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of the personal allowance adequately compensates people on low incomes for the hit they are taking in frozen, cut or withdrawn benefits*.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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Gang of Four’s David Owen says Labour should “proudly and coherently” work with the SNP

The former Labour politician and SDP co-founder tells his old party to “face up to reality” and agree to ally with the SNP.

We don’t have an effective opposition. The question is how to make it effective. I think they should start to discuss with a view to deciding at a conference this summer on its policies. It’s just got to stop for a moment, have a pause on personalities. They’re going to have to return to personalities, they have to have a new leader. But at the moment, the issue should be: let’s get the policies right. I’m sure there are areas in which people want to see changes, but they’re obviously completely incoherent over Europe, so just let that incoherence lie.

If Labour party MPs can’t start to talk about why young people were attracted to Jeremy Corbyn, they won't find the solution. Corbyn – you can trash him like the right-wing press do every day, but they've always done that with every form of Labour leader we've ever had. I’m not defending Corbyn, I don’t think he is the right person to be leader of the Labour party and become Prime Minister.

They've got to widen their base, and they've got to widen it in an election. That doesn't stop the party having more values. The Labour party instinctively, like the country, needs to move a bit more to the left. I'm not afraid of talking more about socialism and social values. I think that would be matching the mood of the country.

Clement Attlee and the Labour party came in in 1945, and shocked everybody, including all the pundits and newspapers – they responded to a mood in the country that wanted a difference. I believe there is a mood in the country that wants a difference. They don’t want recycled Blairism.

You’ve just got to face up to reality. The fundamental thing is, where we slipped up in [the last] election, is that we were not able to answer the question – when they were ravaged and savaged about the SNP – Ed Miliband should've lost his cool. All he said during the attack about working with the SNP was that it ain't going to happen. Well, it obviously was going to happen.

What they needed to say is proudly and completely coherently: if the electorate send a Parliament back which has the SNP in substantial numbers, it is perfectly legitimate for the Labour party to work with them. Health policy – a pretty good step would be to take what’s happening in Scotland and more or less mirror it.

That is the nature of the beast, which is democracy. Even without changing the system of voting, we now have multi-parties, whether we like it or not. We were told the route through was not to create a Social Democratic Party alongside the Liberals, you had to merge with them and that there was no room for more than three political parties in Britain. Well, it’s absolute nonsense. We now have seven, you could argue. We have to live with that reality. You have to be ready to talk to them. You won’t agree with them on separation but you can agree on many other areas, or you certainly should be trying.

I think it’s asking a hell of a lot to be leader of a party, asking to be Prime Minister, when you've never performed yourself in government, you've never held a serious job anywhere else. It's a very, very big thing. He didn't want to be leader of the party, he didn't expect to be leader of the party, he stood on the basis that he was the person they all turned to on the left, and he did it, and he surprised us all. The fact that he won should be a serious message to us. The reason he won is because everybody was totally sick and fed up with the other people. We've got to face up to the fact that this has happened now twice. Is the Labour party going to go on churning out a sort of mollified form of Blairism?

David Owen is an independent social democratic peer and co-founder of the SDP.

As told to Anoosh Chakelian.

Lord Owen was Foreign Secretary 1977-79, a founder-member of the SDP and is now a crossbench peer.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition