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Osborne doesn’t see that voters can love the idea of benefit cuts but end up hating the cutters

The Chancellor should not assume that there is no political limit to how deep his welfare cuts can go.

It is the noisy, knife-edge votes in parliament that furnish the drama. As a piece of theatre, the vote on 21 November on a statutory instrument filling gaps in the Welfare Reform Act will be a non-event. It is a “deferred division”, a bit of legislative housekeeping that allows MPs to indicate their preferences without debate. Results are published without fanfare.

Yet this shuffling of regulations into law is momentous for hundreds, possibly thousands of families. It finalises the conditions that mean, after April 2013, they could be evicted from their homes. That is when the “benefits cap” comes into force, limiting the amount any household can receive to £500 per week; £350 for childless singles.

The level is set to match the average wage, which is what makes the cap politically effective. The view that work should be more lucrative than inactivity and that state handouts must have a limit is, for most voters, irresistible. The most common public objection is that the cap is too generous.

Few households are technically in receipt of benefits above the capped level – around 20,000, mostly in London. None of them feels it as disposable income. The numbers are inflated by housing benefit (already subject to a separate cap), which has run out of control chasing the capital’s exorbitant rents. Yet outrage at perversities in the current system is greater than attention to the detail of who is affected by coalition policy. That anger has been successfully exploited by Conservatives, painting Labour as the party for handing public money to wastrels.

Passing the mirror test

Defenders of the cap point out that its effects can be avoided by the acquisition of a job. Besides, they ask, why should unemployed families have privileged access to expensive postcodes when low-paid workers have to rent within their means? The argument resonates with anyone weighed down by housing costs.

The problem is that evicted families, most with a few children since the cap makes no allowances for fecundity, will end up being rehoused in areas where there is no guarantee of work or a spare school place. Hundreds could end up homeless. When the costs of dislocation are factored in, the saving for the Exchequer will be nil.

While some of the coalition’s welfare policies might be honourably motivated, the function of this particular change is neither budget consolidation nor reform. It is a gesture of pure political positioning by George Osborne that happens, as a side effect, to turn some of London’s poorest families out of their homes.

So far, it is working. The Tories taunt Labour for their refusal to back the cap. Ed Miliband is torn between honouring his party’s historic obligation to defend the destitute and courting voters for whom welfare iniquities were a reason for deserting Labour in 2010.

The Liberal Democrats have a different dilemma. They want to look fiscally responsible while retaining their self-image as socially conscientious objectors. One party strategist talks about calibrating compromise with the Tories in terms of “passing the mirror test” – can Lib Dems look themselves in the eye believing they have done what they can to mitigate the harshest consequences of austerity?

There are those who think that the benefits cap fails that test. “It exists purely to divide society,” says one prominent Lib Dem. “It is politically motivated and it is immoral.” Many more are reconciled to the cuts they have already backed but squeamish about the next wave. Senior figures in the party query the Conservatives’ capacity to grasp the social implications of benefit-bashing. “On the whole, they have no understanding of the people who are affected by this stuff,” says a Lib Dem cabinet minister.

That mood conditions Nick Clegg’s stance in negotiations over the Autumn Statement on 5 December, when the Chancellor must announce new devices for containing the deficit. The Tories are targeting the benefits bill for billions more in cuts. The Lib Dems accept that welfare spending will face another squeeze but demand tax rises on the rich – specifically a levy on expensive property – to spread the burden of pain.

Underpinning the whole process is Osborne’s strategic judgement that there is no limit to how deep the axe can be planted in welfare entitlements because voters think that they are mostly a scam. It is a view largely supported by opinion polls. Labour strategists concede that hostility to welfare “scroungers” remains fierce. There isn’t even much evidence of solidarity between different categories of benefit claimant.

Blind spot

That doesn’t mean there is no compassion threshold in British society – a line beyond which the public suddenly recoils from the consequences of a policy, regardless of its advertised economic necessity. Fickle voters can demand welfare cuts and still see them as reinforcing the Conservatives’ reputation for heartlessness. “[The Tories] need to be careful,” says one Clegg adviser. “It is entirely possible to do a lot of things that poll favourably and then find that the cumulative effect is to make you very unpopular.”

This is a blind spot for David Cameron and Osborne. They know all about the problems with the Tory brand. They have heard the focus groups and studied the polls. Yet, by definition, they cannot identify with the strain in British culture that instinctively ascribes the worst possible motive to Conservatives. As members of the party, how could they? They can read about a suspicion that Tories ultimately always side with their rich friends and neglect the poor but they cannot inhabit the prejudice in a way that would tune their political antennae to what seems fair to the non-aligned voter.

That makes it a perverse kind of blessing to be in coalition with a party full of people with wariness of Tories in their bones and a strategic plan to monopolise the credit for anything that looks compassionate in the government programme. So when Lib Dems say that a line is being crossed, that welfare cuts are starting to look vindictive and that they must be offset with tax rises for the wealthy, the Prime Minister and the Chancellor might think it a negotiating ploy by political rivals. It is. They should nonetheless seriously consider the possibility that it is also true.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 19 November 2012 issue of the New Statesman, The plot against the BBC

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The Tories' aim is to put Labour out of business for good

Rather than merely winning again, the Conservatives are seeking to inflict permanent damage on the opposition. 

