Monday 10 December 2012

Why Labour Must Oppose Benefit Cuts

Controversial. Ed Miliband has indicated he will be taking this LibDem-supported Tory government on over real term cuts to benefits. It's a risky move, but a necessary one for the long-term future of Labour politics.

It's got some folks in a flap. Paid-for right-wing dissenter Dan Hodges says the move typifies EdM's "political immaturity". An immaturity, it has to be said, that has seen consistent healthy poll leads and three recent difficult by-elections in which Labour increased its total vote share. None too shabby. While it's easy to write off Hodges' concerns (let's face it, he'd be painting David as a wild-eyed leftist had the other Miliband won), his argument that the route to power isn't through increased welfare spending is received wisdom shared by many Labour people, not just Blairite Ultras.

It's not difficult to understand why. Apart from the non-stop media onslaught against skivers and scroungers living the high life on unemployment and disability benefits, the very idea someone is skipping work due thanks to your taxes is a powerful one. As I said a little while ago, "it's the very idea that someone, somewhere is living off the backs of your labour without making a useful contribution themselves; that someone is is living a profligate, responsibility-free life while you work to make ends meet and watch every penny you spend. And it's the idea someone is getting away with it while you're being taken for a mug." Welfare is out. Benefit-bashing is in.

As Hodges observes with a sneer, "Miliband is going to try to argue that his stance on welfare is somehow motivated by a desire to stand with “the strivers”. But at the same time as he’s opposing a freeze on welfare, he’s actually advocating a freeze on public sector pay. Is this seriously going to be Miliband’s offer in 2015?" A tricky position to be sure, and one eased by abandoning the current position on the pay freeze. Politically and economically it makes sense to u-turn on this one - the present crisis requires money be put in people's pockets to ameliorate the spiralling cost of living and giving personal consumption a much-needed boost.

But back to the matter at hand. Whether EdM extricates himself from that sticky patch remains to be seen, but opposing welfare cuts is still the right thing to do and isn't necessarily the political own goal Hodges thinks it is. Leaving aside the moral obscenity of denying money to society's very poorest (especially in the context of income and corporation tax cuts for the rich), and the economic case against doing so, EdM's opposition to benefit cuts could represent a breach in the prevailing political order.

When it comes to welfare, Labour can be beastly to benefit recipients - up to a point. We've done a pretty good job of making the lives of the poorest pretty rough too. Ours is the party of the hated Work Capability Assessment and Atos-run assessment centres, though the Conservatives have made these hideous policies very much their own. But ultimately, the Tories and their UKIP mini-me can always undercut Labour in the race to the gutter.

If the right are in disarray, Labour can reap short-term electoral benefits from attacking welfare. And this is how it operated in the Blair years. But when Conservatives are in power they will always outgun Labour in a sanctions arms race. You can either accept that state of affairs - as the Dan Hodges of this world would have us do, (though for strictly pragmatic reasons of course), or try and change the terms of the debate. EdM's opposition could fall in the latter category.

In all likelihood, his attacks on the Tories will focus on the benefits for the in-work. So, the scandal of working people having to top up their wages with tax credits because their pay is too low is a relatively easy way of turning the debate against the Tories. Likewise with housing benefit, Labour's groping toward rent controls is a way of focusing debate on the real reasons for the increasing benefit bill - the unregulated private rental market.

Modest steps, but important steps. It allows us to call these benefits what they really are - subsidies for low wages and buy-to-let. In the cold light of day, who can object to these tax subsidies getting countered by state and social movement activism around living wages and market regulation? The Tories would be all at sea in a welfare debate argued in these terms.

But if you like, these are the easier benefits to argue over. Countering scrounger rhetoric on unemployment and disability is tougher, even though people are forced to depend on them thanks to market failure more than any other reason. But the game of politics is about picking and choosing your battles, and so far EdM has proven himself a rather astute player. Hence instead of victimisation, the two Eds often talk about reducing the benefit bill by fixing the economy. This line is underdeveloped so far, but again is one the government are vulnerable on.

Ultimately, the benefits battle is one Labour cannot duck. The well of resentment around this issue is absolutely toxic. We have to begin the clear up by addressing the real causes and assuaging concerns, not pandering to them. Just as the most compelling argument against violent revolution is the observation you can't build socialism out of a pile of bones; a fairer, tolerant social democratic society cannot arise from a swamp of resentment, bitterness and beggar-my-neighbour. If politics is to change for the better, if this century is to be the Labour Century, fear and spite must be challenged in the strongholds 30 years of neoliberal consensus has built. And it would appear this is something EdM understands.


