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.

Photo: Getty Images
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Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.