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of the personal allowance adequately compensates people on low incomes for the hit they are taking in frozen, cut or withdrawn benefits*.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

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Theresa May's cabinet regroups: 11 things we know about Brexit negotiations so far

The new PM wants a debate on social mobility and Brexit. 

This was the summer of the Phony Brexit. But on Wednesday, the new Tory cabinet emerged from their holiday hideaways to discuss how Britain will negotiate its exit from the EU. 

The new prime minister Theresa May is hosting a meeting that includes Brexiteers like David Davis, now minister for Brexit, Boris Johnson, the new Foreign secretary, and Liam Fox.

For now, their views on negotiations are taking place behind closed doors at the PM’s country retreat, Chequers. But here is what we know so far:

1. Talks won’t begin this year

May said in July that official negotiations would not start in 2016. Instead, she pledged to take the time to secure “a sensible and orderly departure”. 

2. But forget a second referendum

In her opening speech to cabinet, May said: “We must continue to be very clear that ‘Brexit means Brexit’, that we’re going to make a success of it. That means there’s no second referendum; no attempts to sort of stay in the EU by the back door; that we’re actually going to deliver on this.”

3. And Article 50 remains mysterious

A No.10 spokesman has confirmed that Parliament will “have its say” but did not clarify whether this would be before or after Article 50 is triggered. According to The Telegraph, May has been told she has the authority to invoke it without a vote in Parliament, although she has confirmed she will not do so this eyar.

4. The cabinet need to speak up

May’s “you break it, you fix it” approach to cabinet appointments means that key Brexiteers are now in charge of overseeing affected areas, such as farming and international relations. According to the BBC, the PM is asking each minister to report back on opportunities for their departments. 

5. Brexit comes with social mobility

As well as Brexit, May is discussing social reform with her cabinet. She told them: “We want to be a government and a country that works for everyone.” The PM already performed some social mobility of her own, when she ditched public school boy Chancellor George Osborne in favour of state school Philip Hammond. 

6. All eyes will be on DExEU

Davis, aka Brexit minister, heads up the Department for Exiting the EU, a new ministerial department. According to Oliver Ilott, from the Institute for Government, this department will be responsible for setting the ground rules across Whitehall. He  said: “DExEu needs to make sure that there is a shared understanding of the parameters of future negotiations before Whitehall departments go too far down their own rabbit holes.”

7. May wants to keep it friendly

The PM talked to Prime Minister Sipilä of Finland and Prime Minister Solberg of Norway on the morning of the cabinet meeting. She pledged Britain would "live up to our obligations" in the EU while it remained a member and "maintain a good relationship with the EU as well as individual European countries".

8. But everything's on the table

May also told the Finnish and Norwegian prime ministers that negotiators should consider what is going to work best for the UK and what is going to work for the European Union, rather than necessarily pursuing an existing model. This suggests she may not be aiming to join Norway in the European Economic Area. 

9. She gets on with Angela Merkel

While all 27 remaining EU countries will have a say in Brexit negotiations, Germany is Europe’s economic powerhouse. May’s first meeting appeared amiable, with the PM telling reporters: “We have two women here who have got on and had a very constructive discussion, two women who, I may say, get on with the job.” The German Chancellor responded: “Exactly. I completely agree with that.”

10. But less so with Francoise Hollande

The French president said Brexit negotiations should start “the sooner the better” and argued that freedom of labour could not be separated from other aspects of the single market. 

11. Britain wants to hold onto its EU banking passports

The “passporting system” which makes it easier for banks based in London to operate on the Continent, is now in jeopardy. We know the UK Government will be fighting to keep passports, because a paper on that very issue was accidentally shown to camera.