Hackney sees 140 per cent rise in Universal Credit claimants in seven months

The number of people claiming Universal Credit in Hackney has rocketed by 140 per cent in just seven months, as the economic fallout from the global pandemic continues to bite.

According to Department for Work and Pensions figures, there were 12,395 people on UC in the borough in January , rising to 13,125 in February.

By September, this had risen to 31,522 people.

According to council documents, while London’s overall employment rate continues to appear high at 76.5 per cent, the full scale of the jobs crisis caused by Covid-19 is not yet apparent in these figures.

The Institute for Employment Studies finds that employers across the country are planning to make double the number of redundancies than were made at the height of the financial crisis – 380,000 from May to July 2020 versus 180,000 from January to March 2009.

The Town Hall has been preparing for large numbers of people moving on to the government’s contentious UC system since earlier in the year, with officers warning of a risk not just of increased unemployment and unsecured debt, but “blighted” neighbourhoods if large numbers of businesses are forced to close.

This represents a sharp contrast to the council’s pre-pandemic expectation that the East End would see high employment growth, particularly in Tower Hamlets, Newham and Hackney.

A council report on the issue adds: “There were, and are, however structural challenges to the shape of London’s labour market. Many jobs in mid-tier categories such as manufacturing and wholesale have either disappeared from the labour market or were growing at a much slower rate, leaving people with mid-level skills or qualifications at a growing disadvantage. This can also be described as the ‘hourglass’ model of London’s economy.

“Secondly, many of the new jobs created in recent years come with significant risks of low pay and lack of progression within the industry. These roles (e.g. hospitality and retail) are also reliant on spending by people in high skilled jobs. This creates a precarious labour market if there is a macroeconomic downturn.”

Government statistics show that as at 31 August, 18,900 people were furloughed, or 14 per cent of eligible jobs, a percentage point above the London rate.

Those most affected by the crisis, according to the Resolution Foundation, are those who were working ‘insecure’ jobs in February, younger and older workers, the lowest-paid workers, and employees of small companies.

The Town Hall is set to continue scrutinising how to best tackle these issues at a meeting of the Skills, Economy and Growth (SEG) commission on 23 November. This will be against a backdrop of Bank of England analysis pointing to a long recession, with a jobs crisis unlikely to resolve in three years, and with the furlough and other support schemes delaying most of the impact on employment into 2021.

The council is set to reckon with statistics from the Greater London Authority (GLA) estimating “historic downturns” for most sectors of employment in the capital, particularly in accommodation, foods, the arts, entertainment, recreation, education and construction, with Shoreditch businesses relying on footfall in a “comparatively worse position” than those in Dalston and Hackney Central due to low levels of travel into the centre.

The SEG report adds: “The pandemic and particularly the period of lockdown in spring 2020, has shown the importance of ‘key workers’ in providing essential goods and services. There has been a growing recognition of the importance of other roles such as care workers, supermarket check-out staff, delivery drivers and binmen.

“Many of these roles are traditionally low paid and often described as low skilled. Views may be changing about how those jobs are and should be valued, although that hasn’t yet translated into better contracts and working conditions; although the council and wider public sector anchor institutions have an opportunity to provide leadership in a number of these areas, in line with the inclusive economy strategy.”