Labour and welfare: something old, something new

http://www.guardian.co.uk/commentisfree/2013/jan/04/labour-welfare-editorial

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The trick to turning an old idea into a new one is, it seems, timing. A few years ago, a Labour Treasury spokesman announcing yet another plan to cut the number of long-term unemployed would have been greeted with a few small, polite notices in the newspapers and a lot of stifled yawns. That traditional concern with recasting welfarism, that familiar mix of carrots and sticks: this would have been the old New Labour that voters and commentators knew well. Yet when Ed Balls yesterday trailed a new policy to bring down long-term joblessness, he was greeted with a degree of interest that – while not quite Middleton-esque – was still notable. Part of this is down to the details of the scheme; and part because this is the first economic policy to emerge from Ed Miliband's party in a long time. But most of the interest stems from the fact that Labour is now joining battle with the coalition in what is shaping up to be one of the biggest Westminster fights of this year: the battle over welfare.

In its historic austerity programme, the coalition has singled out welfare recipients for some of the biggest cuts. On George Osborne's current plans, £28bn a year will have been taken out of the welfare budget by the middle of next parliament. The latest instalment comes this Tuesday, when MPs vote on plans to increase most benefits by a mere 1% – well below inflation – over each of the next three years. When Mr Osborne announced this measure in the autumn statement, Labour promptly and rightly declared its opposition. What Mr Balls and shadow welfare secretary Liam Byrne did yesterday was advance on that position and set out a stall ahead of the Tuesday vote.

Under the policy, those earning over £150,000 a year will get only 20% relief on any sums they put into a private pension, rather than the 50% relief they currently receive. That will yield over £1bn which, Labour say, should be given to private firms to hire those over 25 who have been out of a job for more than two years. Anyone refusing such a position will lose their benefits. There is a lot wrong with this policy and a lot of missing detail, but the big picture is this: Labour wants to make clear it retains an adherence both to the welfare state and to redistribution – while ramming home the message that the Conservatives don't believe in either. Reformed welfare, certainly, and clearly limited redistribution – but the opposite of the supposedly heartless, slash-happy Tories. And on that score, David Cameron's Conservatives certainly are making Labour's job easy: see this week's reports about Westminster city council cutting off benefits to obese claimants who don't go to the gym. It is also clever politics to hit the pension tax relief for top earners, which is set to fall this April, and which the coalition parties would clearly like to reduce further. That said, the coalition will have a ready riposte to this policy: here is Mr Balls, Gordon Brown's star student, using one of his master's most infamous tricks – raiding pensions to spray money at the poor.

Still, the problems and questions with the new policy outweigh the positives. Mr Miliband has stated his support for the living wage, so it is disappointing to see him now backing a scheme that will only pay minimum wages. There is also nothing about the responsibilities that will be faced by the companies receiving this new job-scheme money: the quality of employment or the training they will provide to people who, after years out of work, will need a lot of help and support. And there is silence over what kind of employment might be created in an economy going through a severe slump. For most of its period in opposition, Labour has been less than sure-footed in its response to the welfare cuts – opposing some, but hemming and hawing over strategy. Yesterday's announcement from Mr Balls doesn't change that. As an outline for opposition, it isn't bad; as a proposal for government, it needs work.