Investing in social security works

This Saturday Labour members will come together at Birkbeck College to discuss how Labour can offer an investment based alternative to the Government’s failed austerity agenda.

One of the key debates will be over how to embolden the front-bench to stand up to the coalition’s smears and ensure that future Labour Government invests in a social security system which supports the most vulnerable and eradicates poverty. As on immigration, social security is an issue where the Labour leadership has been reluctant to talk about its record in government but a proper assessment of the facts point to how it can turn its perceived weakness into a genuine strength.

In recent weeks Ian Duncan Smith has taken to calling Labour ‘the welfare party’. As a label it hasn’t stuck but for many the argument behind it has, namely that Labour spent too much on social security during it’s time in Government. Unfortunately Labour frontbenchers have been all too willing to accept this narrative. Comments by Liam Byrne, while still shadow Minister for Work and Pensions, that a future Labour Government would not ‘restore the status quo’ and by his successor Rachel Reeves about being tougher than the Tories on benefits legitimise Tory arguments that the social security bill is too high.

No-one would argue that a Labour Government shouldn’t look to deliver value for money for the taxpayer on social security but the truth is this is exactly what the last Labour Government did. Yes, spending increased but measures such as the expansion of tax credits and allowing the Disability Living Allowance and Independent Living Fund budgets to meet the needs of disabled people, helped significantly reduce poverty during Labour’s thirteen years in Government. Investment in social security worked. In 1997/98 28% of the population lived in absolute poverty in the United Kingdom by the end of Labour’s time in office this had almost been cut in half to around 15%. 2.3 million children and 2 million pensioners were lifted out of poverty in this time. Most impressively after progress in reducing poverty stalled between 2004 and 2008 Labour investment ensured that even during the recession the numbers living in absolute poverty fell again by 1.1 million. This is one of the Brown Government’s finest achievements and one which is not talked about nearly enough.

Simply championing Labour’s achievements would do little to convince voters if it did not contrast very sharply with their experience under the coalition. Since 2009/10 poverty has been on the rise again. Absolute poverty has increased by 1.4 million including 300,000 children and 200,000 pensioners. 340,000 people now rely on foodbanks as a source of food. Real-term cuts to benefits such as the work-related activity element of Employment and Support Allowance and the introduction of punitive measures such as the bedroom tax and benefits cap have mean the situation is likely to get worse by 2015. If Ian Duncan Smith wants to stoop to childish name-calling then the Poverty Party would seem a pretty accurate label for the Tories at the moment.

Labour therefore shouldn’t be ashamed of its record on social security while in Government and shouldn’t engage in the Tories’ ‘who can be toughest’ competition. Instead it can campaign on one very clear message on social security. Absolute poverty has increased under the Tories. Labour will reduce it.

Putting the cap into capitulation

Despite attempts to spin it otherwise Ed Miliband’s speech yesterday on social security represents a complete capitulation. Capitulation to the Tories, capitulation to the media and capitulation to the Blairites within the Labour Party who for months have been trying to push him into accepting many of the Government’s welfare cuts. Unfortunately despite abandoning some of the most vulnerable in our society this capitulation will fail to satisfy those calling for a tougher stance on benefits. Instead if Labour is to win the welfare argument a braver stance is required.

The key policy announcement in Miliband’s speech was the introduction of a three year cap on ‘structural welfare spending’. Let’s be very clear ‘structural welfare spending’ includes the benefits that the most vulnerable in society are dependent on; Employment and Support Allowance (ESA), Disability Living Allowance (DLA), Carers Allowance etc. A cap, combined with the admission that a future Labour Government would see the current Government’s spending plans as a starting point, suggests that the Labour leadership is accepting the welfare cuts; such as the 25% cut in the DLA budget; time limit on work related activity ESA and the change of indexation from the Retail Price Index to lower Consumer Price Index; which have caused such harm to disabled and vulnerable people in recent years.

In fact a cap could mean a future Labour Government could be forced to cut even further depending on the level at which it was set. Another policy outlined was plans to increase Jobseekers’ Allowance but increase the qualifying period for the support to people who had worked for five years. This increase would exclude young people, many carers and disabled people moving from Incapacity benefit or Employment and Support Allowance in one foul swoop.

Some, including some of the major trade unions, have praised Miliband’s speech for offering a clear alternative to the Tories. Much of this praise has centred on rhetoric around housing and the living wage. Unfortunately this was not matched by policies announced. There was little detail on how to roll out the living wage and the youth jobs guarantee could end up subsidising minimum wage employers. On Labourlist Mark Ferguson argued that the cap on benefits will allow Labour to take real action to curb housing costs yet hearing Liam Byrne on Radio 4 stating that rent controls would be a step too far suggests that this action will fall well short of what is required.

