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6 October 2022

Britain braces itself for the devastation of austerity 2.0

Britons on low incomes dread the Liz Truss government’s “reverse Robin Hood” plan, which prioritises bankers over benefit claimants.

By Anoosh Chakelian

When Faith Angwet tuned in to an interview with Liz Truss on BBC News on Tuesday 4 October, she couldn’t believe what she was watching. The Prime Minister repeatedly refused to say whether benefits will rise in line with prices next April, as promised by the last government.

“I was just amazed, I was appalled,” said Angwet, 37, a charity fundraiser from Southwark, south London, where she lives with her son and daughter, aged five and two. “It feels like they’re sweeping us under the table. It’s as if they don’t care, they just want to help the rich get richer.”

Both Truss and Chris Philp, the Chief Secretary to the Treasury, have refused to confirm that benefits will go up with inflation next year. The former government, under Boris Johnson and Rishi Sunak, had promised that payments would rise in April by the rate of inflation in September, which was about 10 per cent.

The present government, however, is looking for ways to offset the huge tax cuts in the mini-Budget that so spooked the markets at the end of September, and a real-terms welfare cut is rumoured to be one of the things it is considering. It would be part of a wider plan of cuts to public services; Philp has already asked government departments to make savings. This mirrors the 2010 austerity agenda, when the welfare budget took a big hit. Austerity 2.0 looms.

For people in Britain on low wages, in part-time jobs, with caring responsibilities or disabilities – those who rely on welfare, and public services – this hasn’t gone unnoticed. Angwet is looking for a job, which is tricky to balance with expensive childcare; she is divorced and looks after her children alone. She volunteers for the charity, and at a holiday club during the school breaks. After rent, she receives £777 a month from Universal Credit. It goes “less and less far” each month. “It’s crisis mode, really. I’m thinking about it when I wake, I’m thinking about it when I put the kettle on.”

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“Again, we’re the ones, on low incomes, taking the biggest hit”

Every day she tries to find ways to save money: cooking in bulk so she can reheat meals in the microwave for the rest of the week, staying out of the house as long as possible, never driving, not renewing her phone contract, finding the few discounts on supermarket shelves.

“In a short space of time, this new government has chosen the quickest exit out of their responsibilities,” she reflected. “Their gamble [the mini-Budget] didn’t pay off, so now, again, just like post-pandemic, we’re the ones, on low-income, taking the biggest hit. Tears come to my eyes just thinking about it; it’s not fair.”

Esther McVey and Damian Green, two Tory former work and pensions secretaries, have opposed the idea of cutting benefits. Chloe Smith, the current Work and Pensions Secretary, has said that “protecting the most vulnerable is a vital priority for me”. Another cabinet member, Penny Mordaunt, the Leader of the Commons, has said explicitly that benefits should rise with inflation.

Insiders believe that Truss would not have support to pass benefits cuts. “I just don’t think Conservative MPs would wear that,” David Gauke, also a former Tory work and pensions secretary, who has left the party, told me on the New Statesman podcast. “To cut benefits at this time, while also apparently cutting the taxes of the highest-earning – you really don’t have to be someone on the hard left to think that is a pretty ghastly combination.”

“Whatever I earn goes on childcare. I can’t save, and holiday is not a word in my dictionary”

Yet the mini-Budget already includes a welfare cut in the shape of a new policy to force part-time workers to seek more or better-paid work for six hours extra a week or get their benefits sanctioned. This is impossible for some people. “Whatever I earn goes on childcare,” said Tayyaba Siddiqui, 49, a part-time NHS therapy assistant, who is raising her 11-year-old son alone in Islington, north London. She was working full-time and had never needed Universal Credit until she started working part-time eight months ago. She had to leave her abusive partner ten years ago.

[See also: How benefits have failed to keep pace with inflation]

Now she receives £190 monthly benefits, and her salary is £1,000 a month. When we spoke in early October she only had £200 left for the month. She was struggling to sleep, worried about expenses, like the fruit and veg for her son’s food tech classes.

“We are UK citizens, why are we now living in what feels like a developing country?”

“I would work full-time again but my son needs me there, and childcare is not reasonable,” she said. “I can’t save, I can’t do anything, holiday is not a word in my dictionary. Every day I think, ‘OK, one day has passed’ – it’s not living, it’s surviving. And why should my son have to grow up so fast?”

She believes the government is “not listening, because they’re not in my shoes. They help rich people more because they are rich and their friends are rich. They need to help us instead of pushing us into poverty. We are UK citizens, why are we now living in what feels like a developing country?”

While the government has reversed its decision to scrap the 45p top rate of tax, which would have benefited those earning over £150,000, it is still speaking in favour of the idea. The Home Secretary, Suella Braverman, said she was “disappointed” with the U-turn and accused Tory MPs of a “staging a coup” to force it. The government is also pushing ahead with removing the cap on bankers’ bonuses and cancelling the planned rise in corporation tax. This is leading the Conservative Party to get a reputation as a “reverse Robin Hood”.

Brian, 54, a single father to a 16-year-old daughter in Chessington, on the London-Surrey border, has not been able to work since a road accident in 1987. “It’s going to be disastrous for myself and a lot of other families; it’s just not going to be possible to live anymore, especially not live healthy lives,” he said. He receives legacy benefits (the pre-Universal Credit payment system) of £168.45 a week.

