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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The NS leader: Cold Britannia

Twenty years after the election of New Labour, for the left, it seems, things can only get worse. 

Twenty years after the election of New Labour, for the left, it seems, things can only get worse. The polls suggest a series of grim election defeats across Britain: Labour is 10 points behind the Conservatives even in Wales, putting Theresa May’s party on course to win a majority of seats there for the first time in a century. Meanwhile, in Scotland, the psephologist John Curtice expects the resurgent Tories, under the “centrist” leadership of Ruth Davidson, to gain seats while Labour struggles to cling on to its single MP.

Where did it all go wrong? In this week’s cover essay, beginning on page 26, John Harris traces the roots of Labour’s present troubles back to the scene of one of its greatest triumphs, on 1 May 1997, when it returned 418 MPs to the Commons and ended 18 years of Conservative rule. “Most pop-culture waves turn out to have been the advance party for a new mutation of capitalism, and so it proved with this one,” Mr Harris, one of the contributors to our New Times series, writes. “If Cool Britannia boiled down to anything, it was the birth of a London that by the early Noughties was becoming stupidly expensive and far too full of itself.”

Jump forward two decades and London is indeed now far too dominant in the British economy, sucking in a disproportionate number of graduates and immigrants and then expecting them to pay £4 for a milky coffee and £636,777 for an average house. Tackling the resentment caused by London’s dominance must be an urgent project for the Labour Party. It is one that Mr Corbyn and his key allies, John McDonnell, Emily Thornberry and Diane Abbott, are not well placed to do (all four are ultra-liberals who represent
London constituencies).

Labour must also find a happy relationship with patriotism, which lies beneath many of the other gripes made against Mr Corbyn: his discomfort with the institutions of the British state, his peacenik tendencies, his dislike of Nato and military alliances, his natural inclination towards transnational or foreign liberation movements, rather than seeking to evolve a popular national politics.

New Labour certainly knew how to wave the flag, even if the results made many on the left uncomfortable: on page 33, we republish our Leader from 2 May 1997, which complained about the “bulldog imagery” of Labour’s election campaign. Yet those heady weeks that followed Labour’s landslide victory were a time of optimism and renewal, when it was possible for people on the left to feel proud of their country and to celebrate its achievements, rather than just apologise for its mistakes. Today, Labour has become too reliant on misty invocations of the NHS to demonstrate that it likes or even understands the country it seeks to govern. A new patriotism, distinct from nationalism, is vital to any Labour revival.

That Tony Blair and his government have many detractors hardly needs to be said. The mistakes were grave: the catastrophic invasion of Iraq, a lax attitude to regulating the financial sector, a too-eager embrace of free-market globalisation, and the failure to impose transitional controls on immigration when eastern European states joined the EU. All contributed to the anger and disillusionment that led to the election as Labour leader of first the hapless Ed Miliband and then Jeremy Corbyn, a long-time rebel backbencher.

However, 20 years after the victory of the New Labour government, we should also acknowledge its successes, not least the minimum wage, education reform, Sure Start, a huge fall in pensioner poverty and investment in public services. Things did get better. They can do so again.

The far right halted

For once, the polls were correct. On 23 April, the centrist Emmanuel Macron triumphed in the first round of the French election with 24 per cent of the vote. The Front National’s Marine Le Pen came second with 21.3 per cent in an election in which the two main parties were routed. The two candidates will now face off on 7 May, and with the mainstream candidates of both left and right falling in behind Mr Macron, he will surely be France’s next president.

“There’s a clear distinction to be made between a political adversary and an enemy of the republic,” said Benoît Hamon, the candidate of the governing Parti Socialiste, who had strongly criticised Mr Macron during the campaign. “This is deadly serious now.” He is correct. Mr Macron may be a centrist rather than of the left but he is a democratic politician. Ms Le Pen is a borderline fascist and a victory for her would herald a dark future not just for France but for all of Europe. It is to Donald Trump’s deep shame that he appeared to endorse her on the eve of the vote.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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