Our welfare system is broken, but Labour and the Tories just trade myths

Rather than arguing about policy and practice, both parties encourage a futile debate about motivation and motive.

The first half of this parliamentary term was dominated by an economic argument that, in political terms, Labour lost. That doesn’t mean the Ed Balls's position on the deficit and debt has necessarily been the wrong one. Learned economists share the shadow chancellor’s analysis that premature austerity risks suffocating growth. Balls warned there would be a double-dip recession and there was.

But there has not been much reward for that foresight. Opinion polls show voters still inclined to accept the coalition’s explanations for missed fiscal targets and unscheduled stagnation – a derelict Labour legacy and turbulence washing in from the rest of Europe. The Tories act as if economic misfortune is a force of nature visited upon them rather than the product of their own policy misjudgement. Labour, meanwhile, are marooned between the forward-facing argument about who is best equipped to navigate through the storm and the backward-facing one about whether the storm might have been avoided.

Much of the economic argument in Westminster over the past two years has been predicated on mutually sustaining myths, one Labour and one Conservative. I mean "myth" not as in a malicious falsehood but in the sense of a moral parable that might be rooted in real world observation but whose real purpose is to galvanise tribal faith.

The Tory one is that the only feasible fiscal path immediately after the last election was the one laid out in George Osborne’s "emergency Budget" of June 2010. Any alternative, goes the story, would have led to "Greek-style" catastrophe, a flight of international investors from UK bonds, meltdown, apocalypse.

This was never true. Markets wanted certainty that there would be some determination to address the UK’s fiscal problems. But demonstration of will was what mattered, not acceleration of the austerity timetable. Osborne could have entered the Treasury and promised with the requisite level of portentous ceremony to implement Alastair Darling’s pre-election budget plans. The sky would not have fallen in.

The new Chancellor took a more aggressive path for two political reasons. First, he hoped to cast Labour as the party of reckless profligacy. Second, he wanted to get budget consolidation out of the way faster so as to fight a cash giveaway election in 2015. The first part of the plan worked; the second didn’t.

The Labour myth is that Osborne’s political gamble entirely explains why recovery turned to recession and why there is misery in Britain today. The implication in Balls’s "too far too fast" line is that somewhere in the gap between Darling’s proposed deficit reduction timetable and the one Osborne tried (and failed) to implement, was enough cash stimulus to pump vigour into the economy. There wasn’t. Darling envisaged austerity-lite; it still would have looked and tasted like austerity. It still would have hurt. It is entirely possible that the gentler gradient on Darling’s graph would have made all the difference to growth prospects but, come 2015, that will be an academic hypothesis to exercise economics students. It is not the kind of argument that persuades swing voters.

Now that the Osborne timetable is in tatters, Labour and the Tories are not as far apart on the economy as they seem. Balls has explicitly acknowledged the need for fiscal constraint and Osborne has accepted that austerity alone cannot restore growth to the economy and that investment must be brought forward. Labour are reluctant deficit hawks; the Tories are timid dabblers in Keynesian stimulus. It would be silly to suggest that there is some secret consensus emerging but it has also suited the Chancellor and his shadow to depict each other at polar extremes of an ideological spectrum when in fact they don’t. It has suited public enlightenment and intelligent debate less.

And now, with the forthcoming battle over welfare cuts, a similar pattern is emerging. The second half of the parliament will be dominated by more mythological warfare, this time over the benefits bill.

The Tory myth is that Labour is only interested in handing out money for people to sit around doing nothing; that there is no willingness to reform the welfare system. This is a subset of the fiction that Balls doesn’t intend to reduce the deficit. As senior Labour figures point out whenever they are given the opportunity, the party wants to reduce spending on out-of-work benefits and is unafraid to impose sanctions on those who refuse to take jobs when offered. That was Labour policy by the end of the last government and it is Labour policy now. (How popular it is with the party grass roots is another matter entirely.)

The Labour myth is that Conservatives are motivated entirely by the cynical urge to confiscate money from the poor and that, in cahoots with tabloid newspapers, they wilfully vilify those in receipt on benefits. That ignores the possibility that some Tories might sincerely believe that the welfare system they inherited was riddled with hypocrisies and injustices. They might believe it because it is true. It was ridiculous to funnel taxpayers' money into the pockets of rogue landlords through an unchecked housing benefit budget and it was dishonest, unfair and financially reckless to use incapacity benefit as a cash anaesthetic for people who might have been able to work if given the right training and incentives – positive and negative. (Those observations do not cease to be true just because there are greater injustices in the world and worse policy errors that should command more media/political attention.)

The welfare system is broken, not irredeemably but quite substantially. Labour knew it in office. The Tories know it now. The interesting question is what interventions are most effective in doing something about it. What works in terms of affordability and delivery of a just outcome? How should incentives be calibrated for different labour market conditions? That is not the debate we are likely to have over the next two years.

Instead we will have ever more desperate attempts by each side to force their opponents into the mythological template. Some on the Labour side will unintentionally help the Tories by denying that there is such a thing as cultural dependency on welfare and pretending that the only problem with the system is its lack of largesse. Some on the Tory side will help Labour by spraying indiscriminate spite at anyone who happens to be in receipt of state help and by appearing unmoved by the plight of Britain’s poor.

Everyone will be in favour of reform. But Labour will struggle to persuade the public that they have the courage to see it through and the Tories will struggle to convince anyone that they are compassionate enough to do it right. The argument will be about motivation and motive instead of policy and practice.

An important difference between this argument and the economic one that dominated the first half of the parliament is that the coalition parties have already spent much of their political capital. Osborne stole a march on Labour in June 2010. The Chancellor had the benefit of the doubt on his side - and the then still trusted Lib Dems cheerleading for him. The opposition was  reeling from defeat and only embarking on the process of electing a new leader. Now Ed Miliband leads a united party and has more political combat experience under his belt. 

It is, of course, quite possible for both sides to lose this argument. Labour could fail to shake off a reputation for throwing public money at people who are judged not to deserve it; the Tories could thoroughly restore their status as the party that sneers in the face of social destitution. How do we implement a social security system that provides for those in need, supports people out of work in their hunt for a job, doesn’t create perverse incentives to depend on the state for life, rewards enterprise, doesn’t stigmatise disadvantage, is fair and compassionate while also financially sustainable? To find the answer, look away from British politics now.

Goal posts stand in a children's park in the Gorton area of Manchester. Photograph: Getty Images.

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

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle