David Cameron and George Osborne speak in Crewe during the general election campaign. Photograph: Getty Images.
Show Hide image

Do the Tories have a plan to soften the blow from welfare cuts?

The adoption of living wage contracts is one way that the party could reduce the damage from cuts to tax credits. 

The Conservatives have many welfare cuts to make but few ways in which to do so. Before the election, David Cameron vowed to maintain the "triple lock" on the state pension (so that it rises by the rate of inflation, average earnings or 2.5 per cent, whichever is highest) and ruled out cuts to universal pensioner benefits, such as Winter Fuel Payments and free bus passes. Under pressure from Labour, he later added child benefit to the list of no-go areas. If they are to meet their target of cutting welfare by £12bn by 2017-18, this leaves the Tories with £10.5bn of reductions to make from just £125bn of the welfare budget (the protected payments amount to £95bn). The cuts announced so far - a two-year freeze in working-age benefits, the reduction of the benefit cap from £26,000 to £23,000 and the removal of housing benefit from 18-21-year-olds - amount to just £1.5bn. 

When challenged during the campaign on how they would find £12bn of savings, Tory ministers pointed to the £21bn of reductions they made in the last parliament. But this makes the reverse of the point they intend. Any low-hanging fruit have already been plucked: there are no easy cuts left to make. Most Conservatives expect to fall short of the £12bn target they have set themselves (many had assumed that the Lib Dems would force them to do so). But significant savings will still need to be achieved if George Osborne is to meet his aim of eliminating the structural current deficit by 2017-18. 

The most obvious place for the axe to fall is tax credits. They are the largest of the unprotected areas (accounting for £30bn) and have long been regarded by the Tories as emblematic of Labour's statist meddling. Ahead of Osborne's emergency Budget on 8 July, the party is reportedly considering saving £5bn by returning tax credits to their 2003/04 levels in real-terms. For 3.7 million low-income families, the IFS estimates, that would mean the loss of £1,400 a year. For the Tories, who have repeatedly framed themselves as the "workers' party" since the election, this is a political headache. While supporting some welfare cuts, such as a reduced benefit cap, Labour plans to oppose measures that hit the working poor. Further increases in the personal tax allowance (which is due to reach £12,500 by 2020) and low inflation will help to ease some of the pain.  But without a dramatic increase in wages, voters will be left substantially worse off.

An increasing number on the left denounce tax credits as an inefficient subsidy to corporate cheapskates. They call for the introduction of a statutory living wage to relieve the burden on the state. But while some Tories occasionally flirt with the idea, no one expects the party to support a measure that all forecasts suggest would cost jobs. If they are smart, however, the Conservatives will look to the Labour manifesto for inspiration. Before the election, the party proposed the introduction of "make work pay" contracts, which would provide a tax rebate to those companies that sign up to become living wage employers. For every £1 that employers pay to raise salaries to living wage-level, the Treasury saves 49p. Under Labour's plan, the chunk of this accounted for by higher tax revenues (32p) would have been paid back to firms that signed up, while the Exchequer banked the remainder 

The adoption of this policy would provide the Tories with some political cover as they again cut tax credits. Through acts such as capping payday loan charges and banning exclusive zero-hours contracts, they have shown themselves prepared to make selective interventions. As they face the prospect of damaging their nascent "one nation" brand, here is a chance for them to do so again. 

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

To beat the Trump hype, we need a return to old-fashioned political virtues

If we want to resist the Trumpification of politics, what we need is restraint, duty and incorruptibility.

After the 1992 US presidential election, Alistair Cooke’s celebrated BBC radio series Letter from America struck a poignant note. Cooke described Bill Clinton’s worn jeans and checked wool shirt, contrasting them with George H W Bush’s buttoned-up Wasp manners and buttoned-down Ivy League shirts. Clinton’s style, Cooke argued, was a rebuke to a tired social and political establishment. His casualness was the new America.

