Osborne sets a welfare trap for Labour and a test for the coalition

The Chancellor's plan to increase benefits by just 1 per cent creates an awkward dilemma for Labour and Lib Dem MPs.

Everything George Osborne does is notoriously drenched in political calculation. The Autumn Statement was no exception. The Chancellor did not have much room for manoeuvre, given the enduring parlous state of the public finances, which remains (or should remain) the biggest story of the day. Inevitably, he fell back on familiar devices.

Much of the hard work of deficit reduction will be done, as was widely advertised in advance, by cuts to the benefits bill. The main new development, also much anticipated, is the decision to limit the up-rating of benefits to 1 per cent. Since that is lower than inflation, it will feel like a cut. The Chancellor rather sneakily announced the move in a passage that compared the burden faced by hard-working folk with the leisurely life of people on benefits. He repeated his favourite homily of the dogged commuter heading off to work, eyeing the feckless neighbour, blinds drawn, sleeping away a life on the dole. It is a popular theme with the Conservative press and in focus groups.

The problem is that, bundled up with Osborne’s supposed idle scroungers, are people who have jobs, work hard, struggle to make ends meet on low wages and currently depend on some combination of tax credits, child benefit, housing benefit, council tax benefit. The freeze affects them as much as it does those who are out of work (who, in any case, might reasonably be thought of as unfortunate jobseekers instead of pilfering dossers). Once all the number-crunching is done it will be interesting to see if the raising of the personal allowance adequately compensates people on low incomes for the hit they are taking in frozen, cut or withdrawn benefits*.

But politically the most significant element of the freeze is surely the announcement that it will be contained in a separate “Welfare Uprating Bill.” That is plainly an attempt by the Chancellor to put the opposition in an awkward dilemma. Either Miliband appals his party and signs up to the government’s position, which is highly unlikely, or he opposes the freeze/cut – a move that the Tories and most of the press would present as a profligate defence of scrounging. It is the same manoeuvre that was deployed with some effect in votes on Osborne’s benefits cap earlier this year. As I’ve noted before, this ploy has diminishing returns for the Tories. It presumes that the public will stay boundlessly enthusiastic about welfare cuts, regardless of who the recipients are and regardless of the social consequences. That is a risky calculation given the vulnerability of the Conservative brand to charges of heartlessness.

It is worth noting also that the Liberal Democrats were hardly more relaxed about the benefit cap than Labour. Nick Clegg’s party demanded changes to the measure in the Lords and some rebelled against it. As the squeeze on low-earning households is likely to deepen over the next few months and as the Lib Dems feel the need to assert their credentials as the in-house conscience of the coalition, their position on the latest benefits freeze will become very interesting to watch.

There are bound to be Lib Dem MPs with an impulse to reject Osborne’s latest assault on benefit-claimants. Labour will be more than usually glad of their company in a Commons vote on an issue that probes one of the party’s great electoral vulnerabilities – the charge of excess welfare spending. Osborne has set a trap for the opposition with his Uprating Bill. He has also set a potential test for coalition unity.

*Update: The Resolution Foundation has crunched the numbers and the answer is "no, it doesn't."


Labour leader Ed Miliband and shadow chancellor Ed Balls. Photograph: Getty Images.

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

Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.