Will Balls be forced to use the 50p tax to protect benefits?

Pegging the welfare uprating to the 50p tax rate would be an expensive decision in terms of future policy development.

Ed Balls yesterday gave the clearest indication yet of how Labour intends to handle coalition plans to raise benefits by less than the rate of inflation over the next three years.

George Osborne’s aim to put a Welfare Uprating Bill before parliament next year is plainly meant as a political trap for Labour – forcing them, or so the Chancellor sees it, into unpopular defence of wasteful spending on benefit-dependent layabouts. (The nuances of Osborne’s calculation and the dilemmas it poses for Labour are examined in more detail here, here and here.)

Balls was challenged in parliament to say whether he would support the measure. The nub of his reply was to suggest that Labour would only back the real terms cut to welfare provision on the condition that the top 50p rate of income tax is restored. Specifically he said:

“On the question he asked, we will look at the legislation. But if he intends to go ahead with such an unfair hit on mid- and lower-income working families, while he’s giving a £3 billion top rate tax cut, we will oppose it.”

There is no chance of the 50p tax rate coming back, so in effect Labour is committed to voting against the Welfare Uprating Bill and hoping to reframe the argument around fair contributions from the top of society when those at the bottom – specifically those in work and struggling to get by – are hit hardest.

Much commentary on Labour’s position has focused on the difficulties the party will face winning over voters who are hostile to the idea of benefit “scroungers”.  Balls’s solution indicates that he has his eye on a different dimension to the problem, which is that by opposing Osborne’s move he implicitly makes a spending commitment – and the shadow chancellor is deeply averse to making any of those before he has to.

Balls will be alert to the accusation coming down the line that, whatever Labour says it plans to do about the deficit after 2015, it has already implicitly offered to raise spending on benefits. This can easily be fashioned into an attack along the lines summarised by one shadow cabinet minister as “the £10bn benefits black hole in Labour’s plans”. Not surprisingly, that is a charge Balls is determined to avoid.

Pegging the welfare uprating to the 50p tax rate at least provides some fiscal cover to the Labour position – but it would be an expensive decision in terms of future policy development. It implies a Labour pledge to restore the top rate as soon as the party gets into power and then pre-emptively spends the proceeds, which means the cash isn’t available for anything else. There aren’t that many obvious revenue-raising measures going spare. Balls will not be happy if Osborne forces him to deploy one of them upfront and on benefit spending, more than two years before an election.

Ed Balls said Labour would oppose "an unfair hit on mid and lower income working families". Photograph: Getty Images.

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

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Collaboration is the key to coalfields regeneration

When the last shift ended at Kellingley Colliery, North Yorkshire, in December 2015, it marked the end of deep coal mining in Britain. Since the early 1980s, over 250,000 jobs were lost in the industry and whilst regeneration efforts over the last 30 years have reclaimed sites, creating new housing and the infrastructure for new businesses and jobs, the scale of these losses was huge, and deep-seated social and economic problems remain.

The Coalfields Regeneration Trust was established in 1999. When we launched our first grant programme we were overwhelmed by the demand, however, this was simply a reflection of the need out there in the coalfields. Our name resonated with people who were incredibly proud of their communities and the contribution made by the coal industry to Britain’s prosperity.

Our independence meant we could be more flexible and responsive, and this helped us direct resources into communities where other funders struggled. Over the last 17 years our programmes have evolved and we have achieved some fantastic results for the 2,000,000 people who have benefited from our support. We have also gained a better understanding of the underlying issues that still impact on the quality of life in the coalfields. There are 5,500,000 million people living in Britain’s former mining communities and many do not enjoy the opportunities afforded in non-coalfield communities. While this inequity exists, we still have a job to do.

The key challenges

The greatest challenge is the fact that there are only 50 jobs per 100 workingage people in the coalfields. when you compare this figure to London (79), and the South-East (68), it doesn’t take much to recognise that there is a major problem here. The key factor is the number of businesses; the coalfields have significantly fewer businesses than non-coalfield communities. Unless this fundamental problem is addressed at scale, we will continue to see high levels of unemployment in our communities.

