Framing the funding crisis: The attack on low-income households

By: Dr Louise Folkes, Lecturer in Social Sciences

“Poverty is trying to walk up an escalator that’s racing down. Poverty is attempting to stay afloat in a boat full of holes when someone has taken away your oars and shouts at you from the security of a distant shore to paddle a bit harder”

O’Hara (2020, p.89)

This week, Therese Coffey, Work and Pensions Secretary, defended the government’s decision to scrap the £20 uplift to Universal Credit by claiming that is only equivalent to two hours of extra work per claimant (BBC, 2021). The £20 a week uplift was introduced during the pandemic to help support low-income families whose circumstances were exacerbated by the impact of Covid-19. Families are set to lose on average £1040 a year which will impact 4.4 million households and 3.5 million children (Sandhu, 2021). This is a huge chunk of income to lose and has prompted the hashtag #SaveTheLifeline on social media as families desperately explain how that extra £20 a week has made life just that little bit easier. During the pandemic there has been a 98% increase in the numbers claiming Universal Credit, up from 3 million in March 2020 to 6 million in January 2021, as the economic fallout of the pandemic is realised (DWP, 2021). It therefore comes as no surprise that the government wants to introduce what will be the biggest cut in welfare benefits since the Second World War. This builds upon a narrative that has gained increased traction since the Conservatives came to power in coalition in 2010.  

The continuation of the toxic poverty narrative 

Mary O’Hara in her 2020 book The Shame Game builds upon the work of sociologists such as Tracy Shildrick and Imogen Tyler to trace the evolution and weaponisation of the toxic poverty narrative. Despite the context of a global pandemic, the narrative continues that “the poor are to blame for their predicament because of bad life choices and if only they would take some ‘personal responsibility’, show some ‘self-reliance’, stop expecting the government to support them, and work hard like everyone else they would be ‘productive’ members of society who contributed their ‘fair share’” (O’Hara, 2020, p.90). This narrative is bullying and also productive, as it garners legitimisation for cuts to welfare spending amongst the wider public, what Tyler (2020) would refer to as a ‘stigma machine’. An example of this coming to the fore was the recent debate around access to Free School Meals, where the emphasis on individual responsibility again reared its ugly head (see Emma Collins’ post for more on this here).  

What this stigmatising yet productive discourse overlooks when it comes to cutting Universal Credit is that 40% of those claiming in England are in-work and thus experiencing in-work poverty (LGA, 2021). The simplistic suggestion by Coffey that it is the individual’s responsibility to find these extra hours suggests individual blame and Coffey’s ignorance at the condition of the labour market. Coffey’s defence that the £20 a week cut could be remedied by two more hours of work is also a kick in the teeth for the 1.3 million people who claim Universal Credit who have ‘no work requirements’ (DWP, 2021) -usually because they have limited capacity to work, perhaps due to caring responsibilities or disability. For those with ‘no work requirement’ there is no possibility to ‘make up the hours’ (as if it was that easy anyway), and so they face an absolute cut to their Universal Credit payment. Looking at the treasury’s plans for a ‘post-Covid’ economy, it appears the narrative is very much framed around the most vulnerable and the lowest-paid in society bearing the brunt of the economic burden. 

Photo by Nataliya Vaitkevich from Pexels

The first cut is the deepest? 

In addition to the cuts to Universal Credit, low-income households have also been hit the hardest by the news that National Insurance will rise 1.25% next year to 13.25% on all earning over £9564 a year, a lower threshold than for Income Tax, which you don’t start paying until you earn £12, 570 (although this personal allowance has been frozen, another sneaky way of increasing taxes on low earners). The money in wage packets is already not going as far with inflation at 3.2% and prices rising- and this is before the hike in National Insurance. Further bad news has come with the announcement that energy bills are set to rise as UK suppliers announce maximum price increases for electricity and gas of 12%, potentially pushing 500,000 households into fuel poverty (Ambrose, 2021). And just to add even more insult to injury, since May 2021, we have seen the legislation that prevents bailiff enforcement of evictions expire. This essential legislation helped people to stay in their homes throughout the pandemic even if falling into rent arrears due to reduced income. All of the above changes are likely to push more households to a financial breaking point and therefore at risk of losing their homes, plunging into deeper poverty. 

Thinking globally about income and wealth inequality 

Although this post focuses on UK economic policy, it is impossible to ignore global inequality and the impact of this on the pandemic response. This post does not have the space to this justice, but if we think about who have profited from the pandemic, it becomes blatantly clear that we need a serious discussion about unrestrained wealth accumulation (Piketty, 2014) and the origins of resource accumulation and its links to colonialism and empire (Bhambra, 2021). For context, multinational tech giants Apple, Google and Microsoft raked in over $50 billion in profits from April – June 2021 alone, whilst Amazon profited $7.8 billion in the same period (Amazon, 2021Associated Press, 2021). At nearly $60,000,000,000 profit in a three-month period, the power and dominance these companies wield is phenomenal, not to mention the exploitation, extraction and environmental degradation that goes into maintaining these conglomerate ‘empires’. It seems there is a moral question that needs to be asked around how we as a society decide who should pay, and who we should blame, for societal problems; and as alluded to by O’Hara, it is time to fight poverty, not fight the poor. 

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