Miliband's lost welfare intervention

Everyone waited for the Labour leader to say something on welfare. He did but (for obvious reasons) no one noticed.

A colossal news event doesn’t just obliterate other items from the news agenda, it seems to cast them back in time. The arguments about welfare reform that raged last week  – aggravated by George Osborne’s decision to link the case of Mick Philpott, a convicted child killer who happens also to have received benefits, to the more general moral failings of the social security system - seem to have been pushed deeper into the past by the sheer volume of coverage of Margaret Thatcher's death.

The Labour Party was collectively outraged, denouncing the Chancellor’s intervention as callous and cynical. The Tories were generally glad of another opportunity to depict the opposition as hopelessly wedded to defending a profligate system that permits indolence up to the point of breeding depravity. Something approximating a Westminster consensus formed by the end of the week that Labour came off worse from the scrap (although no one in their right mind could have judged it an edifying combat). That is partly because Ed Miliband was away on holiday. Without an intervention from the leader the party’s response looked inevitably diminished. The announcement, in Sunday’s Observer, of a "new" approach to welfare that would recognize more the value of claimants’ past contributions through work, was treated dismissively as a reactive panic, although Liam Byrne, shadow work and pensions secretary, has been kicking around the idea for months.

While some MPs on the right of Labour, mindful of public contempt for the party’s supposed record of unchecked welfare spending, fretted squeamishly that by kicking back at the Tories they were marching into another Osborne trap. Meanwhile, many on the left were in despair that seemed unable to muster sufficient moral outrage to defend those – in work and out of it - who rely on state support just to get by and who are implicitly branded as corrupt layabouts by government rhetoric.

Miliband was convicted by all sides in absentia. So it might be expected that, on his return from holiday, the Labour leader would make a clear and explicit statement of his position on the subject. As it happens, he did. I was travelling with Miliband as he launched his party’s local election campaign yesterday. (Yes, I was there when the news of Thatcher’s death came in but you’ll have to wait a bit longer to read about that.) Campaigning was abandoned and not much, if anything, that happened in politics earlier in the day was noticed.

It is worth disinterring Miliband’s welfare comments, made to a live audience in Ipswich during an unscripted question and answer session. Naturally, what he said won’t satisfy everyone but it is a clearer statement of the official position than anything that emerged last week, a relatively substantial intervention and probably worth quoting in full. So here it is:

“The starting point is we need a welfare system that works. We are very clear about what welfare reform means. Welfare reform means that we should get the 155,000 people who have been unemployed over two years over the age of 25 back to work. Labour is the only party in this country that says we're actually going to do that. We're going to offer them jobs and say you've got a responsibly to take it.

"We think we've got to get the 77,000 young people who have been unemployed for more than a year, back to work. Labour is the only party who says we're actually going to do that by putting them back to work. Do you know what? Those numbers are going up and up under this government because of their economic failure. That's where you start.

"Secondly, you've got to make work pay. You don't make work pay but cutting taxes for millionaires and cutting tax credits at the same time so you've got to make sure that tax credits are there for people to make work pay.

"Thirdly, contribution does matter. I've said in the past that when it comes to housing, if you are working and playing a part in your community, you should get extra points. In terms of the housing list, that is the right thing to do. That is what welfare reform looks like to me.

"Here's the problem with this government, they are not just heartless they are hopeless too. Because actually their welfare reform doesn't work. They say they want to make work pay - Mr Osborne was repeating this on Tuesday . What he doesn’t admit is that his strivers tax that is coming in today - the limit to 1% of the increase in social security payments - is hitting precisely the people he says he wants to help: the people on tax credits and others.

"They’re hopeless too because their bedroom tax is not just cruel and unfair but actually is going to force people into the private sector, which will cost more. And universal credit it in chaos.

"But now we come to the wider issue. Because there are two different views you can take on this: do you try and unite your country and bring it together or do you exploit tragedies? Like the Philpott tragedy. And the right place for Mr Philpot is behind bars. But do you exploit the deaths of six children to try and make a political point about the welfare system? And at the same time say to people actually this is somehow a commentary about so many people on benefits. Of course there is a minority of people on benefits who should be working and aren’t. Labour’s the party that’s going to get them back to work. But what I’m not going to do is engage in nasty, divisive politics.

“I have got a very clear message for the British people on this: we can either succeed as a country by uniting, by using the talents of everybody, by using the talents of everybody out of work, by putting them back into work and making sure there is real responsibility. Or you can say let's divide, let’s set one group of people against another - that’s not how we won the Second World War, that’s not how we succeeded as a country after the Second World War. Now if people want that nasty divisive politics they can have it from the Conservative Party, they’re not going to get it from me. I’m a unifier, not a divider.

"That is what One Nation Conservatives used to believe. And frankly, you know what, I think One Nation Conservatives will be turning in their grave at what’s happened to today’s Conservative Party. They would be ashamed of what’s happened to this Conservative party. Because they have made a political decision, it’s not about the national interest, it’s a political decision to divide this country. Well I’m not having it. I’m not doing it. That’s not my politics."

 

Miliband said that "One Nation Conservatives will be turning in their grave at what’s happened to today’s Conservative Party". Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty Images
Show Hide image

There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR