Victory for sick and disabled as Lords reject welfare reforms

Peers have voted against reducing support for cancer patients and young disabled people. Where next

Cuts to sickness and disability allowances were resoundingly rejected by the Lords last night, as government proposals faced three embarrassing defeats.

As my colleague George Eaton blogged yesterday, Iain Duncan Smith's welfare reform bill would restrict the period that the sick and disabled could receive Employment and Support Allowance (ESA) to just 12 months, and would means-test it.

The amendments, brought by crossbench peers Lord Patel and Lord Listowel, mean that:

  • Young disabled people who are unable to work are automatically eligible for ESA (this was passed 260 to 216)
  • Claimants are reassessed after two years, not 12 months (234 in favour)
  • Cancer patients are exempt from the time limit between reassessments (passed 222 to 166)

This marks the fourth defeat for the government on the flagship legislation, following a vote before Christmas on housing benefit cuts. It is a big success for disability campaigners, who have been lobbying hard against the changes.

So, what next for the welfare reform bill? The government maintains that the changes are necessary in order to meet its targets on bringing down the deficit. Welfare Minister, Chris Grayling, was defiant on the Today programme this morning, signifying that this is not the end of the road:

We have said very clearly that we will seek to reverse the amendments in the Lords when it comes back into the Commons. We are dealing with some extraordinarily difficult economic times financially.

It is difficult to see exactly how the government will get its way after three heavy defeats in one night, but it is likely that ministers will fight hard for the 12 month time limit. Officials claim that extending the limit from one year to two would cost £1.6bn over five years. Lord Freud argued that the one year time limit strikes "a reasonable balance between the needs of sick, disabled people claiming benefit and those who have to contribute towards the cost".

Yet, clearly, the counter-argument -- that the books must not be balanced on the backs of society's most vulnerable -- prevailed in the Lords. Patel said:

If we are going to rob the poor to pay the rich, then we enter into a different form of morality.

All of this suggests that peers are willing to fight, and bodes well for upcoming votes on further controversial measures such as changes to disability living allowance. The vote is not the end of the road on the battle for welfare, then, but was a significant victory for fairness and compassion.

 

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR