How Labour can offer something for something on welfare

A two-tier system of benefits for job seekers, with higher entitlements for those with strong work records, could be funded by reducing spending on mortgage interest.

This is set to be a big week for Labour. Today Ed Balls launched a foray into pensioner benefits, later this week Ed Miliband is set to address the question of working age welfare. The question is what principle (or combination of principles) should underpin any new approach. The shadow chancellor’s announcement today points towards more means-testing but in January, Miliband defended universal benefits and since then Liam Byrne has promised that Labour would "strengthen the old principle of contribution". 

Means-testing and the contributory principle are, of course, uneasy bedfellows; one judges eligibility by what people need to take out of a system, the other by what people have put in. Labour should plump for more emphasis on the latter. This matters most for working age welfare, which has been haemorrhaging support in recent years. International evidence shows that the UK has one of the least generous welfare systems for the unemployed –and one of those with the weakest relationship between what people have paid in and what they get out. The two are linked: people tend to support systems with a stronger contributory element.

In a paper published today Demos argues that the government should create a two-tier system of benefits for job seekers, with higher entitlements for those with strong work records. This would end the ‘nothing for something’ system, in which many people contribute over a number of years, only to find themselves entitled to very little when they require help. This would be paid for by reducing spending on the Support for Mortgage Interest (SMI) scheme, which currently covers the interest on up to £200,000 of loans or mortgages for homeowners out of work, up to a maximum of two years.

The principle behind this is that if people make the choice to take on a mortgage, they should also insure themselves against the associated risks. Homeowners losing their entitlement to SMI would instead be auto-enrolled into mortgage payment protection insurance, leaving them to choose to not cover themselves or to purchase insurance for mortgage interest payments at a cost of £33 a month at most - less than the price of an average mobile phone bill. The money saved from this change would allow for a higher payments for those with strong work records – roughly £95 a week compared to the £71.70 that all job seekers currently get for at least six months.

These changes would promote personal responsibility, through homeowners insuring themselves against risk incurred by their own choices. They would engender reciprocity, through a system which rewarding contribution. And they would avoid increasing the deficit by reallocating existing spending, rather than adding new commitments. 

Duncan O'Leary is deputy director of Demos

A street cleaner passes the Jobcentre Plus office on January 18, 2012 in Bath, England. Photograph: Getty Images.

Duncan O’Leary is deputy director of Demos

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.