Is benefit-bashing the next Osborne gamble to go wrong?

The Chancellor was ready to be seen as heartless. He didn't count on also looking hopeless.

The row about work capability assessments rumbles on. These are the tests that are meant to establish which recipients of incapacity benefit should be deemed fit and moved to a lower, more conditional rate. The Department for Work and Pensions insists the tests - administered by Atos, a private contractor - are an effective way of distinguishing between those genuinely unable to take on work and those who might simply have given up trying. Critics of the process allege it is a cynical device to shovel disabled and chronically ill people from a benefit that costs the Exchequer lots of money to one that costs less - without due regard for the personal circumstances and medical nuances of individual cases.

The accusation is that the government, confident of political cover in the form of the widespread assumption that many benefit claims are bogus, is saving money by targeting people unable to fight back and who mostly don't vote Tory. The rebuttal is that the DWP is working hard to get everyone into work - which for many people currently receiving incapacity benefit would have a rehabilitative effect, restoring independence and self esteem. As one government advisor put it to me recently: "Which part of your progressive tradition says it is ok to just let people rot on benefits their whole lives?" (Of course, for the DWP "tough love" narrative to have a happy ending, there need to be enough jobs out there ... )

It is worth noting that Atos first got contracts to do these assessments under the last Labour government. The assumption then, as now, was that family GPs were too indulgent in handing out 'sick notes' or felt intimidated if they refused to accept a patient's claim of inability to work. The current government has accelerated the process and ramped up the scale. A predictable consequence is the accusation of brutal targeting - setting semi-official minimum rates for assessors to clear people as fit for work. Atos deny this. The number of decisions successfully contested in court certainly suggests some cavalier assessment is going on. Today's story in the Guardian suggesting the DWP sought to censor information about the appeals process suggests ministers think the courts represent some kind if loophole for scroungers who might slip through the Atos net.

So far this whole story hasn't made a big political impact. That is largely because the received wisdom in Westminster is that public opinion supports the government almost without equivocation when it comes to benefit cuts. That view is backed up by polling, private and public, showing most people would gladly see the axe wielded harder and faster against the welfare budget. Labour, for that very reason, are squeamish about opposing benefit cuts. Their MPs hear enough complaints about 'scroungers' on the doorstep to know how toxic the issue can be. The famous squeezed middle that Ed Miliband would like to represent simmers with as much resentment against neighbours whose rent is paid by the state as against bankers.  

That sentiment is what lies behind the strategic decision by the Chancellor to target the welfare bill in his deficit reduction programme (that and, of course, the sheer size of the DWP spend, but the numbers are often inflated by pension payments.) Osborne's calculation is that you can hardly be too tough on benefits. Squeezing the so-called scroungers creates a nifty dividing line from Labour and keeps the public on side for painful cuts. The last government, the story goes, wasted all of the taxpayers' money handing out dole cheques for people to spend on strong lager and sit around watching Jeremy Kyle. The Tories are clearing up the mess. Etc.

A thought: what if Osborne is wrong about this? Opinion polls and Tory-leaning newspapers still endorse the benefit-bashing approach. But the Conservative approach, if it is not to look plain vindictive, relies on two things. First, the fiscal strategy must actually be seen to be working. Second, there must be jobs for people who are allegedly workshy to be ushered into. Both conditions are looking unmet in the absence of economic growth - and the real effect of departmental budget squeezes has hardly kicked in at all. At the start of this parliament it was reasonable to assume that many voters accepted the need for some harsh treatment at the hands of the coalition in the name of necessary budgetary correction. That support was conditional on the pain being delivered fairly and competently.  If, as one shadow cabinet minister puts it, the Tories look "hopeless as well as heartless" the political dynamic changes dramatically.

I doubt the ambient cultural noise around scrounging and benefit fraud will quieten down very quickly. But a prolonged slump, in which ever more people - and people higher up the income scale - feel insecure is bound to have an impact on perceptions of those who have fallen through the safety net. It is not inconceivable that scorn will turn to pity, especially if there are grounds for doubting the government's basic competence in delivering cuts fairly.  Lib Dem MPs will also come under increasing pressure in the next public spending review to distance themselves from Osborne's aggressive targeting of welfare. The junior coalition party has to present itself as the palliative agent in the mix, softening harsh Tory edges.

Besides, and this is the point where Tories should feel nervous, the whole "can't be too tough on benefits" approach came from the mind of Osborne, whose greatest strategic gamble so far - on the economy - has unravelled. If, as seems now apparent, he is not the Chess Grandmaster of politics as he was once advertised to be, is it not possible that he has called this one wrong too?

George Osborne plans to reduce the welfare budget by a further £10bn. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Should London leave the UK?

