Osborne is unafraid of the "nasty party" label. Is he right?

The Chancellor works on the assumption that voters have a boundless appetite for ever tighter welfare limits.

Is there a limit to how hard the coalition can be on people who depend on unemployment benefit? George Osborne clearly calculates that there isn't. Among the announcements in today’s spending review was a further tightening of the conditions to be imposed on people signing on when they lose their jobs. They are:

Introducing upfront work search, requiring all claimants to prepare for work and search for jobs right from the start of their claim;

Introducing weekly rather than fortnightly visits to Jobcentres for half of all jobseekers;

Requiring all unemployed claimants, and those earning less than the Government expects them to, to wait seven days before becoming eligible for financial support;

 Requiring all claimants who are subject to conditionality to verify their claim every year;

 Requiring all claimants whose poor spoken English is a barrier to work to improve their  English language skills; and

 Requiring lone parents who are not working to prepare for work once the youngest child turns three.

According to the Treasury, this will save the taxpayer £350m per year. (See page 7 here.) Hidden in that dry bureaucratic language are measures whose net effect will be to increase the likelihood of people with no money finding themselves without help.

Especially harsh is the obligation to wait seven days before making a claim. This, said the Chancellor, was to make sure people start their job search immediately and don’t just roll up to a Job Centre on day one of their unemployment. What they are expected to do on days 2-6 if their job search isn’t immediately successful isn’t explained.

Besides, the presumption here is that the DWP is a well-oiled machine that efficiently processes benefit claims and disburses money like some social action ATM. That plainly isn’t the case, as anyone who has claimed benefits - or even just met someone who has claimed benefits - would know. The main effect of introducing an arbitrary delay in eligibility will be a hike in rent arrears and a surge in visits to loan sharks.

The stipulation that non-English speakers improve their language skills before claiming is a pretty crude device to show that the government doesn’t like paying benefits to immigrants. How that will be assessed should be interesting to watch. Maybe a private sector provider could be awarded a contract to hurl difficult spellings at people with funny sounding names? The evidence shows that immigrants are proportionately less likely than other sections of the population to claim benefits but that isn’t really the point. It doesn’t take a huge leap of the political imagination to see why the Chancellor came up with this particular wheeze. It is a dash of Ukip-lite in the spending review.

Overall the welfare debate in Britain has become dismal and sterile. Supporters of the Chancellor will today say there is nothing inherently unjust about the new measures – they simply ask that people make the appropriate effort to find work before taking cash from the taxpayer. The left will point out that every increase in “conditionality” amounts to a new hole in the safety net through which vulnerable people fall, leading to deeper poverty, social problems and  – if you want to be all utilitarian about it – higher costs to the taxpayer in the long run.

The opposition will denounce the measures and then refuse to say whether or not it would reverse them. The Tories will jeer. Labour will tie itself in little angsty knots trying to work out whether it is supposed to be channeling the anger of voters against a faulty benefits system it generally failed to reform during 13 years in power or debunking welfare myths and reversing prejudices against benefit claimants.

Immigrants, the unemployed and single mums will drop another rung down the social hierarchy as the supposed authors of their own immiseration. I have asked very well-placed Tories if they are ever worried that at some point this strategy – mining ever deeper into people’s resentment of the way their neighbours appear to game the benefits system  - will backfire. Is there a compassion threshold beyond which voters will recoil from the harsh language and the social consequences of a brutal welfare settlement. (The myth that there is anything generous about the UK’s provision is well addressed here.) The answer from Treasury sources is “no”. I have been told by one senior  advisor that, having looked at opinion polls, the Chancellor has concluded that he would struggle to meet the public’s appetite for welfare crackdowns. Some Conservatives are more cautious, insisting that the party has to be very careful about the language it uses in this context – no explicit references to “scroungers”. “More in sorrow than in anger” is the guidance from one Tory strategist on the tone MPs should take when talking about benefit cuts.

Still, I find it hard to believe that the Tory party, given the whole legacy of brand toxicity from the 1980s and 1990s – the “nasty party” image – won’t eventually suffer some kind of backlash in connection with this stuff. As I’ve written before, voters are capable of holding two contradictory thoughts in their heads at the same time: first, yes we wanted you to cut the benefits bill but, second, in so doing you have reinforced every suspicion we had that you are mean at heart.

Maybe Osborne is right. Perhaps there is no bottom – the axe can go ever deeper, the sanctions can get tougher, the dividing lines with Labour can grow wider. Cracking down on welfare could be the political gift that keeps on giving for the Tories. But there are also swing voters who struggle to put their cross in the Conservative box on polling day because they feel that, ultimately, it is a party that has it in for foreigners, single mums, disabled people, the sick, the poor. Today the Chancellor didn’t do much to persuade them otherwise.

George Osborne leaves 11 Downing Street on August 11, 2011 (Getty Images)

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

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.