Miliband backs new welfare cap and brands Labour "the party of work"

In his speech on welfare, Miliband will announce that Labour would cap "structural welfare spending" and will criticise those "who could work and aren’t doing so".

Conservative strategists are fond of recalling that when focus groups were asked to choose the image they most associate with Labour at the last election they chose one of "a lazy slob" drinking a can of beer and watching daytime TV. In an attempt to reinforce the perception of Labour as the party for "the scroungers", David Cameron branded it "the welfare party" at PMQs last month. It is a label that Ed Miliband will directly reject in his speech today when he presents Labour as "the party of work" and attacks "the denial of responsibility by those who could work and aren’t doing so". He will say:

Labour - the party of work - the clue is in the name. Our party was founded on the principles of work. We have always been against the denial of opportunity through the denial of work. And against the denial of responsibility by those who could work and aren’t doing so...This country needs to be a nation where people who can work, do work. Not a country where people who can work are on benefits.

It's a message that will reassure those Labour MPs such as Frank Field and Simon Danczuk who warn that the party has positioned itself on the wrong side of the divide on welfare, but will trouble those who view such language as redolent of the Tories' "striver"/"scrounger" dichotomy.

As expected, Miliband will also announce that Labour would impose a cap on "structural welfare spending", a pre-emption of George Osborne's plan to introduce a new limit on annually managed expenditure (which includes volatile and demand-led items such as social security payments, debt interest and EU contributions) in this month's Spending Review. The cap, which would be introduced in 2015-16 and would then operate over the three years of each spending review, is aimed at separating the cyclical costs of social security, which increase at times of economic stagnation, from the long-term drivers of higher spending such as extortionate rents, inadequate wages and persistent unemployment. Rather than adopting the Tory approach of imposing populist cuts such as the "bedroom tax" and the benefit cap, which save little if any money, Miliband will pledge to control costs by "attacking long term problems like persistent unemployment, low pay and housing shortages".

On housing, he will promise to make "immediate savings" by negotiating lower rents with landlords through measures such as bulk purchasing and using some of the savings to build new homes. This should help to end the absurdity of the state devoting 95 per cent of housing spend to subsidising landlords and just 5 per cent to building houses.

Miliband will also pledge to save money by expanding use of the living wage in the public and private sectors (the IFS estimates that for every £1 spent on raising pay to living wage level, around 50p returns to the Treasury in the form of reduced welfare payments and higher tax revenues). He will say: "We can’t afford a low wage economy that just leaves the taxpayer facing greater and greater costs. It is only by changing our economy that we can both keep costs under control and make progress towards a fairer society."

Finally, in perhaps the most significant section of the speech, Miliband will flesh out Labour's long-standing promise to reassert the contributory principle, announcing that the party is considering a higher rate of Jobseeker's Allowance for those who have paid in the most. This is aimed at ending the "nothing for something" problem, which sees those who have contributed for decades offered a paltry £71 per week. Miliband will say:

Currently, after two years of work, someone is entitled to ‘Contributory Job Seekers’ Allowance. They get £71 per week, whether they’ve worked for two years or forty years. Two years of work is a short period to gain entitlement to extra help. And £71 is in no sense a proper recognition of how much somebody who has worked for many decades has paid into the system.

Significantly, after the Tories claimed that Labour's only welfare policies would increase, not reduce spending, he will promise that any change will be "cost-neutral". The proposed higher rate of JSA would be funded by increasing the qualification period for the contributory version of the benefit from its current level of two years. As Miliband will say, "A longer period of qualification would mean some new claimants would have to work longer than they expected before being entitled to extra support if they lose their job. But greater support for those who have worked for a longer time, providing real recognition of their contribution."

In response, expect the Tories to argue that Labour can't credibly pledge to reduce welfare spending when its only proposed cut - withdrawing the winter fuel allowance from the wealthiest 5 per cent of pensioners - would save just £100m and when it refuses to support the £26,000 cap on household benefits. Labour's current policy is to support a regional version of the cap which takes into account variations in housing prices. Property prices in London are 61 per cent higher than the national average and, as a result, nearly half of those households affected by the cap are in the capital. As Liam Byrne argued when the policy was first proposed last year, "While all that £500 a week might get you in central London is a one-bedroom apartment, in Rotherham, Yorkshire it would get you a six-bedroom house. How can a 'one-size-fits-all' cap be fair to working people in both London and Rotherham?