The Conservatives are numerically weak but politically strong – that is the peculiarity of their position. Their majority is the smallest of any single-party government since October 1974. Yet, to MPs at the Tory conference in Manchester, it felt like “2001 in reverse”: the year of Tony Blair’s second election victory. Then, as now, the opposition responded to defeat by selecting a leader, Iain Duncan Smith, who was immediately derided as unelectable. Just as Labour knew then that it would win in 2005, so the Conservatives believe that they have been gifted victory in 2020. David Cameron has predicted that the party’s vote share could rise from 37 per cent to a Thatcherite 43 per cent.

For Cameron and George Osborne, who entered parliament in 2001, this moment is revenge for New Labour’s electoral hegemony. They believe that by applying Blair’s lessons better than his internal successors, they can emulate his achievements. The former Labour prime minister once spoke of his party as “the political wing of the British people”. In Manchester, Cameron and Osborne displayed similarly imperial ambitions. They regard Jeremy Corbyn’s election as a chance to realign the political landscape permanently.

Seen from one perspective, the Tories underperformed on 7 May. They consistently led by roughly 20 points on the defining issues of the economy and leadership but defeated Labour by just 6.5 overall. It was their enduring reputation as the party of the plutocracy that produced this disparity. Those who voted for Labour in spite of their doubts about Ed Miliband and the party’s economic competence may not be similarly forgiving of Corbyn. To maximise their gains, however, the Tories need to minimise their weaknesses, rather than merely exploit Labour’s.

This process began at conference. At a dinner organised by the modernising group the Good Right, Duncan Smith, Michael Gove and the Scottish Tory leader, Ruth Davidson, affirmed their belief that, contrary to Thatcherite orthodoxy, inequality is a problem. Only the Business Secretary, Sajid Javid, an admirer of the libertarian heroine Ayn Rand, insisted that equality of opportunity was the defining metric.

George Osborne’s assured speech was most notable for his sustained appeal to Labour voters. Several opposition MPs told me how unsettled they were by the Chancellor’s declaration that Labour’s new leadership calls “anyone who believes in strong national defence, a market economy and the country living within its means” a Tory. He added, “It’s our job to make sure they’re absolutely right. Because we’re now the party of work, the only true party of labour.” The shadow minister Jonathan Reynolds told me: “We’ve got to be extremely clear that this is not business as usual. This is a real attempt by the Tories to put us out of business – possibly for ever.”

The Conservatives’ aim is to contaminate Labour to the point where, even if Jeremy Corbyn were deposed, the toxin would endure. For those opposition MPs who emphasise being a government-in-waiting, rather than a protest movement, the contrast between the high politics of the Tory conference and Corbyn’s rally appearance in Manchester was painfully sharp. They fear guilt by association with the demonstrators who spat at and abused journalists and Tory delegates. The declaration by a rally speaker, Terry Pullinger, the deputy general secretary of the Communication Workers Union, that Corbyn’s election “almost makes you want to celebrate the fact that Labour lost” was regarded as confirmation that some on the left merely desire to run the party, not the country.

But few Tory MPs I spoke to greeted Corbyn’s victory with simple jubilation. “It’s a great shame, what’s happened to Labour,” one said. “We need a credible opposition.” In the absence of this, some fear the Conservatives’ self-destructive tendencies will reassert themselves. The forthcoming EU referendum and leadership contest are rich in cannibalistic potential. Tories spoke forebodingly of the inevitable schism between European Inners and Outers. As the Scottish experience demonstrated, referendums are almost never definitive. In the event of a close result, the party’s anti-EU wing will swiftly identify grounds for a second vote.

Several cabinet ministers, however, spoke of their confidence in Cameron’s ability to navigate the rapids of the referendum and his pre-announced departure. “More than ever, he’s the right man for these times,” one told me. By this December, Cameron will have led his party for ten years, a reign exceeded in recent history only by Stanley Baldwin, Winston Churchill and Margaret Thatcher. That the Conservatives have so far avoided cataclysm is an underappreciated achievement.

Yet there are landmines ahead. An increasing number of MPs fear that the planned cuts to tax credits could be a foul-up comparable to Gordon Brown’s abolition of the 10p tax rate. Despite the appeals of Boris Johnson and the Sun, Cameron and Osborne have signalled that there will be no backtracking. At such moments of reflection, the Tories console themselves with the belief that, although voters may use Corbyn as a receptacle for protest (as they did Michael Foot, Neil Kinnock and Ed Miliband), they will not elect him. They also acknowledge that the current Labour leader may not be their opponent in 2020. The former paratrooper Dan Jarvis is most often cited as the successor they fear. As with Cameron and Blair, his relative lack of ideological definition may prove to be a strength, one MP suggested.

William Hague is fond of joking that the Tories have only two modes: panic and complacency. If the danger before the general election was of the former, the danger now is of the latter. 

George Eaton is political editor of the New Statesman.