UK Capital – New Steps, New Drama, New Pain for the Working Class

The media and the Government keep repeating the message that “the crisis is over, things are improving, we are making headway”. They point to the fact that jobless totals are down, production is up, debt is being reduced, and they say the economy is on the upturn. What they cannot explain is if the outlook is better for the UK economy, and even possibly the world, why is life for millions still getting worse and why is there no let up in austerity?[1]

Even the so-called rise in employment figures belies the fact that much of that rise is courtesy of counting as fully employed:

- those in poorly paid part-time work, unable to fully earn a true wage

- those on zero hours contracts often barely earning enough to live on, in many cases it is a case of 60-70 hours one week and nothing for weeks after.

New figures published by the Office for National Statistics show that 801,000 people were on a zero-hours contract as their main job in the 2015, compared to 697,000 in the previous year – an increase of 104,000 in only a year.[2]

The UK Economy and Austerity

'Austerity', it is claimed, is a necessary step to bring down the budget deficit and the national debt so that the international financial system which brought the debt misery in the first place will continue to support future Government borrowing. But it is not working.

In 2005 the UK National Debt was less that £0.5 trillion. Then came the worldwide financial crisis of 2008 and subsequent recession. The National Debt increased rapidly and went over £1 trillion in 2011. At the end of the 2015-16 fiscal year, it is expected to go over £1.5 trillion.

In terms of Gross Domestic Product the UK National Debt in 2005 was about 38 percent of GDP. But in the last ten years, in the wake of the Crash of 2008 and subsequent recession, the National Debt has doubled to over 80 percent GDP, but shows signs of levelling out as a percent of GDP.[3]

Current national debt is now estimated to be £1.8 trillion. The problem is that in a world capitalist crisis there is virtually no growth and without it there can be no way that the debt can be worked off. In the meantime those particularly bearing the brunt are to be found in areas which were highly industrialised and have fallen foul of the government's push towards further finance based earnings, high tech and foreign investment earnings – anything but those areas which might employ people here and obviously in those areas hit by de-industrialisation (the Northern Powerhouse remains not merely a myth but essentially a model based upon mice running on wheels in cages, it would seem).[4]

The Assault Upon Benefits

Whilst much attention has been focussed on the furore over further cuts to benefits for the disabled (of which more below) the apparent U-turn on this should not blind us to the fact that the cuts elsewhere will go ahead. There are also changes to Universal Credit which will reduce amounts paid or remove them altogether for many. The new corporation administering fitness for work assessments after Atos ran for the hills – Maximus, an American corporation this time – has been shown to be just as harsh as its predecessor. New tapers and thresholds for the withdrawal of Universal Credit have been introduced including:

· Reduced Tax Credits, especially for larger families

· Mortgage interest support to become a loan

· ‘Pay to stay’ introduced for higher-income council tenants

· Limiting Housing Benefit in the social sector to the private-rented rate

· Restricted entitlement to Housing Benefit for 18-21 year olds

· Cut in Employment and Support Allowance for less severely disabled to JSA rate

· Extension of Benefit Cap – £23,000 in London, £20,000 elsewhere

· Four-year freeze in value of most working-age benefits

Replacement of Disability Living Allowance by Personal Independence Payments (PIPs), with more restrictive entitlement, which began in 2013, will roll forward to 2018. It continues to be the case that particularly those suffering from mental health issues are penalised.

Research by Sheffield Hallam University, commissioned by the Joseph Rowntree Foundation and Oxfam, reveals the devastating financial cost of welfare changes to some of the poorest and most vulnerable people in our society.

It shows that the cumulative impact of welfare changes since 2010 is in the region of around £27bn a year, or the equivalent of £690 a year for every working age adult in Britain, at a time when the current Government continue to insist that a cumulative impact assessment isn’t possible.

According to the report, ‘The uneven impact of welfare reform‘ (pdf), by Professor Christina Beatty and Professor Steve Fothergill from Sheffield Hallam’s Centre for Regional Economic and Social Research, couples with two or more children will see their income slashed by an average £1,400 a year until 2020.

Meanwhile, lone parents with two or more children will see their annual income cut by £1,750 a year. Researchers say 83 percent of the overall financial loss caused by welfare reform will hit families with dependent children.

Benefit changes aimed at tenants in social housing, such as the widely condemned ‘bedroom tax’, are set to cost those affected more than £6 billion, amounting to more than half of the overall loss to welfare changes.[5]

Some of the above will save the government money but it is not the case in every instance. All too many of the so-called savings are likely to be used for greater benefits for those with already high earnings. It has been noted in many circles that the hardest hit areas are those that are already poor, particularly northern areas and impoverished seaside areas.

The Budget and Brollies at Dawn

It had been announced that there was to be at least a £30 per week cut in benefits for those receiving ESA and similar benefits. Claimants of such benefits would be on the same basic rate as those on JSA. These measures are estimated to save the government over £1.2 billion over the next few years. It has also been denied that this was to be a budgetary measure related to tax benefits for those well off. This would have been a further assault upon those who are too ill to work, the disabled etc.

