Labour in danger of returning to dividing lines of 1980s, when it languished in opposition to Thatcher’s Tories, says former PM
Tony Blair has warned Labour that a fierce resistance to austerity and welfare cuts risks reducing it to a party of protest.
In an apparent dig at Ed Miliband, the former prime minister cautioned that the political centre ground in Britain had not shifted to the left as a result of the credit crunch.
He highlighted the danger of returning to the dividing lines of the 1980s, when Labour championed the “status quo” and languished in opposition to Margaret Thatcher’s Tories.
The intervention – Blair’s most significant on the domestic stage since leaving office nearly six years ago – came in an article for the New Statesman magazine.
He flatly rejected the argument that New Labour created the financial crisis, insisting the structural deficit had been below 1% in 2007-8. But however the crisis occurred, he said, “no one can get permission to govern unless they deal with its reality”.
“The paradox of the financial crisis is that, despite being widely held to have been caused by underregulated markets, it has not brought a decisive shift to the left,” he wrote. “But what might happen is that the left believes such a shift has occurred and behaves accordingly.
“The risk, which is highly visible here in Britain, is that the country returns to a familiar left-right battle. The familiarity is because such a contest dominated the 20th century. The risk is because in the 21st century such a contest debilitates rather than advances the nation. This is at present crystallising around debates over austerity, welfare, immigration and Europe.
“Suddenly, parts of the political landscape that had been cast in shadow for some years, at least under New Labour and the first years of coalition government, are illuminated in sharp relief. The Conservative party is back clothing itself in the mantle of fiscal responsibility, buttressed by moves against ‘benefit scroungers’, immigrants squeezing out British workers and – of course – Labour profligacy.
Blair said the Labour party was back as the party opposing Tory cuts and highlighting the “cruel consequences of the Conservative policies on welfare and representing the disadvantaged and vulnerable (the Lib Dems are in a bit of a fix, frankly)”.
He said the scenario was “less menacing than it seems” for the Tories. “They are now going to inspire loathing on the left. But they’re used to that,” he said. “They’re back on the old territory of harsh reality, tough decisions, piercing the supposed veil of idealistic fantasy that prevents the left from governing sensibly … For Labour, the opposite is true. This scenario is more menacing than it seems.
“The ease with which it can settle back into its old territory of defending the status quo, allying itself, even anchoring itself, to the interests that will passionately and often justly oppose what the government is doing, is so apparently rewarding, that the exercise of political will lies not in going there, but in resisting the temptation to go there.”
Blair insisted Labour’s “guiding principle” should be to seek answers, not become the “repository for people’s anger”. The party needed to be “dispassionate even when the issues arouse great passion” otherwise it would become a “simple fellow-traveller in sympathy” rather than a leader. “In these times, above all, people want leadership,” he added.
Blair said “the case for fundamental reform of the postwar state is clear”, and urged the Labour leadership to ask itself questions such as: “What is driving the rise in housing benefit spending, and if it is the absence of housing, how do we build more?” He also suggested there should be more focus on increasing the skills of unemployed people, setting the right balance between universal and means-tested help for pensioners, and use of DNA technology to tackle crime.
In a passage likely to be taken as implicit criticism of Miliband’s policy platform so far, Blair said the public wanted to “know where we’re coming from because that is a clue as to where we would go, if elected”.
Producing a “vision of the future” is “of the absolute essence”, Blair insisted. “The issue isn’t, and hasn’t been for at least 50 years, whether we believe in social justice,” he wrote. “The issue is how progressive politics fulfils that mission as times, conditions and objective realities change around us. Having such a modern vision elevates the debate. It helps avoid the danger of tactical victories that lead to strategic defeats.
“It means, for example, that we don’t tack right on immigration and Europe, and tack left on tax and spending. It keeps us out of our comfort zone but on a centre ground that is ultimately both more satisfying and more productive for party and country.”
Lack of growth means George Osborne is having to implement the second, most painful part of his recovery scheme
The 80:20 rule applies to the government’s austerity policies: about 20% of the Treasury plan for rebuilding public finances rests on tax rises, while 80% comes from reductions in spending. In the current phase, welfare spending faces the biggest squeeze.
Back in 2010, in the immediate aftermath of the general election, all eyes in the coalition were on the figure for annual public sector net borrowing. This measure shows how much debt is added to the government’s mountain of IOUs each year.
It was expected to fall only marginally from the record £156bn set in 2009 by the Labour administration. The cabinet agreed a plan to bring the annual overspend down from almost 12% of GDP to less than 3% by 2015-16, which was two years faster than Labour believed possible.
Tax rises were the first to take effect. An increase in VAT to 20% was allied to a rise in capital gains tax and a £2bn levy on the banks. George Osborne also implemented Labour’s 50p top rate of tax for people earning more than £150,000.
In the slipstream came cuts to Whitehall and local authority spending designed to help the government achieve budget cuts – after inflation – averaging 25% over four years. Health, education and international aid budgets were spared the axe, leaving other departments to take even bigger hits. Public sector workers suffered a pay freeze and then a 1% cap.
Osborne planned to impose drastic cuts on welfare spending in 2013, but he expected the economy to be in better shape. In 2010, many analysts said the government’s hope was that a recovery would be in full swing by this year and welfare cuts would be quietly forgotten.
However, two key elements of the Treasury’s plans have gone awry. By 2013 the economy was supposed to be 6.3% larger, but instead it delivered a double-dip recession and over 2011 and 2012 in effect flatlined.
