What does Miliband mean by the "structural" welfare bill?

It doesn't even need capping.

Ed Miliband will cap "structural welfare spending" if he is elected in 2015, he announced today, saying that "such a cap will alert the next Labour government to problems coming down the track and ensure that we make policy to keep the social security budget in limits."

It's not entirely clear what Miliband means by "structural" welfare spending at this point. It could just be a political fudge, designed to mimic the Conservatives' similarly fudgy focus on the "structural" deficit. The structural deficit is a particularly difficult thing to actually measure, because it relies on three pieces of information all of which are themselves uncertain: the output gap, the relation of public spending to economic growth, and the response of tax revenues to both.

Get any of them wrong, and your estimate of the structural deficit is off; get all three wrong, and you can be billions of pounds off the mark. And look at just the variation in the estimates of the output gap, via Touchstone:

But whereas the structural deficit is at least a conventional economic concept, albeit one hugely prone to measurement error, it's not entirely clear what "structural" welfare spending is, and even less clear how to cap it.

The best guess is that the structural welfare bill is the bill which we would expect to see in normal times; in other words, Labour won't view a rise in housing benefit due to the recession as a problem, but would be more concerned if, during the recovery, it fails to drop down to lower levels.

If that is the definition, then it has an interesting outcome once Labour start to cap it, because, as Declan Gaffney showed last month, "there has been no structural increase in the level of aggregate working age welfare spending for a very long time". That's because welfare spending, properly construed, must take into account foregone revenue as well as public expenditure: the most prominent example of which is tax credits. Around £3bn of the cost of tax credits in 2012/13 came from an offset to income tax. Money wasn't being "spent", but it was certainly a cost of welfare.

And when you take into account other taxation expenditures – like the mortgage interest tax relief, which was abolished in 2000 – you find that structural welfare costs have stayed remarkably stable. This chart again from Declan Gaffney's piece:

 

The real question is what "structural" welfare means for people not of working age. Because, thanks to our ageing nation, the state pension liability is growing year-on-year, and even pushing back the pension age by a year from 2026 won't help too much. Of course, it would be possible for Labour to define that increase as something other than structural – "demographic", perhaps – and thereby dodge the question. But if they don't, the key effect of this promise could be that Labour has pledged to cut pensions, two years before a general election against a party which has pledged to keep them above inflation and wage rises indefinitely.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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