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Welfare Benefits Up-rating Bill
Ahead of today’s second reading debate of the Welfare Benefits Up-rating Bill, the Guardian reports that Conservative efforts to single out the “undeserving” poor were attacked by Nick Clegg yesterday as a high-profile attempt to relaunch the coalition instead saw growing faultlines emerge over welfare reform. Mr Clegg is reported to have said: ”“I don’t think it helps at all to try and portray that decision as one that divides one set of people against another, the deserving and the undeserving poor, people in work and out of work.”
Also, former children’s minister and Lib-Dem MP Sarah Teather is expected to rebel in the vote to formally break the link between benefits and inflation, with more Lib Dem MPs rebelling later in the passage of the bill through parliament. Ms Teather is reported to have said: “I hate the scroungers versus strivers rhetoric that drives this stuff, and the use of legislation to try and force artificial dividing lines. We were elected to serve the common good, not to use parliament and the vulnerable we serve as a playground for petty games.”
The Labour party has already said that it intends to oppose the Bill in today’s vote.
For the Guardian story, see Nick Clegg joins protests over ‘shirkers’ tag
Also come across an interesting take on the Bill from the Sun.
Further to claims from the Resolution Foundation that the Uprating Bill will actually impact more on working claimants than those out of work, the Sun reports that the measures in the Bill “will NOT hit working families anywhere near as hard as jobless ones”.
They say that shows that 2.5million of the UK’s 2.8million jobless households will be hit, or 90 per cent. They will lose an average of £215 a year by 2015-16. Of the 14.1million working households, seven million will be affected, around half, and they will lose an average of £165 a year.
For the Sun story, see 9 in 10 jobless will bear the brunt of benefits freeze
Dan Hodges, writing in the Telegraph, puts forward a view that Labour has been out-manoeuvred by the Conservatives in the Benefits Up-rating Bill.
Labour MPs will still troop through the “No” lobbies to oppose George Osborne’s one per cent cap on what we loosely term welfare increases. But despite the bold rhetoric, if you study the papers, listen to the radio, or follow the debate in the chamber, you will not hear a single official Labour voice raised on behalf of the those who actually subsist on benefit. Labour’s defence will not be of those on welfare, but of those who are in work.
This is the classic political tactic of a party that knows it’s lost the argument; try and change the terms of the debate. It’s much beloved by political strategists, but in truth it rarely works, and it certainly won’t work this time.
The debate on welfare was framed 30 years ago, when Margaret Thatcher’s explosive decompression of British manufacturing left the welfare system to pick up the pieces. And ever since, there has been a clear – if false – dividing line between those who want to work and those who don’t. Far too late in the day, Ed Miliband has acknowledged that. Those hoping he would use tonight’s debate to educate the British people on the harsh realities of life on welfare will be disappointed; it is now about damage limitation.
For the full piece, see The Great 2012 Welfare Debate is over: David Cameron has won, and Ed Miliband has lost
Labour has tabled the following amendment to the Bill -
‘That this House declines to give a Second Reading to the Welfare Benefits Up-rating Bill because it fails to address the reasons why the cost of benefits is exceeding the government’s plans;
notes that the Resolution Foundation has calculated that 68 per cent of households affected by these measures are in work and that figures from the Institute for Fiscal Studies show that all the measures announced in the Autumn Statement, including those in the Bill, will mean a one-earner family with children will on average be £534 worse off by 2015;
further notes that the Bill does not include anything to remedy the deficiencies in the government’s work programme or the slipped timetable for universal credit;
believes that a comprehensive plan to reduce the benefits bill must include measures to create economic growth and help the 129,400 adults over the age of 25 out of work for 24 months or more, but this Bill does not do so;
further believes that the Bill should introduce a compulsory jobs guarantee, which would give long-term unemployed adults a job they would have to take up or lose benefits, funded by limiting tax relief on pension contributions for people earning over £150,000 to 20 per cent;
and further believes that the proposals in the Bill are unfair when the additional rate of income tax is being reduced, which will result in those earning over a million pounds per year receiving an average tax cut of over £100,000 a year.’
see rightsnet new story -
Labour amendment to Bill defeated in House of Commons by 328 to 262..
now going to vote on whether to give second reading…
House of Commons has voted in favour of second reading of Welfare Benefits Up-Rating Bill by 324 to 268…
New Statesman has published details of the Lid Dem MPs who either voted against, or abstained, in last nights second reading debate.
One of the more level-headed analyses of yesterday’s Bill comes from BBC Economics Editor Stephanie Flanders.
As I pointed out a while ago, one consequence of uprating benefits with inflation at a time of flat or falling real wages has been to help narrow the gap between rich and poor. It is one big reason why 2011 saw the largest one-year decline in income inequality in a generation.
This cut in the real value of benefits between 2013 and 2015 may undo some of that. But probably a better objection to this policy is that it leaves the poorest households very exposed to inflationary shocks.
We don’t actually know what inflation will be over the next few years. The majority of forecasters expect it to continue to be weak - because they don’t think there’s much chance of a rapid economic recovery which pushes up domestic prices or wages, and because they think the new sources of energy coming on stream in the US and elsewhere will help keep a lid on the world price of oil and gas.
If those forecasts are right, inflation in the UK will be lower in the next few years than it has been since 2009, and the real value of benefits will fall by not much more than 1% a year, between now and 2015, as a result of this policy.
