recession in 2008 and 2014, the numbers of involuntary part-timers from 0.7 to 1.7 million and the number of temporary workers from 1.4 to 1.7 million. The Labour Force survey shows a doubling of zero-hour contracts between 2007 and 2013 to 300,000.

These statistics suggest that we need to pay attention to the quality as well as the quantity of jobs created. Our new research examines factors affecting employment and poverty across 17 European countries for the period of prosperity and growth between 2001 and 2007. This is the time when the sun shone, the most favourable period in recent history for the work = welfare = decent living standards project. The research shows that, even at this time, new welfare was much more successful at getting people into work than at reducing poverty.

Employment rates rose across Europe, especially for women. However, far from declining, poverty rates also increased (by the standard EU 60 per cent of median income measure) from 18 to 18.6 per cent between 2001 and 2007 in the UK, and also in other successful economies such as Germany (11 to 15.2 per cent), Sweden (9 to 11.5 per cent) or Poland (16 to 17.3 per cent). One explanation is to do with access to paid work. Governments need to make sure that even more people move into work. This is the logic that lies behind the EU’s Employment Strategy and Horizon 2020 programme and behind national work-centred policies such as Universal Credit. Then the great recession swept everyone towards work at any price policies, redoubling the stress on paid work.

These were the good times, when, if ever, the link between work and decent incomes should be strongest. Higher employment is associated with lower poverty, but the analysis shows that, even during this period, other factors were more important. In fact the most important factor in reducing poverty levels across the countries was the strength of contractual rights. Other policies such as access to child care, policies to reduce discrimination against women were also significant.

The level of employment plays a role in ensuring decent living standards, but one that is less powerful than that of employment rights. The suggestion is that while employment is probably a good thing, if we want people to be better off, we also need to make sure that the quality of jobs is adequate. The best way to ensure that is to strengthen contractual rights against dismissal and to promote trade union membership. Recent trends in policy to weaken employment protection, to undermine the role of trade unions and to introduce high fees for access to employment tribunals move us in entirely the wrong direction. Shovelling people into low-paid jobs is all the fashion, but it is not the answer to the problem of poverty among those of working age.

For more, see “Can ‘New Welfare’ Address Poverty Through More And Better Jobs?” by Peter Taylor-Gooby, Julia M. Gumy and Adeline Otto.

About the Author

Peter Taylor-Gooby is Research Professor of Social Policy at the University of Kent’s School of Social Policy, Sociology and Social Research. He chaired the British Academy New Paradigms in Public Policy Programme (2010/2011) and is Chair of the REF Social Work and Social Policy and Administration panel 2011-15, a Fellow of the British Academy, a Founding Academician at the Academy of Social Sciences and, previously, a Fellow of the Royal Society of Arts and President of the British Association for the Advancement of Science, Sociology and Social Policy Section.
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Labour needs policies that end low paid and low skilled work

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By Tony Burke | Published: October 27, 2014

The UK has too many poorly performing workplaces, according to a new report

On October 23, the Smith Institute launched a report entitled ‘Making work better: an agenda for government‘ – an independent inquiry into the world of work by Ed Sweeney.

Sweeney of course is the former chair of the Advisory Conciliation and Arbitration Service (ACAS), former deputy general secretary of Unite and former general secretary of the finance union Unifi, now part of Unite.

The report, which runs to over 100 pages, is the product of a nine month inquiry involving research, interviews, discussion events around the UK as well as opinion polling.

It sets out the argument that the UK has too many poorly performing workplaces, with poor treatment of workers who Sweeney’s report states are “underpaid, over-worked and ignored”.

The report also argues that the UK has a “long tail of broken workplaces” which are holding back the recovery and costing the country billions in lost income and in the payment of welfare benefits to those out of work but also to those workers eking out a living in low paid, precarious and agency work.

The report has been welcomed by Labour, the TUC and EEF (the manufacturing employers’ organisation), who were all represented at the report’s launch: shadow business secretary Chuka Umunna for Labour; general secretary Frances O’Grady for the TUC and Judith Hogarth, head Of employment policy of the EEF

Sweeney’s report highlights the UK’s poor performance on a range of indicators, including:

poor productivity, with the USA, France and Germany being 30 per cent more productive than the UK;
a skills shortage and mismatch, with half of employees interviewed saying that their jobs do not make full use of their skills and abilities;
job insecurity with over half of employees worried about loss of employment or job status – the Office of National Statistics now estimates there are 1.4 million zero-hour contract workers;
stagnating pay levels – since 2004 wages for workers on the median wage or less have stagnated or fallen in real terms and since 2010 median wages have fallen by more that 6 per cent in real terms;
and 50 of workers interviewed said they faced unreasonable treatment, while 40 per cent faced disrespect from employers.

The report also recommends that the government should amend the Information & Consultation Regulations to giver workers a stronger voice and bring the UK into line with other EU countries.

The ICE Regulations are barely used by unions to establish these structures as they are dauntingly complex and unions usually face open hostility from some of the worst employers who do not wish to hear the views of their workers, never mind consult with them.

