How MPs are trying to protect the poor from Osborne's welfare cuts

Lib Dem rebels table amendment to Welfare Uprating Bill calling for benefits to increase in line with average earnings, rather than Osborne's 1 per cent.

The coalition's Welfare Benefits Uprating Bill, which will enshrine in law George Osborne's plan to cap benefit increases at 1 per cent for the next three years (a real-terms cut), returns to the Commons today for its report stage and third reading.

Earlier this month, when MPs voted on the bill for the first time, I gave four reasons why it deserved to be defeated: it will force even more of the poorest families to choose between heating and eating; it will damage the economy by reducing real incomes; low wages aren't a reason to cut benefits (contrary to the government's claims) and there are fairer ways to reduce the deficit.

In view of such objections, opposition MPs have tabled a large number of amendments to the bill to protect the poorest. Here's a summary of the key proposals.

Labour: cancel 1% rise and offer a jobs guarantee to the long-term unemployed

Labour has called for the reference to a "1% rise" to be removed from the bill, suggesting that it believes benefits should continue to be increased in line with the Consumer Price Index.

In addition, reflecting its argument that the best way to reduce the benefits bill is to increase employment, it has called for the government to introduce a jobs guarantee for the long-term unemployed. The amendment reads:

This Act will not come into force until a guarantee has been introduced that anyone who has been in receipt of jobseeker's allowance for two years will be offered a job suitable to their circumstances paying at least the rate of national minimum wage for 25 hours per week together with job-search support.

Highlighting the coalition's decision to cut the top rate of income tax from 50p to 45p this April, a move worth an average of £107,500 a year to the UK's 8,000 income-millionaires, Labour has also tabled an amendment stating that "This Act will not come into force if, on or before 6 April 2013, the highest rate of income tax is reduced from 50%."

Lib Dem rebels: increase benefits in line with earnings

Six Lib Dem MPs, including Charles Kennedy and Andrew George (both of whom abstained at second reading) have tabled an amendment calling for benefits to increase in line with earnings, rather than 1 per cent. Since average earnings are forecast by the Office for Budget Responsiblity to rise by 2.2 per cent this year, 2.8 per cent in 2014 and 3.7 per cent in 2015 this would shield the incomes of the poorest from inflation, which is expected to increase at a slower rate than earnings from 2014.

It's also a neat way of skewering the government's complaint that benefits will increase by more than wages this year.

Green Party, SNP and Plaid Cymru: increase benefits in line with RPI inflation

Caroline Lucas, Hywel Williams (Plaid Cymru) and Dr Eilidh Whiteford (SNP) have signed an amendment calling for benefits to rise in line with the Retail Price Index (RPI), rather than 1 per cent. After Margaret Thatcher's government broke the link between benefits and earnings in 1980, welfare payments were calculated using this measure. But in his "emergency Budget" in June 2010, Osborne announced that benefits would instead be increased in line with the Consumer Price Index, rather than the (generally higher) RPI (see James Plunkett's Staggers blog on the coalition's "£11bn stealth cut"), a move that will cost the poor hundreds of pounds by the end of the spending period.

Based on the OBR's forecasts for RPI, benefits would rise by around 3 per cent this year, 2.6 per cent next year and 3.1 per cent in 2015 under this proposal. But since earnings are expected to outstrip inflation from 2014, a more progressive option would be to stipulate that, depending on which is highest, benefits will either increase in line with RPI or average earnings.

Update: Caroline Lucas has been in touch to say that she agrees that benefits should either rise in line with earnings or inflation, depending on which is higher. She added: "Essentially was trying to table amdt which Lab might have supported (ie RPI) - but ideally earnings shd be there too".

George Osborne leaves 11 Downing Street on January 7, 2013 in London, England. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.