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.

Getty
Show Hide image

Leader: Labour is failing. A hard Brexit is looming. But there is no need for fatalism

There is nothing inevitable about the right’s supremacy or a catastrophic Brexit.

Democracy depends on competent opposition. Governments, however well intentioned, require permanent and effective scrutiny to meet the public interest. For this purpose, the role of Her Majesty’s Opposition was enshrined in law 80 years ago. However, at present, and in the week Article 50 is invoked, this constitutional duty is being fulfilled in name alone. (The Scottish National Party speaks only for the Scottish interest.)

Since re-electing Jeremy Corbyn as its leader, the Labour Party has become the weakest opposition in postwar history. It lost the recent Copeland by-election to the Conservatives (a seat the Tories had not held since 1931) and trails the governing party, by up to 19 points, in opinion polls. The Tories feel no pressure from Labour. They confidently predict they will retain power until 2030 or beyond. Yet as the poll tax debacle and the Iraq War demonstrate, prolonged periods of single-party rule run the danger of calamitous results – not least, this time, the break-up of Britain.

Under Mr Corbyn, who formally lost the confidence of 80 per cent of his MPs last summer (and has not regained it), Labour has the least impressive and least qualified front bench in its history. Its enfeeblement has left a void that no party is capable of filling. “The grass-roots social movement of the left that was supposed to arrive in Jeremy Corbyn’s wake has not shown up,” the academic Nick Pearce, a former head of Gordon Brown’s policy unit, writes on page 36.

In these new times, the defining struggle is no longer between parties but within the Conservative Party. As a consequence, many voters have never felt more unrepresented or disempowered. Aided by an increasingly belligerent right-wing press, the Tory Brexiteers are monopolising and poisoning debate: as the novelist Ian McEwan said, “The air in my country is very foul.” Those who do not share their libertarian version of Brexit Britain are impugned as the “enemies” of democracy. Theresa May has a distinctive vision but will the libertarian right allow her the time and space to enact it?

Let us not forget that the Conservatives have a majority of just 15 or that Labour’s problems did not begin with Mr Corbyn’s leadership. However, his divisiveness and unpopularity have accelerated the party’s decline. Although the Unite general secretary, Len McCluskey, elected by a fraction of his union membership, loftily pronounced that the Labour leader had 15 months left to prove himself, the country cannot afford to wait that long.

Faced with the opposition’s weakness, some have advocated a “progressive alliance” to take on the Conservatives. Labour, the Liberal Democrats, the Greens and the nationalist parties are urged to set aside their tribalism. Yet it is fantasy to believe that such an alliance would provide stable majority government when nearly four million people voted for Ukip in 2015. There has also been chatter about the creation of a new centrist party – the Democrats, or, as Richard Dawkins writes on page 54, the European Party. Under our first-past-the-post electoral system, however, a new party would risk merely perpetuating the fragmentation of the opposition. If Labour is too weak to win, it is too strong to die.

The UK’s departure from the EU poses fundamental questions about the kind of country we wish to be. For some on the right, Brexit is a Trojan Horse to remake Britain as a low-tax, small-state utopia. Others aspire to a protectionist fortress of closed borders and closed minds. Mr Corbyn was re-elected by a landslide margin last summer. The Leave campaign’s victory was narrower yet similarly decisive. But these events are not an excuse for quietism. Labour must regain its historic role as the party of the labour interest. Labour’s purpose is not to serve the interests of a particular faction but to redress the power of capital for the common good. And it must have a leader capable of winning power.

If Labour’s best and brightest MPs are unwilling to serve in the shadow cabinet, they should use their freedom to challenge an under-scrutinised government and prove their worth. They should build cross-party alliances. They should evolve a transformative policy programme. They should think seriously about why there has been a post-liberal turn in our politics.

There is nothing inevitable about the right’s supremacy or a catastrophic Brexit. At present, the mood on the Labour benches is one of fatalism and passivity. This cannot go on.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition