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22 June 2015

David Cameron has borrowed Ed Miliband’s methods. He may end up with Ed Miliband’s fate

David Cameron has come around to Ed Miliband's way of thinking on the welfare bill. He could end up in the same dead end.

By Stephen Bush

Who is who? 

In 2013, Ed Miliband declared that Britain couldn’t continue “to be stuck with permanently being a low-wage economy”.

In 2015, David Cameron argues that, for too long, British governments have been dealing with “the symptoms of the problem, topping up low pay rather than extending the drivers of opportunity, helping to create well-paid jobs in the first place”.

In 2013, Miliband said that Labour governments past had erred by trying “to make work pay better by spending more on transfer payments”.

In 2015, Cameron says that, for too long, government has been on a “merry-go round: people working on the minimum wage having that money taxed by the government and then the government giving them that money back – and more – in welfare”.

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The solution, he says, is to get Britain’s welfare bill down with a big payrise.

Miliband called it “predistribution”.  In 2013, Cameron derided it, saying that what he really meant was “spend the money before you get it”. So was Miliband right all along?

Well, it’s complicated. Miliband’s speech was right to say that, if you want to be tough on welfare, you’ve got to be tough on the causes of welfare. The Conservatives’ plans for £12bn worth of cuts to the benefits bill this year alone simply can’t be met without either cutting into pensioner benefits, which the Tories ruled out in the general election, further reductions in child benefit, which the Tories ruled out in the general election, or in making significant reductions to tax credits. It’s easy to caricature the long-term unemployed as scroungers – but somewhat harder to do the same to people working full-time, having their pay topped up by the state.

Miliband then, like Cameron now, was in a bind. Miliband’s big problem was the same question that has crippled the social democratic movement throughout Europe – what’s the point of the left when there’s no money to spend? – and “predistribution” was the answer. Instead of shovelling around tax revenues from the rich to the poor, Labour would raise the wages of the poorest through remaking capitalism. Cameron’s problem is this: how to cut £12bn from the welfare bill without hitting pensioners, child benefit or people in work. He’s hit on the same solution: make working benefits obsolete by raising wages.

The fly in the ointment is that Miliband never worked out how exactly you raise wages. His rhetoric wrote cheques that his policy couldn’t cash. Cameron has stolen Miliband’s lines – and doesn’t have someone else to nick a solution from. It may be that the Conservatives’ embrace of “predistribution”, in thought if not in word, ends up landing them in the same mess Miliband ended in: electoral defeat.

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