We also need to raise skill levels, or at least align skills to the local labour market. There are significant numbers of people who don’t have a qualification or are low skilled and this is a major barrier to competing for jobs. If new jobs are created we want our communities to be able to access them. For many people, it means an introduction to learning again and to do this they need to be engaged. It takes time to develop these relationships and build this confidence in people and the resources to make this happen are often lacking.

We also have a real issue with health in our communities. We have significant numbers of people experiencing long-term health problems that limit their day-to-day lives. It’s a major barrier for some people in accessing a training course or attending a job club but there are often low-cost solutions, such as ‘social prescribing’, that can make a real difference to the health of a person.

What the Trust can offer the coalfields

Right now we’re delivering an ambitious range of activities across England, Scotland and Wales. Everything from safeguarding community assets, developing community plans, engaging people through sport, helping people into work, supporting community organisations and creating new industrial space. I can’t remember a more exciting time in terms of how we want to work with our communities and we’ve got some fantastic partnerships with the private, public and voluntary sectors in the mix to help us. All our future activities will be geared to address our strategic themes of employment, skills and health and we will continue to collaborate to leverage additional resources into the coalfields.

We know we could do more and welcome the continued support of the Scottish and Welsh governments. We do, however, have a new and compelling proposition. Our aim is to create a £40 million investment fund for the coalfields, and we are inviting the English government to become a partner with us and contribute £30 million to match our commitment of £10 million. This will enable us to build 400,000 square feet of new industrial and commercial space, creating 1,000 jobs. Over 25 years this will generate £50 million in income, which we will invest in social impact projects generating £500 million in wellbeing value. We see this as a real legacy project for a generation to come.

We know this might seem an ambitious proposition in the current climate, but it’s a truly enterprising approach. Collaboration is at the heart of this and is the essential ingredient for all our future work. Without it we will not achieve the results we want for our communities.

About The Coalfields Regeneration Trust

The Coalfields Regeneration Trust is dedicated to supporting and improving the quality of life for the 5.5 million people living in the former mining communities of Britain. We have worked at the heart of many of these communities since 1999 and have a track record of delivering targeted programmes that have reached over two million people helping many thousands; back into work; to develop new skills and participate in activities that have improved their health.

There is compelling evidence that recognises the significant challenges that still remain and shows how coalfield communities lag behind national averages on multiple indices of deprivation. Our enterprising and innovative responses will address these challenges but we need the support of government and regional stakeholders to help us achieve the scale of impact required.

Employment
The employment rate in the largest UK coalfields is consistently lower than the rest of the country. On average, 14 per cent of adults in the coalfields are out of work on benefits, which is 40 per cent higher than the national average and double that of south-east England. The Coalfields Regeneration Trust has helped more than 25,500 people into work and created or safeguarded more than 5,500 jobs.

Skills

The proportion of the working-age population with low or no qualifications in the English coalfields is roughly 60 per cent higher than in London and 40 per cent higher than in south-east England. Thanks to the programmes The Coalfields Regeneration Trust has
supported, 1.3m people are now more highly skilled.

Health

A worrying 11.7 per cent of people living in the coalfields report long-term health problems, compared to 8.6 per cent nationally. Incapacity benefit is claimed by 8.4 per cent of adults of working age in the coalfields, which is 35 per cent higher than the national average and almost double south-east England. The Coalfields Regeneration Trust has invested in projects that have improved the health of over 250,000 people

The proportion of
the working-age
population with low or
no qualifications in the
English coalfields is roughly 60 per
Employment
The employment rate
in the largest UK
coalfields is consistently
lower than the rest of
the country.
On average, 14 per cent of adults
in the coalfields are out of work on
benefits, which is 40 per cent higher
than the national average and double
that of south-east England.
The Coalfields Regeneration Trust has
helped more than 25,500 people into
work and created or safeguarded more
than 5,500 jobs.

For more information, visit www.coalfields-regen.org.uk