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

Getty
Show Hide image

What Charles Windsor’s garden reveals about the future of the British monarchy

As an open-minded republican, two things struck me. 

First we are told that the Chancellor, Philip Hammond, has lost his battle for a “soft” Brexit. In a joint article, he and the International Trade Secretary, Liam Fox, the hardest of the ministerial Brexiteers, seem to agree that the UK will leave the European customs union in 2019. Then we get a reverse ferret. Hammond will go for a softish Brexit, after all. A government paper states that the UK will seek a “temporary customs union” in the “transition period” that, it hopes, will follow Brexit.

All this is a taste of things to come. We shall see many more instances of hard and soft Brexiteers celebrating victory or shrieking about betrayal. We shall also see UK and EU leaders storming out of talks, only to return to negotiations a few days later. My advice is to ignore it all until Friday 29 March 2019, when UK and EU leaders will emerge from all-night talks to announce a final, impenetrable fudge.

Lessons not learned

What you should not ignore is the scandal over Learndirect, the country’s largest adult training and apprenticeships provider. An Ofsted report states that a third of its apprentices receive none of the off-the-job training required. In a random sample, it found no evidence of learning plans.

Labour started Learndirect in 2000 as a charitable trust controlled by the Department for Education. It was sold to the private equity arm of Lloyds Bank in 2011 but remains largely reliant on public money (£158m in 2016-17). Since privatisation, 84 per cent of its cash has gone on management fees, interest payments and shareholder dividends. It spent £504,000 on sponsoring the Marussia Formula One team in an attempt to reach “our core customer group… in a new and exciting way”. The apprentices’ success rate fell from 67.5 per cent before privatisation to 57.8 per cent now.

This episode tells us that, however the Brexit process is going, Britain’s problems remain unchanged. Too many services are in the hands of greedy, incompetent private firms, and we are no closer to developing a skilled workforce. We only know about Learndirect’s failure because the company’s attempt to prevent Ofsted publishing its report was, after ten weeks of legal wrangling, overthrown in the courts.

A lot of hot air

Immediately after the Paris climate change accord in 2015, I expressed doubts about how each country’s emissions could be monitored and targets enforced. Now a BBC Radio 4 investigation finds that climate-warming gases emitted into the atmosphere far exceed those declared under the agreement. For example, declarations of methane emissions from livestock in India are subject to 50 per cent uncertainty, and those in Russia to 30-40 per cent uncertainty. One region in northern Italy, according to Swiss scientists, emits at least six times more climate-warming gases than are officially admitted. Remember this when you next hear politicians proclaiming that, after long and arduous negotiations, they have achieved a great victory.

Come rain or come shine

Climate change, scientists insist, is not the same thing as changes in the weather but writing about it brings me naturally to Britain’s wet August and newspaper articles headlined “Whatever happened to the sunny Augusts of our childhood?” and so on. The Daily Mail had one in which the writer recalled not a “single rainy day” from his family holidays in Folkestone. This, as he explained, is the result of what psychologists call “fading affect bias”, which causes our brains to hold positive memories longer than negative ones.

My brain is apparently atypical. I recall constant frustration as attempts to watch or play cricket were interrupted by rain. I remember sheltering indoors on family holidays with card games and books. My life, it seems, began, along with sunshine, when I left home for university at 18. Do psychologists have a name for my condition?

High and dry

Being an open-minded republican, I bought my wife, a keen gardener, an escorted tour of the gardens at Highgrove, the private residence of the man I call Charles Windsor, for her birthday. We went there this month during a break in the Cotswolds. The gardens are in parts too fussy, rather like its owner, but they are varied, colourful and hugely enjoyable. Two things struck me. First, the gardens of the elite were once designed to showcase the owner’s wealth and status, with the eye drawn to the grandeur of the mansion. Highgrove’s garden is designed for privacy, with many features intended to protect royalty from the prying public and particularly the press photographers’ long lenses. Second, our guide, pointing out what the owner had planted and designed, referred throughout to “His Royal Highness”, never “Charles”. I am pondering what these observations mean for the monarchy and its future.

Sympathy for the devil

Before leaving for the Cotswolds, we went to the Almeida Theatre in north London to see Ink, featuring Rupert Murdoch’s relaunch of the Sun in 1969. Many accounts of Murdoch  portray him as a power-crazed monster and his tabloid hacks as amoral reptiles. Ink is far more nuanced. It shows Murdoch as a mixture of diffidence, charm and menace, in love with newspapers and determined to blow apart a complacent,
paternalistic British establishment.

You may think that he and the Sun had a permanently coarsening effect on public life and culture, and I would largely agree. But he was also, in his own way, a 1960s figure and his Sun, with its demonic energy, was as typical a product of that decade as the Beatles’ songs. The play strengthened my hunch that its author, James Graham, who also wrote This House, set in the parliamentary whips’ offices during the 1970s, will eventually be ranked as the century’s first great playwright.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear