ECONOMIC RECESSIONS AND AUSTERITY MEASURES

Not only has COVID-19 had a devastating public health toll, the global economy has been hit with a ‘coronavirus shock’ which could potentially see the deepest financial downturn since the Great Depression in the 1930s. From a human rights perspective, this approaching recession will have a considerable impact on the protection of economic, social and cultural rights enshrined in the International Covenant on Economic and Social and Cultural Rights (ICESCR), including the rights to work, food, adequate housing, social security and healthcare. 

From the 2008–2009 financial crisis which brought about the most recent global recession, we saw that:

the crisis and the global economic slowdown associated with it, has the potential to impact on human rights directly and indirectly…the ability of individuals to exercise and claim their rights and on the ability of States to fulfil their obligations.

Austerity measures are efforts to substantially reduce government spending in an attempt to regulate public-sector debt and are often adopted in response to recessions. However, according to the United Nations Independent Expert on the effects of foreign debt, austerity measures serve to entrench inequalities, weaken social security nets and jeopardise state potential to respond to immediate minimum core human rights obligations.

The UK adopted austerity measures after the 2008/2009 financial crisis, through sustained reductions in public spending and tax rises. Between 2010 and 2019 the UK made cuts of more than £30 billion in spending onsocial services, housing subsidies and welfare payments. Often these types of measures cause retrogression in the enjoyment of economic, social and cultural rights, which may result in a violation of international human rights obligations especially. It specifically affects the most vulnerable, through public spending cuts on those programmes that primarily benefit the poor. The past 10 years in the United Kingdom have proven that economic austerity measures in response to the current crisis would be a regression in human rights protection.

The ICESCR provides a a framework to guide government policies with obligations that all state parties must fulfil. States are obliged to use their maximum available resources towards progressive realisation of economic and social rights, fulfil certain minimum obligations and fully justify any retrogressive measures and discrimination. Where retrogressive measures are used, they must be temporary, necessary and proportionate, ensure protection of minimum core content of rights, and be non-discriminatory. In 2018, the UN Expert on Extreme Poverty and Human Rights, Philip Alston, found that the UK had failed in all these criteria of permissible use of retrogressive measures. Alston declared that “the policies pursued since 2010 amount to retrogressive measures in clear violation of the country’s human rights obligations”.

THE HUMAN IMPACT OF ECONOMIC AUSTERITY MEASURES IN THE UK

Between 2011 and 2017, homelessness in the UK rose by 60 percent and rough sleeping increased by 165 percent from 2010 to 2018. According to the Joseph Rowntree Foundation, between 2016 and the end of 2020 the benefits freeze will have swept 400,000 people into poverty and adversely affected more than 27 million people. The Social Metrics Commission found that almost one third of children in the UK were in poverty in 2018, and 2.5 million people in the UK were one crisis away from falling into poverty. For many, the current COVID-19 pandemic has presented such a crisis.

It is unacceptable that in the world’s sixth largest economy 1.5 million people have experienced destitution and 20 percent of the population live in poverty. 

Within these poverty numbers, persons with disabilities and people from ethnic minority groups are disproportionately affected. Due to austerity measures, families that include a person with disabilities are projected to lose more than 30 percent of their annual net income between 2010 and 2021/22. Furthermore, since 2013 more than 17,000 sick persons and persons with disabilities have died waiting for disability support benefits. 

Similarly, people from Black and Asian households in the UK are the most likely to live in poverty and are the most disproportionately affected by the government measures from 2010 to 2020. Those in the lowest fifth of incomes during this period experienced a 20 percent decline in living standards, the largest average drop. According to Alston’s report “the bottom 20 per cent of earners will have lost on average 10 per cent of their income by 2021–2022”. Whilst those most vulnerable have been disproportionately impacted, according to the UK Equality and Human Rights Commission, these austerity changes have actually resulted in the countries’ top earners increasing their income. 

One austerity scheme, Universal Credit (UC), which rolls six different welfare benefits into one, has been directly linked to increased reliance on food banks. The Trussell Trust, the largest national food bank charity, has reported an increase of 5,146 percent in the distribution of emergency food parcels under the current scheme. Furthermore, UC has also been characterised by arbitrary waiting payment periods, strict sanctions, and a two-child-limit. The negligence and arbitrary sanctions of UC can be seen in the case of Errol Graham. Graham starved to death after his benefits had been cut because he did not attend a Work Capability Assessment due to suffering from depression. He weighed four and a half stone when he died. 

Clearly basic rights to food, adequate standards of living, social security and fundamentally the right to life, have been hugely restricted and infringed upon by the austerity measures of the UK government since 2010, with a detrimental impact on those people that the state should be most committed to protecting.

THE IMPACT OF COVID-19 ON INTERSECTIONAL INEQUALITY

Much like the myth of austerity measures affecting everybody in UK society similarly, with everyone having to “tighten their belts together”, the construction of coronavirus as  “the great equaliser” in society is also false.

COVID-19 is hitting a society that is already unequal.

Already we can see the unprecedented effects of COVID-19 on the UK economy. Between April and June this year, households will have £43 billion less cash available for essential spending. Many families at the sharp end of inequalities who were struggling before the pandemic are now have reduced or no income. The Centre for Economics and Business Research has predicted that unemployment will more than double, with the biggest unemployment increase among the lowest-paid workers. Benefit claims will be unlikely to satisfy the demand for disposable income. The stress and insecurity resulting from financial strain can be anticipated to have immediate mental health effects on those most vulnerable. It is particularly worrying in the context of systemic underfunding of mental health services. 