But the question the party will be pressed to answer is what level he cap would be set at in London and elsewhere. While a regional approach would mean a cap below £26,000 in some areas, it would almost certainly mean a cap above this level in the capital. The political problem for Labour is that most voters already regard the existing cap as too generous. A higher benefit cap in the capital would inevitably prompt the accusation that poorer areas are unfairly being asked to subsidise housing costs for Londoners. For now, Labour's answer is that it would ask an independent body, comparable to the Low Pay Commission, to set the level of the cap, but this will remain a headache for the party and one the Tories will take every opportunity to exploit. 

George Eaton is political editor of the New Statesman.

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Tuition fees uphold socialist principles - the left should support them

The amount of disadvantaged students applying for university between 2005 and 2015 went up 72 per cent in England, which was bigger than all other countries within the UK, including Scotland.

Since their introduction under the Blair Government, tuition fees have been a contentious issue amongst the British left. Under the leadership of Ed Miliband, Labour adopted a compromise position of reducing tuition fees – a seemingly inoffensive concession from his original position supporting free education within higher education.

Whilst they may appearing to promote educational inequality, research has shown that tuition fees have actually had the opposite effect within education. Political Scientist Martin Robbins wrote in the Guardian that “in 2015, application rates of 18 year olds living in disadvantaged areas in all countries of the UK increased to the highest levels recorded”. Though it is unlikely that the increase of fees and their reinvestment within education would have had a large effect on that crop of students, it does demonstrate that tuition fees are not the educational barrier some present them to be.

In fact, the amount of disadvantaged students applying for university between 2005 and 2015 went up 72 per cent in England, which was bigger than all other countries within the UK, including Scotland.

The largest drop-off between the least and most deprived children within educational attainment is between the ages of three and fourteen. Despite this, the higher education budget is around double that of pre-school education, which is where the inequality of education begins to kick in. A more adept way of solving the inequality within education would be a tuition fees system where a set percentage of a student’s fee is retained by their university, and a set percentage put towards pre-school education, to set the taxation of education into a progressive context.

In the latest government White Paper on tuition fees, the Universities Minister Jo Johnson lays out the idea of a teaching excellence framework (TEF). In theory, this is not problematic. Rather than raise the chargeable rate of fees (as done in 2012) the TEF would allow universities to tax above the chargeable rate on account of good teaching. This would mean for the vast majority of university students, rates would be unchanged. However, as tuition fees are currently at the chargeable rate of £9,000, the policy within the current climate is too objectionable.

Jo Johnson’s TEF model is an example of a reasonable concept which would be ineffective in practice, due to the difficulty in ranking the quality of teaching at the point of use, rather than through the means of a policy such as a graduate tax, based off earnings. If the British left championed a version of the TEF with a lower base rate, or instead just a graduate tax, it would mean Labour would be able to once again control the narrative with a sensible but redistributive policy on education. This would not only regain Labour credibility amongst the electorate on financial matters, but could be used as a base to build on, as a positive case for wealth redistribution - whether it be to pre-school education, or through increasing grants for those at university, or via restoring EMA.

Taxation of further education is one of the few issues which can boast a large level of bipartisan support across the political spectrum, and is one of the few viable ways to ensure a fully-funded but regulated further education system, as tuition fees make up over half of many universities budgets. In fact, many political commentators have stated that tuition fees are the only example of taxation upon the middle class that Labour has got the Tories to agree on, albeit if it is a pre-emptive form of it.

Whilst tuition fees are not ideal, they ensure the safeguarding of much university funding, the freeing up of the educational budget to close educational inequality between younger students and to help move towards a meritocratic system of education - which is a thoroughly socialist principle.

Ben Gartside is the Under 19s Officer for North West Young Labour and founder and chair of the Young Greater Manchester Fabians.