Welfare reforms: What are the politics of Labour’s benefits changes?
Over the past few weeks, it’s been hard to avoid reports of the government preparing the ground for a string of changes to the UK’s welfare system.
Call it kite flying, pitch rolling, or testing the waters, when work and pensions secretary Liz Kendall got to her feet in the House of Commons on Tuesday, there was precious little in her statement that hadn’t been at least speculated on beforehand.
Briefly, ministers plan to make it harder to qualify for personal independence payments (PIP) – money to support disabled people with the extra costs they face, such as needing support for eating, washing and dressing – but won’t freeze it, or introduce means testing.
Elsewhere, the focus is predominantly on encouraging people into work, including via increasing the main rate of universal credit, while reducing the health-related top-up; scrapping work capability assessments; merging some benefits into a new so-called ‘unemployment insurance’; and legislating to ensure people have the ‘right to try’ work.
Fundamentally, all of this is aimed at both saving the government money, whether in the short term, by simply reducing the current benefits bill, or in the longer run by getting more people back into the workforce and reducing overall levels of dependency on the state.
There is a case to be made here, with the Institute for Fiscal Studies (IFS) noting “recent spending increases are accounted for by a significant rise in the number of people claiming”.
They found “in England and Wales, four million working-age adults (1 in 10) now claim either disability or incapacity benefits, up from 2.8m in 2019 (1 in 13)”; while Ipsos polling suggests over half (54 per cent) of the public think the system is poor value for money for taxpayers.
If it works, with more people in jobs, and paying taxes, over time these changes could even see more revenue coming into the Treasury, potentially boosting the UK’s economy, GDP, and productivity. Or that’s how the theory goes, anyway.
Welfare versus reality
Of course, once any political party’s plans make contact with reality – and backbenchers – the outcomes inevitably tend to look a little less certain than on minister’s briefing papers.
For example, successive Conservative governments pledged to build more housing, but nonetheless Rishi Sunak ended up admitting – in his own words – to ditching local housing targets after “consistently” coming under pressure from NIMBY-ish opponents to the issue.
“What I heard… particularly from our councillors and members, was what they didn’t want was a nationally-imposed top-down set of targets telling them what to do,” he said.
Despite No10 hauling virtually the entire parliamentary Labour party in for pre-briefings on the plan, left-leaning MPs got to their feet to lambast the changes, including Kim Johnson, who warned three-quarters of those in receipt of state support go “without essential items”.
Ex-shadow Chancellor John McDonnell raised the spectre of austerity-era deaths, citing the “immense suffering and – we’ve seen it in the past – loss of life”, amid calls for wealth taxes.
Keir Starmer may be blessed with over 400 MPs, but with the IFS identifying Kendall’s changes as “a bigger cut to welfare than seen in any fiscal event since 2015”, there may only be so far some are willing to go.
LabourList reported one MP describing their colleagues as “aghast”, with rhetoric having “turned peoples’ stomachs”. On top of a refusal so far to budge on the two-child benefit cap, and the means-testing of winter fuel payments, could a potential rebellion be underway?
Indigestible for others
Similarly, one of life’s other inevitabilities is that trying to please everyone tends to result in no one being pleased with you.
The reforms may be too much for the party’s left flank to stomach, while proving indigestible for very different reasons across the aisle. Kendall’s shadow, Helen Whately, dubbed the package “too little and too late” coming after “eight months of dither and delay”.
She tied her critique to Conservative opposition to Labour’s employment rights bill, which has seen small businesses warn of the impact on jobs, as they move to reduce headcounts.
While the Institute for Economic Affairs (IEA) argued other than causing upset, they “will do nothing much to reform benefits or save significant amounts of money”.
They branded the £5bn figure a “flea-bite” which won’t “reduce government borrowing or contribute to higher defence spending”.
Much of the government’s current reality feels somewhere between a rock and a hard place right now. But changes to benefits and support for those with disabilities are always going to be particularly tough to balance for a party with Labour’s historical roots.
That makes the politics of all this – and any votes – uncertain territory for this government.