Ignore the media spin, this is the welfare speech Ed Miliband will actually give today

June 6, 2013 8:28 am

I received several emails and text messages last night from Labour activists and even a few MPs, all saying variants of the same thing – “What’s in Ed Miliband’s speech in the morning? Am I going to hate it?” The media previews of the speech, beginning early this week, has had many Labour activists dreading what Miliband might say today. This morning’s papers also give a somewhat lop-sided take on what the speech is likely to be focussed on – which may, it must be said, be due to the party’s desire to get the words “tough” and “welfare” in the same headline.

So let me set your mind at ease – Ed Miliband is not accepting the Tory narrative on welfare, quite the opposite. This is a speech about getting people to work, making sure that faith is restored in the benefits system, stopping welfare bills spiralling out of control year on year (without brutal but populist attacks on scroungers) and – perhaps most importantly – building more homes, which our most recent LabourList/Survation polling shows is popular with the public.

Lets take each of the key strands of the speech one by one:

Cap structural social security spending over three years to cover the period of each spending review

Much of the media previews of Miliband’s speech have referred to this cap, and – somewhat unhelpfully – conflated it with the Tory welfare cap. Except whilst the Tory cap is about setting a limit on welfare spending for individuals, Labour’s is about long term structural welfare spending in total. That means it actually has a chance of cutting welfare costs, rather than just on screwing the poor. For example, if Housing Benefit is meant to be X over 3 years, but after one year it’s clear that the real total will be X+£500 million, them the government would need to find ways to get the Housing Benefit Bill down, by dealing with the cost of landlord subsidy housing.

Enable local councils to negotiate lower rents, build homes and cut housing benefit costs – rather than paying for the costs of our failure to build

It’s perverse that some (Labour) councils want to cut rent and build homes, both of which would reduce Housing Benefit costs, yet are currently restricted from doing so. Miliband is going to outline how changes could be made right now that would free up those councils to build, or bulk purchase, in a way that would actually save the taxpayer money in the long term.

Srengthen the route back to employment for parents of three and four year olds in workless households so they can get ready to come off benefits

If you can work, then you should – that’s the principle behind Labour’s compulsory jobs guarantee, so no real surprise there. It’s also the principle behind the Labour Party (clue is in the name), an argument that Ed is going to make himself today. There is going to be a particular focus on one group who often find it tough to get back to work – unemployed parents of young children. Spending on childcare for these parents could pay significant dividends if it helps reduce unemployment. There will also be talk of improving tests for disability (the party has widely acknowledged that ATOS tests have been a failure) with a move away from “dividing line” tests that exist only to determine whether or not someone receives a benefit.

Tackle low pay so that taxpayers’ aren’t left picking up a growing bill

A renewed focus on the Living Wage, a crackdown on abuse of agency workers and taking a serious look at the farcical world of “zero hours” contracts. This is like a Labour activists checklist of ideal workplace legislation, and all of it would slash the welfare bill by cutting down on taxpayer subsidy of businesses paying poverty wages. I’d expect this focus to be popular with the unions too.

Restore the principle of contribution by making people pay into the system for longer to qualify for an improved level of JSA

There’s always a catch isn’t there? Whilst I’m broadly supportive of a return to contribution in the welfare system (as I’ve outlined before – it’s our best chance of a system people have faith in, and, actually, better benefits), a system that sees young people who have never had the opportunity to work (thanks, in part, to the failures of politicians) sticks in my craw. However, as Labour is also committed to a compulsory youth job guarantee, it’s fair to say the party is taking youth unemployment seriously. But if youth unemployment didn’t fall under a Labour government, we’re going to have some very angry – and poor – young people on our hands.

On the whole though, the proposals outlined by Miliband are positive. They focus on the genuine cost of welfare (both in terms of government spending and lost potential) rather than buying into the shameful “scrounger” rhetoric of the government. And it’s another clear nod from Ed Miliband that he realises, even in straightened times, that he’s going to have to make big changes to the British economy to right the structural wrongs that have left too many languishing in dole queues, stuck in poor quality and expensive housing and trapped in poverty (even if they’re in work).

Ignore the media spin. Ed Miliband is getting tough on welfare spending, but he isn’t getting tough on those who struggle to survive on welfare thanks to persistent government failure.

And that’s an important distinction…

  • Monkey_Bach

    “Cap structural social security spending over three years to cover the period of each spending review.”

