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of the personal allowance adequately compensates people on low incomes for the hit they are taking in frozen, cut or withdrawn benefits*.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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Will Britain end up agreeing a lengthy transition deal with the EU?

It's those seeking to prevent a referendum re-run who have the most to fear from a bungled exit.

You can check out, but you'll never leave? Today's papers all cover the growing momentum behind a transition arrangement after Britain leaves the European Union, whereby the United Kingdom remains in the single market and customs union.

The FT reports on the first meeting between Theresa May and her new “business council”, in which business leaders had one big message for the PM: no-one wants a “no deal” Brexit – and Confederation of British Industry director Carolyn Fairbairn repeated her call for a lengthy transition arrangement.

The Times splashes on government plans drawn up by Philip Hammond that include a two-year transition arrangement and private remarks by David Prior, a junior minister, that Britain was headed for “the softest of soft Brexits”.

A cabinet source tells the Guardian that the transition will last even longer than that – a four-year period in which the United Kingdom remains in the single market.

Broadly, the argument at the cabinet table for a transition deal has been won, with the lingering issue the question of how long a transition would run for. The fear among Brexiteers, of course, is that a temporary arrangement would become permanent.

Their long-term difficulty is Remainers' present problem: that no one is changing their minds on whether or not Brexit is a good idea. Put crudely, every year the passing of time winnows away at that Leave lead. When you add the surprise and anger in this morning's papers over what ought to be a routine fact of Brexit – that when the UK is no longer subject to the free movement of people, our own rights of free movement will end – the longer the transition, the better the chances that if parliament's Remainers can force a re-run on whether we really want to go through with this, that Britain will stay in the EU.

A quick two-year transition means coming out of the bloc in 2022, however, just when this parliament is due to end. Any dislocation at that point surely boosts Jeremy Corbyn's chances of getting into Downing Street, so that option won't work for the government either.

There's another factor in all this: a transition deal isn't simply a question of the British government deciding it wants one. It also hinges on progress in the Brexit talks. Politico has a helpful run-down of the progress, or lack thereof, so far – and basically, the worse they go, the less control the United Kingdom has over the shape of the final deal.

But paradoxically, it's those seeking to prevent a referendum re-run who have the most to fear from a bungled exit. The more time is wasted, the more likely that the UK ends up having to agree to a prolonged transition, with the timing of a full-blown trade deal at the EU's convenience. And the longer the transition, the better the chances for Remainers of winning a replay. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.