Coffee House

Ed Balls reverses over his own progress on fiscal responsibility

8 January 2013

The battle-lines over the Welfare Benefits Up-rating Bill — which faces its second reading in the Commons this afternoon — have been drawn. Labour has tied its opposition to the Resolution Foundation’s analysis showing that the bulk of the policy will hit working families. As Ed Balls put it last week, ‘Two-thirds of people who will be hit by David Cameron and George Osborne’s real terms cuts to tax credits and benefits are in work.’ They’ve labelled the move a ‘strivers’ tax’, a continuation of the divisive rhetoric from both them and the Conservatives that seeks to pit ‘hardworking families’ against ‘people who won’t work’ (as a recent Tory ad put it).

Then there’s the new Tory poster, highlighted by Isabel this morning, proclaiming that ‘Today Labour are voting to increase benefits by more than workers’ wages.’ But that’s not strictly true. Labour are voting to continue increasing benefits in line with prices (as measured by the Consumer Prices Index). And according to the Office for Budget Responsibility’s latest forecasts, prices will rise more slowly than earnings from the end of this year. So, under the old policy, benefits would increase by less than wages anyway from next year.

Claim your gift

The Tories’ argument is really more about the fact that benefits have risen more quickly than earnings over the past few years. In his Autumn Statement, George Osborne said:

‘over the last five years those on out of work benefits have seen their incomes rise twice as fast as those in work. With pay restraint in businesses and government, average earnings have risen by around 10 per cent since 2007. Out of work benefits have gone up by around 20 per cent. That’s not fair to working people who pay the taxes that fund them.’

And this morning, party chairman Grant Shapps said:

‘For years, the gap between those who earn and those who live on benefits has grown – and this government is restoring fairness to the system.’

By saying ‘for years’, Shapps may make it sound as if benefits have been rising more quickly than wages for a longer time than they really have. Really, he should’ve said ‘for four years’. Jobseeker’s Allowance for a single adult aged over 25 has risen from 10.5 per cent of average full-time earnings in 2008 to 11.7 per cent now. But in a longer-term context 11.7 per cent doesn’t seem that high. When Labour took power in 1997, for example, it was 13.2 per cent. And when Margaret Thatcher left office in 1990 it was 14.2 per cent.

The stronger attack on Labour’s position was deployed by Nick Clegg in Deputy PMQs this morning. Responding to Harriet Harman, Clegg said:

‘The challenge for her and her colleagues is firstly to explain to this House and to the British public why she could support a 1 per cent limit on the pay increases for doctors, nurses, teachers in the public sector, but not take exactly the same approach in this area. And secondly, where she’s going to find the £5 billion that this measure would save over the next three years.’

By opposing today’s bill, Labour is reversing back over the progress it made in supporting the government’s limit on public sector pay rises. And Ed Balls and colleagues offer no explanation as to why they support one but not the other. Indeed, if Labour’s main gripe is that 68 per cent of those the benefit cut hits are in work, the party should surely have been apoplectic about the public sector pay policy: 100 per cent of those it hits are in work.

Give the perfect gift this Christmas. Buy a subscription for a friend for just £75 and you’ll receive a free gift too. Buy now.

Show comments
  • Russell

    Interesting to hear Labour continuing to claim to reduce public sector spending on welfare by guaranteeing jobs to those unemployed for more than 2 years, all 13,000 of them.
    The only way any government can guarantee jobs to people is by the state employing them! you just couldn’t make it up!!!!
    Take someone off £60 per week state dole and pay them £250 per week state employment pay!

    Labour are a defunct, deluded, deceitful political party who will stoop to any level to get votes.

    • Russell

      Apologies, 130,000 not 13,000. I wish there was an edit feature.

  • HJ777

    The argument about the level of JSA relative to wages is irrelevant. It is so low that virtually nobody can live on it.

    It’s the other benefits, which do not rely on contributions in any way, that should be the issue.

  • Jupiter

    Balls to Balls

  • Oakham Man

    2011 – Government spend £691 billion, income £551 billion. Shortfall £140 billion
    Budget 2012 debt interest £46.9 billion
    Current debt owed £1,108 billion.

    The Government is reducing the deficit i.e. the shortfall. The current debt is still rising. Therefore, somewhere down the line we have to start getting real and cut the shortfall to a point where we are reducing the current debt or IMF here we come again!

  • David Lindsay

    He is facing no contest in 2015. Despite his having a majority of only 1,101, the local Conservative Association, in second place, has had no applicants to stand against him. Not one.

