An open letter to Rachel Reeves: being "tough" on welfare won't work for Labour

Rather than trying to outflank the Tories, the party needs to think harder about how to create a greater sense of collective identity and solidarity.

Dear Rachel Reeves,

As the new shadow secretary for work and pensions, you are now the face of Labour's policies on social security and benefits, and will likely stay there until the 2015 election. So you have a unique opportunity to rethink the failed approach of the past and offer voters something bolder at the next election.

The conventional wisdom within Labour is that the party is seen as 'soft' on people who claim social security and too forgiving of people who abuse the system. You will know that poorer people are usually harsher towards others on benefits and want tough sanctions on abusers of the system. You will have seen polling that suggests Labour needs to neutralise that image or else people may be tempted to vote for the Conservatives in 2015. Hence you wanted to sound tough in your interview with the Observer on Sunday.

This is a safe approach and has been part of Labour's vocabulary since Tony Blair said he was "tough on crime, tough on the causes of crime". It has also stopped working; all the evidence shows it just takes Labour further into a cul-de-sac without a way out. Here's why:

1) It stopped working for New Labour
You couldn't accuse the last Labour government of being soft on people on welfare benefits. Successive ministers were trotted out repeatedly to deliver harsh language on "scroungers" and "fraudsters" who ripped off the system. Labour even unveiled billboard ads calling on people to report benefit fraudsters. And yet, a 2010 poll found that 66% of people thought Labour "was close to" benefit claimants. If being 'tough' on claimants is a good strategy, why didn't it work for New Labour?

Last week the American cognitive linguist and writer George Lakoff (the author of Don't Think of an Elephant) toured London and made a point that some campaigners have been making here for years: adopting your political opponent's language doesn't neutralise your disadvantage, it cements their advantage as the centre of gravity shifts in their direction (just ask your colleague Stella Creasy, she was there too). New Labour helped create a harsher climate for people on social security without reaping any political benefits, despite silly gimmicks such as lie-detector tests.

Most people don't pay attention to policy details. Labour would have to do something very drastic, perhaps beheading a welfare claimant live on TV, to cut through to voters and convince them that it is 'tough'. Otherwise they just think you're pandering for votes and dislike you even more.

2) Look at immigration as a warning sign
New Labour adopted the same strategy on the issue of immigration. Phil Woolas was regularly wheeled out to deliver sanctions and he didn't mince his words. The Conservatives didn't give Labour any breathing space of course - they shifted even further to the right and kept attacking Labour. Once again there was no political benefit for Labour. In fact, it created a monster for the Tories, as they now face public disillusionment over their absurd promises.

As in the case of social security, by feeding a war of words on immigration, New Labour ended up alienating some of its own voters while convincing almost no one. Even uber-Blairite John McTernan admitted this failure. Reports show that tough rhetoric only shifts attitudes even further away from where Labour needs them to be. As Emma Burnell recently pointed out, "If all we intend to do is ape the Tories in a macho punishment contest we will fail. Because the public refuse to see us like that however hard we tried."

3) Labour should appeal to voters but think broader
How about this for a message: "Labour is absolutely committed to reducing the welfare bill, but without the divisive and demonising language of the Tories. To do that we need to get people into well-paying jobs, and Labour will offer not just a jobs guarantee to the long-term unemployed, but refocus our economy to create better jobs. That is about creating a different kind of an economy that isn't reliant on property bubbles and the City, and one where we pay vastly less on housing benefit and unemployment." Tough on the costs of social security without the demonisation.

But there is a broader problem here. Britons are less appreciative of some welfare payments because our society has become more individualistic and atomised, with a breakdown of traditional social links with neighbours. Labour has to think harder about how to increase a sense of collective identity and solidarity within Britain if it wants to preserve the welfare state. We have to reverse government policies that increase loneliness and kill communities.

As Labour's policy review co-ordinator Jon Cruddas once said : "An ex minister wrote last week of how we needed to 'crack down on the welfare underclass'. Others argue for us to become the 'anti immigration party'. A new kiss up, kick down politics that blames the victim. There lies political death for labour. No language, no warmth no kindness; no generosity, vitality nor optimism. No compassion. If you seek to outflank the coalition from the right, you will turn Labour into a byword for intolerance."

This talk of Labour 'walking into a welfare trap' set by the Tories has itself become a problem: we keep returning to the safe ground of 'tough' rhetoric, without convincing messages or policies that favour Labour in the long term. It is time to bring some fresh thinking to this debate and I hope you won't shy away from doing so.

Shadow work and pensions secretary Rachel Reeves.

Sunny Hundal is editor of Liberal Conspiracy.

Getty
Show Hide image

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.