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Cruel Tories are punishing those on low incomes #SpendingReview

“The number of people in the UK earning less than the Government’s official minimum wage rate has increased five times since the start of the coronavirus pandemic.”

By the Labour Assembly Against Austerity Team

With the Government’s Spending review quickly approaching, it was recently revealed that the number of people in the UK earning less than the Government’s official minimum wage rate has increased five times since the start of the coronavirus pandemic. Few statistics could more starkly show how those on lowest incomes have been financially disadvantaged by the Conservative Government’s response to the virus. 

Whilst public spending on furlough payments and business support have been significant, Prime Minister Johnson and his Chancellor Rishi Sunak, have refused to take the steps necessary to ensure those on lowest incomes are able to live with dignity.

The government’s original furlough scheme – the Coronavirus Job Retention Scheme – only covered 80% of wages of those furloughed for three months until the end of May, and was grudgingly increased first to the end of June, and then to the end of October, when it was due to be replaced by a scheme offering reduced wage support of 67% and put greater requirement on employers to fund furlough incomes. With a new ‘lockdown’ through November announced on Saturday 31 October, the government confirmed it would continue to fund the 80% furlough amount through the month, and then a week later on 5 November, announced the furlough would last until the end of March 2021.

The unwilling nature of the government to guarantee people even a below-salary income, is shown by its gradual extension, from a 3, then 4, then 8, then 9 and, at the latest count, a 13 month scheme. 

However, despite the furlough, more and more people are being forced to live on less.

A report by the Resolution Foundation this week found those with the lowest savings are dipping into them the most. As the crisis persists more households are likely to run out of savings altogether, losing a vital financial safety net. And lower-income households have been far more likely to rely on additional support to get by throughout the pandemic, including through claiming additional benefits and increasing credit card debt. 

Furthermore, three-in-ten adults who have seen their income fall throughout the crisis are now experiencing deprivation in some form to such a degree that they are unable to afford basic household costs such as heating, saving £10 a month, or fresh fruit and vegetables. 

The surge in people now earning less than the minimum wage is down to employers being far more likely to furlough those earning the least – over 50% of those furloughed are on the minimum – and the failure of the furlough scheme to maintain a minimum wage floor. 

Those who were earning the minimum at £8.72 per hour will only earn £6.98 if furloughed. 

The TUC General Secretary Frances O’Grady has said the government “must fix the furlough scheme to ensure that no one is paid less than the minimum wage” and it is Labour MP Richard Burgon leading campaigning in Parliament, publishing a letter of Labour MPs, and a petition to rally support to defend the minimum wage.

In addition to demanding no-one on furlough is paid below the minimum wage, Burgon has set out a series of demands to increase low incomes, including ensuring sick pay is increased to real living wage rates, social security is increased to living costs, and rent relief is offered.

Additionally, the demand to retain the temporary £20 per week uplift to Universal Credit payments continued to make itself heard this week – Gordon Brown was the latest figure to demand the government keep the lifeline with a call in the Daily Mirror, but Labours frontbench back the demand but have failed to drive a campaign through local parties to speak to voters.

These real world problems for those on low incomes demonstrate why Labour Assembly’s Plan for the People demands – including the call for eradicating financial insecurity through a minimum earnings guarantee at a decent level, ensure Statutory Sick Pay at living wage levels, support for renters, and build a Social Security System that is universal and not punitive – sets the popular left framework for Labour to offer to voters.

  • Read the whole Plan for the People and sign here
  • You can sign Richard Burgon’s petition here
  • Join John McDonnell on 25th November at 7pm our event For a #PeoplesPlan to Protect Jobs & Livelihoods – register here.

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