Friction within the ruling class over how to deal with the crisis in employment and welfare is being driven by the dual risks of social unrest on the one hand and the interruption of production and labour supply on the other.
Fear of social unrest clearly drove the amendments announced on 22 October by Chancellor Rishi Sunak to the successor programme of the job retention scheme, including increased state support for employees’ wages; a reduction in the eligibility threshold for job support to 20 percent of normal working hours; a doubling of state grants for the self-employed from 20 percent to 40 percent of previous earnings; and the provision of grants for struggling companies in Tier 2 restrictions, especially in the hospitality, accommodation and leisure sectors.
These amendments occurred in the wake of dissent in Liverpool (focused on businesses and employees of the above-mentioned sectors) and an unholy row in Greater Manchester (which had been suffering under additional restrictions for months) over the introduction of a new Tier 3 lockdown. The local backlash was expressed succinctly in the graffiti on the Piccadilly Gardens wall: “The North is not a petri dish.”
Rishi Sunak, for his part, is keeping his fingers crossed that this new package “can be part of the country pulling together in the coming months”. (Rishi Sunak announces more generous UK job support scheme by Jim Pickard, George Parker and Robert Wright, Financial Times, 22 October 2020)
The ever-pressing need for the ruling class to crack the whip is apparent, however, in his failure to extend the £20 boost to Universal Credit – a boost that was introduced at the start of the pandemic and is set to expire next March – as part of the new Covid-19 care package. This has caused ongoing discussion in parliament, as well as a justified backlash by charities, progressive thinktanks, and the lucid of mind.
Right-wing thinktanks have no such qualms. Those eminent organisations of unelected policy directors the Institute for Fiscal Studies (IFS) and the Institute for Economic Affairs (IEA), have been keen to remind us throughout the pandemic that all relief measures are necessarily transient.
Back in March, the IFS warned that Sunak “may find recent increases in the generosity of universal credit and housing benefits hard to unwind”. (Tough economic decisions will litter the road ahead once coronavirus crisis is over by Paul Johnson, 30 March 2020)
In the same month, the IEA’s advice was that “governments should not worsen the growth potential of the economy further by … making these labour-supply impairing programmes permanent”. (Coronomics: the case against ‘Corona Keynesianism’ by Ryan Bourne, 17 March 2020)
In June, the IEA stated point blank that “large across-the-board increases in public sector pay and in welfare benefits may be inadvisable”, and again reminded us:
“One of the subtler problems created by the design of the CJRS is the ‘moral hazard’ introduced by in effect insuring employees against job loss. For some, perhaps many workers, being guaranteed 80 percent may be an acceptable substitute for normal pay – particularly when travel and other costs of going to work no longer apply. They are safe from infection at home, whereas going back to work would mean little increase in income for the greater health risk attendant on rejoining the outside world.” (Rebooting Britain by Julian Jessop and Professor Len Shackleton, 10 June 2020)
This is a view of the working class at odds with reality – two-thirds of furloughed workers have been working through lockdown anyway! – as “people are afraid of losing their jobs when the scheme ends”. (Dr Christopher Rauh in Two-thirds of UK’s furloughed workers continued job in Covid-19 lockdown, The Guardian, 9 August 2020)
That such a blatantly callous approach is causing rifts in the ruling class is increasingly apparent, however. On 19 October, a cross-party House of Commons work and pensions committee warned the government of the danger of refusing an extension, and warned also of the misery caused by the five-week wait in initial Universal Credit payments (anyone who has suffered – survived – that five-week wait will be shocked but not surprised that it has taken so long to be recognised).
The Financial Times commented: “The miserliness of the UK welfare system – with unemployment benefits replacing a far smaller proportion of earnings than in many other European countries – is a growing concern as new restrictions imposed on large parts of the country threaten a fresh wave of job losses.” (MPs urge ministers to make UK welfare system more generous by Delphine Strauss, 19 October 2020)
On 30 September, the secretary of state for work and pensions Thérèse Coffey again refused to confirm an extension of the £20 boost, reiterating that the original provision was for 12 months only.
