UK families see hard times ahead as COVID programs end

September 30, 2021

LONDON (AP) — Diana Gaglio has been in the economic crosshairs of the pandemic for the past 18 months. The 53-year-old from Bedfordshire, north of London, was furloughed from her job as entertainment manager for a holiday company when COVID-19 gutted the travel industry, then lost her job altogether just before Christmas. Now her temporary job at a virus testing center is coming to an end, just as the government scraps the emergency program that provided an income the last time she was out of work.

“The market is going to be flooded,’’ Gaglio said. “If it wasn’t hard already, it’s going to be harder.’’ Gaglio is one of millions of people across the U.K. who are facing a long, bleak winter as the rising cost of living coincides with the end of government programs that once shielded households from the economic fallout of COVID-19.

The biggest of those programs, which sought to preserve jobs by subsidizing the wages of workers whose hours were cut due to the pandemic, ends on Thursday. Some 1.6 million people were still supported by the so-called furlough program this month, down from a high of 8.9 million in May of last year.

Also, a temporary increase in welfare payments ends next week, cutting benefits by almost 1,100 pounds ($1,480) a year; and protections for renters squeezed by the pandemic are being phased out. All of this comes as 15 million households face a 12% jump in energy bills, adding to consumer price inflation that reached the highest level in more than nine years last month.

Adding to the sense of gloom, drivers are facing long lines to fill their tanks after a truck driver shortage curtailed fuel deliveries. Newspapers warn of a scarcity of everything from toys to turkeys this Christmas unless the crisis is resolved soon.

“The country and the labor market is in for a really bumpy autumn,’’ said Charlie McCurdy, an economist at the Resolution Foundation, a think-tank focused on improving living standards for those on low to middle incomes. “We can expect a living standard squeeze for families across the country.”

With front page headlines screaming “Prepare for winter of discontent” and “Boris in battle to save Xmas,” the bad news is fueling concerns about Prime Minister Boris Johnson’s leadership and heaping pressure on him to do more to help struggling consumers.

Keir Starmer, leader of the opposition Labor Party, on Wednesday mocked Johnson’s promise to “level up” incomes and economic opportunity. “Level up?’’ Starmer said during a speech at the party’s annual conference. “You can’t even fill up.”

The government has resisted calls to reverse course, saying the economy is rebounding from the pandemic and it is time to end emergency support programs. Treasury chief Rishi Sunak said Thursday that other programs, including job training, recovery loans for businesses and a recent increase in housing benefits would remain in place. The government has spent 400 billion pounds to support the economy during the pandemic.

“With the recovery well underway, and more than 1 million job vacancies, now is the right time for the scheme to draw to a close,’’ he said of the furlough program. “But that in no way means the end of our support.’’

The U.K. economy has recovered strongly since the depths of the pandemic, although gross domestic product remains about 2.1% smaller than it was in February 2020, according to the Office for National Statistics.

The recovery has pushed job vacancies to record levels as employers hire staff to meet increasing demand. But while the future may look bright for truck drivers and hospitality workers, things are a lot less hopeful for other professions.

The surge in vacancies has been driven by openings for low-paid workers, with more than two-thirds of unemployed jobseekers facing increased competition for jobs, according to the London-based Institute for Fiscal Studies.

The situation is particularly bad for older workers. Data released Thursday by the IFS showed that just 35% of workers over 50 had found work six months after being laid off during the pandemic, compared with 64% of younger workers.

Stuart Lewis, founder of Rest Less, a digital community for people over 50, said his members are anxious about the darkening financial situation. “We’re seeing there’s concerns around the pandemic and the health risks that are still lingering for some,” he said. “There’s additional concerns, as well, around affordability, around the financial impact as people run into Christmas. There’s a perfect storm of challenges that many people are concerned about in the coming months.”

Gaglio is one of them. Before the pandemic she was a respected manager, booking cabaret performers, comedians and singers for an international holiday company and spending much of her year abroad. Now she’s back in England, renting a room in someone else’s house to keep costs down as she tries to get her career back on track.

But she fears that recruiters and employers don’t look beyond her age to see the vivacious, curious and confident woman she remains. “Other people see your face and your skin and it's older — they have a perception of you,” she said. “Maybe they need to get to know me better.”

Employers are also in a bind. Take Tool Shop, a hardware chain that had 12 shops and 50 employees before high property taxes and the shift toward online shopping closed three stores in 2019. The pandemic added to those pressures, forcing Tool Shop to close five more outlets and merge two others last year, leaving it with just three shops and 11 staff members. The company used to draw up a multi-year strategy targeting growth and expansion. Now the planning horizon is three months.

Tool Shop is hoping customers will return as the pandemic eases and people return to their usual routines, said Sara Edmiston, the company’s human resources director. Tool Shop employee Martin Matio, 69, is betting people will recognize that personal service is valuable and seeing what you are buying is better than looking at a tiny picture on a website.

Matio quickly illustrates his understanding of the London household, together with instant recall on where items can be found in a shop packed to the rafters. Got a moth problem? He’s got just the thing. Mold? No problem.

Returns? No questions asked. Jokes? Part of the service. “I believe physical contact is the most important thing; customers want to know what they are buying’’ he said, comparing retail transactions to courtship. “If I’m going to get married, I want to see the girl.”

Associated Press Writer Khadija Kothia contributed.