The report makes a series of important recommendations, including a new mandate for the Low Pay Commission to increase the national minimum wage towards 60 per cent of the median wage; a target for government of lift one million workers to the living wage by 2020 and, interestingly, a requirement on the government to promote the positive role trade unions play in achieving fair pay and giving ACAS the power to promote collective bargaining and good employment relations.

At the launch, the issue of collective bargaining was a major talking point, with a number of speakers and questioners (including academics and trade unions) arguing strongly that the restoration of widespread collective bargaining would do much to restore decent work and pay equality.

Speakers pointed out that this was always ACAS’s role (it was the Major government who scrapped ACAS’s role in promoting collective bargaining) and it would require significant political and financial support.

On the role of trade unions, Chuka Umunna said in his remarks:

“The report is right to highlight that trade unions have an important role to play here in boosting training, pay and conditions for their members and helping Britain win that race to the top.

“At a time of rapid global economic change and a cost of living crisis at home, it is vital that the UK continues to have strong and modern trade unions as a genuine voice fighting against discrimination and abuse.”

Building on Ed Sweeney’s report, Chuka Umunna also announced the setting up a further review of Labour’s policies in regard to the world of work, to be lead by John Monks, former head of the TUC and the ETUC, Douglas McCormick, former MD of Atkins UK Rail and Alison Downie, head of the Employment Department at Goodman Derrick LLP.

Frances O’Grady hit the nail on the head at the launch when she said:

“With so many facing stagnant pay and too many new jobs made insecure through zero-hours contracts, agency working or low value self employment, we won’t fix the economy without fixing the workplace.”

Labour has to recognise that in order to win the election and win back working people, there is crying a need to promote clear policies to end low paid and low skilled work; but also to end exploitation, firmly regulate precarious work and create decent employment in decent workplaces.

Tony Burke is assistant general secretary of Unite

Labour needs policies that end low paid and low skilled work

Increase in number of people on low pay

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Increase in number of people on low pay
By Left Foot Forward | Published: November 3, 2014

The number of people on low pay has risen by 147,000 to 5.3 million in the last year, according to a study by KPMG.

Childcare vouchersjThe research indicates that 22 per cent of employees are now earning less than the Living Wage – up from 21 per cent last year.

According to the data, part-time, female and young workers are the most likely to be earning a wage that fails to provide a decent standard of living.

The research, conducted by Markit for KPMG, also found that the proportion of people earning less than £7.65 per hour (£8.80 in London) is higher amongst part-time workers. More than 4 in 10 part-time workers take home less than the Living Wage, compared to 13 percent of full-time employees.

There are also more part-time roles paying less than the Living Wage (2.98 million) than full-time jobs (2.29 million), despite making up less than a third of all UK jobs.

The research revealed that during October of this year almost three times as many people who earned less than the Living Wage (29 per cent) reported that their household finances had worsened over the month, compared to just 10 per cent who saw an improvement. Meanwhile, twice as many people who earn below the Living Wage (18 per cent) reported an increase in their need to borrow, compared to 9 per cent who saw a reduction.

The financial outlook for many remains bleak. Five per cent of those earning less than the Living Wage said they expected to see their household finances worsen between now and November 2015. Almost a quarter (22 per cent) also reported fears over job security.

Commenting on the research, head of Living Wage at KPMG Mike Kelly said:

“Although there are almost 1,000 organisations pledged to pay a Living Wage, far too many UK employees are stuck in the spiral of low pay.

“With the cost of living still high the squeeze on household finances remains acute, meaning that the reality for many is that they are forced to live hand to mouth. Inflation may be easing, but unless wages rise we will continue to see huge swathes of people caught between the desire to contribute to society and the inability to afford to do so.

“For some time it was easy for businesses to hide behind the argument that increased wages hit their bottom line, but there is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity. It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying a Living Wage.”

Increase in number of people on low pay

Why did Britain’s political class buy into the Tories’ economic fairytale?

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Ha-Joon Chang
Falling wages, savage cuts and sham employment expose the recovery as bogus. Without a new vision we’re heading for social conflict

Sunday 19 October 2014 17.46 BST

The UK economy has been in difficulty since the 2008 financial crisis. Tough spending decisions have been needed to put it on the path to recovery because of the huge budget deficit left behind by the last irresponsible Labour government, showering its supporters with social benefit spending. Thanks to the coalition holding its nerve amid the clamour against cuts, the economy has finally recovered. True, wages have yet to make up the lost ground, but it is at least a “job-rich” recovery, allowing people to stand on their own feet rather than relying on state handouts.

That is the Conservative party’s narrative on the UK economy, and a large proportion of the British voting public has bought into it. They say they trust the Conservatives more than Labour by a big margin when it comes to economic management. And it’s not just the voting public. Even the Labour party has come to subscribe to this narrative and tried to match, if not outdo, the Conservatives in pledging continued austerity. The trouble is that when you hold it up to the light this narrative is so full of holes it looks like a piece of Swiss cheese.