Gary Elsby said...

The Tories pay out more in welfare payments (2012) than any other Government, ever.

Phil said...

Indeed. Because benefits subsidise their mates in big business.

Gary Elsby said...

A non argument there Phil,if I may be so bold.
The truth is that the Tories may be congratulated then if they turn on their inner held desires of big business and do the dirty deed by contracting welfare payments down to a vile 2010 level so distributed by Labour.

Doesn't stand up really does it?
I know by reading Boffy, that he can make a good argument for decresing benefit spending and it's somewhere at the point where I veer away from the Marxist left of whom some say are barmy.

George Osborne doling out welfare like a good un during a deep financial crisis.
Eat your heart out Ed Balls.

Chris Brennan said...

I had a dream yesterday that I punched Hodges until my hands were just blood and bone shards. It was a very good dream.

Phil said...

Now, now, Chris. Violence in the labour movement is never a good idea.

Anonymous said...

I am afraid the party is over, the civilising mission has come to an end, and it never really civilised anyway. All we got were self obsessed consumer junkies with no sense of responsibility, perspective or concern for others. We got fat people eating too much meat, wasting too much food and buying too much crap. It was never civilising just re-inventing barbarity. Secularism came with no moral or ideological base; it was just secularism, without meaning, just the status quo with a separation of church and state. In this respect at least religion is tied to some kind of humanity, has certain parameters, and includes customs and practices that are not just medieval but also humanist.

In a decade or 2 people will be eating garbage out of bins, no work no benefits. Capitalism with Asian values. The race to the bottom will intensify, socialism will remain at the fringe, the age of irresponsibility is upon us on a global scale. It will be very ugly indeed, but I have no sympathy for the humans.

Phil said...

I don't buy this 'party over' narrative. British society has got progressively richer over the last 30 years, the problems is the fruits of greater productivity has been concentrated at the top. A decent life can be had by all, but demands big changes to our politics. And the only way of bringing them about is by getting stuck in - it's too easy to sit at home and despair.

Chris Brennan said...

Glad the blogs up and running again

Boffy said...

Gary said,

"I know by reading Boffy, that he can make a good argument for decresing benefit spending..."

I've said no such thing. I have said, as did Marx, and as many socialists understand, that Benefits to workers in work, subsidise not those workers, but their employers, who thereby get away with paying low wages. In the case of things like Housing Benefit, they also subsidise profiteering landlords, and support inflated property prices.

But, the answer here is not, at least immediately, reducing these benefits, but raising wages to an adequate level. That requires two immediate things.

1) A much higher Minimum Wage i.e. to a level whereby the average working class family can have a decent standard of living,

2) Much higher Benefits for people who are out of work, so that they are not forced into low paying jobs.

The State can do the former, as witnessed by the fact that it was Churchil who introduced the first Minimum Wage in 1909, and did so on the basis of opposing bad employers undercutting good employers.

The second is unlikely to come from the State, because the times when it is necessary are precisely those times, when the State will seek to cut benefits. That is why as marx said more than 100 years ago, workers should never have let go their Friendly Societies, and allowed the State to take their place. We need a worker owned and controlled social insurance scheme for that reason.

But, by the same token, the best way of raising wages and conditions is also for workers to have ownership and control of the means of production. That was the experience with Co-ops from the 19th century onward until well into the 20th Century. Its also the message essentially that "Owen" gives in the "Ragged Trousered Philanthropists". The more we take workers out of the sphere of Capital, and into the sphere of worker owne and controlled firms, the more we can set our own terms.

Gary Elsby said...

I'm sure you expect me not to understand all that much, but I do find the explanation rather hard to follow.

Your earler comment made clear that welfare benefit paid to workers only subsidised the rich employers and, if I'm correct, you (and Marx) would like that benefit to stop.

You want low paid workers to be paid higher and unemployed to be paid more (I assume to counteract the low minimum wage).

It doesn't add up.

