In opposition, David Cameron re-positioned his party with a new brand of ‘compassionate Conservatism’ that could heal ‘broken Britain’. Three years into government, the record contrasts sharply with those promises.
Recently, we learned that absolute child poverty has risen sharply. The downward trend in relative child poverty inherited from Labour has halted. In-work poverty is rising. In 2011-12, 66 per cent of poor children lived in working families, up from 60 per cent in the previous year. Long-term unemployment is rising inexorably. If you are looking for a more equal society, give the coalition a wide berth.
To begin with, ministers told us the introduction of universal credit would solve all these problems. Labour supported the principle, but the project now looks in desperate trouble. Inept ministers have consistently under-estimated the difficulty of implementation. They have delayed crucial policy decisions. In November 2011, Iain Duncan Smith boasted a million people would be receiving universal credit by April 2014. Now the Department for Work and Pensions won’t say how many will be getting it by then. The current number appears to be about 100.
The country needs leadership and fresh vision. That is what Ed Miliband offered in his ‘one nation’ speech at the Labour party conference in Manchester last year. He and Ed Balls have developed the theme in the context of social security in speeches in June. The challenges are huge – the fiscal environment is tough, and public confidence in the welfare system is low. Resolving them will be at the heart of our election case.
Ed Balls pointed out that Labour must prepare for a “very difficult inheritance … an economy with families under real financial pressure, businesses that have lost vital opportunities to invest, and public finances in poor shape, despite deep cuts to vital public services”. Government promises to cut welfare bills have not been delivered, partly because of their failure on unemployment. Social security spending has been revised up by £20 billion since the 2010 spending review. In 2010, the Office for Budget Responsibility forecast a deficit of £18bn in 2015-16. It is now anticipated to be £96bn – £78bn more, even with further cuts in public spending scheduled for 2015-16.
The scale of that challenge does not mean, however, that we abandon our Labour values. We need to be focussed on crafting the right policies, and making the right interventions to turn the situation around. We will be committed to raising living standards and growth and ensuring that the deficit and public expenditure are reduced in an equitable manner.
And we have to recognise the crisis of confidence in the social security system. Too many people think the system costs too much, and – all too often – doesn’t help them when they need it. Public attitude research by the Joseph Rowntree Foundation highlights a long-term hardening of attitudes. In 2011, 54 per cent believed that, if welfare benefits were not so generous, people would learn to stand on their own feet, compared with only 33 per cent in 1987. However, the view that the state should be tackling child poverty remains widespread. The same report found that 82 per cent viewed cutting child poverty as ‘very important’, with almost three-quarters (74 per cent) saying this is a task for government.
Labour will reform social security so that it once again works for working people, addressing the root causes of the rising benefit bill and renewing the contributory principle. In his recent speech at Newham Dockside, Ed Miliband said: “…the idea that people should get something back for all they’ve put in is a value deeply felt by the British people.” Our policy review will explore how the system can be reformed within tight cost constraints. For example, can we ask people to work longer to qualify for extra support?
We are committed to a concerted effort to tackle long-term unemployment. We will introduce job guarantees to ensure a paid job for every young person out of work for a year, and for those over 25 unemployed for over two years, with jobseeker’s allowance ceasing for six months after the offers have been made.
We will also ensure the cap on household benefits works for the whole country. Housing costs are different in London to other parts of the country, so we would ask an independent body – like the Low Pay Commission – to help set the cap so that, wherever you live, you get a clear signal that you’re better off in work. We will also reform housing benefit to tackle high rents and the shortage of affordable housing.
Labour’s historic task is to address inequality. Familiar ideas about full employment and contribution are key to Labour’s contemporary ‘one nation’ plans, the best way to tackle today’s inequality.