Labour and benefits: a regressive policy

In the last few days, Labour has begun to clarify its policy on benefits.  It’s far from encouraging.  There is still little to suggest that the party has not broken out of its dangerous tendency of allowing the Tories and their media to set the agenda, and the implications of its  announcements are that many of those on benefits will be hit much harder than even the current Coalition has managed.

The fundamental problem lies in the benefit cap, and how it will be applied.  Labour has announced that it will continue to cap benefit spending, and will include state pensions.  Tories reacted with surprise and no little glee to this, arguing that this provided evidence that Labour was in effect promising to cut pensions in real terms, affecting millions of the very people who are most likely to turn out to vote at election time. Not so, retorted Balls: while pensions – which account for more than 45% of DWP spending – would be included in the cap, the so-called triple lock – under which pensions are indexed against earnings, inflation or 2.5%, whichever is the greater – would remain.

The implications of this are obvious.  Retaining the triple-lock inside a capped benefits total will mean that other benefits will be squeezed disproportionately.  While the case for protecting pensioners remains overwhelming, for as long as the cap is in place other benefits will be subject to swingeing cuts – potentially significantly more than even the Coalition is making now.  Moreover, with Balls determined to keep Osborne’s wider cuts in place, it is unlikely that there will be a significant fall in unemployment or much progress on tax revenues, without very significant tax rises (or a serious and sustained assault on tax evasion, something that the entire Westminster establishment seems reluctant to countenance).  The effect of this cap – above all on in-work benefits and those dependent on housing benefit – will be devastating for individuals and collectively damaging to the economy.

It’s all evidence that Labour continues to be locked into a narrative on benefits dictated largely by the Tories and the media – one that is framed in terms of a Victorian language of workshyness, sanction and scrounging.  The effect is that Labour appears to be quite happy to endorse an approach to benefits that will punish the most needy, because it is afraid to be seen to be “weak” – and at the same time is helping to chip away at the universal principle.  Labour’s obsession with sanction rather than entitlement – so often expressed by Liam Byrne – is evidence of a similar refusal to take hold of the initiative.

The New Economics Foundation has today published a critique of Ed Miliband’s recent speech on welfare which shows that, despite his conscious attempt to distance Labour from Cameron’s “strivers versus strikers” rhetoric, Labour remains trapped in a mindset that draws on the myths that Tories want to propagate – about generations of the workless, benefits and idleness and social spending going mainly on the unemployed.  It is a narrative that simply cannot recognise that real wages are falling sharply, and that this is a major contributory factor to what is clearly no ordinary cyclical recession but a deep economic slump.  Other than the vague generalisations of “predistribution”, which looks increasingly like a rationalisation for the state throwing in the towel and admitting its reluctance to do anything about distribution, Labour has nothing to say about the problem of low and falling real pay – which of course is exacerbated by cuts in in-work benefits.

There is a desperate need for courageous, radical thinking on benefits and pay, which in turn means asking fundamental question about the balance of rewards in society between capital and labour – in recent years shifting powerfully in the direction of the former – and about social cohesion and solidarity, to produce a society that is characterised by generosity rather than the atomised, destructive, fear-driven meanness of Coalition Britain. Recent pronouncements suggest Labour is not remotely close to that territory.

3 thoughts on “Labour and benefits: a regressive policy

  1. A passing favourable reference to the universal principle is better than nothing. But this is the key to the otherwise perplexing paralysis of Labour. The same despicable attitude among the unions is easier to understand – they always were mostly self-centred. Why expect any better when austerity threatens them with insecurity? How soon before somebody wakes up to the central role the Citizens Income principle – the true Universal Credit – should play.

  2. Pingback: Should Labour support the benefits cap? | Notes from a Broken Society

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