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

Getty
Show Hide image

Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

0800 7318496