George Osborne is about to walk into his own welfare trap

13th December, 2012 10:22 am

George Osborne comes from one of those families where current events get discussed. His mother Felicity Alexandra Loxton-Peacock was a Labour voter and worked for Amnesty International. His father, the 17th Baronet, wasn’t and didn’t. You can imagine some lively dinner-table conversation.

Having been rejected by the Times graduate trainee scheme, Osborne joined Conservative Central Office in 1994, just as his party was doing its impression of Felix Baumgartner. Osborne was a spy in the camp at the launch of New Labour at the Labour Party conference, when we went pistachio and tore up the Edwardian prose of Clause IV. I didn’t notice the 23-year-old George Osborne there in Blackpool, but I can remember how utterly thrilling it was to finally believe we could win a majority again. I won a cuddly tiger in an amusement arcade, and christened him ‘Tony’. The revivalist atmosphere, backed by serious political modernisation, also made an impression on young George.

It’s not much of a leap of imagination to see how Osborne’s witness to Labour’s success in the 1990s (contrasted with his own party’s abject and legion failures) led him to promote David Cameron’s campaign for the leadership in 2005, when both men had only been in parliament for four years. They both understood the degree to which the Tories had to look and sound (but not necessarily be) different.

But grabbing the zeitgeist by the throat gets you elected for the first time, not the second. For Cameron and Osborne to pull off that trick requires them to look, not to Blair, but to Thatcher. Thatcher was all about dividing lines with real and imagined enemies within. It was about the identification of minority targets, to unify the broader majority: ‘militants’, lesbians and gay men, peace campaigners, benefit scroungers, single parents, urban youth, the North.

That’s what this week’s Uprating Bill is all about. As I wrote last week at Progress, Osborne is political to the tips of his fingers. It’s easy to spot which of his actions as chancellor are driven by narrow political advantage: it’s all of them. By ‘capping’ benefit payments at 1%, he hopes to paint Labour as the party of benefit claimants, and the Tories as the party of those in work. It’s a despicable attempt at divide and rule, but it speaks to a deep and real sense amongst every community that the social security system is unfair, and rewards those who choose not to work, and hammers those who do. As a political stratagem, it has all of the subtlety of a speech by George Galloway.

But Osborne, as he did with the Budget, has got it badly wrong. The people getting hammered by the real-terms cut in benefits are not easily caricatured as good-for-nothing, Jeremy Kyle-watching scroungers. Instead, six out of ten the people seeing their incomes reduced are the people holding down one, two or even three jobs, working night-shifts and weekends, struggling to do the right thing, day after day. As Liam Byrne, Ed Balls and others have argued, they are the strivers, not the shirkers. Those, such as my friend Jacqui Smith, who are hoping for a more sophisticated response to Osborne’s trap than a Tom Daley-esque dive, will not be disappointed. As reported on LabourList yesterday, Liam Byrne is refusing to fall for the trap. Instead he is using the battering ram of constituency-by-constituency figures which show that the number of people in work whose benefits are being cut is greater than the Tory majorities in scores of seats. He is changing the terms of debate.

Byrne is not merely arguing over the narrow terrain of individual winners and losers; he is also making the bigger arguments about how to get the country back to work. He prays in aid the Obama Jobs Act, which has brought US unemployment down to 7.7%, lower than the UK. Byrne points out that the Office of Budget Responsibility (OBR) is revising the claimant count by 340,000 by 2016. The dole bill is now forecast to be £0.9bn higher in 2015-16, and is cumulatively higher by £1.6bn over the next three years. The Tories’ policies are creating long-term unemployment, and there’s no greater strain on the public finances than people out of work.

The hard-working public want to see evidence that the government is tackling debt, but they don’t want to see their tax credits, maternity allowance, maternity pay, sick pay, tax credits and housing benefit shrink whilst millionaires get a tax cut. I think it is only the English language which contains the phrase ‘too clever by half’ but it applies precisely to the trap that George Osborne has set, and is about to step into himself.

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