The winter fuel rebellion is a small taste of the welfare battles to come
Starmer is struggling to cut a payment for millionaires. What hope he can end the far bigger benefits disaster?
The next Labour mutiny takes place next week: a rebellion over Keir Starmer’s plans to cut back the winter fuel payment. It should be an easy argument to win, but the Prime Minister is visibly struggling. Giving state handouts to millionaires is obviously indefensible and the sums involved are smaller than the state pensions increase. But if he can’t make this basic point, how will he navigate trickier battles? And if his backbenchers are angry over this, how might they react when they work out what’s about to happen on welfare?
Ten Labour MPs have so far signed a motion on the winter fuel payment changes, saying that the misery of rising energy bills will be compounded by “a bureaucratic and unpopular means-test which undermines the benefits of universalism”.
Ministers could respond by saying common sense is being applied. Support should go to those who need it, not those who don’t. But their bungling (one Cabinet minister absurdly claimed that the markets will crash if they don’t make the cuts) has intensified the rebellion.
The Tories are pretending to be appalled at the cut. They wish they’d been able to ditch the payments, especially given that a quarter of them went to millionaire households. By all means, help the needy. But why post winter fuel cheques to expats in their Sicilian villas? Rachel Reeves is making a difficult but fair decision that the Conservatives dodged for years.
But not a single Labour minister seems capable of making the case for it. They ought to be pointing out the basics. The state pension rose by almost £700 this year and will rise by £300 next year. The income gap between the average pensioner and worker had reduced from 30 per cent to 10 per cent. Pensioners are being looked after as never before: it’s the young workers, taxed to death, that someone needs to look out for. A difficult argument, certainly. But it’s there to be made.
But a far bigger argument is awaiting for surging welfare, easily the biggest social calamity heading towards the country. A problem so big that every party has been too terrified to acknowledge it.
When unemployment passed three million under Margaret Thatcher, the statistic seemed to scandalise the whole country. It’s odd, now, that no minister has ever quoted the total number on out-of-work benefits: 5.8 million, at the last count.
Nationally, it’s 13 per cent of those who could be working. A fifth of those in Manchester, Liverpool and Glasgow. A quarter of those in Blackpool. Most sickening of all, a worker shortage crisis exists in each of these cities.
It’s a staggering waste of lives, let alone money.
But it’s rapidly getting worse. A welfare system discombobulated by mental-health complaints is shovelling people on to disability benefit at the rate of 1,000 a day and is expected to keep doing so every day for the next five years. What impact will this have on the communities that will be worst affected? What hope for children, when so many adults don’t work
A progressive party, dedicated to poverty eradication, should be obsessed with this calamity.
But all we’re hearing about welfare reform now is the need to improve Jobcentres. Such poverty costs billions, but it’s happening because no one feels able to call it out. Labour seems tongue-tied: unable to find the words to describe – let alone fix – the greatest social malaise of our times.
As things stand, Liz Kendall is due to implement Tory reforms making it harder to claim incapacity benefits and ending the loophole where claiming to be suicidal was a fast-track to a full payout. More of those with mobility issues will be told to consider working from home. This is delicate ground, and battle is guaranteed.
If the Work and Pensions Secretary backs out, she’d have to somehow find the £3 billion that these reforms are due to save. If she presses ahead, she can expect to be sued by all kinds of campaign groups under human rights law, equalities law and more. She’d need to be fully prepared to war with angry backbenchers and disability charities. Even if she wins, this reform would mean the cost of disability benefits jumps from £40 billion now to a mere £50 billion by the end of parliament. Kendall is due to speak last at the Labour Party conference, a hint that she has not yet got much to say.
The good news for Labour is that an agenda is being formed: not by a union or a think tank but by Barnsley Council in South Yorkshire. Its leader, Sir Steve Houghton, saw a social disaster: 4,000 job vacancies but just 4,030 on welfare under obligation to look for work. He found a further 6,000 who weren’t working and commissioned a year-long study figuring out what could be done for them.
It found horrors – even in the workplace. Specifically, that the young (under-35) worker is now as likely to report a work-limiting health condition as a middle-aged worker was 10 years ago. Disability awards for anxiety and depression are twice what they were pre-lockdown. But he also found that, on proper probing, far more people were more willing to work than the government figures predicted.
Perhaps the biggest upshot of Sir Steve’s report is that, if its findings were applied nationally, it suggests three million more people willing to work than the Government seems to think. This should be seen like an oil strike: a huge engine of human potential waiting to be put to use. It just needs ministers who believe in the people and their communities – or ministers able to find the words and courage to make this a defining mission.
Barnsley council enlisted Alan Milburn, a Blair-era minister, for its report. He calls it “a wake-up call for the new Labour government”, saying that failure to use the skills of locals means immigration, which means populism. This is the kind of language that Kendall and Starmer could use to their party: not a Tory-style crackdown but a great social reform in the tradition of Beveridge. Not a great disaster, but a great opportunity to embark on social repair, revive the economy and vanquish populism.
The political argument is there to be made and Starmer certainly has the political capital. But if he stumbles over the basics, there might not be much hope for his taking on the reforms that really matter.
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