Over the past six weeks, we have seen how the markets respond to political uncertainty and indecision, witnessing the harm it causes to our economy and our wider social fabric. While attention has rightly focused on the spectacular extent of u-turning and resultant chaos, we need to recognise that families on a low-income have long faced state-driven uncertainty and perpetual insecurity.
The ongoing refusal to confirm whether benefits will uprate by inflation next year is the latest in a long line of decisions with massive ramifications for millions, which are put-off, postponed, and sometimes overturned, leaving individuals unsure how they will get through the next few days and months
The refusal to commit to benefit uprating at a time of soaring inflation takes place against a context in which families have quite simply nowhere left to cut. The extent of the political uncertainty means that – at the time of writing – it is impossible to say whether the expected announcement on this in the November fiscal statement will even take place. There remains a very real fear that the government will choose to raise benefits in line with earnings rather than inflation.
There was a refusal to commit to uprating benefits with inflation (something previously promised by Boris Johnson) during Liz Truss’s short premiership. The new chancellor Jeremy Hunt has offered platitudes about protecting ‘the most vulnerable’ but no meaningful reassurance. If Rishi Sunak, our new shiny Prime Minister, uprates benefits by earnings rather than inflation, this would represent a drastic cut to the incomes of poorer working-age families. The Resolution Foundation estimates that such a change could see the income of some families reduced by up to £1000 a year; the biggest loss would be felt by families on a low-income with dependent children.
This leaves us in a situation where the poorest families in the UK may be about to face a massive cut to their income that many will not be able to accommodate in what is an already impossibly stretched budget. But these families are being expected to wait and see, to hold on to find out whether they are soon going to be in a situation where they can’t afford to feed their children.
In our work with parents and carers on the Changing Realities research programme, we are seeing firsthand the harm this is doing to parents. They worry and fear about the material hardship they may face is corrosive and incredibly damaging, even if the Government does eventually do the right thing and increase benefits in line with inflation.
Erik, a single parent to a teenager, told us:
“The uncertainty around any benefits increase is deeply concerning and worrying. I have simply come to the end of any cutbacks I can make. As someone living on legacy benefits that has not seen any increase in recent years, the current situation is having a severe impact on the mental and physical health of both my daughter and myself. We are now living in the dark, unable to buy washing powder to wash our clothes & surviving on very basic food that does not need cooking if possible. Without a proper increase in line with living costs I don’t know how we are going to get through”.
The refusal to offer reassurance to families like Erik’s demonstrates an astonishing lack of respect for families living on a low income, for their need to budget and for their mental health. Their willingness to suspend families in uncertainty, at a time of extraordinary pressure, is reminiscent of the decision making around the £20 increase to Universal Credit and Tax Credits during the COVID-19 pandemic.
Having introduced the £20 increase to support families on a low-income, the government often refused to say how long it would continue, in what form or how it might end. This was a political decision that made clear the provisional, temporary nature of the measure. Its effect was to create profound uncertainty for families across the country, revealing a brutal disregard for people living in or close to poverty.
Despite the concerted campaign efforts of anti-poverty activists and organisations, the extra £20 was unceremoniously dumped in the September 2021 Budget. Families suddenly found that their weekly food budget had halved, or they could now no longer pay their heating costs.
Just over a year on, as we wait for the Chancellor to declare whether or not families will face a marked real-terms cut to their income we see again this brutal disregard for people living on a low income. The markets, we are told, need stability, they need certainty and predictability.
But what about families, don’t they need stability and certainty, too?
Don’t families need to be able to budget, to plan, to understand what their income is going to be and how they can meet their outgoings? At the moment, their ability to plan has been cursorily removed from them, causing profound uncertainty and anxiety. Cruel, unnecessary, thoughtless. It would appear that the government respects markets far more than it respects families.
Mollie sets out how it feels to be at the sharp end of this uncertainty:
“Yet again we are faced with more financial uncertainty around what’s happening next….We can barely afford basic things for our home and the cost of living payment isn’t even touching the sides. The government haven’t raised benefits in line with inflation and the “support” being advertised everywhere is deeply confusing….I still haven’t turned on our heating at home and I don’t know when we will be. Everything is just too expensive”.
After economic chaos, the government finally listened to the markets and U-turned. The time to listen to families, especially those on a low-income, is long overdue.