Labour’s welfare bind is excruciating

If politics is increasingly seen as a game, then why does it keep feeling like Labour’s not very good at it?

To extend the metaphor well beyond breaking point, the polls suggested Labour was in with a decent shout of the play offs, when the reality was a relegation battle. And now it seems we’re having a bad transfer window. Fan favourites and pundit’s tips couldn’t be persuaded to join the leadership team, and the current contest resembles, according to Gerry Hassan, the summer of the living undead. In a speech at Policy Network, Tristram Hunt agreed with Jon Cruddas that “we face the biggest crisis in the history of the Labour party.”

Take, for example, this week’s collective meltdown over George Osborne’s proposed cuts to tax credits. Like so much else in the party’s current debate, a fundamental question of purpose is being seen only through the prism of short-term tactics.

The reason Labour’s welfare bind feels so excruciating is because it’s a reckoning with how it has conducted its core business for over half a century. Since the revisionists of the 1950s, Labour’s core ‘end’ of a more equal society has been operationalised through the ‘means’ of state-led redistribution of the proceeds of growth. Crosland’s way reached its apotheosis under Gordon Brown, with a booming economy and unassailable parliamentary majority. Famously, the New Labour governments left intact the basic political settlement of the 1980s but set up a new architecture to ‘make work pay’ and shift resources down the income scale: tax credits. This was the mechanism by which the government’s laudable aims of taking families and children out of poverty were to be met. Attempts to address market inequalities at source were regarded as politically or practically unfeasible.

This is the background to the choice Labour’s leaders face today – and why George Osborne is taking such pleasure asking Labour to confirm or deny it is the ‘party of welfare’. Because, for a long time, it has been: its goals have been pursued almost exclusively through the tax and benefits system. So now it is forced to choose between the devil of supporting greater inequality, or the deep blue sea of being on the wrong side of public opinion.

Of course it would be better if people earned enough from the work they did to support the life they want to lead. The last Labour government didn’t think that was possible in a globalised economy and so tried to find another way. This is the judgement that a generation of Labour politicians are now locked into.

Which is why John Harris’s suggestion that “Labour ought to pause, and take a few collective deep breaths” is a sensible one. Labour is understandably responding to the shock of defeat with a relentless focus on finding what it takes to ‘win’. But at the moment we keep getting stuffed because we’re playing on the wrong pitch.

Instead of being trapped into simply defending our old ways, we need to set our sights on developing the new. Over the course of the last parliament, there were the beginnings of a conversation about a new approach, that sought to reimagine the left’s purpose in a world of scarce resources, plural politics and complex problems. While it was reflected in some of Labour’s language, it ultimately didn’t trouble its policy offer. The manifesto played to type, with proposals that taxed the very wealthy to spend on public services.

George Osborne is being lauded as a genius for the havoc he’s sowing in Labour ranks. But he’s not being particularly clever. He is simply – as the Tories did throughout the election campaign – relentlessly exposing a fundamental Labour weakness. The only way for Labour to break out of the chancellor’s binary frame of welfare v wages is to think creatively about new means for modern times.

For Labour, this isn’t just a matter of life and death; it’s much more important than that.

Ed Wallis is the Editorial Director and a Senior Research Fellow at the Fabians