The worst of times are just around the corner

The UK Government’s response to the rise in unemployment is a remarkable example of the triumph of spin.

Highlights include the central assertion that the “rise in employment and vacancies shows a stablising labour market“, the suggestion that 1,000 more young people becoming unemployed and 22,000 more full-time students looking for work represents “a more stable picture“; and the trumpeting of there being 11,000 more jobs in the economy while hiding the fact that over the year to December 2011, there were actually 21,000 fewer jobs available (in the footnotes).

But the most astonishing claim was that its welfare reforms are working.  The UK Government used the fall in the number of people designated as economically inactive to point to its success (sic).  The number of people claiming incapacity benefits – disabled people to you and me – fell by 43,000 while the number of lone parents fell by 84,000.  Cheerily, the media release points to a further fall of 15,000 in the number of lone parents on income support for November 2011, “driven by welfare reform“.

What all this means is that in the last quarter of 2011, there were at least 150,000 more people chasing just 11,000 more jobs.  Far from the picture being rosy, it is terrifying.  There might be 476,000 vacancies in the economy but there are now 2.67 million unemployed people in the UK to fill them.  You don’t need your Standard Grade in Arithmetic to work out the supply is nowhere near being able to meet the demand.

The UK Government also suggested that the number of people claiming Job Seeker’s Allowance (JSA) rose, partly because of the shift of people off of incapacity benefits and income support on to JSA.  This might be true, but if there are only 1.6 million on JSA, it begs the question – what are the other 1 million unemployed people now living on?

Sorry, but however the latest Labour Force statistics are viewed, they are far from good.  Unless, of course, you are a Conservative or Liberal Democrat and want to point to the impact of the toughness of your austerity measures in all their technicolour glory.  They might see this all as very good news, but the rest of us can only watch from behind a cushion.  It’s beginning to feel like we’ve been pushed down Alice’s hole and are now hurtling ever faster without any sense of how and when we are going to hit the bottom.

As Polly Toynbee pointed out in an excellent Guardian article a week or so ago, the cuts have barely got going yet.  Only 6% of public service cuts have actually filtered through (it’s probably less in Scotland) and in benefits, 88% of already announced cuts and changes are still to come.  April is going to be a bit of a shocker for many individuals and families, as reality bites.  In fact, that moment for many came yesterday, when epistles from HMRC indicated an end to people’s entitlement to tax credits.  The cut off point is £26,000 for joint and single incomes:  a lot of families are going to hurt.  My own hit is in the region of £50 a month.   Still, let’s look on the bright side, there’s another budget looming – there will be more goodies coming our way from 2013 and 2014.

Everywhere you look, people really are starting to struggle.  A recent Netmums survey found that one in four families are living on credit cards and one in five mothers regularly go without meals in order to feed their children.  Anyone shocked at the latter finding shouldn’t be.  Such behaviour has always been with us:  I remember doing it too, a while ago.  You wait to see what they leave before you decide whether or not to make yourself something to eat.  More often than not, you make do with a half portion of food off of your child or children’s plates.  It ain’t pretty but it’s survival and it makes sure that your children get what they need.  The feckless poor and single parents huh?

The gulf between the haves and have-nots all across the UK has never been greater.  What has kept the system of inequality in place, the demographic glue of it all, has been the existence and mobility of a big group in the middle. Folk shifting their status a bit, from lower middle class to nearly the top, by dint of a university degree, a decent berth, promotion, credit, fortuitous house purchase etc, with the prospect of more to come, particularly if employed in middle management in the public sector or the financial services industry.

They are the ones about to slide right back down the ladder, for whom the haves were tantalisingly in reach and are now still sitting pretty while they and their families suffer.  The haves remain at the top, still untouchable in every way it seems.

Many, including myself, have been astonished at how calmly we have taken every insult and injustice thrown at us since 2008.  Self-interest and self-preservation has played its part in ensuring that we have chattered and grumbled but shown no real outward sign of our pain and displeasure.