    Add in that UKIP now openly wants a deal with Labour, and has not been rebuffed. Balls is the single most prominent Eurosceptic in British politics, not an unrelated fact.

    Balls really could be looking at re-election unopposed.

    • Chris lancashire

      “UKIP now openly wants a deal with Labour” Eh?

      • David Lindsay

        Yesterday –

        And today –

        Farage is absolutely serious about this. He is clearly well-informed about what is going on inside the Labour Party. And he has not been rebuffed.

        • Span Ows

          I hope those who pressed the ‘down’ arrow on my comment earlier now ‘eat their clicks’.

        • Noa

          Unlike Cameron Labour will be desperate not to leak its traditional voters to UKIP.

          • David Lindsay

            It isn’t doing. Its traditional voters are happier with it now than at any time in the last 30 years. It is their Tory neighbours who are haemorrhaging to UKIP.

            I doubt that there will be a deal. Labour certainly doesn’t need one. But there was always going to be a Labour commitment to an In-Out referendum. There was never going to be a Conservative one.

            • Span Ows

              It isn’t doing.

              Nobody said it was! Labour was haemorrhaging voters to the BNP.

              Its traditional voters are happier with it now than at any time in the last 30 years.

              Rubbish: it was Labour’s traditional voters are not represented by Labour!

              It is their Tory neighbours who are haemorrhaging to UKIP.

              That’s what Noa means!

              • David Lindsay

                “Labour was haemorrhaging voters to the BNP.”

                No one is anymore; the BNP is practically defunct. When anyone was, it was the Tories. Specifically, Tory voters in Labour areas, leading lazy media types to assume that they had previously been Labour voters. But they weren’t. The Labour vote held up whenever and wherever there was an apparent BNP surge. It was the Tory vote that collapsed. The same as now happens whenever and wherever there is an apparent UKIP surge.

                “Labour’s traditional voters are not represented by Labour!”

                Well, they certainly think that they are. Bennism and Blairism are both no more. Or, rather, while Blairism is of course alive and well in Downing Street, it is not in the Labour Party. Not anymore.

                • Span Ows

                  Wrong and demonstrably so:


                  “But perhaps the most startling finding came when we tested anecdotal reports that many BNP voters were old Labour sympathisers who felt that the party no longer speaks up for them. It turns out to be true. As many as 59 per cent of BNP voters think that Labour “used to care about the concerns of people like me but doesn’t nowadays”.


                  “What’s the profile then of BNP voters from this brief analysis? We get a picture of a man or woman, most likely C2DE, who didn’t vote at the 2005 election (though if they did vote they were most likely to have supported Labour).”

                • David Lindsay

                  The figures speak for themselves.


                  Yes, they do David Lindsay. Who pays you to peddle pro-Labour comments on this site?

            • Noa

              Of course UKIP happily takes Labour voters, as Rotherham and Middlesborough demonstrate. It will continue to do so. Nigel Farage and UKIP’s manifesto, has a cross party appeal to Britain’s threatened indigenees as successive waves of happy benefits seekers continue hit our DWP and NHS benches;-

              Mark Ferguson analyses it well:
              “…The UKIP leader knows that there’s a sizeable number of former
              Labour voters backing his party at present… The Tories aren’t the only ones missing out from the UKIP surge, and the impact could hurt Labour too… – especially in the European elections where a UKIP win is not inconceivable….
              …There will never be a Labour/UKIP pact. It’s unthinkable, crazy
              and laughable. The two parties, and their worldviews, are miles apart.
              It would tear the party apart. But it’s really not so long since some
              Tories were saying the same about a coalition with the Lib Dems.”


              • David Lindsay

                Not everyone in Rotherham or Middlesbrough is ordinarily a Labour voter. Assuming that they all are is how the Tories can now come fifth in somewhere like Rotherham, where, as in Middlesbrough, the Labour vote held up.

                UKIP and BNP voters are all ex-Tories. In Labour areas, especially in the BNP case, and increasingly also in the UKIP ones. But all ex-Tories all the same. The results speak for themselves.

                • Noa

                  “UKIP and BNP voters are all ex-Tories….etc”.

                  Not so. I canvassed in rotherham and spoke with several ex Labour voters who, disgusted with Labour, told me that they were voting UKIP.

                • David Lindsay

                  You can’t erase something that isn’t there. The figures speak for themselves.

                • Span Ows

                  UKIP and BNP voters are all ex-Tories

                  A complete lie as proven in comments below…

  • Mombasa69

    Ed Balls the deranged lunatic, with that fire of insanity in his eyes.

