As we enter what we all hope is the beginning of the end of restrictions, it is more important than ever that the Chancellor’s Budget next week takes bold and compassionate action to protect people’s incomes, homes and livelihoods – and begins to chart a course to a better future.
The Prime Minister has set out the steps for exiting this latest lockdown, and as the restrictions begin to lift, the economic consequences of COVID-19 will come into sharp relief. Throughout the pandemic the Government has pledged to wrap its arms around people and give them the support they need to get through it. We will be looking out for three immediate priorities in the Budget on 3 March:
- Keep the £20 uplift to Universal Credit and Working Tax Credit in place and extend it to people on ‘legacy’ benefits who have so far been unjustly left behind: the uplift has been a lifeline for millions of people. Ending it now, or doing a short extension of only six months, will leave millions of people exposed just as the economic storm is expected to reach its height – with unemployment forecast to peak in the middle of this year and remain elevated for years to come. Whipping away the lifeline would see 6.2 million families face an overnight cut in their incomes equivalent to £1,000 per year, plunging an additional 500,000 people into poverty. It would also take money out of people’s pockets just at the time when we need people to spend money and increase demand in our economy
At the start of the pandemic the Chancellor announced the uplift saying it would “strengthen the safety net”, a tacit admission that benefit levels were not enough to keep people afloat. We need a social security system we can all rely on when life events happen – like illness, redundancy and relationship breakdown. We believe this lifeline should be kept in place permanently – and at very least for the next year - and extended to people claiming legacy benefits. This would be the first step to rebuilding a social security system that truly acts as an anchor in difficult times.
- Don’t have an arbitrary end date for furlough - keep it while health restrictions are in place and phase it out slowly as they’re lifted while supporting new job creation: unemployment sweeps people into poverty, but the furlough scheme has helped keep unemployment down. It has also kept people connected to their employers which should help speed the recovery when it comes as people will return to jobs they already know. Having come this far with this powerful measure we need to end it in the right way, which means in line with decisions about health restrictions, rather than arbitrarily selected dates. Businesses that are instructed to close or are severely restricted in how they operate because of social distancing rules, should continue to be fully supported, while employers that are able to begin to get their businesses back on track should be incentivised to use part-time furlough to bring more workers back part-time rather than fewer workers back full-time.
As the furlough scheme unwinds it will be the right time to ramp up measures to support the recovery. JRF has called for the cost of hiring new workers to be reduced to help stimulate job creation, along with investment in sectors like adult social care and green jobs (such as fitting energy efficiency improvements and renewable energy) to deliver a new generation of secure, dignified and well-paid jobs.
- Reduce the coming wave of evictions by supporting renters in arrears: in November JRF estimated 700,000 renters were in arrears, and some 2.5 million households in Great Britain were worried about how they would pay their rent in the coming months. This picture could worsen further as renters tend to work for sectors that have been badly affected by the impact of the pandemic. While schemes to help with COVID-related arrears have been established in Wales and Scotland, renters in England are yet to receive help. We recommend providing immediate financial help by significantly boosting funding for Discretionary Housing Payments to address rent arrears and reforming the way they’re set up and administered, to ensure that support reaches those who need it.
As we begin to exit lockdown it is a good moment to think about what else we want to leave behind.
The Budget should be a moment to seize the opportunity for change and avoid a return to the pre-pandemic normal. Back then, normal meant too many jobs that lacked security, dignity and decent pay. It meant people being pushed into poverty by crippling housing costs and a social security system that did not do enough to keep people afloat. It also meant people’s life chances being profoundly affected by where they live, the colour of their skin and how much money their family has. That’s just not good enough for our society in the 21st century.
We have the choice to build a different future, one that is characterised by good jobs and investment in people and their skills, one where housing is genuinely affordable and where social security is there for us when we need it.