Coffee House

Liam Byrne interview: The welfare system is ‘completely out of whack’

13 December 2012

Liam Byrne is a modernising, Blairite Labour MP, and in case you were in any doubt about that, he conducts his interview with Coffee House sitting next to a framed photograph of him with Tony Blair. The party’s Shadow Work and Pensions Secretary is well known for his modernising zeal, which has sometimes led him onto a collision course with his party grassroots and other MPs on the left. This week, though, he’s on a collision course with the Conservatives, who hope they’ve managed to corner Labour into admitting it hasn’t quite modernised its welfare policy enough to win voters back.

The Welfare Uprating Bill, launched in last week’s Autumn Statement, will see benefits rise by 1 per cent, rather than in line with inflation. That George Osborne pulled this out as separate legislation from the Finance Bill showed the Chancellor was laying an elephant trap for the Labour party, forcing it to take a clear public position on cutting the benefits bill. He has certainly wasted no time in prodding senior Labour figures rather gleefully about whether they will support or vote down the bill.

But Byrne appears more than happy to walk into this elephant trap with his eyes wide open: he believes that the Tories have laid the wrong trap, and will hit the ‘striving’ voters they are trying hardest to appeal to:

‘We’re going to fight this on a very clear argument that this is a strivers’ tax, this is punishing the people that David Cameron promised to protect at his conference, and the Tories are pushing this through at the same time as giving a tax giveaway to Britain’s richest citizens, so in many ways, in many constituencies in Britain, there will be maybe one, two millionaires who are getting a tax cut, but there will be thousands of working families seeing fewer tax credits in their pay packets.’

Byrne might think that strivers – those key C2 voters who deserted Labour in their droves at the last general election – might be put off the Tories by the uprating decision, but why does he think that benefits should rise higher than wages, regardless of whether they go to someone in work? His argument is that wages are set to rise – although not by the 5 per cent rise in inflation that benefits would have risen by:

‘Look at the OBR’s figures. The OBR says that earnings are going to grow in 2013 by 2.2 per cent and that is going to rise in 2016 to 4 per cent, so actually it’s simply not true to say that ordinary people’s incomes are rising at 1 per cent. They are not: they are rising at 2.2 per cent next year, they are rising at 4 per cent in 2016, so [Osborne] is talking nonsense, frankly.’

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This is all very well, but if Labour opposes decoupling benefits from inflation, how does Byrne propose to cut the benefits bill?

‘The question in voters’ minds is not ‘is the uprating bill bad’, the question in voters’ minds is how do you bring down the welfare bill and the choice we’re determined to present is that there is a Labour way to bring down the welfare bill, and a Tory way. The Labour way is about pushing people into work, and insisting on the responsibility of work. The Tory way is about cutting working people’s tax credits.’

This focus on work includes a very clear commitment to full employment, which makes Byrne sound very ambitious indeed. He says:

If you go back to the 1945 Labour manifesto, we have always seen full employment and social security as two sides of the same coin. We can afford social security if we get Britain into work. You can’t afford good social security with rates of unemployment that are as high as they are now. The Tories have never understood this.’

He focuses initially on the housing benefit bill, which he accepts is ‘too high and we have got to look at ways to bring it down’. This was a bone of contention for Byrne and his team when the government was taking its own benefit cuts through the House of Commons: initially Labour supported the £26,000 overall benefits cap for workless families, but then the party changed its position to fight it, and has voted against the cap on numerous occasions since. But Byrne still takes a tough line on the idea of a cap:

‘The flip side of being better off in work is a benefits cap, now we think that if that is done in the right way, it makes sense. It would require some people to move, we can’t be starry eyed about that.’

Moving people from their communities won’t be something everyone in the Labour party is happy about: its policy review chief Jon Cruddas has voiced his own opposition to the idea, for instance. But the Labour cap would be split in two, with a higher rate paid for those living in London to reflect the higher cost of living in the capital. But he doesn’t plan to regionalise other benefits than those paid to cover housing costs.

