Why Labour must defend universal benefits for pensioners

The party should remember that benefits for the poor end up being poor benefits.

One of the suggestions that Tony Blair makes in his piece for the centenary edition of the New Statesman (180 pages, out today) is that Labour should look again at "the right balance between universal and means-tested help for pensioners". It's an argument that's made with increasing frequency as the coalition's welfare cuts bite. While dramatically reducing support for working-age claimants, Cameron has "triple-locked" the state pension (so that it increases each year by average earnings, the rate of inflation or 2.5%, whichever is highest) and protected universal benefits for the elderly such as the Winter Fuel Allowance, free TV licences and free bus passes.

With pensioners accounting for 42.3% of all welfare spending (a total that will continue to rise with an ageing population), an ever greater number of politicians and commentators argue that this settlement is unsustainable. Nick Clegg has called for pensioners' benefits to be means-tested, while Iain Duncan Smith has hinted that he believes David Cameron should not repeat his 2010 election pledge to protect them. As Labour seeks to win credibility on welfare and deficit reduction, Ed Miliband is being urged to abandon his long-standing support for universalism and announce that he would restricit benefits if he becomes prime minister. 

It is right to highlight Cameron's cynicism in protecting pensioner benefits. As the decision to means-test child benefit shows, the Prime Minister has little regard for the principle of universalism. The move was motivated by raw political calculation: pensioners are more likely to vote than any other group (76 per cent did in 2010, compared to 65 per cent of the population at large) and are notoriously vigorous in defending their interests. But there are strong principled and practical reasons why Labour should be wary of joining the coming war against universal benefits.

A new system of means-testing would be complex and expensive to administer, while affecting only a fraction of pensioners. Of the UK's 11 million over-65s, two million live in poverty and another six and half a million have an income below £10,500. Just 200,000 earn enough to pay the 40p rate of tax, meaning that any savings would be largely symbolic. Clegg complains that "we are giving free bus passes and TV licences and winter fuel payments to Alan Sugar", while forgetting how rare the likes of Sur Alan are.

The government currently spends £2.2bn a year on winter fuel payments, £1bn on free bus passes and £600m on free TV licences. Compare that to the £23.8bn annually spent on housing benefit (owing to extortionate rents and substandard wages) and the £27.2bn spent on tax credits (owing to inadequate pay) and it becomes clear where the real savings are to be made. It makes little sense to target benefits for cuts when £70bn a year is still lost to tax evasion, £25bn to tax avoidance and the highest earners (including some of those dreaded "millionaire pensioners") have just received a £1bn income tax cut. By insisting that the welfare state (or at least part of it) should bear the brunt of austerity, the left is playing Osborne's game. 

The great practical advantage of universal benefits is that they ensures support goes to those who need it. At present, 1.8 million elderly people eligible for the means-tested pension credit do not claim it due to the complexity and invasiveness of the application process. In the case of the winter fuel payment, restricting the benefit would risk an increase in the 25,000 pensioners who die every year as a result of cold-related illnesses. 

The left most of all, should be wary of abandoning the principle of universalism. History shows that a narrower welfare state soon becomes a shallower one as the politically powerful middle classes lose any stake in the system and the poor are stigmatised as "dependent". The "paradox of redistribution", as social scientists call it, is that provision for some depends on provision for all. A Fabian Society study of 11 OECD countries found that greater means-testing led to increased levels of poverty as the value of benefits progressively withered. In the UK, we are already witnessing this phenomenon at work. While removing child benefit from higher-earners (a measure defended by Beveridge’s ostensible heirs, the Liberal Democrats), the coalition has simultaneously frozen it in cash terms for three years, a real-terms reduction of £1,080 for a family with two children. As Richard Titmuss observed more than forty years ago, "services for the poor end up being poor services". 

The logic of means-testing is remorseless. Remove winter fuel payments and free bus passes from well-off pensioners and the right will next ask why they should not be charged to use the NHS. Fortunately, as a principled social democrat, Ed Miliband has long recognised such arguments. Challenged over his support for universal pensioner benefits on The Andrew Marr Show in January, he replied: 

Look, if you’re saying to me we should make everything in our society means tested - in other words it shouldn’t be universal - that would include child benefit, the health service, the old age pension. Well that isn’t the road I want to go down. Why is that? Because I think everybody as part of the foundation of being a citizen of the country is entitled to some basic things, including on the basis of having children, needing free healthcare.
But as Labour's policy review continues, pressure will grow on Miliband to reverse his stance in order to prove that the party is "tough" on the deficit and welfare spending. He should resist such short-term maneouvres. The principle of universalism is too valuable to be traded in a foolhardy (and likely doomed) attempt to appease the austerity lobby. 
Tony Blair with Ed Miliband during a service to mark the Queen's Diamond Jubilee at Westminster Hall on March 20, 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Liz McInnes MP: I voted to keep Jeremy Corbyn as Labour leader - now I'm backing Owen Smith

I furiously opposed the vote of no confidence. But Corbyn should have listened and resigned. 

