Benefit claims soar as cornavirus lockdown devastates working life

The number of people claiming work-related benefits across Lancashire rocketed in May as the worst effects of the coronavirus lockdown hit hard.
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Nationally, more than 600,000 UK workers have lost their jobs amid the measures taken to control and benefit claims soared by a record 1.6 million, but experts warn the worst is yet to come for Britain’s labour market.

The Office for National Statistics (ONS) said early estimates showed the number of paid employees dropped by 2.1 per cent or 612,000 in May compared with March while job vacancies also slumped to a record low last month.

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Claims under Universal Credit by the unemployed and those on low incomes jumped 23.3 per cent month-on-month in May to 2.8 million and have rocketed 125.9 per cent or 1.6 million since March – with a record rise of over 1 million in April alone.

Jobcentre and civil service staff have been busy as more people claim benefits due to the coronavirus lockdownJobcentre and civil service staff have been busy as more people claim benefits due to the coronavirus lockdown
Jobcentre and civil service staff have been busy as more people claim benefits due to the coronavirus lockdown

In Lancashire's Parliamentary constituencies the numbers claiming benefits such as universal Credit in May shot up. In Blackpool North and Cleveleys 4,725 people were on benefit, 9.6 per cent of the population there a rise of 7.3 per cent on the same month last year.

In Blackpool South, there were 6,600 claims, 13.5 per cent of the population, up 7.3 per cent on last year. Both Blackpool areas have been hit by the shutdown of the tourism and hospitality sector.

Preston saw 5,495 claims, 8.4 per cent of the population, up 4.3 per cent on last year.

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Wyre and Preston North saw 2,075 claims, 4 per cent of the population up 2.9 per cent on last year.

Fylde has also been hit with 2,900 people claiming in May when it might normally see around 700. This equates to 5.9 per cent of the population and was up 4.1 per cent on last year.

Lancaster and Fleetwood saw 3,145 claims, 5.2 per cent of the population and up 2.9 per cent on last year, while South Ribble had 2.620 claims, 4.4 per cent of the population, up 2.7 per cent on the same month last year.

Ribble Valley had 2,420 claims up 2.7 per cent on last year while Chorley had 3,395 claims up 3.2 per cent on last year.

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The grim ONS data also showed the number of people temporarily away from work, including furloughed workers, rose by six million at the end of March into April, hitting 8.4 million at the end of April.

But the UK jobless rate remained largely unchanged quarter-on-quarter at 3.9 per cent in the three months to April, with unemployment at 1.34 million as nearly nine million workers were furloughed under the Government’s support scheme.

Experts said while the data shows the painful toll taken by lockdown, the true impact will only be shown after the current furlough scheme to support workers ends in October.

Yael Selfin, chief economist at KPMG UK, said: “The true impact of the crisis on the labour market is likely to only be revealed once the job retention scheme starts unwinding in the second half of the year.

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“Many businesses are expected to bring only part of their furloughed workers back, while they seek to tentatively reopen after the lockdown.

“Hiring new workers is also likely to be put on hold for some time.”

Job vacancies also laid bare the impact of lockdown, plummeting to an estimated 476,000 between March and May – down 342,000 on the previous quarter and the lowest since current records started in 2001.

The ONS said vacancies also slumped around 60 per cent in May compared with March.

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Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked.”

Figures showed employee average pay growth slowed notably in April 2020 and the three months to April saw total pay including bonuses fall in real terms for the first time since January 2018 – down by 0.4% after inflation.

The ONS said pay fell in industries where furloughing was most prominent, with many of these being the lowest-paying industries, such as accommodation and food service activities.