Who did we protect during the pandemic? And who fell through the cracks?

If it isn’t too early in the new year for a throwback, a few weeks ago I appeared at the UK Covid-19 Inquiry, talking about how well (or not) the economic interventions had been designed with inequality in mind.

The economic shock caused by the pandemic was felt very unevenly across the economy, reflecting the sectors seemed to be “essential” in the first lockdown, or the ease of adapting to remote work, or the extent to which consumers avoided face-to-face activities as the economy re-opened. But it just so happens that the worst-affected sectors also disproportionately employed younger and lower-paid workers (and, in some cases, more ethnic minority or disabled workers). So the key achievement of the labour market interventions – particularly the Job Retention Scheme (JRS) – was to reduce the extent to which this very uneven economic shock translated into very uneven, inequality-worsening outcomes for workers.

But that doesn’t mean the JRS was perfect. Its biggest flaw from the point of view of inequality is that employers could choose whether or not to use it; if an employer decided to make a worker redundant rather than furlough them, or simply not to offer their zero-hours contract employees, agency workers or a dubiously-classified self-employed workers any hours, then there was nothing the worker could do. And this was more likely to happen to the lower-paid or those in insecure employment.

My evidence also touched on the changes to social security benefits. Whether one views the £20 a week uplift to Universal Credit (UC) and Working Tax Credit (WTC) and the hike to Local Housing Allowance (LHA) as a success depends on the rationale. It’s now clear that the Government would ideally have provided the extra support only to people who lost earnings thanks to the pandemic: it saw the £20 a week increase as necessary to provide greater income replacement (which is unsurprising, given how low benefit levels are in the UK compared to people’s earnings). But DWP wasn’t able to limit the £20 increase (or the additional LHA) only to the newly-out-of-work, so it had to give it to all on UC (and WTC), leading to what it called a “windfall gain” to those already on UC when the pandemic hit.

But there was another rationale for increasing the value of benefits: the pandemic, and particularly the lockdowns, made life more expensive for low-income families. If that was the rationale (and it’s not clear that the Government ever accepted this), then the £20 a week hike should have been varied by the size of the family, and extended to more social security benefits. So either the increase was too little (because, even after a £20 increase, the income protection provided the social security system was far less than that provided through the JRS or SEISS), or the increase should have been varied with household circumstances and extended to those on legacy benefits, Carer’s Allowance, and even Pension Credit.

The Inquiry is focused on what should be done differently in future, and I have three main recommendations.

• First, the Government should consider whether, in future furlough schemes, employees should have a right to be placed on furlough, or a right to make a formal request to their employer that they be placed on furlough (similar to the rights employees have to request flexible working). This will prevent the most marginalised workers from missing out on the scheme.
• Second, the Government should recognise that lockdowns and the sort of restrictions on work and daily life imposed in the pandemic put up costs, particularly for low-income households, and that low-income households will need additional support to compensate for this. Such support would ideally be provided through the social security system through proportional increases in all benefit rates, rather than via discretionary schemes administered by local authorities.
• Finally, given the very large difference in the amount of income protection provided to people whose jobs were protected by furlough or who could claim the SEISS, and those who missed out on both (either because they were made redundant, or they were not eligible for SEISS) and had to rely on protection provided by the social security system, the Government should recognise that the social security system does not provide enough income replacement in the event of job loss or sickness.

My evidence is now published here, and if you are an insomniac, then you can watch the hearing here. My thanks to Imogen Stone, who co-wrote the report with me, and to the various people working for the Inquiry who gave comments and steers along the way (and who looked after me on the day I gave evidence).