We’re deep into one of the most intense periods in British politics. The phrase “A week is a long time in politics” and the old Chinese curse “May you live in interesting times” are becoming clichés in their overuse. As the Labour party embarks on another leadership contest, it’s useful to think about how we got here.

I haven’t been an MP for very long.  I was elected in 2014 in a by-election and came into Parliament after a long career in the NHS as a healthcare scientist. In the 2015 leadership contest I supported Andy Burnham to be our leader because I agreed with his policies and views on the NHS and also because I had been a workplace rep for Unite and Andy had given us a great deal of support.

I believe Jeremy won because for many people he was the only candidate who appeared committed to socialist principles, and the only candidate who seemed to fully oppose austerity and welfare cuts. I strongly disagree that is actually the case, but that’s how it was allowed to appear. The turning point in the campaign was the decision of the party to instruct MPs to abstain on the second reading of the Welfare Reform bill last July. Jeremy was the only candidate to vote against the plans, along with 47 other Labour MPs – myself included. It was the right decision to vote against the bill, and I believe that was the moment which convinced many to vote for Jeremy.

Although I hadn’t supported Jeremy in the leadership contest, when he was elected by an overwhelming majority I spoke with him and told him that he had my support. His large mandate from members and supporters had given him the right to lead our party, and it was important to give him the opportunity to prove himself up to the job.

I was very pleased and quite surprised to be asked to serve on Jeremy’s front bench as part of the Communities and Local Government team and I accepted the honour. Having also served as a local councillor I felt that this was a team I could get really involved in. Since September and until just a few weeks ago, I fully supported him.

At the beginning of this piece I said that we are deep into one of the most intense periods in British politics and I believe that this began with the murder of our friend and colleague, Labour MP Jo Cox. I cannot begin to describe the shock that reverberated around the Labour Party, indeed around the whole country, that somebody so giving and so vibrant could be wiped out by a senseless act of violence as she went about her business, in the normal way, on an ordinary day, in the constituency she loved so much.

MPs, and particularly female MPs, have been fearful since then. Security and safety is being improved, for ourselves and for our staff. Yet the psychological effect remains and the process of grieving is a slow and painful one.

We then had the shock of the referendum result. Suddenly our place in the world had changed. I personally felt an acute sense of loss and I’m sure I wasn’t alone in that.

Following the referendum result, I learnt of the motion of no confidence in Jeremy Corbyn because of his handling of the Remain campaign. I was furious. At a time when as a Labour Party we should have been taking the Government to task over the fallout from a referendum which they had called, we had instead chosen to create divisions amongst our own party.

I made my feelings clear at the meeting of the parliamentary Labour party on the Monday following the referendum result. I said that I didn’t blame Jeremy for the Brexit vote and I still don’t. I actually agreed with his message that the EU isn’t perfect, but that we were better off remaining members with the ability to influence from within, rather than standing outside with no influence and facing an uncertain future.

I said that in my opinion, the people of the UK were receiving a mixed message from the Labour party because a minority of our MPs had chosen to appear on platforms with the likes of Nigel Farage and Boris Johnson, prominently on TV hustings, and one even on a boat with Nigel Farage during the ridiculous Thames flotilla. It’s not surprising, given these antics, that the public were confused about Labour’s message.

I voted against the motion of no confidence in Jeremy’s leadership. However, 172 of my colleagues, 80 per cent of the parliamentary Labour party, from all wings of the party, voted for it. I fully expected Jeremy to stand down because of such an overwhelming result. If I had received a vote of no confidence of that magnitude as a union rep, or as a councillor, then I would have stepped aside. I would have recognised the situation as being totally unworkable and I would have accepted with a heavy heart that it was time to go and let someone else take things forward.

It came as a massive surprise to me to see Jeremy refusing to go. It made no sense to me that having had it confirmed that he was unable to lead an effective opposition in Parliament, that he still chose to remain as leader, knowing that he could only be a totally ineffective leader. The job description of the leader of the Labour party is to lead the party in Parliament and it had been very forcefully pointed out to him that he was unable to do his job.