Cooke, then 83, was honest enough to admit unease about this departure from the old, patrician modes and manners. “Along with the passing of George Bush,” he said, “we shall see, I fear, the passing of the blue blazer.” Cooke seemed right at the time. But don’t write off the blue blazer just yet. As ruling elites change, so does the appropriate counterpoint. To topple Bush’s stuffy golf club elites, Clinton picked up his saxophone, took off his tie and felt everyone’s pain. And now? The subtext of these turbulent months (the inevitable second question, prompted by “How do you beat Donald Trump?”) is: “What should ­tomorrow’s leaders, the leaders we crave, look and sound like?”

My conjecture is that, to beat Trump and his type – bling, shiny suits, dodgy deals – we should push towards centre stage an underestimated set of political virtues: restraint, duty and incorruptibility. If it weren’t for the gender associations, I would be tempted to call this quality gentlemanliness. Aside from personal virtue – signally lacking in the Clinton camp – how might decency inform public debate as it comes under attack from maverick showmen trained in the media circus? How can the middle ground regain its confidence?

First, level with the public. Maybe liberalism hasn’t failed so much as its messaging has failed. Instead of smashing the electorate over the head with the idea that everything is just great, make the case that not everything can be for the best in all possible worlds. As populists reach for empty slogans, a new space has opened up. Accept and exploit those asymmetries: more people are ready to hear uncomfortable truths than politicians imagine.

Kingsley Amis once argued that a writer’s voice should stay close to his speaking voice: not the same, but close. Adapting that idea, if politicians stayed closer in public debate to the truths that they articulate in casual conversation – some things are impossible; almost every policy creates a losing as well as a winning side; there really isn’t any money – they would be surprised how many people are ready to hear that not all problems can be evaporated into thin air. Stray too far from awkward truths and elections become about simple lies v tricksy lies.

Second, centrists do more harm than good when they rush to categorise dissenting opinion as not only wrong, but unacceptable. “Any suggestion that liberal values are not humanly universal,” as John Gray wrote in a recent NS essay, “will provoke spasms of righteous indignation.” Instead, we need to be more tolerant in our tolerance.

Third, stop pretending that everything desirable can be shoehorned into the “progressive” agenda. “I really care passionately about persevering with the common-sense middle ground and doing it quite well” is a problematic political sales pitch, but not for the reasons that are usually given. The gravest difficulty may come at the beginning, with the faux passion, rather than with the substance – public service and competence – underneath.

It is revealing that those closest to David Cameron expended so much energy trying to persuade us that he was not an updated version of Harold Macmillan. That is why the gay marriage reforms, though admirable, were accorded too much significance. Ah, Cameron was a natural crusader! But he paid a price for dressing up as a “radical” when greater challenges arrived. It weakened some of his strongest cards – calmness, perspective, proportion – just as politics was coarsening. Aren’t Tories supposed to understand the virtues of yesterday? In other words, as an electoral strategy to beat Trump (or Nigel Farage), I’d put up a Macmillan type over a Clinton type every time.

Fourth, cut ties with “messaging experts”. It’s a fraud. They teach that everything must be asserted with powerful conviction. Yet ideas unworthy of powerful conviction are best left shorn of them. The electorate has endured a communications version of crying wolf. As a result of the messaging game, when something genuinely important crops up, it sounds simply like the same old shtick.

Fifth, ditch the bogus quantification. Few things signal untrustworthiness more reliably than fake precision. Something shifted in me when George Osborne argued that Brexit would leave households £4,300 worse off. What, no decimal point? Voters understand uncertainty better than politicians imagine. Precise quantification used to sound professional. Now it sounds suspicious.

Finally, think about tone. Conventional wisdom holds that the mainstream must fight the Trumpian revolution on its own terms: a simple solution, memorably expressed, a guiding vision for the country or the world. If anyone has a good one to hand, I’m all for it. But what if – after decades of ­sophisticated argument and counterargument, as politics has solved the easy problems while parking the difficult or insoluble ones – we have reached a state of such evolved equilibrium that no such easy answer can exist?

Pretending otherwise is no longer a point of difference. It takes you towards the lowest common denominator. As Trump has shown, that is well-occupied territory. Perhaps wooing the angry mob is not the solution. Instead, the admirable and successful politician of the future will have to win back the support of moderate, sensible but disillusioned voters. 

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 01 December 2016 issue of the New Statesman, Age of outrage