Almost 1m people have applied for universal credit since Boris Johnson urged people to stay at home two weeks ago, highlighting the rapid surge of unemployment that coronavirus has caused as Britain’s economy descends into recession.
The steep figures for those losing regular work came as the government revealed the highest number of daily deaths from Covid-19, rising by 563 to a total of 2,352, while also admitting it had only tested 2,000 frontline NHS staff out of 500,000 for the disease since the crisis started.
To limit any further fallout on jobs from the lockdown, Alok Sharma, business secretary, told banks it would be “completely unacceptable” if they were not giving the promised help to viable small businesses in the weeks ahead.
But the government’s extensive package of job retention schemes, support for the self-employed and cheap loans for companies has not prevented a surge of claims for state support 10 times faster than normal.
The level of universal credit claimants has risen almost as much in just two weeks as unemployment figures rose over three years from 2008 to its 2011 jobless peak.
The Department for Work and Pensions said on Wednesday that 950,000 people had successfully applied for universal credit since March 16. Over a normal two-week period, only 100,000 claims would be expected.
If every claim for universal credit represented someone made redundant, the unemployment rate would have risen to 6.7 per cent, compared with 3.9 per cent, or 1.34m, at the start of the year.
DWP officials stressed, however, that some of the claims would be from people who are still working but on lower pay and some from people furloughed from their companies and ready to start work immediately once the health crisis is over.
The department said the figures showed the system was “delivering in these unprecedented times”. It admitted there were “pressures on services” but said the system was working and 10,000 existing staff had been moved to “help on the frontline and we’re recruiting more”.
With such a sharp rise in claims, the current economic crisis is forcing people out of work much faster than in the global financial crisis of 2008-09.
Paul Dales, UK economist at Capital Economics, said the new leap in benefit claims suggested “the government support designed to keep people employed isn’t working”.
He said that if the rate of increase continued at this pace, the UK unemployment rate could exceed 10 per cent by mid-April, a rate not seen in the UK for 26 years.
Official unemployment statistics for the period would not be published for another two months and would be impaired by an inability of the Office for National Statistics to carry out the usual face-to-face interviews.
The UK is not alone in coping with a huge surge in joblessness. The US saw 3.3m jobless claims in one week to 20 March and Norway has seen its unemployment rate soar from 2.3 per cent to 10.4 per cent in March, taking it to the highest level since the second world war.
In Germany, unemployment has been stable but almost half a million companies have applied for the government’s short-hours scheme in a move JPMorgan called “off the scale”.