Ed Miliband claimed the rationale behind his policy announcements was that “people’s faith in social security has been shaken when it appears that some people get something for nothing and other people get nothing for something”. This backed is up by opinion poll after opinion poll which indicates that the public feel that at present welfare payments are too generous. This is unsurprising given the benefits narrative portrayed in the media. Earlier this week Nick Robinson referred to spending on DLA as ‘out of control’. No balance, no attempt to explain the importance of DLA on disabled people’s lives just a complete acceptance of the Tory line from the supposedly impartial BBC’s chief political correspondent.

Unfortunately for Ed Miliband his efforts to win over the media by accepting their welfare myths is doomed to failure. As Mark Serwotka has pointed out Labour are simply unable to out flank the Tories to the right on welfare. On the 1 O’clock news following his speech the BBC’s Norman Smith was already highlighting that Labour would not be ‘credible’ on welfare unless the public could see where the ‘pain’ was going to come from. If the BBC are openly advocating deeper welfare cuts it won’t be long before the rest of the media follow.

Instead Labour should be brave and look to fight for social security on their own terms. Earlier this week Ed Balls rejected claims the last Labour Governments overspent public money, Ed Miliband should take the same approach to social security. We should be proud, for example, that we oversaw a social security system which ensured that even in a period of recession child poverty fell. While this may be a daunting task he should take heart that in the past year when Labour has been prepared to fight the Tories over specific cuts to benefits such as the 1% cap and bedroom tax opinion polls show the public have supported the party’s stance. While such an approach would take real courage the alternative is capitulation and defeat.

Means-testing Winter Fuel Allowance is a disastrous shift in policy

Ed Balls’ announcement today that Labour would begin means-testing the Winter Fuel Allowance is a disastrous shift in policy.

During the 2010 leaders debate, Gordon Brown went on the offensive on universal benefits for pensioners, challenging Cameron to commit to keep a raft of support including help with energy bills for the elderly. As a result of his pledge to do so it has been politically impossible for him to touch Winter Fuel payments, despite calls from the Lib Dems and his backbenchers to do so. In today’s speech, Balls cedes all the ground that Brown sured up and in doing so has paved the way for pensioners to see benefits slashed regardless of who wins the next election.

Balls hopes that his speech will appease those who believe fiscal credibility is gained through making ‘tough decisions’ (read: spending cuts) but if he believes that ‘In the Black Labour’ and their Shadow Cabinet supporters will be bought off by a policy that cuts just 0.09% from the deficit then he is very much mistaken.

Cutting Winter Fuel Allowance in the way Balls plans would save just £100 million but the cost of this policy is significant. Much has been made by Cruddas’ policy review of a rather crass interpretation of a ‘contributory principle’, but this cut travels in the completely opposite direction.

For a welfare state to be successful it needs everyone to feel they have a stake in it. If some people feel like they go through life only paying in through taxes and getting nothing out, then support for welfare is eroded and people will resent paying taxes. Support for welfare has declined dramatically in the last 30 years, with those on benefits being demonised as “scroungers”, but if middle and high earners also receive benefits it’s less likely the payments will be stigmatised. People won’t buy into negative stereotypes of benefit recipients as ‘feckless shirkers’ if they’re benefit recipients themselves.

Means-testing benefits, similar to the heavily criticised way the government has tinkered with eligibility for child benefit, is massively inefficient and creates administrative costs that can even run the risk of eclipsing any anticipated savings. The variation in administrative cost between universal and means-tested benefits is clearly demonstrated by the stark contrast between the State Pension and the Pension credit; administration for a new claim for the former costs £91 while the latter costs £351.

Bureaucracy is not the only downside to means-testing, it also creates the real possibility that, in attempting to take benefits away from the richest, some of the most vulnerable slip through the net and fail to get support. Universal benefits are the most effective method to ensure that those who need the state’s help get it. Complicated forms, a lack of awareness of entitlement and people being too proud to claim means that a third of those who are eligible for Pension Credit are currently missing out, with something as vital as keeping the elderly’s house warm at winter we simply cannot take a gamble that the poorest won’t receive their payments. Not only would this be socially irresponsible but it would create a spiralling health bill for pensioners suffering from the impact of cold weather.

Labour should be immensely proud of introducing the Winter Fuel Allowance; it has saved countless lives and made a meaningful difference to the 3.5 million older households living in fuel poverty. Now is no time to turn our back on this benefit or the universal principle more generally. Balls should listen to Miliband when he, quite rightly, said in January “I think that universal benefits, which go across our population, are an important bedrock of our society”. And surely that’s what One Nation is all about.

Join Next Generation Labour for a discussion on Labour’s economic plans with Peter Hain MP, John Healey MP, Cllr Catherine West, Mick Burke and Heather WakeField – 6.30pm on Monday 10th June