“We are in desperate need through no fault of our own”

They use a torch around the house rather than overhead lights, and didn’t turn the heating on last winter at all. When his daughter does homework in the evening, he asks her to use the glow of her laptop to see. He cooks once a week, and only has sandwiches and cold food otherwise. “People are in desperate need through no fault of our own,” he said. “The government should be trying to make it a fairer society, not helping the rich.”

Jake Berry, the chairman of the Conservative Party, recently said that people facing rising bills should get a “new job” with a “higher salary” and “cut their consumption”. Braverman has said she wants to “cut welfare spending”, claiming Britain has a “Benefits Street culture” and that some people choose benefits over work.

[See also: Liz Truss wants to govern a country that does not exist]

These critiques ignore that 40 per cent of people on Universal Credit are already in work, and the rest are either looking for jobs or cannot and are not required to work due to disability, illness or caring responsibilities.

Data by Katharine Swindells

“I feel like I’m working for nothing while I’m trying to better myself,” said Ella, 35, who works one day a week for a children’s charity and has to care for her prematurely born three-year-old son the rest of the time. While receiving Universal Credit and carer’s allowance, she only sees £200 of her £500 monthly earnings (benefits are withdrawn as you earn, and there's a limit on carers' earnings).

“I’m really stressed. It’s very difficult to explain how hard it is”

Before her complicated pregnancy, Ella, a graduate, had a full-time retail job. “I was working and then suddenly had no income,” she said. “I’m really stressed. It’s very difficult to explain how hard it is. I think the government has completely ignored our cry for help, it’s fallen on deaf ears.”

If the government doesn’t raise benefits to match price rises then there will be “bedlam”, she said. “I can’t imagine how I’ll cope if that happens; how are people supposed to live?”

Raising benefits in line with wages rather than prices, as ministers have hinted might happen, would mean a big loss to household incomes. It would cost a typical low-wage working family with two children over £1,000 a year, according to the Resolution Foundation, a living standards think tank.

“Failing to raise benefits in line with inflation would be a devastating blow to families across the country, piling hardship and insecurity onto families who have faced years of hardship already,” said Dr Madeleine Power of the University of York. She works on Changing Realities, a project that documents and seeks to improve life on a low income, run in partnership between parents and carers, the University of York and Child Poverty Action Group. Interviewees in this piece are participants.

[See also: The problem with Liz Truss’s attack on the “anti-growth coalition”]

The Chancellor, Kwasi Kwarteng, who is insisting he'll get government debt falling in the medium term, would need to save between £37-£47bn to do this, according to the Resolution Foundation’s calculations. This would mean cuts on a level similar to the George Osborne austerity era.

Britain is still suffering the consequences of those cuts to public services. More than 330,000 excess deaths in Britain can be traced to cuts to public services and benefits, a new study in the Journal of Epidemiology and Community Health revealed.

“There are very few pure efficiency savings that you can make,” said Nick Davies, a programme director at the Institute for Government, where he runs a “performance tracker” on UK public services. He warns that there isn’t much else that can be cut without services such as the NHS and criminal justice system failing to keep up with day-to-day demand, let alone waiting lists.

“Most public services won’t have enough money to keep pace”

“For most services, we now don’t think they will have enough money even to keep pace with demographic demand growth, never mind to deal with the aftermath of the pandemic, in the form of unmet needs, or backlogs,” he warned. “And that’s off the back of the fact that almost all services were performing worse on the eve of the pandemic than they were in 2010.”

While spending cuts loom, departments already have less to spend due to inflation. As with the first round of austerity, this will impact lower-income Britons the most, particularly those with disabilities, who have higher energy costs.

“The kids are hungry and cold. It’s heart-breaking when you look at your children’s face and say ‘just put another layer on’, or ‘there are no snacks in’,” said Kim, 36, in north Wales, whose family has been struggling since her husband lost his construction job during the pandemic. They have four children, aged eight to 18, and Kim cannot work due to early-onset osteoarthritis. Their £1,600 a month in Universal Credit is being eaten up by the rising cost of oil, which their heating and hot water runs on.

“My kids’ birthdays and Christmas are not going to happen this year, we just can’t afford it”

“Mentally, it’s an absolute drain," Kim said. "You go to bed worried about the kids’ birthdays, Christmas coming up, and there’s nothing left; they’re not going to happen this year, we just can’t afford it. We’ve landed in this position through no fault of our own, and the government treats us like the country’s dirty little secret. I’d like them to come and live a day in my life; how in their right mind do they expect people to survive?”

As the Prime Minister did not confirm where cuts would fall in her party conference speech, Britain braces itself for a new, uncertain era of austerity.

“I just feel like I don’t recognise the world we live in, let alone the country we live in, any more,” said Faith Angwet, still on the phone to me as she walked her son home from school – somehow tracking down her daughter’s lost Peppa Pig toy in the process.

“I don’t know what message we’re sending out: ‘When it’s tough in Britain, we’re not going to help the poor. They should help themselves.’ I’m very disappointed.”

[See also: “People have nowhere to turn”: Britain’s first “warm banks” open their doors]

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