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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Tim Shipman's Diary

The Sunday Times political editor on poker, pasta – and being called fat by Andrew Marr.

A couple of Saturdays ago, I was having dinner with my wife at Padella (which serves the best pasta in London) when the phone rang. It was an irate David Davis. “You’re reporting that a friend of mine has said Philip May wants Theresa to quit. It’s not true. I don’t even know Philip May.” I calmly explained that I wasn’t accusing him and I had his friend on tape. “Who was it?” he asked me. I wasn’t saying. “Well, it’s not bloody helpful,” the Brexit Secretary said before hanging up.

The following day, I woke up to watch Philip Hammond explain to the BBC’s Andrew Marr why his cabinet colleagues had leaked me details of how the Chancellor had branded public-sector workers as “overpaid”. “I don’t know who [Tim Shipman’s] sources are,” he said, after inaccurately suggesting that I was being fed information as part of some Brexiteer conspiracy to discredit the cabinet’s leading Remainer.

On Monday, I did an interview with Eddie Mair in the back of a beer garden in Ireland, where I’m playing cricket. In reality, the leaks had much more to do with colleagues irritated at Hammond’s sometimes grating behaviour. Word reaches me that he regards it all as very unhelpful. It seems odd after 16 years in political journalism to have to say this, but we’re not here to be helpful. It might make sense if our politicians gave us less to write about. Over the past three years, they have delighted us enough.

Back for seconds

Voter fatigue is a recognised problem. No one talks about journalist fatigue. We all hope that Theresa May rejuvenates on her Swiss walk (perhaps regenerating into Jodie Whittaker). Thanks to the decision she took when she last went walking, I’m facing the obliteration of another summer holiday writing a second political tome covering the period since my Brexit book, All Out War, up to the general election. What looked at one stage like the boring second album is now a rip-roaring tale of hubris and nemesis. When I asked for title suggestions on Twitter, there were plenty of votes for “Mayhem” and “Mayday”. The most imaginative was: “The Snarling Duds of May”. Sadly, it’s too long for my publisher.

Catching the big fish

The new-found attention from writing books is a double-edged sword. To my delight, then embarrassment, Andrew Marr referred to me twice as “the doyen” of the print lobby. “We keep trying to stop him,” Marr’s editor, the redoubtable Rob Burley, confided at a rival magazine’s summer party. The following week, Marr said: “The biggest fish in the pool, if only physically, is Tim Shipman…” I got a text from a special adviser friend asking: “Are you paying him?” I pointed out that Britain’s best-known political interviewer had just called me a fat bastard live on national television.

New blood

I make my debut on BBC2’s Newsnight alongside Ash Sarkar of Novara Media, one of the new websites that cheerlead for Jeremy Corbyn. She is nerveless and fluent in her mid-twenties, when I was a tongue-tied naif. People who get the Corbyn phenomenon are rightly getting more airtime. Off the air, she tells me that she’s a “libertarian anarchist” and then asks me where I live. “Are you going to smash it up?” I ask nervously. She smiles. Ash’s main concern is to paint the town red in the Saturday-night sense. A Labour MP draws attention to her Twitter biog, which concludes: “Walks like a supermodel. Fucks like a champion. Luxury communism now!” Bravo. I think…

Brexit gamble

I was greatly cheered by the induction in the Poker Hall of Fame of the late Dave “Devil­fish” Ulliott, the player who did the most to create the TV and online poker boom in Britain. Westminster has a few useful card sharps – Paul Stephenson, formerly of Vote Leave, among them – but I don’t know any politicians who play. By contrast, the US presidents Harry Truman, Dwight Eisenhower, Lyndon Johnson and Richard Nixon were all accomplished poker players.

When I worked in the US, I interviewed a member of Barack Obama’s poker circle when he was a state senator in Chicago. The cautious, composed and occasionally bold player he described was the mirror image of the politician we came to know. His Republican rival in 2008, John McCain, preferred the chaotic gambling of the craps table and his erratic campaign reflected that. Too many of the current cabinet seem to be dice men. What we wouldn’t give for Devilfish running the Brexit negotiations.

Blundering through

Anyone who has ever dealt with McCain would have been saddened by the news that he is suffering from brain cancer, but his resilience almost makes you feel sorry for the tumour. McCain is undoubtedly the most media-friendly politician I have ever met. When I travelled on his plane in 2008, he took every question from the foreign press pack and made us feel welcome. Through him, I also met Steve Duprey, the former boss of the New Hampshire Republicans. He was fond of explaining Duprey’s first law: “In politics, before considering malevolence, always assume incompetence.” I have had much cause to remind myself of that over the past three years.

Paranoid android

If you are looking for a summer read, I recommend Jonathan Allen’s and Amie Parnes’s Shattered, a great insider account of Hillary Clinton’s disastrous 2016 presidential election effort. It shows how a flawed candidate with little ability to connect with the public presided over a paranoid regime of advisers engaged in Shakespearean bloodletting that led to them coming a cropper when fighting a charismatic populist. On second thoughts, you could always wait to read my second book this autumn. 

Tim Shipman is the political editor of the Sunday Times. “All Out War” is now available in paperback (William Collins)

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue