Virus impact on Islands described as “Economic Armageddon” as Universal Credit claims rocket up

According to figures released by the Department of Work and Pensions (DWP) the Islands had 784 claimants in March 2020 rising to 1,252 claimants in April 2020, a staggering 59.7 percent increase month on month.

EXAMPLE HIGHLIGHTS POSSIBLE LOSS TO ECONOMY OF £3M PLUS PER ANNUM

The figures give a taste of the economic challenge facing the Islands’ once the coronavirus (Covid-19) lockdown measures are eventually eased.

Average incomes in the Western Isles may be low, but for example, if those 468 claimants were once earning £15,000 per year and now only receive Universal Credit the difference to the economy will be massive.

Universal Credit payments can range from £342.72 per month for a single claimant aged under 25; £409.89 per month for single claimant aged over 25; £488.59 per month for joint claimants both under 25 and £594.04 per month for joint claimants over 25.

Even at that highest payment for joint claimants the financial loss to the local economy would be upwards of £3m per annum, but this is likely to be far more.

The difference is staggering and politicians this week have recognised that this tidal wave of hardship will have a severe impact on the Islands, with the Leader of Comhairle nan Eilean Siar, Roddie Mackay, describing the situation as “economic Armageddon” at a Council debate on Crown Estate Funding for the region (see full report in this week’s Gazette on page 8).

FIGURES ARE SHOCKING

Western Isles MSP Alasdair Allan described the situation as “shocking” and warned that the way out of this damage to the economy would not be through austerity measures.

He said: “These figures, though largely expected in the current situation, are truly shocking. They reflect the real hardship which many island families now face.

“Because of our local dependence on seasonal industries such as tourism, and the difficulties now posed for other sectors like construction, the numbers of people who were forced to rely on benefits in the islands as a direct result of Coronavirus was always going to be significant. But that does not take away from the impact of these figures, in the islands and across the country.

“They also show the need for intervention in the islands’ economy, as restrictions are eventually gradually lifted, to support businesses, build up our local infrastructure and get people back into work.

“There will also be a legacy of social and other challenges from this unique shock to our economy. None of this can be solved via austerity.”

Western Isles MP Angus MacNeil talked of the need to get out of the lockdown safely and quickly with “proper testing and tracing in place in the islands”.

He told the Gazette: “It is very concerning to see what the current crisis has caused for many people.

UNIVERSAL CREDIT NOT ADEQUATE

“It will also underline that Universal Credit is not adequate, I know that people in some of our neighbouring countries are getting a better deal from their governments than we have through the UK Government.

“We must also ensure that the Job Retention Scheme is led by the health needs of the four countries in the UK and not just by the health needs of England and the rest tagged on as an afterthought.

“It further underlines how we have to think about getting out of lockdown safely and quickly and why since March 19th, I have been writing to the Scottish Government to have proper testing and tracing in place in the islands.

“National lockdown ending will, of course, help the economy, but local lockdown ending in the islands would be of help too and perhaps lessen the number of people on Universal Credit.

“We must remember that when this crisis is over there will be an economic cost not borne by all but will be borne heavily by some.

“That is a huge responsibility that we all have to ensure that health, the economy and people’s welfare is looked after as a result of the problems caused by Covid-19,” he added.