From austerity to crisis: Covid-19 Inquiry highlights UK’s pre-pandemic weaknesses, says TUC

Just three days short of its second anniversary, the Covid-19 Public Inquiry published the report from the Module One investigation into the resilience and preparedness of the United Kingdom (writes TUC’s NATHAN OSWIN).

The report highlights the devastating consequences of austerity in the decade that preceded the pandemic and the risk of vulnerability in the UK population.

The Impact of austerity on public services

Inquiry Chair, Baroness Hallett, states plainly that, “In short, the UK entered the pandemic with its public services depleted, health improvement stalled, health inequalities increased, and health among the poorest people in a state of decline.” This blunt assessment underscores the critical condition of the nation’s public services as they faced the unprecedented challenges of the Covid-19 pandemic.

The role of the TUC and evidence from frontline workers

As Core Participants in the Inquiry, the TUC played an integral role in the process, working with our unions to provide the evidence that ten years of under-investment and real terms funding cuts to public service in the run up to the Inquiry left key services struggling to cope.

“Public services, particularly health and social care, were running close to, if not beyond, capacity in normal times” the report states, a statement that doctors, nurses, porters and social care workers have been telling us all. 

The Inquiry also heard that “there were severe staff shortages and that a significant amount of the hospital infrastructure was not fit for purpose. England’s social care sector faced similar issues. This combination of factors had a directly negative impact on infection control measures and on the ability of the NHS and the care sector to ‘surge up’ during a pandemic.”

A call to avoid past mistakes

The report is both a damning indictment and a call to never repeat the mistakes of that decade – a desperate reminder of the need to invest in our public services.

And while the report is not naive about the costs needed to make the UK more resilient ahead of the next pandemic – a matter of when not if – it reaches  the conclusion that “the massive financial, economic and human cost of the Covid-19 pandemic is proof that, in the area of preparedness and resilience, money spent on systems for our protection will be vastly outweighed by the cost of not doing so”.

Addressing health inequalities

What’s more, the Inquiry is crystal clear as to the price we pay for inequality across our communities. It notes that at the outset of the pandemic, the UK had “substantial systematic health inequalities by socio-economic status, ethnicity, area-level deprivation, region, social excluded minority groups and inclusion health groups”.

And Baroness Hallett’s report correctly states that these inequalities weakened the ability of the UK to cope, stating that “resilience depends on having a resilient population. The existence and persistence of vulnerability in the population is a long-term risk to the UK.’ 

Recommendations for the future

The recommendations themselves speak of the need to engage with wider society for planning on how we handle a crisis and to take into account the “capacity and capabilities of the UK”. 

No one knows the capacity and capabilities of our public services better than the staff that deliver them and the TUC and its affiliated unions stand ready to assist the government in this vital work.

Conclusion: Building a resilient future together

It is by working in partnership – with proper resources going into our public services – that we can truly learn the lessons this report sets out and secure the resilience and preparedness that the UK needs for a future full of challenges.

NHS building plans for Scotland delayed: Briggs speaks out

Plans to reveal which new hospitals, surgeries and treatment centres will be built in Scotland have been delayed.

In a letter to Holyrood’s finance committee, Cabinet secretary for Finance and Local Government Shona Robison explained: ‘To provide as much certainty as possible to parliament and wider stakeholders of our capital investment plans, I must wait until I have confirmed capital allocations from the new UK government”.

That confirmation is not expected until late Autumn – and, given the new Labour government’s warnings about a £20 bn. ‘black hole in the UK’s finances, it’s not expected to be good news.

Lothian Conservative MSP, Miles Briggs said: “This further delay to finding out if SNP Ministers will reinstate the funding for a new Princess Alexandra Eye Pavilion is extremely disappointing. 

“We urgently need a new eye hospital to improve the delivery of ophthalmology across the South East of Scotland. 

“The decision by SNP Ministers not to reverse funding for a new hospital has been a disastrous decision and will ultimately lead to additional costs for the delivery of a new hospital.

“I will continue to lead calls for the funding for a new eye hospital. What we desperately need is to see some leadership from SNP Ministers.”

