The Costs of Austerity

In this project I’m interested in the ways in which people’s relationships with family, friends and the wider community enable them to negotiate social and economic change. The cluster of economic and social changes that I’m particularly focused on are those associated with the ongoing recession and the austerity measures implemented, by government and other institutions, in response to recession.

Many of these changes are part of the coalition government’s ongoing welfare reforms, announced in the 2012 comprehensive spending review and the 2012 Welfare Reform Act. The key reforms include:

– the freezing of child benefit rates and ‘tapering’ of access for higher income households (earning over £50,000) plus reductions in a variety of payments to new parents (such as the Child Trust Fund and the Health in Pregnancy Grant)

– the capping of housing benefits (as part of the overall benefit cap, see below), a reduction in Local Housing Allowance rates (which set the local levels of housing benefit) and benefit reduction for ‘under-occupation’ (the so-called ‘bedroom tax’)

– time limiting of employment and support allowance (ESA)

– a reduction in both coverage and levels of tax credits (in advance of all tax credits being subsumed with Universal Credit, see below)

– the replacement of the Disability Living Allowance (DLA) by Personal Independent Payments (PIPs) and a re-assessment of all recipients (expected to result in hundreds of thousands receiving reduced levels of benefit)

– the localisation of council tax benefit (i.e. to cash-strapped local authorities) and a reduction of council tax benefit budgets by 10%

– a benefit cap of £500 per week for a family or £350 per week for a single person

– the abolition of community care grants and crisis loans (with a suggestion but no statutory requirement that they be replaced by local schemes, devised by (cash-strapped) local authorities)

– the introduction of Universal Credit from Oct 2013; this will become the main means-tested social security benefit for people of working age, replacing Housing Benefit, Income Support, Employment and Support Allowance (ESA), Jobseeker’s Allowance, Working Tax Credit & Child Tax Credit

– an increase in state pension age

In addition to these welfare reforms, the other major cuts affecting households’ everyday lives are the cuts to council spending allocations, amounting to £5 billion in 2011/12 and 2012/13. This equates to an average decline, over two years, of approximately 16% in councils’ funding from central government. These cuts are leading to declining support for essential services and the wholesale of withdrawal of support from apparently non-essential services (in, for example, Newcastle City Council’s plan to cut all arts subsidies). There’s a particular geography to these funding cuts, as Patrick Butler’s Cuts Blog in the Guardian explores. In North Tyneside, Conservative mayor, Linda Arkley, has spearheaded an outsourcing of council services, in the face of opposition from Labour-held council. The impacts of this outsourcing are as yet unknown, but the fear is that access to services will be reduced.

On top of all these, families are feeling the ‘squeeze’ from, at one end, pay cuts and freezes, reduced working hours and job loss, and at the other, from increases in everyday prices, for food and energy for example. The ‘big six’ energy providers announced price increases in December of between 6 and 12%. At the same time, a number of the large supermarkets predicted further food price rises, as a result of both high world grain prices and the wet UK winter. The impact of this particular squeeze is seen in the rapid growth of food banks across the UK; the Trussell Trust, the UK’s largest provider of food banks, estimates around 230,000 people will be fed nationwide by food banks in 2012/13 (see also this report).

Numerous commentators suggest that yesterday’s Budget will do little to alleviate the pressures on families. Budget reflections by the Resolution Foundation, the Joseph Rowntree Foundation, the Fawcett Society, and many others argue that nothing has been done to stop more and more working families finding themselves in, or on the brink of, poverty. What’s more, there are fears that the upcoming Comprehensive Spending Review (expected later this year or in 2014) will see further cuts to welfare.

All in all, this is tough picture for the ‘squeezed middle’ families at the heart of my research. Whilst these are not families living in poverty, they are families for whom a few knocks (such as reduced working hours, or rising energy prices, or limited access to tax credits, or the loss of free local playgroup) make life increasingly difficult.