Six questions which show Ed Miliband's benefits cap is a mess - already
By Mark Wallace
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Ed Miliband's attempted about-turn on welfare spending is a sign of how politically effective the Conservatives' welfare policies have been. Battered by repeated polling which showed his opposition to welfare reform was harming Labour, he eventually decided to change sides.
It's a remarkable shift - this is the man who has long been comfortable as part of an anti-cuts movement which employs the most barmy hyperbole to denounce any attempt to reduce the welfare bill. Those hearing the news that a Miliband has today committed to support a benefits cap might be forgiven for thinking the media have mixed up the brothers again - but no, it's definitely Ed. I checked.
In summary, he has now pledged that Labour would introduce a cap on the overall benefits bill.
It's a clever move, to a certain extent. On the surface, it sounds like he would mimic the Coalition's cap on how much any one family can receive. But dig into it, and this is a very different proposal, which raises some awkward questions for the Labour Party.
Here they are:
1) What level will the cap be set at?
Ed's new policy is "a cap on overall benefits" set three years in advance to "help control costs".
There is no index or measure to peg it to. Will it be a cash limit? A percentage of spending? As is traditional on planet Miliband, there is no detail - he simply proposes that "an independent body" will decide how the system works.
So in reality, the cap involves the Government deciding in advance how much the state will spend on benefits. It could well be a very high figure, as there is no guide intended to restrain it. That sounds less like a "cap" than what is commonly known in English as a "budget".
2) What prevents the cap being breached?
Setting a welfare budget is very different to capping the benefits available to every claimant. Under the current £26,000 benefits cap, there is an actual limit on how much money is available to each household - the system provides up to that boundary over a year, and no more. People can then plan their own spending knowing how much they will get, as is fair.
Setting a welfare budget, as Ed proposes, does not do that. It simply says how much he intends to spend (or rather it would if he wasn't refusing to say what level he would set it at). If you leave the individual allowances in place then there is nothing to stop more people than expected claiming them, and driving spending above the supposed cap. A recession could easily create such a situation.
What happens then? If Ed's cap is to be enforced, the Government would have to stop paying any more money to anyone - an unimaginable act, given it would a) mean abandoning people without any money for a period of weeks or months b) mean punishing lower claimants for the amount paid to higher claimants.
Obviously that wouldn't happen - which suggests that either the cap is meaningless rhetoric or Miliband means to head off such an eventuality by proposing reductions in the range or quantity of benefits offered to people. Therefore question 3 is...
3) Will Labour propose reductions in the range or quantity of benefits offered to people?
The answer seems to be no - they have voted against three benefit caps since 2010 (the Housing Benefit cap, the £26,000 benefit cap and the Welfare Uprating cap). In fact, they've opposed every benefits cut that I can think of, decrying them in the strongest possible terms, and promised to cancel some including the £7.5 billion a year savings on tax credits. In media interviews today, Liam Byrne has been unwilling to give a single example of benefits cuts Labour would implement in order to make the cap a reality.
Without the willingness to reduce the money being handed out, this is simply another "Golden Rule" for Labour to breach.
4) Why should anyone trust Ed Miliband or Ed Balls on this promise?
The Labour Leader and his Shadow Chancellor are keen to give the impression of a break from the past. This is intended to look like a new departure.
And yet they refuse to actually distance themselves from the past. As well as the last three years of opposing benefits caps and billions of pounds worth of savings, they won't even confess that the last Labour Government spent too much. When the suggestion was put to him this morning, Miliband was very clear:
"No...I don’t agree with that."
This whole announcement has come about because the Labour leadership have realised voters disagreed with them about welfare. Given their record, it should do little to persuade anyone they can be trusted on the issue. If he doesn't think they spent too much, what reason does he have to deliver a cap at all?
5) How does this fit with other Labour policies?
Today's speech throws open new inconsistencies within Miliband's rather sparse policy portfolio. His pledges not to make savings through welfare cuts now look rather odd, as does the commitment to reverse cuts to tax credits.
Most notable, though, is the proposal to regionalise benefits. If he accepts that it is wasteful to pay London-level benefits in areas where the cost of living is far lower, why do they reject the same logic for public sector pay?
In April last year, he told the Today Programme:
“The lessons of regional pay as I have seen them are that it doesn’t particularly work. In a way it’s an acceptance of the north-south divide. You are basically saying to people, if you don’t live in the south of England, you are going to get much lower living standards and much lower pay.”
It's nice to know he now believes a one-size fits all model doesn't work for benefits. Logically, he should now abandon his support for the same model in public sector pay. The Shadow DEFRA team are also set to announce their support for flying pigs.
6) Will the Labour Left support it?
It's one thing for a leader to change his position so sharply - it's quite another for him to bring his party and its supporters with him.
Labour's lurch to the left under Miliband's leadership has actively encouraged the party's MPs and activists to become ever more extreme in their opposition to cuts, and welfare cuts in particular. As recently as December, the party was briefing the Observer that Ed would lead a coalition against welfare cuts in "a high-risk move that could come to define his leadership".
He might be able and willing to brazenly u-turn on this issue. But will the Owen Joneses of the world do the same?
Ed Miliband has achieved one thing I thought impossible - squeezed praise out of Blairite ultra Dan Hodges. It seems highly unlikely that, having marched them up to the top of the anti-cuts hill, he will be able to bring the Left of his party out in support of his new position, too.