320,000 people pushed into poverty because of mortgage interest rate rises

“Poverty statistics that hide the real scale of increases risk policymakers missing what is truly happening to poverty.”

Many households remortgaging or taking out new mortgages since 2022 have experienced sharp falls in their disposable income as higher interest rates have pushed up housing costs, and by December 2023 this is set to have pushed 320,000 such people into poverty. But official data do not measure mortgage interest payments properly, so official poverty statistics will only capture about two-thirds of this effect (230,000 people). 

These are the findings of a new IFS report, released on Thursday and funded by the Joseph Rowntree Foundation, which examines recent trends in poverty and deprivation. Other key findings include:

  • Despite the pandemic and the cost-of-living crisis, the overall rate of absolute poverty was the same in 2022–23 as in 2019–20 (18%, or 12.0 million people), though it did rise slightly by 0.8 percentage points (520,000) between 2021–22 and 2022–23. But there was a significant increase in more direct measures of hardship. For example, the proportion of working-age adults who reported being unable to keep their home warm enough rose from 4% to 11% (1.8 million to 4.6 million) between 2019–20 and 2022–23, and the share who reported being behind on bills rose from 5% to 6% (2.1 million to 2.5 million). 
  • Part of the difference is likely to relate to how the official statistics measure incomes and hence poverty. Higher energy and food prices mean that lower-income households and pensioners faced a higher inflation rate than average – but this is not captured by the official poverty statistics. Taking account of higher inflation for these households implies poverty rose by 210,000 more people than implied by official statistics for 2021–22 and 2022–23 (730,000 people rather than 520,000), including 80,000 pensioners.
  • In addition, the official statistics do not measure households’ mortgage interest payments directly, instead modelling them based on average interest rates. This matters when there is a growing spread of interest rates as some households come off their fixed rate: in 2022–23, mismeasurement of mortgage interest payments resulted in the number in poverty being understated by 70,000; as more fixed-term mortgages end, that number is set to rise to 150,000 (based on December 2023 interest rates).
  • There is evidence that mortgage rate rises have pushed some adults into financial hardship. Adults remortgaging in 2022 were 2 percentage points more likely to fall into arrears on bills than those with mortgages who had not remortgaged. This suggests that, once all households have remortgaged, the number of adults behind on bills could rise by 370,000. 

Sam Ray-Chaudhuri, a Research Economist at IFS and an author of the report, said: ‘Rising mortgage rates have played and are likely to continue to play an important role in many households’ living standards. But, perhaps surprisingly, they are not measured properly in the official income data.

“This has led to the headline statistics understating the number of people in poverty, something set to get worse in next year’s data. Poverty rises have also been understated due to the unequal impact of inflation.

“At a time when rates of deprivation and food insecurity have risen substantially, poverty statistics that hide the real scale of these increases risk policymakers missing what is truly happening to poverty.’ 

Peter Matejic, JRF Chief Analyst, said: ‘This research shows the cost-of-living crisis wasn’t felt equally by everyone. Compared with before the COVID pandemic, many more people, especially those on a lower income, struggled to heat their homes or keep up with their bills.

‘One reason lower-income households went without essentials is because they faced a rate of inflation even higher than the headline numbers. High interest rates also saw many households forced into financial hardship after they remortgaged.

‘This report raises many questions about whether social security is adequate for the challenges looming over struggling households. The new government can’t wait for growth, after years of cuts, caps and freezes to social security have left families without the financial resilience and security they needed to cope with higher prices and costs.’

Commenting on the IFS report IFS on poverty, which shows that 320,000 people pushed into poverty because of mortgage interest rate rises, TUC General Secretary Paul Nowak said: “This surge in poverty shows the awful impact on people’s lives of the Conservatives’ economic and policy failures.  

“It’s a poverty crisis that has been created by poor growth and social security cuts. Interest rate hikes came on top of the longest period of pay stagnation for more than 200 years.  

“Rapid delivery of the government’s plan to make work pay will ensure more better-paid, secure jobs and help reduce poverty among working families.”