Archive | November, 2013

A Living Wage to Cut the Benefit Bill

30 Nov

In the first half of this parliament the Tories destroyed Labour’s fragile post-recession recovery with excessive cuts and flat-lined the economy for three years. As a result they did pretty well in the polls. Post the omni-shambles budget they’ve been consistently behind, but not by much. It had seemed clear that when the recovery finally came, they would steam ahead and the public would reward them with another five years to cut away at the state. However, now that the economy is recovering it is Labour that is ahead and looking on course for election victory (especially given they only need 35% of the vote).

Of course the turnabout is all to do with setting the debate on your own terms. In the first three years the Tories managed to frame the political debate around cutting the deficit and being tough on welfare. If these are your fundamental priorities you’re never going to vote Labour. The more Labour tried to court these votes, the more they reinforced Tory priorities in the public mind.

Since Miliband’s conference speech pledge to freeze energy bills, Labour has managed to re-focus the political debate onto living standards. The Tories will never win on these terms, just as Labour could never win on benefit bashing. If your fundamental priorities are fuel poverty and fixing broken markets, you’re never going to vote for another five years of Cameron and Osborne. Recent Tory U-turns on payday lending and tobacco advertising only serve to reinforce in the public mind Labour priorities.

Labour has another advantage: they are the only party who can potentially link together both of these public concerns to their advantage. According to the Resolution Foundation, the treasury would save 5.7 billion if the living wage became the minimum wage, due to greater tax revenues and lower spending on tax credits. The next stage of the Labour project should be to lower the benefit bill by dealing with root causes: building houses to lower the housing benefit bill, and replacing tax credits with a living wage.

Elections are won with simple messages, and Labour should enter the next election with a simple message on welfare. Yes the benefit bill is too high, but this is because the state is lending support where the market has failed to provide a basic standard of living. We have two choices. The Tory way is to remove that support and let the market fail for working people. The Labour way is to ensure that the market faces up to its responsibilities so that the state can step back.