With growth nonexistent, tax revenues were lower than expected and it became harder to reduce government spending. The Treasury’s independent forecaster, the Office for Budget Responsibility (OBR), expected the annual deficit to be £89bn in 2012-13 and then £60bn in 2013-14. In his most recent budget Osborne conceded that borrowing would be £120bn in both years, adding to a debt accumulator total that most experts believe will be £250bn higher than the OBR expected to be run up over five years when the plan was hatched in 2010.
Another element, the cost of implementing Iain Duncan Smith’s universal credit, which has needed considerable funds for new computer systems and administration before the largely online scheme begins to save money, was initially underestimated. It is due to go live for new claimants in October, but three out of four “pathfinder projects” were delayed last week and the October start date may also be deferred.
In the meantime, the government has saved £432m by cutting 10% from the council tax benefit grant to local authorities. The Resolution Foundation thinktank believes the move, which scraps the grant and replaces it with a payment worth 90% of its value, will hit 3.2m low-income households who pay no council tax or a reduced charge.
One of several benefit cuts to take effect from April 6 – which include the cut to child benefit for higher-rate taxpayers, reductions in disability living allowance, housing benefit cuts and a 1% cap on annual rises in benefit payments – council tax benefit cuts are designed to push government spending to less than 40% of GDP from a peak of 48% in 2009.
Changes to the UK’s welfare system are fair, Work and Pensions Secretary Iain Duncan Smith insists, as some of the new measures come into effect.
Go here to see the original: Welfare reforms fair – Duncan Smith
The government is to scale back some of its plans to test a radical new reform to the welfare system.
See the article here: Universal Credit pilots scaled back
An official report into the government’s main welfare to work initiative, the Work Programme, highlights significant problems with the scheme.
Link: Report raises Work Programme issues
Welfare secretary Iain Duncan Smith instructs his department to “look again” at how the “bedroom tax” will affect disabled people.
See the original post: ‘Bedroom tax’ rules re-examined
How on earth do we end up with a challenge to this awful government’s attack on the welfare system (Back to work schemes broke law, court rules, 13 February) coming from a “self-described reticent and shy woman” sent to work for free at Poundland (‘I’m no job snob. They made me angry’, 13 February), and not “Her Majesty’s opposition”? We know the Lib Dems have facilitated this deliberate Tory-inspired attack on the poorest and most vulnerable in our society, as bankers still coin it in while claiming to be “sorry”, but where is the Labour party, its policy wonks and their hundreds of MPs? In the House of Commons bar?
• Your third leader (In praise of… Cait Reilly, 13 February) chooses to trivialise the court of appeal’s reasoning in Ms Reilly’s case (“The obscure reasoning was that the welfare secretary had prescribed an insufficiently prescriptive interpretation of prescription … Or something like that”). Ten minutes’ careful reading of the judgments would have enabled you to explain to your readers that the court had upheld the constitutional principle that it is parliament, not ministers, which makes the law, and that the court of appeal had fulfilled its constitutional role of stopping the secretary of state for welfare breaking the law. Parliament had authorised him to prescribe schemes for making jobseekers’ allowance conditional, so long as these were first laid before parliament. The welfare secretary had introduced the scheme applied to Ms Reilly and others without doing this.
Not too difficult, was it?
Visiting professor of law, Oxford University
One Nation Labour will reach out to voters alienated in the 80s and resist vested interests, party leader will tell Fabian Society
Ed Miliband is to set himself apart from old and New Labour when he declares that both strands in his party’s postwar history have lost relevance in 21st-century Britain.
In his first speech of the new year, Miliband will say his new one nation Labour will reach out to voters alienated by the party in the 1980s while standing up to the vested interests courted by the party in government over the past decade.
“New Labour rightly broke from old Labour and celebrated the power of private enterprise to energise our country,” Miliband will tell the Fabian Society on Saturday. “New Labour, unlike old Labour, pioneered the idea of rights and responsibilities. From crime to welfare to antisocial behaviour, New Labour was clear that we owe duties to each other as citizens.”
But Miliband will say that New Labour, which was famously launched with a “prawn cocktail” charm offensive in the City of London, failed to stand up to big businesses. He will say: “By the time we left office, too many of the people of Britain didn’t feel as if the Labour party was open to their influence, or listening to them.”
The Labour leader sees this speech as a chance to show that his address to the Labour conference last year, in which he first spoke of creating a one nation party, was not just a simple political slogan.
He regards it as a coherent political project which will achieve two broad goals: give an honest account of the party’s past and set out a governing framework for the economy, society and politics.
On the economy, Miliband believes a Labour government would provide greater opportunities than the Tories and New Labour, which “skewed the system to the powerful few”, in the words of one source.
Miliband believes his society theme highlights his determination to focus on greater responsibility from top to bottom, with bankers expected to show restraint in remuneration and responsibility in lending, and welfare recipients expected to seek work.
On the politics theme, Miliband will also focus on empowerment – helping people to feel involved and appreciated.
One example is on immigration, as Miliband makes clear that people should feel free within certain bounds to voice concerns.
He will distance himself from his mentor, Gordon Brown, who famously described the Rochdale pensioner Gillian Duffy as a “bigoted woman” after she raised concerns with the then PM about immigration during the election.
Miliband will say: “I bow to nobody in my celebration of the multi-ethnic, diverse nature of Britain. But high levels of migration were having huge effects on the lives of people in Britain – and too often those in power seemed not to accept this. The fact that they didn’t explains partly why people turned against us in the last general election.”
Miliband will also say that his new approach stands in stark contrast to what is described as the government’s “old trickle-down divisive ideology” in which taxes are cut for the rich while benefits for the poor rise below the rate of inflation.
He will say: “Can David Cameron answer this call for one nation? This week shows yet again why he can’t. At the Ronseal relaunch, all we saw was an empty tin with no vision for the future of our country and an attempt to divide the country between scroungers and strivers.”