Osborne puts housing benefit for under-25s first in line for cuts

The Chancellor says he will prioritise further cuts to the housing benefit budget before making any changes to universal pensioner benefits.

Depending on who you believe, David Cameron is either preparing to withdraw benefits from wealthy pensioners after the next election, or is set to pledge to ring-fence them again. Cameron's refusal to promise to protect universal benefits such as Winter Fuel Payments, free TV licences and free bus passes on The Andrew Marr Show yesterday, in contrast with his pledge to maintain the triple lock on the state pension (so that it rises in line with inflation, earnings, or 2.5%, whichever is highest), was widely interpreted as preparing the ground for a U-turn. But a Downing Street source tells today's Daily Mail that the PM is "minded to repeat the pledge" (which has seen pensioner benefits protected throughout this parliament) and that he remains personally committed to preserving the benefits for all pensioners, not just the poorest. 

It was left to George Osborne, who is more open to cuts in this area than Cameron, to try and provide some clarity in his first interview of the year on the Today programme this morning. Osborne refused to rule out the withdrawal of benefits from some pensioners, repeatedly stating that he was "not writing the Conservative manifesto today", but offered an important indication of his priorities. There would certainly be further welfare cuts (Osborne has previously declared that he hopes to cut "billions" more from the budget), but pensioner benefits would not be first in line. The Chancellor suggested that reducing their scope would save only "tens of millions", adding that "it is not where you need to make the substantial savings required". Instead, he singled out housing benefit for the under-25s as the first target for cuts and took aim at those "on incomes of £60-£70,000 living in council homes". 

Osborne is right to point out that means-testing pensioner benefits would not raise the sums that many suggest. Last year the government spent £2.2bn a year on winter fuel payments, £1bn on free bus passes and £600m on free TV licences. Compare that to the £23.8bn annually spent on housing benefit (owing to extortionate rents and substandard wages) and the £27.2bn spent on tax credits (owing to inadequate pay) and it becomes clear where the real savings are to be made. Labour's pledge to withdraw Winter Fuel Payments from the wealthiest 5% of pensioners is expected to save just £100m.

But Osborne's preferred approach of salami slicing the welfare budget, rather than addressing its underlying causes, will not raise significant sums either. For all the human misery they have caused, the household benefit cap is forecast to save just £110m a year by the DWP, while the bedroom tax will raise just £490m (and both, as analysts have warned, may end up costing more than they save by increasing homelessness and other social ills). 

Throughout the interview, Osborne repeatedly referred to his "values" and the state's duty to ensure "dignity and security in old age". But in this instance, his motives (as so often) are nakedly political. While spending on the NHS and the state pension is among the most popular (and the over-65s are the most likely age group to vote), few will object to the abolition of housing benefit for the under-25s (the least likely age group to vote). With the Tories increasingly focused on chasing the grey vote, the question facing Labour is whether it is prepared to speak up for the young. 

George Osborne speaks at the Conservative conference in Manchester last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.