But quite a lot of economists think that, sooner or later, the hundreds of billions that the Bank of England and other central banks have been pumping into the global economy will come back to bite us, in the form of runaway inflation. That is unlikely to happen right away, but others think there could be another surge in global commodity prices this year, which the Bank of England will not able to prevent filtering into inflation.
If either or both of those things happens, this policy would mean that households who depend on benefits for all or most of their income could see their real incomes fall by a lot more than 4% between now and the next election. But right now, ministers would probably say that runaway inflation was not their number one concern.
For the whole piece, see Fairness and the welfare bill
Owen Jones, again, pulling no punches.
Steve Richards writing for the Independent says, amongst other things:
...when David Miliband in a first-rate speech in the Commons on Tuesday argued that iniquitous benefits cuts could be avoided by fairer redistribution within the existing welfare budget, his robustly progressive argument was taken as a rebuke to Miliband and Balls because the duo propose to spend more on welfare. They do not have such a plan and yet the assumption that they do is evidently widely held – another example of why the stakes are high in the political battle even though the arguments are not based on actual policy.
The actual policies are more nuanced and the real challenges daunting. Cameron/Osborne can claim with good cause to be acting fairly in targeting child benefit for the better-off. On this, Labour has some explaining to do, defending benefits for millionaires. But the Conservatives’ case is incoherent because they support other universal benefits for the elderly, including the rich.
Beyond the noisy debate, there is quite a lot of consensus over welfare: work should always pay; those capable of work should be encouraged or compelled to do so; and those genuinely incapable should be supported. Of course, the twist is that each of these broad objectives raises nightmarishly complex questions. No government has answered them. Instead, each successive adminstration promises a welfare revolution. New Labour even staged welfare revolution roadshows before deciding what form it should take. The Coalition hails its own revolution amid economic gloom in which jobs and affordable housing are scarce. In the 1980s, Tory ministers sang about their revolutionary plans to ecstatic party conferences.
We’ve had many revolutions and fuming political rows. The impossibly demanding task of delivering a fair and affordable modern welfare state remains unmet.
To read the whole article, see Nothing in British politics is harder than welfare reform. The dogfight over it is a distraction
Meanwhile, Chris Giles writing for the Financial Times aims to take a “non-partisan” approach to analysing the impacts, and says that a temporary cap on benefits uprating is a reasonable step to have taken. However, he also feels that using a justification that compares out-of-work benefit indexation with average earnings is a mistake and finishes by saying:
By using the wrong arguments, ministers have pandered to Britain’s infatuation with indexation and the desire to chant “it’s not fair”. The decision will come back to bite them.
For the whole article (you will need to register with the FT to view), see Welfare cuts may bite the UK government
And there’s more, this time from Zoe Williams writing in the Guardian, who broadens out the debate to the language of strivers and skivers and finishes by saying:
If you want to make sure “work pays”, wouldn’t it be better to force up wages than force down benefits? If you want to increase the money available to the public purse, wouldn’t it be better to make sure people keep their jobs, than penalise and denigrate the unemployed, who don’t have any money anyway and can only pay you in shame?
In a way, it is precisely to avoid those questions that this false war has been created. Every minute spent discussing the factual inaccuracies, dishonesty and sleight of hand in the skivers/strivers debate is time wasted, time that could be spent addressing the bone-rattling mismanagement of an economy that only doesn’t look more dangerous because it is going so slowly. And yet, we have to discuss it; to leave it unaddressed is to accept that public life has been polluted, that we now live in a system where it doesn’t matter what’s true, it only matters what’s been said most often.
For the whole article, see Skivers v strivers: the argument that pollutes people’s minds
A nice little coda to this thread I think, from the Telegraph….
The majority of Westminster politicians surveyed by the Parliamentary Standards Authority (IPSA) said they deserve a 32 per cent pay increase to £86,250.
IPSA also found that more than a third of MPS believe they should keep generous final salary pensions.
The findings emerged as Ipsa published a report on its initial consultation into pay and pensions, which ended last month.
The research, which politicians completed anonymously, found that 69 per cent thought they were underpaid on £65,738.
The average level suggested for the salary was £86,250.
To read it and weep, see Seven in ten MPs on £65k believe they are underpaid
New Statesman carries an article with an overview of the main amendments to the Uprating Bill, which is being debated in the House of Commons this afternoon.
Labour: cancel 1% rise and offer a jobs guarantee to the long-term unemployed
Lib Dem rebels: increase benefits in line with earnings
Six Lib Dem MPs, including Charles Kennedy and Andrew George (both of whom abstained at second reading) have tabled an amendment calling for benefits to increase in line with earnings, rather than 1 per cent. Since average earnings are forecast by the Office for Budget Responsiblity to rise by 2.2 per cent this year, 2.8 per cent in 2014 and 3.7 per cent in 2015 this would shield the incomes of the poorest from inflation, which is expected to increase at a slower rate than earnings from 2014.
Green Party, SNP and Plaid Cymru: increase benefits in line with RPI inflation
For the whole piece, see How MPs are trying to protect the poor from Osborne’s welfare cuts
Further to the Benefits Uprating Bill completing its main passage through the Commons on Tuesday, the Lords debate on the Bill is scheduled to take place on 11 February (thanks to Sue Royston for highlighting).