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Miliband's welfare plan deserves the left's support

His plan to reward those in work is a reaffirmation of the founding principles of the welfare state.

Despite the headlines it has attracted this morning, Ed Miliband's plan to give workers priority over the jobless for social housing is not a new one. In the fine speech he delivered on responsibility in June, Miliband promised that Labour would be "a party that rewards contribution, not worklessness." He cited the approach of Manchester which, as well as helping the most vulnerable, gives priority to those who contribute the most to their communities, be it through volunteering or employment, and those who have been good tenants in the past.

In his speech at 2:15pm today, he will say: "The hard truth is that we still have a system where reward for work is not high enough, where benefits are too easy to come by for those who abuse the system and don't work for those who do the right thing." His ambition is for the entire country to emulate the Manchester model: "Our first duty should be to help the person who shows responsibility, and I say every council should recognise the contribution people are making."

Miliband's bid to put the contributory principle back at the heart of the welfare state hasn't been welcomed by all on the left. It is viewed by some as a reassertion of the crude distinction between the deserving and the undeserving poor. Buth both Lloyd George and Beveridge regarded the contributory principle as essential to preserve fairness, increase work incentives and maintain public support for the welfare state. Neither believed in a "take what you can" approach. As Beveridge put it in his 1942 report: "The correlative of the state's undertaking to ensure adequate benefit for unavoidable interruption of earnings is enforcement of the citizen's obligation to seek and accept all reasonable opportunities of work." (Although, of course, he assumed a system of full employment, hence the title of his second report in 1944: Full Employment in a Free Society.)

It's important to emphasise that Miliband isn't calling for the state to relinquish its duty to protect the poorest. Fears of workless families being evicted from their homes are wide of the mark. But he is proposing a radical reordering of our social contract. He recognises that an approach that focuses on need alone risks reducing the welfare state to an American-style safety net for the poorest. Miliband should now go further and take up James Purnell's proposal to extend the contributory principle to pension provision. Those who pay in should receive a higher pension than those who do not.

Liam Byrne, the shadow work and pensions secretary, recently observed that "Labour is behind on welfare reform. It must get back in front". Miliband's vision of a system that rewards those who give the most, rather than simply those who need the most, offers one way to do so.