Why Cameron has rejected Nadhim Zahawai's child benefit plan

The Tory MP's plan to limit all child-related benefits to two children would undermine the 'striver'/'scrounger' divide by hitting all families, regardless of their employment status.

Earlier this week, George Osborne vowed to cut "billions" more from welfare if the Tories win the next election. In an op-ed in today's Mail on Sunday, Conservative MP Nadhim Zahawi suggests one way he could do so. The No. 10 policy board member calls for the government to limit all "child-related welfare" to "the first two children". Here's the key passage:

This would include Child Benefit and Child Tax Credit but would exclude disability payments.

It would apply to all households, both in and out of work, and only to new births after the change became law. Capping welfare at two children may seem tough, but setting the cap at three simply wouldn’t deliver the savings we need.

At first sight, this might merely appear to be a restatement of the proposal previously floated by Iain Duncan Smith. The Work and Pensions Secretary said in September 2012: "My view is that if you did this you would start it for those who begin to have more than say two children. Essentially it's about the amount of money that you pay to support how many children, and what is clear to the general public, that they make decisions based on what they can afford for the number of children they have. That is the nature of what we all do."

But there are several key differences with the Duncan Smith plan, which was vetoed by the Lib Dems before the 2012 Autumn Statement. The first is that Zahawi's cap would apply to all child-related benefits, rather than child benefit alone. The second is that it would apply to all families, rather than just those claiming out-of-work benefits. It's the latter point that explains why No. 10 has been quick to stamp on the idea, with a source commenting: "this is not government policy and is not supported by the prime minister."

Were the Tories to limit child-related benefits for all families, regardless of their employment status, it would undermine the 'striver'/'scrounger' divide they have worked so hard to create. As Grant Shapps said of the Duncan Smith plan earlier this year: "A lot of people worry that the way welfare operated under the last government meant claimants were free from taking the difficult decisions you would take if you are in work – none more starkly obvious than when you have children.

"If you are a working family and you have another child, you know it’s going to mean quite a severe impact on your living costs. Yet in the welfare system, it’s almost turned on its head, so additional children are actually recognised, with no limit. We need to create a choice for people on welfare which mirrors that which millions of people in work who aren’t receiving state support have to make. It’s only fair to the taxpayer."

This, of course, is nonsense. There is no evidence that significant numbers of families have more children merely to claim benefits and nor is it clear why it would be a less "difficult decision" for them to do so (unlike in-work families, they cannot draw on private salaries as well as social security). But Shapps rightly believes there is a ready audience for his rhetoric.

While the Duncan Smith proposal would help to reinforce the artificial divide created between "working" and "workless" families (owing to the insecure labour market, many cycle in and out of work), the Zahawi plan would undermine it. For that reason, while the former idea will almost certainly appear in the next Tory manifesto, the latter will not.

David Cameron talks during a PM Direct event at the Tetley Tea factory in Darlington on December 13, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Hilary Benn has been sacked. What happens now?

Jeremy Corbyn has sacked Hilary Benn, effectively challenging his critics to put up or shut up.

Hilary Benn been sacked from the shadow cabinet, following an article in the Observer reporting that the former shadow foreign secretary had told Labour MPs he would challenge Jeremy Corbyn should Corbyn lose the vote of confidence in his leadership that the PLP are due to discuss on Monday.

Anti-Corbyn plotters are convinced that they have the numbers to pass the no confidence motion in Corbyn’s leadership. Passing that motion, however, would not formally trigger either Corbyn’s resignation or a leadership challenge.

The word from Corbyn’s inner circle is that he would remain in post even if he were to lose the confidence vote, and dare his opponents to collect the 50 names they would need to trigger a leadership challenge.

Should that come about, Corbyn’s allies are certain that they would triumph over whoever ran against him. As one senior source said “they lost really badly in September and that’s not gonna change”.

Labour’s rebels are convinced that they have the numbers necessary to trigger a formal challenge to Corbyn’s leadership.

What happens next is fraught as the relevant clause in Labour’s rulebook is unhelpfully vague: 

“ii. Where there is no vacancy, nominations may be sought by potential challengers each year prior to the annual session of party conference. In this case any nomination must be supported by 20 per cent of the PLP. Nominations not attaining this threshold shall be null and void.”

The question that no-one is certain of the answer to: whether the challenged leader would have to seek nominations as well or if they would be on the ballot as by right. My understanding is that the legal advice that Corbyn’s critics have is that Corbyn would not automatically have a place on the ballot. But Jolyon Maugham, a lawyer who writes regularly for the New Statesman, looked over the clause for us and believes that he would.

More important than the legal basis, though, is what the party’s ruling National Executive Committee, which would rule on whether Corbyn had to seek nominations to stand, believes.

Although Corbyn has received the backing of 12 of Labour’s affiliated general secretaries, a well-placed source tells me that they are confident the NEC would rule that Corbyn will need to seek nominations if he is to stand again.

But control over the NEC is finely balanced, and could shift decisively towards Corbyn following this year’s elections to the NEC; one reason why Corbyn’s opponents are keen to strike now.

In that situation, Corbyn’s allies believe they can secure the 50 nominations he would need – the threshold has been raised due to a rule change giving Labour members of the European Parliament the same nominating powers as their cousins in Westminster – thanks to a combination of ideological support for Corbyn and pressure from the party’s grassroots. Senior sources believe that once Corbyn reached shouting distance of 50 nominations, the bulk of the shadow cabinet would quickly fall in line. Another estimates that the “vast majority” of the PLP accept Corbyn requires more time and that the plotting is the result of “a rump” of MPs.

But Corbyn’s critics believe that the European result, which saw Labour voters reject the party line in large numbers, has left Labour MPs with large majorities in the party’s ex-industrial seats more spooked by their voters than by their activists, putting them in the same group as those MPs with small majorities. (The two groups who currently pose the biggest danger to Corbyn are MPs who are old enough to be eligible to collect their pension at or before the next election, and MPs with majorities of under 2,000.) 

Who's right? Much depends on the disposition of Labour's 20 MEPs. Prior to Britain's Brexit vote, they were believed to be the most sensitive to the concerns of the party's activists, as Labour members vote on the order of the party's list, making anti-Corbynites vulnerable. Now all 20 MEPs are out of a job at, or before, the next European election regardless, the question is whether they decide to keep Corbyn off the ballot, or try to curry favour with Corbyn's supporters in the membership prior to making a bid for seats at Westminster. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.