First, let’s look at the origins of the deficit. Contrary to the Conservative portrayal of it as a spendthrift party, Labour kept the budget in balance averaged over its first six years in office between 1997 and 2002. Between 2003 and 2007 the deficit rose, but at 3.2% of GDP a year it was manageable.

More importantly, this rise in the deficit between 2003 and 2007 was not due to increased welfare spending. According to data from the Office for National Statistics, social benefit spending as a proportion of GDP was more or less constant at about 9.5% of GDP a year during this period. The dramatic climb in budget deficit from there to the average of 10.7% in 2009-2010 was mostly a consequence of the recession caused by the financial crisis.

First, the recession reduced government revenue by the equivalent of 2.4% of GDP – from 42.1% to 39.7% – between 2008 and 2009-10. Second, it raised social spending (social benefit plus health spending). Economic downturn automatically increases spending on many social benefits, such as unemployment benefit and income support, but it also increases spending on things like disability benefit and healthcare, as increased unemployment and poverty lead to more physical and mental health problems. In 2009-10, at the height of the recession, UK public social spending rose by the equivalent of 3.2% of GDP compared with its 2008 level (from 21.8% to 24%).
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When you add together the recession-triggered fall in tax revenue and rise in social spending, they amount to 5.6% of GDP – almost the same as the rise in the deficit between 2008 and 2009-10 (5.7% of GDP). Even though some of the rise in social spending was due to factors other than the recession, such as an ageing population, it would be safe to say that much of the rise in deficit can be explained by the recession itself, rather than Labour’s economic mismanagement.

When faced with this, supporters of the Tory narrative would say, “OK, but however it was caused, we had to control the deficit because we can’t live beyond our means and accumulate debt”. This is a pre-modern, quasi-religious view of debt. Whether debt is a bad thing or not depends on what the money is used for. After all, the coalition has made students run up huge debts for their university education on the grounds that their heightened earning power will make them better off even after they pay back their loans.

The same reasoning should be applied to government debt. For example, when private sector demand collapses, as in the 2008 crisis, the government “living beyond its means” in the short run may actually reduce public debt faster in the long run, by speeding up economic recovery and thereby more quickly raising tax revenues and lowering social spending. If the increased government debt is accounted for by spending on projects that raise productivity – infrastructure, R&D, training and early learning programmes for disadvantaged children – the reduction in public debt in the long run will be even larger.

Against this, the advocates of the Conservative narrative may retort that the proof of the pudding is in the eating, and that the recovery is the best proof that the government’s economic strategy has worked. But has the UK economy really fully recovered? We keep hearing that national income is higher than at the pre-crisis peak of the first quarter of 2008. However, in the meantime the population has grown by 3.5 million (from 60.5 million to 64 million), and in per capita terms UK income is still 3.4% less than it was six years ago. And this is even before we talk about the highly uneven nature of the recovery, in which real wages have fallen by 10% while people at the top have increased their shares of wealth.

But can we not at least say that the recovery has been “jobs-rich”, creating 1.8m positions between 2011 and 2014? The trouble is that, apart from the fact that the current unemployment rate of 6% is nothing to be proud of, many of the newly created jobs are of very poor quality.

The ranks of workers in “time-related underemployment”, doing fewer hours than they wish due to a lack of availability of work – have swollen dramatically. Between 1999 and 2006, only about 1.9% of workers were in such a position; by 2012-13 the figure was 8%.

Then there is the extraordinary increase in self-employment. Its share of total employment, whose historical norm (1984-2007) was 12.6%, now stands at an unprecedented 15%. With no evidence of a sudden burst of entrepreneurial energy among Britons, we may conclude that many are in self-employment out of necessity or even desperation. Even though surveys show that most newly self-employed people say it is their preference, the fact that these workers have experienced a far greater collapse in earnings than employees – 20% against 6% between 2006-07 and 2011-12, according to the Resolution Foundation – suggests that they have few alternatives, not that they are budding entrepreneurs going places.

So, in between the additional people in underemployment (6.1% of employment) and the precarious newly self-employed (2.4%), 8.5% of British people in work (or 2.6 million people) are in jobs that do not fully utilise their abilities – call that semi-unemployment, if you will.

The success of the Conservative economic narrative has allowed the coalition to pursue a destructive and unfair economic strategy, which has generated only a bogus recovery largely based on government-fuelled asset bubbles in real estate and finance, with stagnant productivity, falling wages, millions of people in precarious jobs, and savage welfare cuts.

The country is in desperate need of a counter narrative that shifts the terms of debate. A government budget should be understood not just in terms of bookkeeping but also of demand management, national cohesion and productivity growth. Jobs and wages should not be seen simply as a matter of people being “worth” (or not) what they get, but of better utilising human potential and of providing decent and dignified livelihoods. Ways have to be found to generate economic growth based on rising productivity rather than the continuous blowing of asset bubbles.

Without a new economic vision incorporating these dimensions, Britain will continue on its path of stagnation, financial instability and social conflict.

http://www.theguardian.com/commentisfree/2014/oct/19/britain-political-class-tories-economic-fairytale?CMP=fb_gu