    What happens if some unexpected disaster, e.g., a financial crash, suddenly appears over the horizon and increases demand for help from the social security system? Under such circumstances, if the welfare budget has been capped at too low a level, help to individuals will have to be significantly reduced, in order keep welfare spending levels below arbitrary cap, which could have disastrous consequences for hundreds of thousands if not millions of innocent people.

    I’m not sure that straight jacketing yourself like this is sensible let alone wise.

    Set such a cap too high and it will make no people will accuse Labour of “planning for failure”

    I bet this will boil down to something similar to what used to be the case pre-1979 with Unemployment Benefit (based on contributions) and Supplementary Benefit (means tested), where a slightly higher rate of benefit was paid to claimants with long records of contribution (for up to twelve months) and a lower means tested rate paid to long-term unemployed claimants and all claimants with shorter (or no) records of contribution via National Insurance. The differential between the higher rate and lower rate probably won’t turn out be that great: a recent article on LabourList by a disciple of Progress mentions a figure of £23.30 a week funded by slashing other benefits. I doubt this would generate much enthusiasm amongst those likely to be affected.

    Still, slightly better than the Coalition, I suppose.

    Kind of.

    Eeek.

    • John Ruddy

      As I understand it, they are talking about the bit of the welfare budget that isnt changed by economic performance – so they’re not going to cap JSA etc.

      • Monkey_Bach

        Both George Osborne and now Ed Miliband and Liam Byrne have talked about capping the welfare budget without mentioning which benefits would be affected. My feeling is that if the social security system was under strain benefits might not be uprated in line with inflation (as is the case now) which, over a period, could plunge huge numbers of people into ever increasing poverty if prices begin rising quickly.

        Liam Byrne IS clueless.

        Check out Byrne’s performance on today’s Daily Politics on iPlayer (http://www.bbc.co.uk/programmes/b02w9gyg ) when it becomes available or during its repeat showing on BBC Parliament (Freeview 81) at midnight tonight to see exactly what I mean.

        Makes you want to weep.

        Eeek.

    • aracataca

      Thanks Monkey for reminding us about the situation pre-1979 I had completely forgotten about that contributory and non-contributory stuff even though I think I claimed it a couple of times ( contributory).

  • John Ruddy

    We already have income-based JSA and Contribution-based JSA. They’re actually two different benefits (I think one is the successor to income support, the other to UB).
    I wont have a problem if contribution-based JSA is increased based on the amount of contributions, just so long as its not funded by cutting income-based JSA. Both are really at the most rock-bottom level as it is.

  • ColinAdkins

    I used to work in an Unemployment Benefit Office circa 1976-1981. Payment of UB was based on a full NI contribution record in the relevant tax year. There was also an Earnings Related Supplement and payments for dependents (I cannot recall if this included unemployed partners but certainly children).
    On a like-for-like comparison those on non-contributory benefits rarely received more than those entitled to contributory benefits. Although the contributory benefits were limited to one year and after this period people moved onto non-contributory benefits.
    After then I went to University (I was able to claim UB during the breaks!) and I think the system became overwhelmed by mass unemployment in the early Thatcher years.
    If Miliband is proposing a return to these principles then I am in favour. Very ‘nudge’ theory and restores confidence in the system.
    Surely, though this will have initial expenditure during the transition to any new system?

    • aracataca

      Thanks Colin for reminding us I had completely forgotten about that contributory and non-contributory stuff even though I think I claimed it a couple of times ( contributory).

    • RogerMcC

      My comment above (or below) covers Earnings Related Supplement which was introduced in 1966 and abolished by Thatcher in 1983.

      As it was originally intended to equal a half of previous salary for an average wage worker (and paid more than half for lower paid and less than half for higher paid) if it was brought back on the same terms now a newly unemployed worker who had been on the average wage would be getting £250 a week rather than £70 a week….

      Even if you applied a rule that you got half the minimum wage that would be £110 a week or a 50%+ increase on JSA.

      You see how far we’ve fallen?

      • ColinAdkins

        Thanks for reminding me ERS lasted 6 months. I think NI was raided by Thatcher to divert to other expenditure heads.

        • RogerMcC

          The justification was that the money saved from ERS would be used to increase the basic rate of supplementary benefit paid to everyone and so it was an egalitarian change.

          That it removed the ‘something for something’ element and thus delegitimised benefits in general was however the real point.

  • RogerMcC

    I despair at the complete lack of historical context in both our leader’s speeches and the commentariat response.

