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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Who is the EU's chief Brexit negotiator Michel Barnier?

The former French foreign minister has shown signs that he will play hardball in negotiations.

The European Commission’s chief Brexit negotiator today set an October 2018 deadline for the terms of Britain’s divorce from the European Union to be agreed. Michel Barnier gave his first press conference since being appointed to head up what will be tough talks between the EU and UK.

Speaking in Brussels, he warned that UK-EU relations had entered “uncharted waters”. He used the conference to effectively shorten the time period for negotiations under Article 50 of the Lisbon Treaty, the legal process to take Britain out of the EU. The article sets out a two year period for a country to leave the bloc.

But Barnier, 65, warned that the period of actual negotiations would be shorter than two years and there would be less than 18 months to agree Brexit.  If the terms were set in October 2018, there would be five months for the European Parliament, European Council and UK Parliament to approve the deal before a March 2019 Brexit.

But who is the urbane Frenchman who was handpicked by Commission President Jean-Claude Juncker to steer the talks?

A centre-right career politician, Barnier is a member of the pan-EU European People’s Party, like Juncker and German Chancellor Angela Merkel.

A committed European and architect of closer eurozone banking integration, Barnier rose to prominence after being elected aged just 27 to the French National Assembly.  He is notorious in Brussels for his repeated references to the 1992 Winter Olympics he organised in Albertville with triple Olympic ski champion Jean-Claude Killy.

He first joined the French cabinet in 1993 as minister of the environment. In 1995, Jacques Chirac made him Secretary of State for European Affairs, teeing up a long and close relationship with Brussels.

Barnier has twice served as France’s European Commissioner, under the administrations of Romano Prodi and José Manuel BarrosoMost recently he was serving as an unpaid special advisor on European Defence Policy to Juncker until the former prime minister of Luxembourg made him Brexit boss.“I wanted an experienced politician for this difficult job,” Juncker said at the time of Barnier, who has supported moves towards an EU army.

 

Barnier and the Brits

Barnier’s appointment was controversial. Under Barroso, he was Internal Market commissioner. Responsible for financial services legislation at the height of the crisis, he clashed with the City of London.

During this period he was memorably described as a man who, in a hall of mirrors, would stop and check his reflection in every one.

Although his battles with London’s bankers were often exaggerated, the choice of Barnier was described as an “act of war” by some British journalists and was greeted with undisguised glee by Brussels europhiles.

Barnier moved to calm those fears today. At the press conference, he said, “I was 20 years old, a very long time ago, when I voted for the first time and it was in the French referendum on the accession of the UK to the EU.

“That time I campaigned for a yes vote. And I still think today that I made right choice.”

But Barnier, seen by some as aloof and arrogant, also showed a mischievous side.  It was reported during Theresa May’s first visit to Brussels as prime minister that he was demanding that all the Brexit talks be conducted in French.

While Barnier does speak English, he is far more comfortable talking in his native French. But the story, since denied, was seen as a snub to the notoriously monolingual Brits.

The long lens photo of a British Brexit strategy note that warned the EU team was “very French” may also have been on his mind as he took the podium in Brussels today.

Barnier asked, “In French or in English?” to laughter from the press.

He switched between English and French in his opening remarks but only answered questions in French, using translation to ensure he understood the questions.

Since his appointment Barnier has posted a series of tweets which could be seen as poking fun at Brexit. On a tour of Croatia to discuss the negotiations, he posed outside Zagreb’s Museum of Broken Relationships asking, “Guess where we are today?”

 

 

He also tweeted a picture of himself drinking prosecco after Boris Johnson sparked ridicule by telling an Italian economics minister his country would have to offer the UK tariff-free trade to sell the drink in Britain.

But Barnier can also be tough. He forced through laws to regulate every financial sector, 40 pieces of legislation in four years, when he was internal market commissioner, in the face of sustained opposition from industry and some governments.

He warned today, "Being a member of the EU comes with rights and benefits. Third countries [the UK] can never have the same rights and benefits since they are not subject to same obligations.”

On the possibility of Britain curbing free movement of EU citizens and keeping access to the single market, he was unequivocal.

“The single market and four freedoms are indivisible. Cherry-picking is not an option,” he said.

He stressed that his priority in the Brexit negotiations would be the interests of the remaining 27 member states of the European Union, not Britain.

“Unity is the strength of the EU and President Juncker and I are determined to preserve the unity and interest of the EU-27 in the Brexit negotiations.”

In a thinly veiled swipe at the British, again greeted with laughter in the press room, he told reporters, “It is much better to show solidarity than stand alone. I repeat, it is much better to show solidarity than stand alone”.

Referring to the iconic British poster that urged Brits to "Keep Calm and Carry On” during World War Two, he today told reporters, “We are ready. Keep calm and negotiate.”

But Barnier’s calm in the face of the unprecedented challenge to the EU posed by Brexit masks a cold determination to defend the European project at any cost.

James Crisp is the news editor at EurActiv, an online EU news service.