PMQs review: Miliband's fiercest attack yet on the welfare cuts

Labour leader says the government is hitting people "they don't meet and whose lives they will never understand".

Rarely has Ed Miliband sounded as outraged at the government as he did at today's PMQs. Challenging David Cameron on the coalition's welfare cuts, he declared: "They look after their friends, the people on their Christmas card list and, meanwhile, they hit people they don't meet and whose lives they will never understand." He turned George Osborne's rhetoric on its head by declaring that the Chancellor's cleaner would lose out "while his curtains are still drawn and he's still in bed." Despite the political risks (the majority of voters support the benefit cuts), this is a battle that Miliband has decided he must fight.

Cameron didn't deny that the 1 per cent cap on benefit increases would fall most heavily on working households ("everyone who is on tax credits will be affected by those changes," he said), rather he argued that the cap was necessary to reduce the welfare bill and pointed out that families would benefit from the large increase in the personal allowance. "This is the party for people who work, his is the party for unlimited welfare," he declared. In response, Miliband highlighted research by the Institute for Fiscal Studies showing that the average one earner couple will be £534 a year worse off by 2015, a point Cameron was unable to rebut.

But it was the personal, not the policy clashes, that were most memorable. After Cameron described Ed Balls as a bully who can "dish it out but can't take it", Miliband replied: "I've heard it all when the boy from the Bullingdon Club lectures people on bullying. Have you wrecked a restaurant recently?"

The Tories remain confident that voters will support their tough stance on the deficit and welfare, rather than Labour's. Conversely, Labour believes that the government has badly miscalculated by hitting the very "strivers" it claims to support. The outcome of the next election will likely rest on which is right. 

Labour leader Ed Miliband addresses a Trade Union Congress (TUC) rally in Hyde Park earlier this year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

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