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19 March 2014

Labour to vote for Osborne’s welfare cap next week

Party's decision could lead to backbench rebellion.

By George Eaton

George Osborne’s new cap on total welfare spending, which a parliamentary vote will be held on next week, is his least disguised trap for Labour yet. But at his post-Budget briefing to the lobby, Ed Balls made it clear that he won’t be falling into it.  He said:

We’ll vote yes on the welfare cap next week…Ed Miliband called for a welfare cap last year, in his speech in June, and we have agreed with the way in which the government has structured the welfare cap, what’s in and what’s out in the next parliament [Osborne’s cap excludes the state pension and cyclical unemployment benefits]. We obviously have different views about the way in which we think social security policy should develop, we would rather they did more to reduce the housing benefit bill through building more affordable homes, we think there would be a wider spin-off within the welfare cap from our jobs guarantees, and also we’ll abolish the bedroom tax.

In response to Conservative claims that Labour’s pledge to scrap the bedroom tax is unfunded, Balls emphasised that “we’ve said as a backstop how we’d pay for that” (see my blog from the time of Ed Miliband’s announcement for details) but noted that many housing analysts predict the measure will cost more than it saves. He ended his answer by confirming “we’ll support the welfare cap next week” (Osborne has set the limit at £119bn for 2015-16 and will increase it in line with inflation from then on).

Since, as Balls said, Labour has already pledged to cap “structural welfare spending”, and to reduce the benefits bill by building more homes and reducing long-term unemployment, this is not as surprising as it might appear. But the decision will sit uneasily with those MPs opposed to the principle of capping welfare (for fear that weaker-than-expected growth will force cuts to benefits for the vulnerable) and those who simply dislike the act of walking through the yes lobby with Osborne and his Tory cohorts. I would not be surprised if Miliband faces a significant backbench rebellion next week.

P.S. Balls also used his briefing to tell an amusing story about Eric Pickles, who fell asleep during the Budget. Miliband and himself motioned to Vince Cable to wake him, lest Osborne announce major cuts to local government spending, but there wasnt “enough oomph” in the Business Secretary’s nudge to do so. It was only when David Cameron intervened that Pickles was finally roused.

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Balls said: “Eric Pickles fell asleep for a quite an extended period of time. And Ed and I were worried because, you know, you never know whether there might have been some big cut in local government spending coming which he didn’t know about and so we just politely suggested to Vince Cable that he should wake him up. And Vince elbowed and elbowed and it didn’t seem to make any difference. So Vince was actually knocking away…although at one point after a third nudge from Vince Cable, Eric started to nod knowingly at the contents of the speech while still, with his eyes closed…Then I think, eventually, David Cameron intervened.”