    The contributory principle is actually very Old Labour and was in fact
    implemented by Harold Wilson in 1966 through an Earnings Related
    Supplement which gave someone who had been earning the average wage an
    unemployment benefit equal to 50% of what he had been earning – however
    nothing so radical could be contemplated now (and even the Wilson scheme
    only applied for the first six months of unemployment – although with
    full employment being still the norm that was perfectly reasonable at
    the time).

    This was abolished by Margaret Thatcher only in 1983 and it is she
    who is the true begetter of our niggardly means tested ‘social security’
    system (and also incidentally of the reducing unemployment figures by
    redefining people as disabled even if you have to pay them more money
    and it renders them really unemployable scam).

    Now if only Ed could frame it in those historical terms and by
    comparing our systems with those of our EU neighbours who do have
    genuinely social insurance systems rather than one that is the linear
    descendant of the Poor Laws.

    But no, he still has the characteristic New Labour obsession with
    pretending that everything is an ‘eye catching new initiative’ and a
    radical and brave break with the old outmoded way of doing things….

    When Wilson did it he had the whole-hearted support of the left and
    of the TUC but because Ed won’t (and to be fair probably can’t) frame it
    in any way that might upset a single Sun or Daily Mail reader in a
    marginal constituency we will get crap about Blue Labour’s malign influence and bringing back the deserving and undeserving poor.

  • Hamish Dewar

    It would be better if politicians stopped trailing their speeches in advance. Then we wouldn’t have the media telling us what Ed M or Ed B is going to say, and our estimable host Mark correcting the press reports. We would just wait for the speech.
    Also let’s stop demonising the concept of means-testing. Income tax is means-tested and quite right too. Removing subsidies from higher-rate tax-payers doesn’t have to involve extra procedures and bureaucracy. Higher-rate tax-payers are already ‘known’ to the Exchequer.

  • markfergusonuk

    At present Dan, in many parts of the UK, Landlord subsidy is exactly what Housing Benefit is, as landlords scalp the taxpayer for eye wateringly high rents each month, driving up market rents in the local area at the same time.

  • Monkey_Bach

    If my comment is confusing it’s because I am personally confused myself because Labour has not spelt out what happens if any welfare cap is exceeded or what the “contributory principle” gimmick actually means. (I suspect that the Labour Party has no real idea either.) So I’ve merely filled in the gaps based on what was historically. I really hope that I’m wrong but I would bet money that what I’ve stated will be something pretty near to the mark.

    Eeek.

  • RogerMcC

    Except that the jobs are there in the shape of a compulsory job guarantee and programmes to create hundreds of thousands of jobs in new house building.

  • RogerMcC

    Labour’s supposedly far left 1983 Manifesto had:

    By the end of our first five years, our aim is that no-one will be out of work for more than a year without receiving an offer of a job or training place…..

    Working people are entitled to a decent income when they lose their job through circumstances beyond their control. An improved earnings-related supplement will once again be paid during the first months of unemployment.

    So again this is no betrayal of core Labour principles but a return to what was Labour policy between 1964 and 1983.

    The difference is of course in the framing – nobody had to add ‘compulsory’ to job guarantee under Harold Wilson or Michael Foot to persuade Sun readers that it was really a punishment or pretended that what can only be a miserable few extra pounds for some unemployed paid for by cuts to other benefits they’d have been eligible for is a return to the old ERS scheme which was originally intended to pay out 50% of an average workers previous wage in benefits.

  • Pingback: Withdrawing welfare: kind of like knee-capping the defenceless » 21stCenturyFix.org.uk

  • http://twitter.com/waterwards dave stone

    “Rent is not a landlord subsidy.”

    You’re having a laugh. And I don’t imagine you’ve had much experience of the rent sector.

    I spent many years in the building game and became more than familiar with the antics of property developers. Many have become millionaires thanks to housing benefit – social tenants are as sure a way to riches as owning a casino.

    The mugs are the tax payers who stump up year after year and have nothing to show for it. While landlords rake-off a fortune, tenants remain dependent on benefits. And Labour and the Tories have done nothing – partly out of laziness and partly because they want to show what go-ahead enterprise friendly people they are.

    No surprise that a growing number of people can’t be bothered to vote for the tossers.

  • Pingback: Tory rhetoric on poverty = Lies and Myths | Blog Blog

  • markfergusonuk

    What Miliband and Balls have said, is that on the 8th May 2015, the budgets they will have to work to are the ones that are currently in place. That’s simple a statement of fact, not politics…

    • MikeHomfray

      And always is for the first year of any government

  • MikeHomfray

    Nonsense. It’s perfectly possible to set fair rents. Look towards Germany. This above all else is the reason Germany’s economy has not even affected by house price inflation.

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