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Can Labour start a different conversation about benefits?

The public is very far away from embracing some of the ideas about the welfare state that social dem

The Labour Party faces a terrible dilemma dealing with the politics of welfare. That is one conclusion I took away from an event last night, run by the Fabian Society and the Child Poverty Action Group (CPAG), that I was lucky enough to chair.

The focus of the evening was a presentation by David Brady, associate professor of sociology at Duke University in North Carolina. Respondents on the panel were Alison Garnham, Chief Executive of the CPAG and Stephen Timms, shadow employment minister.

Brady's presentation distilled some of the arguments in his book Rich Democracies, Poor People: How Politics Explain Poverty - a comparative international study of the relationship between welfare systems, poverty and inequality.

At the risk of doing violence to Brady's thesis, I think I can summarise the gist as follows: spending on social security works. Countries that have higher welfare spending have lower rates of poverty. What is more, the wider social dividend of that outcome creates a positive feedback loop, building more consent for generous state support. By contrast, countries that develop a political discourse based on individual responsibility as the determinant of life chances - essentially the argument that personal failings, bad lifestyle choices are what hold people back - end up less equal and with more poverty. What is more, the cost of paying for that social failure (e.g. in increased crime and incarceration) outweighs the cost of a generous welfare system.

It was pretty compelling and, not surprisingly, popular with the Fabian audience. Much of the ensuing discussion focused on the political challenge of communicating these truths, held to be self-evident, to a sceptical British population. The Tories, it was argued, cheered on by the media, have successfully convinced the nation that money spent on benefits is being squandered, subsidising idleness.

Labour's job, by extension, should be rebutting those myths, defending universal benefits and robust state intervention to alleviate poverty. Stephen Timms did a valiant job of agreeing broadly with the moral consensus in the room, while delicately pointing out that the vast majority of the electorate are in a different place and that, under what was euphemistically referred to as "difficult financial circumstances", simply spending more on welfare was not on the agenda.

There was not much appetite in the room, I sensed, for a discussion of tough political choices presented by the obligation to bring down the budget deficit. No one raised the point in the audience. Only one person raised the question of whether it might at least be politically expedient to accommodate people's perceptions that there is inherent unfairness in the way benefits are currently paid out - sometimes appearing to reward inaction and penalise work.

It was, for the most part, a refreshing and insightful discussion, serving as a necessary corrective to some of the assumptions about the ineffectiveness of welfare spending that seem rapidly to be congealing into a political orthodoxy. That said, some recognition of Whitehall's woeful record of innovation and productivity in social spending would have balanced things out a bit. Not for nothing did ministers in the last Labour government complain (in private) that the money they were spending was "bouncing off" the bottom 10 per cent of recipients.

I came away distinctly pessimistic about the prospects for Labour developing a coherent position on this stuff. A Fabian Society audience is a very particular crowd, but often representative of the intellectual mood of the party. If last night's discussion is anything to go by this is very, very far away from the political mood of many people whose votes the party needs. Most Labour MPs I speak to recognise this problem. Their constituents are lapping up the government's tough rhetoric on welfare. The holy grail for Labour is a position that reassures the public that the benefits system is fair, not wasteful, rewards effort, does not offer something for nothing, while also meeting the high moral demands of activists who think any accommodation with Conservative language on this theme is craven capitulation to the forces of darkness.

Liam Byrne, shadow work and pensions secretary, is due to make a speech on Friday in which he tries to advance Labour's position. The thrust, I gather, will be that the welfare state, as originally conceived, was based on expectations of full employment and that any renewal of the welfare state should have the same goal in mind. The attack on the Tories is that they are dismantling social security, aiming to chase people off benefits and into work, but without honouring the implicit promise that there is work to do. This strikes me as sensible terrain for Labour to be marching on. As I argue in my column for the magazine this week, the government's failure to address unemployment and the likely bungling of reforms that are meant to make work a more attractive option than benefits will start to turn the tide of opinion on this issue. Labour can only capitalise if it has a clear position - and if it is united behind that position. That last point poses the greatest challenge.