The problem with welfare reform? It's the market, not the benefits cap

Labour should focus on reforming the market to support the vulnerable without being labeled as profl

Labour should focus on reforming the market to support the vulnerable without being labeled as profligate.

Amanda Jacobs (not her real name) lives down the road from me in Peckham. It's a classic inner London location where deprivation soars as high as the rents. The state pays £900 a month to keep her and her daughter in a tiny, damp flat with failing heating. With 20,000 people on the waiting list, there's not much chance of a council house, and the jobs she's qualified to do would almost certainly leave her worse off.

"I want to work, and I've been looking," she says, "But there's no way I could afford the rent if I lost my benefit, and I have to think about her (my daughter) -- I don't want her changing schools again."

Talking to Amanda, you can't deny that some of the right's critique is spot on. It's true that the threat of losing benefit stops you working. It's true that paying £192bn a year in welfare is outrageous when you're trying to decrease debt. And it's true that the public is running out of sympathy for families like hers. Perhaps that's partly why in a week when the Tories have been talking about capping benefit, they have gained a five-point poll lead over Labour.

So what does the left do? It would fail people like Amanda to follow the coalition and suddenly limit their benefits. As Randeep Ramesh helpfully points out, the government itself acknowledges that this move is likely to increase child poverty and detrimentally affect some disabled groups and even those in work. But the left will also fail people if it leaves them in a position where work doesn't pay.

The answer is not to simply accept a watered down version of the government's proposals that allow a higher cap for higher rent areas like London, or even to just exclude child benefit from the equation. The answer is to change the market as well as the state.

First, we need to understand that the disincentive to work doesn't just come from high benefits from the public sector. It also comes from low wages in the private sector. For most people on benefits, the only jobs available are low skilled, badly paid, insecure and part time. If you had a living wage, regular hours and a chance of rising up through a company, you would be more likely to come off benefits, not because of the threat of eviction, but because of the rewards of employment.

Second, you need stricter regulation on the scandal that is the private rented sector. There is no way that Amanda's flat is worth £900 a month. In a world where housing is limited and ownership concentrated, we need much tighter regulation that so far we're failing to get. Otherwise we're just wasting our money and vulnerable people are still living in substandard housing.

Finally, we also need to promote alternative models of home ownership that give people a stake in where they live. Co-operatives, mutuals and community land trusts need to be much more accessible. What's happening in Rochdale -- where they have just created the largest housing mutual in the country -- is interesting. The left should remember its past and learn from it.

So the problem with welfare reform isn't so much the benefits cap, it's the failure to look at the problems of the market as well as the state. What I wanted to get across on the Sunday Politics this week but didn't have space to, is that the Tories have nothing to say about this. Reforming the market is fertile ground for Labour if the party wants to support the vulnerable without being labeled as profligate. And perhaps most importantly, such measures wouldn't just support Amanda, they'd also leave her more empowered.

Rowenna Davis is a journalist and author of Tangled up in Blue: Blue Labour and the Struggle for Labour's Soul, published by Ruskin Publishing at £8.99. She is also a Labour councillor.
 

Rowenna Davis is Labour PPC for Southampton Itchen and a councillor for Peckham

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Everyone's forgotten the one issue that united the Labour party

There was a time when Ed Miliband spoke at Momentum rallies.

To label the row over the EU at Thursday’s Labour leadership hustings "fireworks" would be to endow it with more beauty than it deserves. Owen Smith’s dogged condemnation of John McDonnell’s absence from a Remain rally – only for Corbyn to point out that his absence was for medical reasons – ought to go down as a cringing new low point in the campaign. 

Not so long ago, we were all friends. In the course of the EU referendum, almost all of the protagonists in the current debacle spoke alongside each other and praised one another’s efforts. At a local level, party activists of all stripes joined forces. Two days before polling day, Momentum activists helped organise an impromptu rally. Ed Miliband was the headline speaker, and was cheered on. 

If you take the simple version of the debate, Labour’s schism on the EU appears as an aberration of the usual dynamics of left and right in the party. Labour's left is supposedly cheering a position which avoids advocating what it believes in (Remain), because it would lose votes. Meanwhile, the right claims to be dying in a ditch for its principles - no matter what the consequences for Labour’s support in Leave-voting heartlands.

Smith wants to oppose Brexit, even after the vote, on the basis of using every available procedural mechanism. He would whip MPs against the invocation of Article 50, refuse to implement it in government, and run on a manifesto of staying in the EU. For the die-hard Europhiles on the left – and I count myself among these, having run the Another Europe is Possible campaign during the referendum – there ought to be no contest as to who to support. On a result that is so damaging to people’s lives and so rooted in prejudice, how could we ever accept that there is such a thing as a "final word"? 

And yet, on the basic principles that lie behind a progressive version of EU membership, such as freedom of movement, Smith seems to contradict himself. Right at the outset of the Labour leadership, Smith took to Newsnight to express his view – typical of many politicians moulded in the era of New Labour – that Labour needed to “listen” to the views Leave voters by simply adopting them, regardless of whether or not they were right. There were, he said, “too many” immigrants in some parts of the country. 

Unlike Smith, Corbyn has not made his post-Brexit policy a headline feature of the campaign, and it is less widely understood. But it is clear, via the five "red lines" outlined by John McDonnell at the end of June:

  1. full access to the single market
  2. membership of the European investment bank
  3. access to trading rights for financial services sector
  4. full residency rights for all EU nationals in the UK and all UK nationals in the EU, and
  5. the enshrinement of EU protections for workers. 

Without these five conditions being met, Labour would presumably not support the invocation of Article 50. So if, as seems likely, a Conservative government would never meet these five conditions, would there be any real difference in how a Corbyn leadership would handle the situation? 

The fight over the legacy of the referendum is theatrical at times. The mutual mistrust last week played out on the stage in front of a mass televised audience. Some Corbyn supporters jeered Smith as he made the case for another referendum. Smith accused Corbyn of not even voting for Remain, and wouldn’t let it go. But, deep down, the division is really about a difference of emphasis. 

It speaks to a deeper truth about the future of Britain in Europe. During the referendum, the establishment case for Remain floundered because it refused to make the case that unemployment and declining public services were the result of austerity, not immigrants. Being spearheaded by Conservatives, it couldn’t. It fell to the left to offer the ideological counter attack that was needed – and we failed to reach enough people. 

As a result, what we got was a popular mandate for petty racism and a potentially long-term shift to the right in British politics, endangering a whole raft of workplace and legal protections along the way. Now that it has happened, anyone who really hopes to overcome either Brexit, or the meaning of Brexit, has to address the core attitudes and debates at their root. Then as now, it is only clear left-wing ideas – free from any attempt to triangulate towards anti-migrant sentiment– that can have any hope of success. 

The real dividing lines in Labour are not about the EU. If they were, the Eurosceptic Frank Field would not be backing Smith. For all that it may be convenient to deny it, Europe was once, briefly, the issue that united the Labour Party. One day, the issues at stake in the referendum may do so again – but only if Labour consolidates itself around a strategy for convincing people of ideas, rather than simply reaching for procedural levers.