Why Labour has reason to hope

New data shows that 88 per cent of Osborne's cuts are still to come.

The benefits cap, which MPs voted through yesterday, is becoming an ever bigger headache for Labour. In the week that Fred Goodwin lost his knighthood and Stephen Hester lost his bonus it's worth remembering that the family next door living off benefits grates far more with voters than the banker in his mansion.

Indeed, the latest polls confirm that the policy is probably the most popular measure the government has announced. The most recent YouGov survey shows that 72 per cent of voters support the £26,000 cap and that 52 per cent want a lower threshold. Labour's reasoned objections to the cap fail to cut through because few voters are interested in the facts. They've simply fallen for the populist line that "no family should receive more in out-of-work benefits than the average family receives for going out of work". Liam Byrne's insistence that "we are in favour of a benefit cap, but we like a cap that doesn't backfire" makes little sense to voters. Why would a cap of £26,000 - an amount that seems generous to most people- backfire?

The one hope for Labour is that as the full force of Osborne's austerity programme is felt the mood will shift. The startling fact from yesterday's Institute for Fiscal Studies Green Budget that 88 per cent of the planned public spending cuts and 88 per cent of the planned welfare cuts are still to come explains why Ed Balls and Ed Miliband believe they can still turn round the polls (the Tories currently enjoy a 12-point lead as the party that would best handle the economy). As many families experience unemployment for the first time in a generation, these ratings will begin to shift.

For this reason, it's unsurprising to learn this morning from ConservativeHome's Tim Montgomerie that Number 10 is not forecasting a Tory majority at the next election. As I've noted before, even after the boundary changes have been implemented, the Tories will still need a seven point lead to win a majority. Labour, conversely, will require a lead of just 4 per cent. Another hung parliament looks like the most likely outcome of the next election. Those Conservative optimists and those Labour pessimists who expect to see a Tory majority in 2015 should look again at the data.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.