Tory-Lib Dem battle on welfare heats up as Hammond demands further cuts

The Defence Secretary's intervention puts pressure on Clegg's party to keep its pledge to prevent further welfare cuts in this summer's Spending Review.

In order to stick to his current deficit reduction timetable, George Osborne needs to announce another £10bn of cuts in this summer's Spending Review (which will set spending totals for 2015-16) and cabinet divisions over where the axe should fall are becoming ever more visible. After Danny Alexander declared that he is opposed to further cuts in welfare spending, which was reduced by £18bn in the 2010 Spending Review and by £3.6bn in last year's Autumn Statement, Defence Secretary Philip Hammond has given an interview to the Telegraph in which he says that he will not accept any significant reductions to the defence budget and that the burden of cuts should fall on welfare instead.

He tells the in-house paper of the armed forces: "There may be some modest reductions we can make through further efficiencies and we were look for those, but we won't be able to make significant further cuts without eroding military capability." And on welfare he says:

There is a body of opinion within Cabinet that we have to look at the welfare budget again. The welfare budget is the bit of public spending that has risen the furthest and the fastest and if we are going to get control of public spending on a sustainable basis, we are going to have to do more to tackle the growth in the welfare budget.

As Hammond suggests, he is not the only Conservative who believes his department should be exempt from further austerity (a phenomenon dubbed "fiscal nimbyism" by Treasury minister David Gauke). Theresa May (Home Office) and Chris Grayling (Justice) are also reported to be pushing for deeper welfare cuts in order to allow their budgets to be protected. The stage is set for a dramatic confrontation with the Lib Dems, who have staked their reputation on preventing further benefit cuts.

The one area of the welfare budget that the Lib Dems would be willing to see reduced is that concerning universal benefits for the elderly, such as the Winter Fuel Allowance, free bus passes and free TV licences. But Downing Street has already signalled that David Cameron's generel election pledge to protect these payments will be extended for another year in order to cover the Spending Review. As a result, any further cuts to welfare will again fall entirely on the working-age poor.

Before last year's Autumn Statement, Tory ministers, including Cameron and George Osborne, floated policies including the abolition of housing benefit for the under-25s and the restriction of child benefit for families with more than two children only to see these proposals rightly vetoed by the Lib Dems. But the insistent Conservatives demands for further welfare cuts will likely see them examined again.

In this regard, the by-election victory in Eastleigh is a mixed blessing for the Lib Dems. Nick Clegg's boast that the result proves they "can be a party of government and still win" will weaken his negotiating hand when it comes to the Spending Review. After victory in Eastleigh, victory in the welfare battle will be a lot harder.

 

Defence Secretary Philip Hammond said further welfare cuts should be made in order to prevent "significant" cuts to defence. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Richmond is a victory for hope - now let's bring change across the country

The regressives are building their armies. 

Last night a regressive alliance was toppled. Despite being backed by both Ukip and the Conservative Party, Zac Goldsmith was rejected by the voters of Richmond Park.

Make no mistake, this result will rock the Conservative party – and in particularly dent their plans for a hard and painful Brexit. They may shrug off this vote in public, but their majority is thin and their management of the post-referendum process is becoming more chaotic by the day. This is a real moment, and those of us opposing their post-truth plans must seize it.

I’m really proud of the role that the Green party played in this election. Our local parties decided to show leadership by not standing this time and urging supporters to vote instead for the candidate that stood the best chance of winning for those of us that oppose Brexit. Greens’ votes could very well be "what made the difference" in this election (we received just over 3,500 votes in 2015 and Sarah Olney’s majority is 1,872) - though we’ll never know exactly where they went. Just as importantly though, I believe that the brave decision by the local Green party fundamentally changed the tone of the election.

When I went to Richmond last weekend, I met scores of people motivated to campaign for a "progressive alliance" because they recognised that something bigger than just one by election is at stake. We made a decision to demonstrate you can do politics differently, and I think we can fairly say that was vindicated. 

There are some already attacking me for helping get one more Liberal Democrat into Parliament. Let me be very clear: the Lib Dems' role in the Coalition was appalling – propping up a Conservative government hell bent on attacking our public services and overseeing a hike in child poverty. But Labour’s record of their last time in office isn't immune from criticism either – not just because of the illegal war in Iraq but also their introduction of tuition fees, privatisation of our health service and slavish worship of the City of London. They, like the Liberal Democrats, stood at the last election on an austerity manifesto. There is a reason that we remain different parties, but that doesn’t mean we shouldn't also seize opportunities like this to unite behind what we have in common. Olney is no perfect candidate but she has pledged to fight a hard Brexit, campaign against airport expansion and push for a fair voting system – surely progressives can agree that her win takes us forward rather than backwards?

Ultimately, last night was not just defeat of a regressive alliance but a victory for hope - a victory that's sorely needed on the back of of the division, loss and insecurity that seems to have marked much of the rest of this year. The truth is that getting to this point hasn’t been an easy process – and some people, including local Green party members have had criticisms which, as a democrat, I certainly take seriously. The old politics dies hard, and a new politics is not easy to forge in the short time we have. But standing still is not an option, nor is repeating the same mistakes of the past. The regressives are building their armies and we either make our alternative work or risk the left being out of power for a generation. 

With our NHS under sustained attack, our climate change laws threatened and the increasing risk of us becoming a tax haven floating on the edge of the Atlantic, the urgent need to think differently about how we win has never been greater. 

An anti-establishment wave is washing over Britain. History teaches us that can go one of two ways. For the many people who are utterly sick of politics as usual, perhaps the idea of politicians occasionally putting aside their differences for the good of the country is likely to appeal, and might help us rebuild trust among those who feel abandoned. So it's vital that we use this moment not just to talk among ourselves about how to work together but also as another spark to start doing things differently, in every community in Britain. That means listening to people, especially those who voted for Britain to leave the EU, hearing what they’re saying and working with them to affect change. Giving people real power, not just the illusion of it.

It means looking at ways to redistribute power and money in this country like never before, and knowing that a by-election in a leafy London suburb changes nothing for the vast majority of our country.

Today let us celebrate that the government's majority is smaller, and that people have voted for a candidate who used her victory speech to say that she would "stand up for an open, tolerant, united Britain".  But tomorrow let’s get started on something far bigger - because the new politics is not just about moments it's about movements, and it will only work if nobody is left behind.

 

Caroline Lucas is the MP for Brighton Pavilion.