U.K. Economic Scars Emerge With Jobless Excluded From Benefits
(Bloomberg) -- More than 10% of the U.K. workforce is out of a job and struggling to tap government benefits, exposing economic scars set to remain long after the coronavirus fades.
About 3.8 million people including actors and musicians in London’s famous theaters don’t qualify for the most lucrative welfare payments, according to the Standard Life Foundation, which campaigns for those on low and middle incomes. They’ve slipped through the cracks during lockdowns because of strict rules that filter out the self employed, contractors and people with patchy work histories.
Their plight highlights holes in the government’s safety net that will leave millions of workers worse off for years after Prime Minister Boris Johnson’s rapid vaccination program allows society to reopen. It’s increasing pressure on Chancellor of the Exchequer Rishi Sunak to provide more aid for those who are excluded when he delivers his annual budget on March 3.
“Tens of thousands of people have not earned a penny since March and of course its completely unsustainable,” said Rufus Norris, artistic director of the National Theatre in London. “There’s a huge drain away from the industry.”
Their concerns contrast with the optimism from the Bank of England that activity and growth will bounce back quickly starting in the second quarter once restaurants and bars reopen.
All told, 7 million people in the U.K., or one in five employees, are receiving furlough payments covering up to 80% of their wages or unemployment benefits. While those programs have won praise for preventing a bigger spike in joblessness, there are millions more who are left out because their circumstances don’t line up with the benefit system.
Even the industry’s richest and most successful figures are worried, including Andrew Lloyd Webber, the composer behind hit musicals including “Phantom of the Opera” and “Cats.” He had to take out a mortgage on his house to pay help pay 1 million pounds a month in bills coming in from seven of his theaters, which are earning no revenue during lockdown.
“It came home to me last October when I met a one of our finest British viola players. She said she was stacking goods in a supermarket,” Lloyd Webber said in an interview. “It’s got to that point -- it’s very serious.”
The problem isn’t confined to the arts. An estimated 3 million self-employed people have missed out on government support, according to the ExcludedUK pressure group. The Standard Life Foundation says 1.8 million have lost at least a third of their household income.
“The system is full of cliff edges,” said Mubin Haq, chief executive officer of the foundation. “It needs to allow for people who have changed jobs, worked in part-time roles topped up with self-employment, and those whose earnings have not been consistent.”
Actors and people who work in theaters are especially hard hit because many work a combination of freelance jobs or on short-term contracts. The lack of support during the pandemic will force many out of the industry, delivering a permanent blow to cultural institutions. Theaters could lose 26% of their staff and 3 billion pounds of revenue from the pandemic, Oxford Economics estimates.
“Our whole industry is under a great deal of pressure,” said Alan Lean, tax and welfare rights officer at the actors union Equity. “We’ve got a huge group of people that have lost out. The government doesn’t seem to be on the same wavelength.”
Sushil Chudasama, 43, was juggling about 15 jobs a month including acting and a regular local radio show. That dropped to nothing with the first lockdown. He’s ineligible for grants because of the portion of his income that came from freelance work.
“No one should fall through the cracks,” Chudasama said. “I wrote to Chancellor Rishi Sunak’s office. I got a three page document back telling me all the great work they’d done and everyone they’d helped. That doesn’t help me.”
Parliament has recognized the issue. The Public Accounts Committee in January gave the government six weeks to explain why such a significant number of struggling taxpayers were not receiving any support at a time when companies are cutting tens of thousands of jobs each month.
Speaking to the House of Commons last month, Johnson agreed that some groups have been “hard to reach and support in the way that we want.” He said some solutions may come in Sunak’s budget, more than a year after the pandemic started.
Stage manager Emma Cook was on tour with a major production in the U.K. when the lockdown hit in March. Her savings excluded her from univesal credit, and it took until June for her to get 76 pounds a week ($104) in jobseekers allowance.
“It gets worrying as you watch your money run out,” Cook said. “Nobody should be faced with not being able to pay their rent, not being able to eat, not being able to feed their families, just because of some metric that the government decided to make up.”
©2021 Bloomberg L.P.