Other tough stances the shadow work and pensions secretary takes include on conditionality, with plans to dock benefit payments for those under 25 who turn down a job because ‘there is no life on welfare’. But he believes that the way to cut benefits ‘is by pushing people, not into a corner, but into a job’.

That’s the stick, so where’s the carrot? The various working groups looking at the party’s welfare policy won’t report back until next year, but there are strong hints that Labour could well introduce some sort of contributory principle, and that idea has come from the research Byrne has conducted into why so many voters deserted Labour in 2010.

‘I presented to Cabinet in March 2010 the analysis that we had done in the Treasury on living standards that revealed this problem for the first time, and so I saw from January through to March 2010 that this was going to hit us like a train and sure enough it did. When you look at the seats that we lost, sure enough the squeezed middle had the balance of power then. That’s why I think we lost in 2010.

‘The numbers were pretty stark and the truth was it was too late to do anything about it. But what was going on: living standards were under pressure and that was fuelling pressure on social security because thousands of people in Britain, working people, felt they were paying a load of money into the system and getting very little back out again and that is because the world has changed a great deal.

‘That means people need different things from the welfare state, they need childcare, they need help with retraining, they need social housing, they need better protection on private pensions, they need social care, and working people don’t feel they get those things back out of welfare in spite of what they put in.’

He describes the balance in terms of what someone puts in and gets out of the welfare system as ‘completely out of whack’: ‘That’s why we will put the something for something back into social security, we’ve got to forge a new deal for working people that means they get back out things they need to get on in life.’

Although he won’t go into detail, all this suggests that Byrne’s final report on welfare policy for Labour will cause more than a few ripples in his party. Indeed, he breaks from his rather serious demeanour to laugh at some length when I ask whether it will contain some home truths for Labour. He does admit that this is the ‘hardest job I’ve ever had’, which is quite something from a man who worked on immigration under John Reid, on reorganising Number 10 under Gordon Brown, and deficit reduction with Alistair Darling. But he insists that he has the support of his local party on this, and that critics won’t deter him.

‘Some on the left say to me: it’s not your job to think up policy, it’s just your job to oppose. Well, actually, I think it’s my job to do both, and I’m determined to do both.’

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Show comments
  • 1maia

    Speaking of which, can someone explain to me why i go from being a ‘striver’ when i have a job to a ‘scrounger’ the minute the employer fires me? For instance, a friend’s retail employer was having a refit, so they fired her for the 2 weeks they refitted the shop. How exactly did her morals go from virtue to vice and back punctually in line with the multinational’s cost-saving measure?

    As for immigrants, they contribute more than non-dom taxpayers. No tax paying yet live here? No passport/leave to remain, like in America!

  • 1maia

    I don’t like the ‘contributary principle’ because, when i work full-time as a cleaner, i earn barely over £1,000/month before rent (we actually worked 42 hours a week but we got paid for far fewer) and that year i earnt £6,900 in total (employer deducted for meals) – so how is anyone on minimum wage meant to contribute if they can’t even pay the rent? You can work your arse off and end up starving. I was lucky that year, the year before my retail job called me up when they wanted me and each week i didn’t know if i’d get enough hours to pay the rent that week. Some people, however much they contribute, are to be screwed over. He might be onto a vote winner, though, as under the new disability ATOS tests and cuts, lots of richer older people i know feel they’ve paid thousands in NIC but are being given nothing, that’s been really unpopular.

  • Powder

    Only an idiot socialist would call not taking money out of people’s pockets a “tax giveaway”. Modern my ass.

  • Troika21

    Why is always assumed that ‘on benefits = Labour voter’?

    Or for that matter, ‘immigrant = Labour voter’, as long as Conservatives keep treating both of them as such, then I’m not surprised if they are inclined to vote Labour, but it’s not automatic for either of them.

