Progress | Centre-left Labour politics

The Osborne trap

One of the most surprising things about George Osborne’s omnishambles budget statement was that it undermined his reputation as a canny – some might say devious – political operator. The autumn statement has gone some way to restoring this reputation. His proposal to cap benefit payment increases has set a potential trap for Labour. We need a much more sophisticated response than that suggested by the headline in Sunday’s Observer – ‘Ed Miliband to wage war on Osborne over benefit cuts’.

Within the article a ‘senior Labour figure’ suggested that there was a ‘caucus of “new Labour” figures believing it will be politically suicidal to leave the party open to charges that it sides with ‘scroungers’ and is in denial over the need to cut the benefits bill’. I’m sure this wasn’t meant as a good thing by the ‘senior Labour figure’, but frankly you can count me into this ‘caucus’. And incidentally I’m pretty sure it would include a large number of people who’ve knocked on doors recently and been told that the problem for Labour is that they think we caused the deficit and they’re not yet convinced we know how we’ll solve it.

The Tories want to paint us as a party which cares more about those unwilling to work than those struggling in work and who are careless with taxpayers’ money. This is a nasty way of pitting one set of poor people against another set, but the Tories’ polling will tell them that this is a strong message with voters. In the medium term, then, our ability to be able to get into government and to put right the unfairness and economic incompetence of this government depends on being able to change this view in the short term. This requires a more sophisticated approach to the trap set by Osborne than simply to jump into it even if this is accompanied by cheering from church and voluntary sector groups.

Ed Balls and the Treasury team have done sterling work in reframing the context for this decision. They are wholly right that there is a prior question about the government’s failure to deliver growth in the economy which is the reason we are faced with the need for further cuts. Paying out more in benefits is also part of the ‘automatic stabilisers’ which help to maintain demand in the economy at a time of recession. They are right to identify that the benefit cap would mostly hit those in work on low pay, so is not about ‘strivers versus shirkers’. They are right to identify the unfairness in providing tax cuts at the top and benefit cuts at the bottom and the fact that we are not all in it together when it comes to sorting out the deficit. Women are paying £3 for every £1 paid by men in Osborne’s tax, benefit and spending changes, for example.

So I am hopeful that there is also some really hard thinking going on about how to respond to the Osborne trap. How do we scale up the living wage campaign so that there aren’t so many people in work still needing benefits to help them make ends meet? Given the failure of the work programme to deliver job opportunities, what would we do to get people into work and cut the cost of unemployment? What are the cut-through headlines which show we’re serious about dealing with the deficit? In the same Observer piece, a ‘senior figure close to Miliband’ said, ‘Make no mistake, we would come down very hard on people who milk the system’  Let’s flesh out what this would look like and how to rebuild support for a modern welfare system focused on work and opportunity.

The battles over pasties, caravans, charities and grannies were gifted to us by Osborne’s ‘eye off the ball’ budget. This is a much more difficult challenge – our ability to rise to it in a principled, but politically mature, way will say much about our likelihood of success at the next general election.


Jacqui Smith is former home secretary, writes the Monday Politics column for Progress, and tweets @smithjj62


Photo: Ewan McIntosh

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Jacqui Smith

is a former home secretary and writes the Monday Politics column for Progress


  • I think Ed Miliband’s point on 60pc being in work and facing a cut is the right message. We need to show that the government are not making work pay by cutting those sorts of benefits – siding with them sends out the wrong message to those turning to us for hope.

  • At some point Labour has to stand up for those out of work. They are not all skivers sleeping behind curtains. Most people out of work are young (many graduates) or between jobs or have been made redundant recently. Everybody knows people that are unemployed and would desperately like to be in work. Everybody realises that they could be unemployed at some point in their life. If Labour does not stand up for the unemployed who will?

  • What is progressive about stigmatising and lying about unemployed people? If the Labour Party has given up of changing people’s attitudes toward the poor and weak then how are you “progressive”?

    The facts are out there: out of work benefits cost less than in work benefits, there are very few long term unemployed (or there were until recently), there is only a tiny number of multi-generational workless households, we have deaths and misery, food banks and soup kitchens in record numbers and so on.

    All these could be deployed and expose the Tories as liars, changing the nature of the debate.

    Sadly, politicians and think tanks have become dominated by arguments over tactics. You offer no strategy, no hope and no goal. That will deliver defeat at an election for an already demoralised population.

  • So far a good response from Labour to this. I think the bigger point is that whilst we are being tactically good, at the moment we still don’t have a convincing answer as to how we will reduce the deficit. Some sort of growth / deficit reduction combo is needed.

  • ‘Scroungers’? George creates them. What he doesn’t comprehend is the following: jobs pay wages, wages buy things, wages also pay taxes, taxes pay government expenses. Giving 600,000 public sector workers the chop is not terribly bright. Multiply 600,000 by the tax and NHI payments paid by those people when in work. Then multiply 600,000 by the benefits then paid to them when they have lost their jobs. The loss to the Treasury is in the £billions. Not including the loss to the economy of people buying stuff.
    Ed needs to comprehend that the scroungers issue is a small thing, relatively speaking. He should go for the jugular and ram home at PMQ’s the fact that the deficit has increased by 50% since this lot have been in power, that other countries are not suffering so much (Germany, Canada, Australia) and that every time George opens his mouth he reveals he knows nowt, and that the Tories have done nothing about the people who created this awful mess, the bankers. He needs to attack on every front at the same time – immigration, crime, banks, potholes even! He needsto be Ed The Impaler, not Ed The Reasoner. For all our sakes.

  • Good politics is to take stance in front of the curve of opinion change, not constantly to be chasing the curve. Standing up against a policy which will hurt children, the genuinely out of work, those on low pay, genuinely disabled people all of whom are swept up in this Tory wave of venom against the ‘scroungers’ is not only the right thing to do it is the best hing to do. As someone who was knocking on doors yesterday and been talking to some business people this evening i have noted that there is already a change in mood as people realise friends, neighbours, relatives fellow congregationalists are being affected unfairly.
    Conversely not taking a stance will leave a lot of members and natural supporters, even non supporters wondering what the Labour Party is for. We will loose respect and self respect.
    This does not mean we do not work out some constructive alternatives which involves carrots as well as sticks.

  • As it happens, I have just blogged my own piece on this drawing attention to the political rhetoric and the actual reality even in leafy parts of Surrey. Of course, we should be opposing the real terms benefit cuts but the political aspect is to address the inefficiencies in the system. For example, my own district council has more than £300k owing in overpayments – get this right in the first place and we can easily cut welfare costs without causing even more poverty.

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