We all agree that low wages should be higher and maybe higher than the new idea of the 'living wage'.
To pay the unemployed more than the current minimum wage is a non starter.
In the eyes of the Marxist, it closes low pay factories and sustains higher paid one's instead.
In other words, we only have high wage factories, offices and employers.

I neither wish to denigrate Marx or anyone who follows the line, but all I see is a shifting of the core problem to a simplistic change to high pay without allowing for the consequences of inflation.

I'm sure Marx is a good guy, but I doubt he'll catch on.
A quick shop in the local Co-Op will quickly bring you down to earth and go running to ASDA,

Boffy said...


You equate high wages with inflation, which from an Economists point of view is a non sequitur. You may perhaps have noticed that Germany pays much higher wages than the UK - it also pays much higher Unemployment Benefits, Pensions and has a better Health Service. Yet German inflation is lower than in the UK, and Germany is the world's second largest exporter after China - it was ahead of China until about a year ago.

By contrast, there are a number of countries like Argentina and Zimbabwe, which have low wages and huge rates of inflation.

The whole point is that it depends upon the industry, and it depends upon how efficient they are. Marx in Capital, for example, refers to the example of the Earthenware manufacturuers who claimed that they could not agree to a shorter working week, because they would be unable to make a profit. The Ten Hours Act was introduced, and the consequence was that the employers had to introduce more efficient methods.

In fact, these more efficient methods, meant that earthenware prices fell, sales rose, and profits rose. Go figure!

Gary Elsby said...

What is the German minimum wage set at when compared to the unscrupulous bosses and Governments of the UK whom have no morals or idea of what a living wage should be?

Anonymous said...

Isn't Marx dead?

The Stickler.

Phil said...

Isn't Adam Smith?

Boffy said...


What it is, is that despite the attitudes of some British bosses, despite the insistence on having exemptions from basic European legislation on workers rights, despite low British wages, pensions and so on, German industry is more efficient, more profitable and more competitive!!!

The whole point, as marx pointed out is that the two things go together. Bosses who rely on poor conditions and low wages, have less incentive to modernise, to improve efficiency, to introeduce more machines etc. So, it creates a vicious circle of lack of investmnet, lack of productivity, low profits, leading to attempts to compensate by yet worse conditions, lower wages and so on.

Its what the Liberal Churchill in 1909 realised when he introduced the first Minimum Wage. Its what Henry Ford and other such capitalists realised when they started raising wages, providing company welfare, and at the same time raising productivity.

Its why in the 19th century, as Marx again demonstrates, it was Britain that provided higher wages for workers and better conditions than its European counterparts, and yet still was able to have lower prices, and capture world markets.

As a number of even bourgeois economists noted at the time, "wherever wages are low, labour is more expensive".

I'd suggest reading the following short chapter from Capital which sets it out.

Chapter 22.

Gary Elsby said...

Very interesting Boffy, but...

Isn't it the case that the conquering of the British Empire captured those exclusive markets that also fed into the British economy via importing cheap secondary labour?
The Empire, by curtailing China and India's natural dominance of world goods, was to make itself, a market that dominated?

I doubt that one country alone can create a marketplace that dominates pay and condidtions and it therfore stands to reason that only a few examples (to scale) can be highlighted offering market busting pay and condidtions.

The EU appears to be the modern answer but I understand your concerns.

Boffy said...


No, if anything it was the other way around. It was the power of Britsih industry that made the Colonial Empire possible. In fact, Britain bought cotton from the United States until it was blockaded during the Civil War, which led to it transferring to buying cotton from India.

The Colonies did provide protected markets, but most of Britain's exports went to Europe, and North America.

Its not true that you can only have a limited number of high value, high paid industries or jobs. Its not a zero sum game. Take the following example.

Suppose you have a particular location, say in a Big City centre, where there is some high value industry. Let's say Financial Services, but it could be anything from IT, to a Film Industry and so on. The people who work in this industry, produce high value output, and get high wages.

On their way to and from work, they call in at a series of establishments selling coffee at what to most people would seem ludicrously high prices. They can afford to buy this coffee, because of their high wages. In doing so, they also create a new industry selling over priced coffee, which in turn can employ people, probably at higher wages than were they selling cheap coffee in a greasy spoon.

There may, of course, be Chinese workers who would work in the coffee shop for much less, and chinese firms who would sell coffee much more cheaply. But, then no one is going to go to China to buy a cup of cheaper coffee!