Peter Hoskin: Labour's fiscal bribes persist — they should be killed off

Meet Gordon Brown, the pre-1997 model. You might have preferred him back then, and for a very simple reason: he was not a politician who saw more public spending as the solution to everything. This was evident in his commitment to Ken Clarke’s spending plans, but it was there, too, in his opposition to universal benefits. As Tom Bower’s biography of the man explains, he had been heavily influenced by Bill Clinton’s election campaign and particularly by one of its central maxims, “We want to offer a hand-up, not a hand-out.” Mr Bower writes, “Brown was leaning towards ‘incentives’ and the cessation of universal benefits. In short, he was becoming attracted to means tests, which he had formerly vociferously opposed.”      

Just wonder what the country would look like now if this model of Brown had persisted into Government. But, sadly, it didn’t. The reach of the benefits system wasn’t merely maintained under his rule from the Treasury and then Number 10, it was extended. New benefits, such as the Winter Fuel Payment, ended up going towards the well-off. Tax credits were pumped into the bank accounts of the middle-classes, a transaction that created more and more disincentives to work. And social security spending increased by a fifth, even before The Great Crash took hold. Universalism had truly gone universal.

Yet what’s even sadder is that this second, post-1997 model of Gordon Brown lours over our politics still. Indeed, over the past week, Labour have made it their primary cause to defend in-work benefits from cuts. And while the Tories are the ones implementing those cuts, they are also protecting other sectors of the Brown universe, such as the free bus passes and TV licences for pensioners. Even during the austerity years, hand-outs for the have-lots remain in fashion.

We don’t really need to ask why this is so. The parties will talk of principles and refer to fiscal spreadsheets, but much of it comes down to electoral arithmetic. The Conservative and Labour leaderships want voters, and they’re prepared to use bribes to secure ‘em. This is how it’s been since the dawn of politics. But rarely has such bribery been so central to the political debate. Whereas the last election was largely about the overall parameters of deficit reduction, it looks as though 2015 will have a tighter focus on benefit spending. Do you want it? Or do you not?

This Brown-inspired bribery does considerable harm. For the sake of votes, politicians aren’t willing to consider all the options available for cutting the deficit. They ring-fence according to their — rather than the public finances’ — net benefit.

But might it also inflict self-harm too, on the politicians themselves? Take the Conservatives. They have made some very persuasive arguments in favour of their benefit and tax credit cuts. As David Cameron put it during PMQs in October, “I do not see why those on the Opposition Front Bench should go on collecting their child benefit when we are having to make so many other difficult decisions.” As he put it last week, “I think that the right thing to do is to cut the taxes of people who are in work, rather than taking more in taxes and then redistributing it through tax credits.” Yet similar arguments also apply to those universal benefits that the government is refusing to cut. It’s the sort of thing that can look inconsistent, at best; cynical, at worst.

Political bribery is also a form of segregation. Voting groups are identified and catered for, while the burden of deficit reduction is imposed on others. This raises questions about fairness, which is the main reason why Nick Clegg is sensibly advocating further cuts to universal benefits. But it also has electoral implications. For generations now, politicians have neglected young people, in favour of old people, because young people are less likely to vote. And while this might make sense when it comes to winning tomorrow’s election, it’s always seemed a myopic approach to me. If the parties gave young people — and others — something to vote for, then surely the votes would come. There are great untapped reserves of enthusiasm out there.

It would certainly help if the tax and benefits system could be depoliticised. True, politics could never be removed from the equation entirely, but there are ways to diminish its more tawdry effects. Something like this was detailed in an important report from the Centre for Social Justice, earlier this year. It talked of measuring the effectiveness of policies by their “social value”, and — tellingly — its first recommendation was that the Government articulate the “most important outcomes” that they are trying to deliver. Are benefits there to get the unemployed into work? Are they to reward people for years of completing their tax returns? Too often, politicians say one thing and do another, or just say lots and lots of things. A framework for policy decisions could bring about some consistency.  

And who knows? With such a framework established, it might even be possible to task a cross-party commission with looking at how the welfare state can be properly balanced against the demands of deficit reduction and of an ageing, growing population. Gordon Brown could even make a good chairperson for it — so long, of course, as it’s the pre-1997 model.