I could not understand Jeremy’s reaction. His position was untenable yet he was refusing to go. I had no choice other than to resign from my shadow ministerial role. I could no longer serve a leader who appeared to be putting his own interests ahead of the party.

Since then, and with Jeremy hungrily clinging on to power, I have watched gaping holes appear in the front bench and shadow ministerial structure following the resignations of capable colleagues all exasperated at the stubborn refusal of Jeremy to accept reality. I have colleagues who were still willing to serve a dysfunctional leadership holding down two or more roles. Every day I have seen the Tory Government mocking us, laughing at our inability to oppose them. They relish our disarray, and make no mistake about it – they are desperately hoping Jeremy stays.

Since my resignation I have been bombarded with conspiracy theories from some of Jeremy Corbyn’s supporters. I would like to confirm that I was not bullied into standing down, as some would have it. I have not been offered a job/promotion or any other incentive, another favourite conspiracy theory. Nor was I "got at" by plotters, indeed I am unaware of any plot ever having existed. The series of resignations appeared to be an organic process triggered by the sacking of Hilary Benn, leading to members of the shadow cabinet considering their own position and making their own decisions. Some of them, like my colleagues Lilian Greenwood and Thangam Debbonaire, have since written very eloquently about their own experiences of Jeremy’s leadership. Their accounts are shocking and, knowing both Lillian and Thangam, I have no reason to doubt them.

I have become concerned about his failure to condemn protests outside MPs’ offices, showing scant regard for the atmosphere of fear and grief that Jo Cox’s tragic death has created. Just this week I have supported and signed a letter to Jeremy from female Labour MPs, started by my colleague and friend Paula Sherriff, expressing our concern about his failure to protect us at a time when we are most in need of it. His refusal to support a secret vote at the National Executive Committee meeting was a mistake and seems to suggest he really doesn’t understand the intimidating and threatening atmosphere his leadership is allowing to fester.

I have completely lost faith in Jeremy. He has the worst personal poll ratings of any opposition leader in living memory, Labour have been consistently behind in the polls since he took over, and in May we had the worst local election results of any opposition party in 40 years. Even William Hague won seats – Jeremy lost 18. Jeremy claims credit for overturning some Tory policies since September, when the truth is that he had little to do with any of it and the credit should go to individual ministers like Owen Smith and their teams, as well as to Baroness Smith and the Labour Lords, who have worked tirelessly and effectively with apparently little involvement from Jeremy or his office. After failing to get a response from him, former shadow Health secretary Heidi Alexander had to stage a sit-in outside Jeremy’s office in order to get answer from him on a question of NHS policy.

Jeremy is good at slogans and nobody can disagree with him when he identifies inequality, neglect, insecurity, prejudice and discrimination as blights on our society that must be tackled, but the challenge for our party is to come up with practical policy solutions to those issues and be competent and popular enough to enact them. Jeremy and his team have been short of policies since he became leader. He did announce one at his campaign launch yesterday about forcing businesses to publish equal pay reports – but it later turned out this had been a pledge in our 2015 manifesto. And he refused to answer whether he would publish such a report for his own office. This isn’t good enough.

Those who want Jeremy’s leadership to end need to do more than simply say he’s "unelectable", even though that’s what the evidence suggests, and we need to do more than point out he’s incompetent, even though that’s what the evidence suggests. We need to make it clear that Jeremy and his most loyal supporters are not the only ones who care about fighting austerity, they aren’t the only ones who care about a free and public NHS, and they aren’t the only ones who care about tackling inequality and discrimination.

We need a leader who can articulate those values that all of us in Labour believe in but also a leader who can translate fine words and speeches into action and practical policies. And it is absolutely critical that we have a leader who can carry out the basic duties of a major political party competently and effectively. We need a leader who can unite our party, our members, trade unions and MPs, so that instead of fighting ourselves we all work together towards a common goal – to win the next general election and start putting right the many wrongs which years of Tory rule have inflicted on our communities.

I believe that Owen Smith is that leader. He has the principles of the Labour Party at his core and he has the ability to lead and unite. Above all, he is a principled man who I know would never put his own self-interest above that of the party. I have utmost confidence in him and that’s why I’ll be supporting his campaign.

I love the Labour Party and I know that Owen does too. Neither of us want to see it split and we’ll be working hard to make sure that doesn’t happen. I want everybody who loves the Labour party to join with us in unity so that we can go forward together for the good of the country and the millions of people who need us to be up to the job.

Liz McInnes is Labour MP for Heywood and Middleton.