Labour tries to avoid falling into Osborne's welfare trap

Balls signals that he is willing to support the Chancellor's new curbs on claimants, including a seven-day wait for benefits.

Every time that George Osborne announces new restrictions on benefits it has as much to do with tripping up Labour as it does with saving money. Aware of how much support the party's perceived softness on claimants cost it in 2010, he aims to paint it as "the welfare party". 

Having opposed most of the £18bn of cuts previously announced by the coalition, it is a trap Ed Miliband and Ed Balls are now keen to avoid. After Osborne announced in the Budget that he would unveil plans to cap Annually Managed Expenditure (AME) in the Spending Review, (the area of public spending that includes volatile and demand-led items such as welfare, debt interest and EU contributions), Labour pre-empted him by outlining its own cap on "structural" welfare spending and announced that it would remove Winter Fuel Payments from the wealthiest 5 per cent of pensioners, a (rather successful) attempt to redirect attention on to the main driver of higher social spending: an ageing population. 

In today's review, Osborne announced a series of tougher rules for claimants, including a seven-day wait before they can claim benefits, a duty to learn English (with benefits docked if they fail to attend language classes), the introduction of weekly, rather than fortnightly, visits to the jobcentre for half of all jobseekers, a requirement for all single parents of children aged three or over to prepare for work and a duty for individuals to prepare a CV and register for an online job search before they can receive benefits. 

In response, it was notable that Balls avoided opposing any of the measures outright. He told BBC News: 

We need to look at the detail, obviously. On the welfare things, English language for incoming migrants - definitely. For the seven-day - is it going to be a blank cheque for Wonga? Let's look at the detail. If it saves money and it works, fine.

So, while expressing some scepticism, Balls has essentially accepted the principle of a seven-day wait for benefits provided that it "saves money" (it will, but at a terrible cost to claimants forced to turn to foodbanks) and that it "works" (again, based on Osborne's definition, it will). Nor, the party signalled, will it oppose the requirement for single parents to look for work. 

In his statement, Osborne also served notice of the biggest welfare trap of all. He announced that his new cap on total benefit spending would be set in next year's Budget and would apply from April 2015. Expect him to adopt the toughest limit possible and then challenge Labour to match it. Should it do so, it will be accused of signing up to an unconscionable attack on the poorest. Should it not, it will be accused of failing to control runaway spending. Having signalled that it will not borrow more to reverse cuts to current spending (only to invest in capital projects such as housing), any difference will need to be funded through tax rises. 

Ed Miliband and Ed Balls at the Labour conference in Manchester last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.