  • Tarka the Rotter

    The Census bods tell us 20% of the population were born outside the UK. Could they tell us what proportion of this 20% or in employment paying tax, and what percentage are on welfare? Could we have a similar breakdown for the 80% too while we are at it? As for Mr. Byrne…before he throws any brickbats perhaps he could ponder on the state of the economy at the end of Labour’s watch, and that little note he left…

  • Hexhamgeezer

    ‘giving a tax giveaway to Britain’s richest citizens’

    whose money is it then?

    How very ‘modernising’

  • David Ossitt

    You write that Liam Byrne is a modernising, Blairite Labour
    MP, to differentiate him from the Brownites and the grotesque Balls’es and Ed the
    red Miliband.

    You are quite wrong he like the rest of this motley brood is
    a venal twat.

  • Wilhelm

    Labour brought 5 to 7 million immigrants ( I think the real figures are double that ) into the country, as a voting base

    Do you think Nigerian scam merchants, Congolese witch doctors, Somalian pirates and muslim terrorists are going to pay tax ?, Hmm, I wonder.

    In the 1930’s , Stalin and the bolsheviks persecuted the Kulaks ( the property owning middle class ) because they wanted a great peasant class, so it would be easier for the elite, the communist party to control.

    The Labour party set out the same plan, displace and persecute the indigenous white population.

  • Jebediah

    Under the Conservative the rich are taxed more, 45%, the poor are taxed less (thanks to the Lib Dems). I don’t like the tax at 45%, but Labour as usual, are liars.

    • Powder

      Thanks to the LibDems? There was a campaign in the Conservative Party for a big increase in the personal allowance long before even the election campaign got started. The ASI and several right-wing think tanks have for many years heavily promoted taking the working poor out of income taxes as much as possible. It is not a Liberal Democrat idea and it has wide support within the Conservative parliamentary party.

      This is the LibDems by the way who are in reality far more aligned with the policies of one Gordon Brown than any Conservative. How did the working poor get on under his economic and fiscal leadership?

  • Wilhelm

    And this from a guy who left a note on his desk ” there is no money left, we spent it all.” to the incoming conservatives / liberals.

    Yeah, hilarious.

  • HooksLaw

    Byrne is in dreamland if he thinks Labour lost 98 seats in 2010 because of some minor tweak in living standards.

    he then goes on to say ‘That means people need different things from the welfare state, they need childcare, they need… blah blah’

    ie more state spending (more people dependent on the state), not just on those not in jobs but those working. Who pays? Eventually the money comes from more borrowing because as ever the economy cannot generate the money labour want to spend.

    The future national disaster under Labour is laid out plain fore all to see. Lets all step back and watch them inflict it shall we?

    • dorothy wilson

      A fundamental question – why do people “need” child care. They may want it but that’s a slightly different thing.

      • PickaName

        I agree..there’s a difference between wanting and needing something. Perhaps people should consider whether they can truly afford to have children before deciding whether to have them. We should be accountable for our personal actions and not rely on others to chip in all the time. Why should people be expected to pay for other people’s children? This idea of entitlement needs to be quashed… We should encourage smaller families and lifestyle accountability by only providing small pokey housing and limited benefits for the first two children.

      • Powder

        Really? You can’t think of the people with children who, I don’t know, need to go out and earn a living?

  • TomTom

    Last time i looked Miliary pay was capped at 1%, Public Sector at 2% and Private Sector ranged from Pay CUTS to extraordinary boardroom EXCESS….so Liam take your pick. What were you doing between 1997 and 2010 ? We know about “Working With Liam Byrne” a satire along the lines of Bridget Jones….

    • Powder

      Public sector was frozen for two years and is now capped at 1%. Some agencies did have pay cuts. Private sector pay is about +3% in the last year. Of course that’s an average, but it’s more accurate than your attempt to indicate pay changes in that sector.

  • Colonel Mustard

    More Labour lies. The Coalition is taxing the poor less than Byrne’s government and taxing the rich more than Byrne’s government without the sleight of hand of Brown’s labyrinthine bribery of the Brown/Balls “benefits system”. Why is this Goebbelsian charlatan not being called on that by the media?

    If they really believe full employment and social security is a balance why flood the country with millions of Labour voting benefits tourists?