Almost 60 per cent of Londoners voted to stay in the EU. Is it time for the city to say good by to Brexit Britain and go it alone?

Amid the shocked dismay of Brexit on Friday morning, there was some small, vindictive consolation to be had from the discomfort of Boris Johnson as he left his handsome home in EU-loving Islington to cat-calls from inflamed north London europhiles. They weren’t alone in their displeasure at the result. Soon, a petition calling for “Londependence” had gathered tens of thousands of names and Sadiq Khan, Johnson’s successor as London mayor, was being urged to declare the capital a separate city-state that would defiantly remain in the EU.

Well, he did have a mandate of a kind: almost 60 per cent of Londoners thought the UK would be Stronger In. It was the largest Remain margin in England – even larger than the hefty one of 14 per cent by which Khan defeated Tory eurosceptic Zac Goldsmith to become mayor in May – and not much smaller than Scotland’s. Khan’s response was to stress the importance of retaining access to the single market and to describe as “crucial” London having an input into the renegotiation of the UK’s relationship with the EU, alongside Scotland and Northern Ireland.

It’s possible to take a dim view of all this. Why should London have a special say in the terms on which the UK withdraws from the EU when it ended up on the wrong side of the people’s will? Calling for London to formally uncouple from the rest of the UK, even as a joke to cheer gloomy Inners up, might be seen as vindicating small-town Outer resentment of the metropolis and its smug elites. In any case, it isn’t going to happen. No, really. There will be no sovereign Greater London nation with its own passport, flag and wraparound border with Home Counties England any time soon.

Imagine the practicalities. Currency wouldn’t be a problem, as the newborn city-state would convert to the euro in a trice, but there would be immediate secessionist agitation in the five London boroughs of 32 that wanted Out: Cheam would assert its historic links with Surrey; stallholders in Romford market would raise the flag of Essex County Council. Then there is the Queen to think about. Plainly, Buckingham Palace could no longer be the HQ of a foreign head of state, but given the monarch’s age would it be fair to turf her out?

Step away from the fun-filled fantasy though, and see that Brexit has underlined just how dependent the UK is on London’s economic power and the case for that power to be protected and even enhanced. Greater London contains 13 per cent of the UK’s population, yet generates 23 per cent of its economic output. Much of the tax raised in London is spent on the rest of the country – 20 per cent by some calculations – largely because it contains more business and higher earners. The capital has long subsidised the rest the UK, just as the EU has funded attempts to regenerate its poorer regions.

Like it or not, foreign capital and foreign labour have been integral to the burgeoning of the “world city” from which even the most europhobic corners of the island nation benefit in terms of public spending. If Leaver mentality outside the capital was partly about resentment of “rich London”, with its bankers and big businesses – handy targets for Nigel Farage – and fuelled by a fear of an alien internationalism London might symbolise, then it may prove to have been sadly self-defeating.

Ensuring that London maintains the economic resilience it has shown since the mid-Nineties must now be a priority for national government, (once it decides to reappear). Pessimists predict a loss of jobs, disinvestment and a decrease in cultural energy. Some have mooted a special post-Brexit deal for the capital that might suit the interests of EU member states too – London’s economy is, after all, larger than that of Denmark, not to mention larger than that of Scotland, Wales and Northern Ireland combined – though what that might be and how that could happen remain obscure.

There is, though, no real barrier to greater devolution of powers to London other than the political will of central government. Allowing more decisions about how taxes raised in the capital are spent in the capital, both at mayoral and borough level, would strengthen the city in terms of managing its own growth, addressing its (often forgotten) poverty and enhancing the skills of its workforce.

Handing down control over the spending of property taxes, as set out in an influential 2013 report by the London Finance Commission set up by Mayor Johnson, would be a logical place to start. Mayor Khan’s manifesto pledged to campaign for strategic powers over further education and health service co-ordination, so that these can be better tailored to London’s needs. Since Brexit, he has underlined the value of London securing greater command of its own destiny.

This isn’t just a London thing, and neither should it be. Plans are already in place for other English cities and city regions to enjoy more autonomy under the auspices of directly elected “metro mayors”, notably for Greater Manchester and Liverpool and its environs. One of the lessons of Brexit for the UK is that many people have felt that decisions about their futures have been taken at too great a distance from them and with too little regard for what they want and how they feel.

That lesson holds for London too – 40 per cent is a large minority. Boris Johnson was an advocate of devolution to London when he was its mayor and secured some, thanks to the more progressive side of Tory localism. If he becomes prime minister, it would be good for London and for the country as a whole if he remembered that.  

Dave Hill writes the Guardian’s On London column. Find him on Twitter as @DaveHill.