Many of the measures mentioned above were announced in the Budget. It also brought eventually the resignation of IDS. A grand gesture stated as being because of the punitive effects of the stated reductions in PIPs payments to the disabled (PIPs being what is taking over from DLA). All of these measures resulted from instructions given by the Treasury to the DWP for them to work on – they were told to find ways in which such reductions could be passed on and so diminish the welfare budget (the unstated result being also the ability to pass on benefits to the well-off via capital gains tax, income tax and more). IDS has adopted the posture of being outraged at these measures even though his department has worked on them for months and has done similar things over the past few years, equally harmful to the poor, the sick, the disabled, without a bat of a lash[6]. The real reason he threw a wobbly was that Osborne had forced him to publicly defend welfare cuts made by the Treasury only to back down himself after the rebellion of a reasonable number of panicking Tory MPs in the wake of the budget announcements. Duncan-Smith was thus left hanging out to dry as the bad guy. Given his past record of attacking the vulnerable his fate at the hands of the hypocritical Chancellor was entirely deserved. Cuts to PIPs etc. may be put on hold for some time, or different measures implemented but Osborne now has to find £4.4 billions from somewhere in the next 3 years to make his sums add up.

What has emerged is that greater emphasis is now being put on the move over to Universal Credit. This had been slated to be introduced fully by 2016, then put back to 2017 and may now only be introduced around 2020. Again these were measures given over to groups within the DWP and to some extent the Treasury to work on but with the expected mismanagement of the whole exercise, leaving many aspects to particular 'working groups', i.e., committees chatting over coffee, it has not hit any targets. Universal Credit has only been rolled out in a few areas so far. Those who have been through the process have found that although there is a stated waiting period of 42 days – 6 weeks – thus adding savings to the budgetary outlay, on many occasions that is extended to 8 or more weeks. The victims have found themselves suffering in terms of penalties over unpaid bills, loss of services, even threatened evictions through unpaid rent. The bullying goes on. It is now emerging that rates concerning the payment of Universal Credit are dropping and the rules governing such are changing. Because UC collects a whole raft of other benefits under one hat it is already affecting and will affect a wider range of people. Housing benefit will be grouped within UC, thus people will have to pay full rents to whichever landlord from their one-off benefit payment. This saves on office and other staff costs for government and local government but threatens further evictions through failures to pay rents. It will be all too easy for those with little or nothing to put food and warmth before rent. Those receiving UC in place of tax credits will find now that the new proposals for thresholds mean that they will lose benefits earlier than before because the rate at which such is cut has been changed. It means that working only a few hours per week will become less of an option even for those with health problems. In effect, the alteration of thresholds and rates in Universal Credit means that it has been effectively reduced. Overall Universal Credit is a further step towards making the poorest worse off, making it more difficult for those with families or health problems but some income more difficult to make ends meet or to stay out of severe economic hardship.

The Reality

The so-called rise in employment figures belies the fact that much of that rise is courtesy of counting as fully employed:

- those on workfare, i.e. indentured labour forced to work for their benefits for the profits of major corporations or charity/corporations (charities that are corporations in all but name)

- those in poorly paid part-time work, unable to fully earn a true wage

- those on zero hours contracts often barely earning enough to live on, in many cases it is a case of 60-70 hours one week and nothing for weeks after.

What we have is a series of measures merely emphasising the worth of those in the top percentiles, particularly in the richest regions of the UK. The changes to benefits, far from being designed to aid people into worthwhile work, work that pays a true living wage, are nothing more than an attempt to recreate on a US model a Britain where the poor are imprisoned in that poverty.

Given the fact that the 'austerity measures' are often not doing what is stated – saving money and so aiding the budgetary shortfall – what do these measures actually achieve? A large part of the intention of the government is nothing more than bullying and a conscious remodelling of the welfare state. These measures are in effect doing nothing more than moving us towards a society that is reminiscent of centuries ago, at least in its flavour. They are hoping to have a society of meek workers subdued by the threat of becoming paupers begging for any scraps they can manage to gather from the tables of those at the very top, a society uncomplaining in the face of anything thrown at them and serviced by systems that barely work but earn a massive amount for their owners (not of course the state). This society, though, will be one where the economy is driven by the top percentiles drawing an income from finance and speculative processes, with all of the severe ups and downs that entails, served by the rest of the economy and population only able to access a tiny amount of value and paying the price of any downside to the finance/speculative economy.


notes, bibliography, references

Government borrowing, debt and debt interest: historical ...


[1] For an economic analysis of the crisis check:



[4] Previous articles have mentioned how all of these things have developed:


[6] And there is no light on the horizon for claimants. Crabb, the gay hating rabid christian successor to IDS, has stated that he wants companies such as Maximus to be removed from making assessments relating to sickness benefits and disabilities. It has now been revealed that Capita who has taken over some of these responsibilities are doing their usual job. They are employing people with no medical background, paying them a ridiculous amount and expecting such to make assessments via a form in literally a few minutes, often just 15 minutes. A Channel 4 documentary catalogued the efforts of one such 'assessor' – he would often fill in such forms prior to the interview. Within the documentary you can hear offensive statements made by examiners about claimants showing precisely the attitude Capita has towards anyone such. See

Tuesday, April 19, 2016