  • Rhoda Klapp

    Can’t help thinking that when you read what he says, this is all about numbers and positioning against the incumbents and not really to do with that awkward world of people who do the wrong things and moan about the wrong subjects. Nor is it to do with the prosperity of the country or its industries. This is, in fact, a westminster bubble story. What one might like to see is the man held to account on different grounds, on the issues that affect people outside the bubble, Not the usual dull questions designed to place him on the paint-by-numbers picture which is his comfort zone. It’s politics-as-usual put under no pressure by journalism-as-usual. I’d like to come up there with my arse-kicking boots on.

  • Russell

    But Isabel, he failed in Immigration with Reid, he failed in No.10 with Brown and he failed in deficit reduction with Darling. He is consistent (as a failure).

  • toco10

    Byrne and his disgraced Labour Government deliberately threw vast sums of money at the scroungers rather than the strivers because the former invariably vote Labour.A cynical plot indeed.In addition Labour as a matter of policy supported by among others Blair and Straw allowed three million immigrants access to the Welfare System at the expense of the vast majority of us who have paid into the system for decades and who continue to pay into the system.An immigrant with a wife and two children would need to earn at least £40,000 per annum to generate sufficient tax revenue to cover the cash payments,housing allowances,education,healthcare etc.his family receives and the vast majority are either unemployed or earning less than this figure.Another disgraceful act by Labour to buy votes.

    • telemachus

      As posted yesterday

      Migrants are by definition those with dynamism sufficient to up sticks and come

      Study after study has shown the economic benefit of immigration
      And not just short term, it has long-term benefits for the economy, providing needed skills and helping to boost economic growth.

      Further it has been conclusively shown that pay more in taxes than they receive in benefits?

      Arguments against immigration are simply little englandism

      • LordLieutenant

        Would you agree that there’s a difference in benefit depending on the individual or family group?

        • Coffeehousewall

          Only 40% of Somalian men in the UK are working. And of those who are working most are receiving benefits other than unemployment ones. Only 50% of Somalian adults have any educational qualifications at all, and only 3% have any higher educational attainment.

          What financial or cultural benefit do the Somalian community bring to the UK? They are one of the largest Muslim communities. There may be 350,000, or there may be 1 million Somalians living here.

          Each person may well be worthy of sympathy. But when were we asked whether we wanted 1 million uneducated Somalians to come here? And if we are helping them to gain an education, to get jobs, to use the benefit and NHS systems, who is paying? How much can we afford to pay?

          • LordLieutenant

            You’d have to have your head in a bucket to not see this on the streets of almost every city, yet our political class continue to imagine that the political ‘middle ground’ rests with putting our children in debt to pay for the bed and board of these highly expensive people.

          • Jebediah

            Simple question: Does anybody know why we have Somalians here. What use are they to Britain? They can’t speak English, often can’t even read their own language, have few skills and often support the hostile end of Islam. Indian doctors, Chinese engineers, French teachers yes… Somali wasters, no.

            • dorothy wilson

              Using evidence from a project I was involved in a couple of years ago I could make the argument against Chinese – and other – engineers. Unfortunately, I haven’t the time to do so just now.

            • Powder

              “Does anybody know why we have Somalians here. What use are they to Britain? They can’t speak English.”

              None of them? Really? Ignorant fool.

              Oh, Mo Farah says hi.

          • Powder

            Sounds like scousers and most northern towns. And the Irish – time we deported every one of those.

      • Rhoda Klapp

        Your figures are bogus, but to prove your assertions why not do some other country a favour and take your talent there. We can manage.

        • dalai guevara

          I frankly cannot see the point of this discussion – surely, anyone in business today would have noticed that vast number of ‘immigrants’ have already left again, simply due to the dismal lack of opportunity here?
          I give you that what we are left with are those who have nowhere else to go.

