Osborne's welfare super-cap is a frightening prospect for families

The new limit on "Annually Managed Expenditure" could mean even less support for the unemployed and the working poor.

The Budget was nothing but underwhelming for low income families: cancelling the rise in fuel duty and a penny off the price of a pint of beer do little to offset the increase in living costs that low-income families have had to contend with in recent years. Gains from the much-vaunted rise in the personal allowance all but evaporate for low-income families, who simply see their benefits reduced as their earned income increases. And as many commentators pointed out earlier this week, the winners from the new childcare scheme will be those some way up the income scale.

But perhaps the biggest worry for low income families is not the lack of policies that would help them today, but the threat of what might hurt them still further tomorrow. Tucked away in the Budget statement, the Chancellor made some seemingly technical comments about reforming the spending framework, and the need to put a limit on demand-led Annually Managed Expenditure (AME) in the future.

Critically, a large part of AME is spending on social security, which is supposed to protect us all in times of need. But putting a nominal limit on AME would mean that as these needs increase – in times of rising unemployment, for example, or as a result of growing housing costs – there would be no commensurate rise in social security provision. Consequently, benefits would either need to be spread more thinly, or restricted in some other way.

The Chancellor presented the idea of a limit on AME as necessary to rein in a run-away social security budget. However, as usual, the figures he provided show only part of the picture. While the Budget document speaks of "welfare spending rising in real terms by 20% in the decade before the financial crisis", it fails to mention that social security spending as a percentage of GDP was broadly static during this period.

The only glimmer of hope, perhaps, was the Chancellor's rather cryptic comment that he would establish a limit for AME "that allows the automatic stabilisers to operate". As the International Monetary Fund recently pointed out, social security payments form a critical part of these stabilisers. Clarification from the Chancellor as to how he will square this fact with a limit on AME is clearly necessary.

Of course, the idea of disconnecting state support from assessed need is not a new one for this government: the overall cap on benefits, which will be rolled out from April this year is a perfect example of this model. But the idea of a 'super-cap' on total social security in the future is a genuinely frightening prospect for families already struggling to get by with diminished support from state. 

The balcony of a residential development in the London borough of Tower Hamlets. Photograph: Getty Images.

Lindsay Judge is senior policy and research officer for the Child Poverty Action Group.

Photo: Getty
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What Jeremy Corbyn gets right about the single market

Technically, you can be outside the EU but inside the single market. Philosophically, you're still in the EU. 

I’ve been trying to work out what bothers me about the response to Jeremy Corbyn’s interview on the Andrew Marr programme.

What bothers me about Corbyn’s interview is obvious: the use of the phrase “wholesale importation” to describe people coming from Eastern Europe to the United Kingdom makes them sound like boxes of sugar rather than people. Adding to that, by suggesting that this “importation” had “destroy[ed] conditions”, rather than laying the blame on Britain’s under-enforced and under-regulated labour market, his words were more appropriate to a politician who believes that immigrants are objects to be scapegoated, not people to be served. (Though perhaps that is appropriate for the leader of the Labour Party if recent history is any guide.)

But I’m bothered, too, by the reaction to another part of his interview, in which the Labour leader said that Britain must leave the single market as it leaves the European Union. The response to this, which is technically correct, has been to attack Corbyn as Liechtenstein, Switzerland, Norway and Iceland are members of the single market but not the European Union.

In my view, leaving the single market will make Britain poorer in the short and long term, will immediately render much of Labour’s 2017 manifesto moot and will, in the long run, be a far bigger victory for right-wing politics than any mere election. Corbyn’s view, that the benefits of freeing a British government from the rules of the single market will outweigh the costs, doesn’t seem very likely to me. So why do I feel so uneasy about the claim that you can be a member of the single market and not the European Union?

I think it’s because the difficult truth is that these countries are, de facto, in the European Union in any meaningful sense. By any estimation, the three pillars of Britain’s “Out” vote were, firstly, control over Britain’s borders, aka the end of the free movement of people, secondly, more money for the public realm aka £350m a week for the NHS, and thirdly control over Britain’s own laws. It’s hard to see how, if the United Kingdom continues to be subject to the free movement of people, continues to pay large sums towards the European Union, and continues to have its laws set elsewhere, we have “honoured the referendum result”.

None of which changes my view that leaving the single market would be a catastrophe for the United Kingdom. But retaining Britain’s single market membership starts with making the argument for single market membership, not hiding behind rhetorical tricks about whether or not single market membership was on the ballot last June, when it quite clearly was. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.