Labour’s welfare cap is a largely symbolic gimmick – but it works as a communication device

6th June, 2013 2:00 pm

It would be easy to be dismissive of Labour’s proposed welfare cap on policy grounds. It would be equally easy to hail it on political grounds, as a brilliant landgrab of populist territory where Labour tends to fare badly. But either of these responses would be missing the point.

Certainly, in terms of its stated objective of limiting ‘structural’ (as opposed to cyclical) increases in benefits spending, the cap is a solution looking for a problem, as there hasn’t been a ‘structural’  increase  for a very long time. The idea that welfare is on an unsustainable upward trend is at best a folk memory from the postwar decades, with zero relevance to current circumstances (see chart).

The decade prior to the last recession saw the longest period of stability in welfare expenditure since Beveridge. Given that this was achieved without the gimmick of a cap, the question naturally arises, what is the point of this policy?

correctedchart.docx 2013-06-09 22-05-50

Source: National Accounts (Blue Book) Central and local government social benefits other than transfers in kind, excluding employee benefits and student grants. [There was a calculation error in the data underlying the version of the chart originally published. Declan has now corrected this. The correction does not change the picture of overall expenditure trends]

But the cap is more about sending a signal on future spending intentions than upgrading the armoury of fiscal discipline. Policy wonks might be well advised not to probe to deeply into the detail of a policy which is essentially symbolic in intent. Whatever fiscal stance Labour adopted were it  to form the next government, the idea that it would not have to make further reductions in spending is implausible. Better to get that message across now, both to the public and the party faithful.

And as a communication device, the cap really can’t be faulted.

If Labour wins in 2015 the choices it will face will not be pretty. It will be almost inevitable that some decisions will run counter to values that are of fundamental importance to party members. But one of the clear messages from Ed Miliband’s speech today is that Labour won’t follow the coalition’s strategy of selling cuts by pretending that everyone who is losing out deserves to suffer. ‘I will tell you that there is a minority who don’t work but should. He [Cameron]  will tell you anyone looking for work is a skiver.’ This reframing of a toxic welfare debate deserves to be warmly welcomed. Less welcome is the unimaginative spinning of the speech in the very terms Miliband rejects – exemplified by today’s Mirror coverage.

Whether the sort of aspirations on housing and the Living Wage set out in the speech are likely to  cushion the impact of cuts by reducing the need for welfare spending is open to question: these are longer term aims which wouldn’t have much effect over the three year welfare cap period (even if successful). But the reasons for shifting focus to inequality before taxes and benefits, as Miliband’s speech aimed to do today, go beyond mitigating the impacts of deficit reduction.

Addressing underlying inequalities is after all a large part of what social democracy is about. It can be argued that the sort of proposals outlined in the speech are inadequate given the scale of the task. But if that’s the case, the imperative is to come up with better proposals, not to dismiss the objective.

  • Hugh

    “The decade prior to the last recession saw the longest period of stability in welfare expenditure since Beveridge.”

    Since you’re talking of welfare expenditure as a proportion of GDP should we therefore assume you reckon that growth in the long run will typically look like the decade prior to the recession?

  • PaulHalsall

    Why did we vote for Ed rather than David?

    As a person with AIDS for 31 years I can never work full time again. Ed has deserted people like me. In fact, if I cannot live, I will take my life as soon as I am done supporting my dad.

    • AlanGiles

      Paul. Please don’t think like that. I am sure your dad would want you to soldier on. I think Miliband, and indeed most politicians don’t understand what chronic illness or pain is. It is not to their credit they don’t listen to people like you, and Sue Marsh who could tell them, but choose to try to ingratiate themselves with the popular press instead to try to obtain power. The fact that he has performed a complete volte face in two years rather shows how shallow he is. I felt he would grow into the job, the last year has proved that he hasn’t and won’t

      To be honest I don’t think there was much to choose between any of the 2010 candidates – they were all out of the same mould, – for all his pleading and posturing on the NHS, Burnham still boasted on Any Questions? about his NHS Global and attempts to privatise the NHS.

      I don’t know where in the country you are, but I am sure The Terrance Higgins Trust could probably help with support, if only for moral support. I would think and hope they would have an advocacy service for people in your situation: a three year limit on claims, as Miliband appears to be suggesting really shows he has no idea.

      I just hope Mark allows my message through quickly, as I am currently in the position of the old BBC World Service being “filtered” in East Germany back in the 80s.

  • JoeDM

    “… but it works as a communication device”

    That sounds like good old Blairite spin to me.

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

      Yes, the politically bankrupt have nothing to offer other than perception management.

Latest

  • Comment Defeat doesn’t make us defunct

    Defeat doesn’t make us defunct

    It’s frustrating when protests and demonstrations are shrugged of as a meaningless waste of time and those who pick up a placard and participate are faced with accusations of ‘disillusionment’ and of being ‘sore losers’. The thousands of people who took to the streets of London (and in cities across the country) on June 20th had every right to do so. Yes, Labour suffered a cataclysmic defeat at the ballot box resulting in the Conservatives prevailing as the ‘winning’ party […]

    Read more →
  • Comment Featured The EU Referendum could do to Labour in England what the independence referendum did in Scotland

    The EU Referendum could do to Labour in England what the independence referendum did in Scotland

    The issue of Europe rarely stirs Labour’s soul. The current attitude of ‘we’re moderately pro mainly because the antis come across as a bunch of swivel-eyed fruitcakes’, has not served Labour badly, partly because it chimes with the majority view. Despite two decades of daily derision and drip-feed EU hostility from a small group of mostly foreign media-owning billionaires, poll after poll has shown a majority in favour of staying. But while leadership contenders tiptoe cautiously round this subject, in […]

    Read more →
  • Featured News Yvette Cooper launches child poverty petition

    Yvette Cooper launches child poverty petition

    Yvette Cooper is launching a child poverty petition, which calls on the government to rethink plans to cut tax credits. She says these plans will push thousands more children into poverty. Cooper is one of four people in the running to be Labour’s next leader. Today at a leadership hustings in Swindon she will say 4 million children are living in poverty in the UK, 500,000 more than when David Cameron first became Prime Minister. She will point out that in the […]

    Read more →
  • Comment Featured Cutting the public health grant would be a cut to the NHS

    Cutting the public health grant would be a cut to the NHS

    Amidst the chaos of the coalition’s NHS reforms a few years ago responsibility for public health services moved from primary care trusts to local authorities. Credit where it is due, this is the one move of those controversial reforms that presented a positive opportunity. Public health’s relationship with local government is a historic one and many in local government stood ready to drive forward a progressive public health agenda once again, aiming to tackle alarming health trends and health inequalities. […]

    Read more →
  • Comment Scotland Scotland has a housing crisis and it demands radical solutions

    Scotland has a housing crisis and it demands radical solutions

    It’s vital that Scottish Labour goes into next year’s Holyrood elections with a bold and ambitious manifesto. Few issues need ambition more in Scotland than housing. With 150,000 people currently on waiting lists and private landlords pocketing more than £450m in housing benefit, there is a housing crisis. This week I was inspired on a visit to the West Whitlawburn Housing Cooperative in South Lanarkshire. Approaching its 25th birthday, the Coop provides over 600 properties and has transformed a community. […]

    Read more →
Share with your friends










Submit