All that might well change from April.  Middle income families – that’s people on between £15 and £45,000 per year – are about to get hammered.  It’s a big pool but the Tories are keen not to discriminate for once; while people at the lower end of the band will face real hurt, the impact might well be most keenly felt by families at the top end.

A two parent family could lose one worker, endure another pay freeze, lose the tax credits and find the credit cards maxed out.  Just like that.  Such a scenario takes them from the top end of that income band into its lower steps but with all the trappings of greater prosperity – cars, mortgages, holidays, nursery fees.  In the coming year, notorious lag indicators like homelessness and repossessions will undoubtedly start to rise.

The worst of times really are just around the corner – we might well be about to see deprivation creep in from the margins of our towns and cities and into suburbia.  Poverty is bound to get more visible, more pervasive and it will be interesting to see if folk continue to seethe silently or become more vocal about it all.


6 thoughts on “The worst of times are just around the corner

  1. All driven by the public sector budget mindset.

    To cut Council Tax would be an admission that the Scot Gov grant was too much meaning that next year it would be cut. Much better to be seen to be raiding reserves to make ends meet.

    When next year’s process starts, all officials will be doing is looking at the raw numbers. Heaven forfend anyone will try to analyse whether what has been spent was actually necessary or even desirable (to the punters at least).

    I don’t mind cutting in one place and increasing spend in others. In fact, Scot Gov is encouraging transfer from revenue to capital and symptomatic to preventative. But is there any similar philosophy behind the shifts in Edinburgh’s spending?

    • The thing is they aren’t raiding reserves to make ends meet but to build in investment – which is fine as far as it goes and yes, there is some transfer from revenue to capital and also some gearing up of preventative/early years – but also some cuts here too!

      And you are bang on re the starting point from next year. It’s all historic cost: we spent this much last year, to stand still we need to spend this much and no analysis of whether or not that is the right area or way to spend whatsoever. Only Stirling I think with SNP minority administration tried to build budgets from scratch and saved over £2 million (I think it was) in first year alone. More like this!

  2. Good article, and certainly one many people can relate to.

    My family gets tax credits, but we learned a long time ago not to rely on any state benefit, since it could always get cut. I also learned the hard way about maxing out on credit cards twenty years ago – never again!

    People are getting hammered everywhere. I have a pay freeze, increased rail costs, increase petrol, VAT……the list goes on and on.

    What amazes me is that politicians seem unable to grasp simple facts: every penny lost means a penny less that could be spent elsewhere, say a couple of DVD’s. The retailers therefore get hit, putting more people out of jobs and onto whatever benefits are available.

    It might help if we didn’t have a Westminster cabinet made up of millionaires…….

  3. We also have workfare making its way back onto the scene. I think I did at least one of each of the various schemes this idea went under back in the 80s & 90s – YOP, TOP, YTS, Community Programme, Training for Work, Employment Training etc etc. I would be made redundant 3 times, go to college twice, and find myself on short term or temp jobs then the routine of siging on and being offered training to fill that all important skills gap. If these schemes could have worked, they would have worked. They didn’t work because they don’t work. It’s a box ticking exercise that allows the government to be seen to do something, while in reality doing nothing. There was no incentive for a company to keep a trainee on when they could always get rid of him/her and get a new one in their place. The siutation will be the same and we’ll have another generation of kids hopes wasted.

  4. Yep, it’s not going to get any better, hence why they’re desperate for the referendum to come sooner – the economic environment in 2014 is not going to be a very accommodating backdrop for the Positive Case for the Union. The AAA credit rating will be long gone by then, which removes one of their arguments; the NHS deforms (sorry, reforms) will have been pushed through; people will be really suffering because of the welfare cuts; and it’s scary to think it, but there’s no reason to believe the rise in unemployment will stop any time soon.

    I would like to say “it could be worse, we could live in Greece”, but I think that would be like being punched in the face repeatedly by a cruiserweight boxer and saying “at least he wasn’t a heavyweight”.

  5. You are so right to raising these issues. These are the really big questions we need to be addressing.

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