The Resolution Foundation thinktank has called this a “significant mistake”. Fifty charities have penned a letter pointing out that families would be “cut adrift”. Undoubtedly true – this is one more bitter twist of the knife for vast swathes of the population who, even without the upheaval of Covid-19, would be struggling to make ends meet.
What must be remembered throughout, of course, is that the boost has topped up the benefits income for a family to a staggering peak of almost three grand less than their 2011 equivalent.
This is therefore not merely an indictment of the government’s poverty measures in response to the pandemic. It is an indictment of the entire Universal Credit system itself – a system established to be quicker, more efficient, and more easily understood the benefits system it replaced. It has not been any of these – not for the end user, at any rate.
A cross-party House of Lords committee concluded in July that the UK benefits system needs an £8bn ‘overhaul’ if it is to be made fit for purpose – that is, if it is to provide people with the bare minimum level of subsistence in these trying times. For the £20 extension in particular, another 12 months has been costed at £9bn.
A single, one-off tax on the fortunes of the very wealthy could net the Treasury well over £17bn. The sums are not difficult to do – although the Conservative government and the rest of the ruling class would have us believe that the nation is skint, even whilst billions are being haemorrhaged into private coffers from every leaky orifice of the state.
It is one more expression of the contradiction in how poverty is produced and treated under capitalism: the production of misery must be kept low enough that social unrest does not become a serious temptation; conversely, it must not be alleviated so thoroughly that the most desperate forms of labour lose their attraction.
This is a contradiction that extends back to the development of state-led poor relief in the 16th century – as serfdom was passing into history – in the sudden vacuum of religious alms caused by the dissolution of the monasteries and the closure of religious hospitals.
At the end of that century, the Oxfordshire uprising – an attempt by a small group of workers to march on London in protest against the enclosure of common land and the ensuing unprecedented poverty – resulted in 1601 in a new codification of the Poor Law. This divided the poor into three categories – the impotent, the able, and the idle – and determined state measures to be taken in relation to each.
This was later expressed quite eloquently in the workhouse policy of the 19th century: “Into such a house none will enter voluntarily; work, confinement, and discipline, will deter the indolent and vicious; and nothing but extreme necessity will induce any to accept the comfort which must be obtained by the surrender of their free agency, and the sacrifice of their accustomed habits and gratifications.” (Poor Law Amendment Act 1834, Wikipedia)
The problem of poverty and unemployment has been simmering quietly in the background since the pandemic broke out, and is now truly coming to the boil. Not only with the question hanging over the benefits increase, but also with the voting down of the proposal for free school meals – we see the spirit of Thomas Malthus, the ghost of Christmas present, come to haunt us just in time for the approaching festive season.
Between the lines of current Conservative actions can be read the ‘modest proposal’ of Jonathan Swift in 1729. Whilst influential voices seem to call out for moderation in the name of social peace, those with their hands on the reins are cracking the whip.
So how should we view the potential loss of the £20 benefit boost? It is, on the one hand, a gesture so unnecessarily vindictive, so superfluously cruel, that in it can be seen refracted the full malevolence of the class war that is being waged.
It is a measure that gives weight to the words of Milton Friedman – spiritual forefather of every lunatic right-wing thinktank on the planet – that “only a crisis – actual or perceived – brings real change”. This is for them – as it is for us – an opportunity to step onto the front foot – to attack.
On the other hand, this is merely one small twig of a system we need to change root and branch. To extend and exhaust the metaphor: we cannot miss the forest for the trees.
We must be prepared to resist any and all ‘tightening of the belt’ – a belt that is invariably tightened around the throats of the working class; that is, tightened deliberately to reinforce the precarity of our situation, our need to sell our labour, our need to accept employment on conditions that the ruling class takes any opportunity to ‘relax’.
The IEA lists occupation regulation, the minimum wage, and the apprenticeship levy as three potential points of ‘relaxation’, stating: “The current crisis presents a rare opportunity for a fundamental change of direction to help boost the economy’s recovery without further increases in public spending.” (How to create new jobs by JR Shackleton, October 2020)
We must equally press the fact that all ‘boosts’, all reforms within the capitalist system that merely extend the same old means-tested system of poor relief handed down from days gone by, are built on sand – subject to repeal at the whim of the ruling class.