          • Telemachus the teletubby

            I think the point is, Labour had 11 years of growth and the benefits bill still went up. They didn’t achieve their full employment neither, and youth un-employment was brushed under the carpet to criticise the Tories with when they got in power. I always thought that during an ecomonic cycle benefits went up in recessions and came down during periods pf growth. Well i guess, Labour proved that complete rubbish. Never trust them again, ever. They will only play to the ear, and whosh, once in they gerrymander their vote.

            • Powder

              And they fixed the definition of poverty which concealed absolute poverty. It allowed them to say poverty went down, when absolute poverty went up. But under Labour, helping people buy iPhones and flat screen TVs was more important than ensuring those in genuine poverty could afford food and housing.

              • Fergus Pickering

                What is absolute poverty, may I ask? How poor do you have to be to be in absolute poverty? Surely no-one in Britain is in absolute poverty, I mean starving to death like some wretched African child?

      • TomTom

        Hasn’t done Greece a lot of good, nor Spain, nor Iraq,

      • Ian Walker

        Your analysis fails because you only read one side of the ledger. Unless there is already full employment, immigration by definition causes unemployment to rise, since you are increasing the supply of workers without increasing the supply of jobs. Rising unemployment means rising welfare costs

        Therefore for each immigrant, you have to factor in not only their own benefits claims, but also those of the native that they displaced.

        It’s not a race thing. I don’t care what colour you are, where you were born, or what imaginary friend you believe in. If the car is full, then offering to help pay for petrol won’t create an extra seat.

        • Thalassios

          Ah no, Ian, you miss the point altogether, you do. If the natives are like damp squibs, and the immigrants are hungry like dry tinder, and you have an economy with potential to ignite and spread the heat, then of course not all fuels will do. You need talent and will and energy. Not talk about ledgers.

          • Ian Walker

            And how did we end up with the ‘damp squbs’? By creating inter-generational unemployment through the socialist policy of welfare INSTEAD OF work, instead of the conservative approach of welfare INTO work.

            Duncan-Smith’s welfare reforms give people no excuse – as of next year work will ALWAYS pay off. And Osborne’s restriction on welfare inflation will wake up a few who might otherwise have slipped into the benefits trap. The final piece of the jigsaw is to incentivise companies to train up the native British unemployed rather than taking the easy option of importing trained labour.

            Earning a wage has been, is now, and always will be the best form of welfare. But Labour know that it costs them votes, which is why they have cynically changed from the party of the working class to the party of the underclass, purely for the purpose of staying in power for power’s sake.

      • Chris lancashire

        I smell amother unsubstantiated claim, please provide the figures that show immigrants pay more in tax than benefit receipts.

      • gscott

        you are a complete twat

      • Jebediah

        Nah it’s not clear cut. Not all immigrants are useful to a society. Not only that we has to consider the social impact as well as the economic one.

        Oh and as the Colonel pointed out, you’re a disgrace always tacking on to the highest rated post with your lick spittle Balls stalking propaganda.

      • The_Missing_Think

        Are you trying to destroy and create a mirror image of your own life decisions?

    • Aardvark


    • 1maia

      As someone who most years can barely pay the rent and always have the sort of job contract where you get sacked with an hour’s notice, i count as a scrounger (well, it’s sign on or be homeless and get raped and die of hypothermia), and i don’t vote labour. I thought they were for rich people.

    • Jim Moore

      Rubbish ! The Rich poor divide was being closed and now it is at its widest. I think not only are the Tories out of touch but many of their supporters are being led by their noses in to the garden path too. Look and see very carefully even on face book to see how many disgruntled there really are, My estimate given that the CSJ targeted 14 million people as broken that is about the size plus relatives, does not take a fool to see how divisive and ruinous the unfettered greed is causing because there is nothing trickling down except for urine on the people !

      The poor have been disproportionately hit hard across the board and the knock on affects of families and others who are working and paying taxes is breaking a lot of people’s patience. The combination of demonizing and out right selfish hypocrisy will come back to haunt

  • telemachus

    Sadly Liam is not fully on message

    • RealTory

      Whereas you are you otiose, thick, labour schmuck

    • Hexhamgeezer


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