While making up just 13 percent of the population, Black, Asian and Minority Ethnic (BAME) people are disproportionately affected by COVID-19 due to health inequalities, and account for over a third of critical cases. Additionally, the economic impact is likely to hurt these communities more, as seen with the effect of austerity measures. This is because, due to discrimination and structural inequality, the UK poverty rate is twice as high in BAME communities as it is in that of white groups.

According to the Department for Work and Pensions, the number of people on Universal Credit (UC) has increased by 40 percent due to the pandemic, with over 5.2 million people claiming UC in May 2020. It can be assumed by the shortcomings of UC already experienced that many of those who have applied will have to wait, will not qualify or may be sanctioned if not actively seeking work during this unprecedented period. Increased food insecurity has also been seen in response to COVID-19. As food prices have risen and access has been reduced, The Food Foundation has indicated a preliminary quadrupling of adults who are now food insecure. 

The impact of COVID-19 has hit people from uneven starting points, which were exacerbated and deepened by a policy of cuts that made poor people poorer and weakened the position of vulnerable people.

AUSTERITY NOT AN OPTION FOR COVID-19 POLICY 

The 2010 programme of economic austerity was posed by the Prime Minister at the time, David Cameron, as the only response to “save the economy”, with “no alternative”. Similar rhetoric is being employed by the government in response to COVID-19 to be “doing whatever is necessary”, thus ringing familiar alarm bells. 

In light of the coronavirus shock and huge government funding for emergency support measures (estimated to consume 41 percent of national income by 2023) fiscal watchdog George Osborne in April called for new austerity measures to balance the budget after the crisis. Whilst the current Prime Minister, Boris Johnson, has attempted to distance himself from the term “austerity”, that does not mean that the UK will not be served austerity measures in different packaging. 

Considering that austerity has hugely contributed to the ineffective UK response to the pandemic, the 44,236 preventable deaths and the devastating impact on the most vulnerable in the UK, austerity cannot be the policy of the UK government in response to COVID-19.

It is unsurprising that a decade of spending cuts and benefit freezes have left the country wholly incapable of responding to a crisis such as the COVID-19 pandemic. Even without a pandemic, the National Health Service was overworked, overwhelmed and underfunded. Social care and the welfare system have been gutted, destroying the safety net of those least able to help themselves, children, single mothers and persons with disabilities.

TOWARDS A NEW NORMAL – ADDRESSING INEQUALITY AND COVID-19

The UK needs to create a “new normal”, one that is not dictated by austerity and individualist capitalism. Yet, despite massive public spending and borrowing in relation to the COVID-19 pandemic, the reinstatement of benefit sanctions on 1 July 2020 with the reopening of job centres is a return to the hostile environment for those most vulnerable in the UK. This arbitrary reintroduction of sanctions comes at a time when “vacancies have dropped, people are still shielding and the schools aren’t back”. 

While the huge economic bail-out packages from the government are welcome and necessary, the long-term support plans must take a human rights-based approach, where people, rather than business, are central. Public spending should not just be reserved for when we are in crisis but needs to be sustained to create a resilient public sphere, with investment in “people and places”.

According to economist Mariana Mazzucato, the economic crisis caused by COVID-19 presents us with an opportunity to “do capitalism differently”, recogise state potential to generate value, and take a “stakeholder approach to capitalism”. Rather than the government working to fix market failures after the fact, the role of governments should be to proactively shape and create markets “that deliver sustainable and inclusive growth”. Mazzucato suggests this could be done by attaching Green Growth conditions, that promote sustainability and inclusivity, to bailouts offered to companies seeking assistance. This Green Growth strategy focuses on tackling today’s big challenges, including climate change, through reducing carbon emissions, but also focusing on investment in workers and “bottom-up innovation” technologies. Such an approach re-centres the relationship between the government and the people, rather than making the relationship between government and big business central.

The new normal should be characterised by governmentally funded partnerships with business which are not driven by profit, but public interest. The government has the power to make positive change, create value and strengthen our structural capacity and public organisations. Accordingly, David Blanchflower, professor of economics, argues that the “economy must serve ordinary people, not hedge funds”, with investment in living standards, incentives to work and the welfare state. 

Tax increases present the progressive alternative to budget cuts and austerity. Increasing wealth tax, which has largely been untouched during the austerity period, presents a good opportunity to support investment, along with taxing unproductive economic activity. 

To redress inequalities in the UK, we need to build a balanced economy, generate well-paid new jobs, thus creating a sustainable tax base, and invest in workers and public services.  

In the words of Blanchflower, “You don’t weaken people when they are down, you build them up”. The UK government failed those most vulnerable in 2010, they cannot fail them again. 

*An earlier version of this article was published under the author’s own account on the Medium platform.

Ana is currently completing an M.A. in ‘Understanding and Securing Human Rights’ at the Institute of Commonwealth Studies, University of London after having received a B.A. Hons. in History and War Studies from King’s College London. Her research interests focus on international human rights law, women’s rights, refugee rights, and social justice.

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