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

June 6, 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 Why Britain’s women won’t “calm down”

    Why Britain’s women won’t “calm down”

    From November 4th until the end of 2014, women across the country will effectively be working for free. The gender pay gap means that women are paid on average 15% less than their male counterparts; we have to work an extra 60 days annually to earn the same amount as a man doing the same job. For black and minority ethnic women, the pay gap is 20%. Women in Britain need a pay rise. It was heartening to see so many […]

    Read more →
  • Featured Get used to hearing a lot more of what Cameron’s Tories really think…

    Get used to hearing a lot more of what Cameron’s Tories really think…

    The revelation earlier this week that government welfare minister Lord Freud had referred to disabled people as ‘not worth the full [minimum] wage’ seemed somewhat familiar – and not only because of the Prime Minister’s repeated assertion that, when it comes to disabled people, anything his government does is above criticism. Fans of longstanding rent-a-reactionary-view Philip ‘why it is so offensive to black up your face’ Davies, Conservative MP for Shipley, will remember that he made the same point in […]

    Read more →
  • News “I rule it out”: Burnham says he won’t be making a leadership bid

    “I rule it out”: Burnham says he won’t be making a leadership bid

    Andy Burnham has been named in several newspapers lately as a possible future Labour leadership candidate, but he was keen to scotch such rumours when he appeared on Marr this morning, saying: “I rule it out… No, I am [a] Labour loyalist to my core. I am loyal to the leader, and the leader of our party, Ed Miliband, has said, the NHS will be his big priority going towards this election. I am 100% focused on developing a plan for the […]

    Read more →
  • News Tory minister: “disabled people work harder because they’re grateful to have a job”

    Tory minister: “disabled people work harder because they’re grateful to have a job”

    Tory Minister Lord Freud was put under pressure this week after he suggested that disabled people were “not worth” the minimum wage. Today another Tory Minister appears to have make similarly ill-judged (and revealing) comments about the Tory Party’s approach to disabled workers. The Independent on Sunday reports that Andrew Selous – the former parliamentary aide to Iain Duncan Smith and now a Justice Minister – told a fringe meeting: “disabled people work harder because they’re grateful to have a job”. […]

    Read more →
  • Comment Our party should welcome a debate with Farage – and we can win it

    Our party should welcome a debate with Farage – and we can win it

    By James Dray and Lewis Iwu Should UKIP be part of the televised election debates? Forget for a minute the question of whether or not Farage should be entitled to be there; instead, let’s look at the real question; can we beat him? A man who significant numbers of people see the rather obvious faults of but still really rather like? A man who decimated Nick Clegg in the European debates? We think that we can, and more importantly, we […]

    Read more →
7ads6x98y