  • Chris lancashire

    I really don’t care whether it’s “strivers” or “shirkers” who will receive slightly less benefits – the nation’s finances say we cannot afford the levels of benefits being paid and they need to be reined in.
    As for your focus on Jobseekers Allownace and how it is has fallen relative to average wages – you really can’t make that comparison without including the plethora of Brown’s benefits so you would need to add in Housing Benefit, the labyrinthine tax credits and god knows what else Brown gave away.
    As for Balls’ stance – carry on Ed, by opposing every restraint (I can’t call them cuts) on spending, your credibility continues to erode (if there’s any left).

    • hexton

      The vast majority of the ‘two-thirds of people who will be hit by David Cameron and George Osborne’s real terms cuts to tax credits and benefits are in work’ will, moreover, benefit from the proposed increase in the personal allowance for 2012-13: worth £220 to a basic-rate taxpayer aged less than 65. (There’s a tiny benefit, also, from a small increase in the NI thresholds, but minuscule in comparison.)

  • Paddy

    Just watching the Debate.

    IDS is certainly giving it to them.

    They have spent the Banker’s Bonus Tax to the tune of over 25 billion.

    I’ve never laughed so much… television so far this year.

    Balls and Liam Byrne showing fake outrage.

  • AdemAljo

    Its quite clear that as a political institution, Labour and for most parts the Left in general, are not interested in taking an adequate approach to what is obviously seen as a problem by the vast majority of the working public. This is the tact with which they apply themselves to the majority of policies that are put forward. The shameful thing being that there are very, very few Labour politicians who are actually worth listening to, as they all seem to have been inflicted by the same Blair/Brown-ian, anti-‘Good for Britain’ sickness.

    So forget about them. Why are we bothering ourselves with the quibbling opposition, who have no direction or concept of duty? If these policies are not likely to meet any significant difficulty in either House, then just ignore what Balls, Miliband, Abbott et al. are saying and get on with it.

    I wholeheartedly support the Coalition, but like Ulysses below, I think we should actually be cutting benefits and putting stringent limits on them.

    • Dimoto

      As unreformed Brownites, every one, why should we be surprised ?

      But yesterday, Jacqui Smith was all over the press saying that she was “one of the caucus of senior Labour politicians” (your guess is as good as mine), who think that the Balls-Miliband line is suicidal.

      Judging by the press comments sections, IDS has had a big win on this one.

  • Archimedes

    “By opposing today’s bill, Labour is reversing back over the progress it made in supporting the government’s limit on public sector pay rises. And Ed Balls and colleagues offer no explanation as to why they support one but not the other. ”

    I think you’re falling into the trap of assuming that the public are idiots that don’t question things. It’s such an obvious inconsistency that the governing logic will be “nah, wouldn’t make sense for Labour to do that”, which leads to “so why are they opposing it?”. All in all, I’m sure it has the intended effect of making the cap seem far more beastly than it actually is, or at least of having the average person presume that there is a cynical motive on the part of the Tories.

  • Sally Chatterjee

    This shows that once you give people something a sense of entitlement sets in quite quickly. You never hear people saying “well I’m very grateful for the support, thank-you to all the taxpayers who keep me fed, watered and in housing.” Instead there are howls if the rate is not raised every year, it is a system where nobody is every content.


      Those on long term benefits not paying tax shouldn’t get the vote, and those employed by the state should get only half a vote, then politics wouldn’t be skewed towards pandering to the now majority who leach off of the minority who are paying taxes.

      Immigrants who are not British citizens should not be able to vote, and citizenship should take a lot more than being resident in the UK.

      If we restricted the franchise to those contributing to our society, and not either sucking off the taxpayers teat or trying to build a version of Bangaldesh in the East End, then we would not have such an issue with politics being all about keeping those who are not socally productive happy.

  • lee taylor

    Today the BBC yet again show their bias towards Labour. They today have described the policy as a ‘cap on benefits and tax credits’. Last time I checked tax credits are a benefit so why ‘and tax credits’ BBC??? I don’t think it’s a coincidence that Labour have spent most of today on TV and Radio focusing their attention towards those on tax credits and the BBC just happens to decribe tax credits as if it’s separate to benefits.

  • UlyssesReturns

    On a Sky News report from Rochdale (benefits capital of the north?) this morning, a working man with children was complaining about the ‘cuts’ to his tax credits and railing against the ‘guvamun’t without being able to articulate where cuts should be made. Labour, who are largely responsible for the creation of a client state encompassing a mind-boggling 7 million households – 50% of the population – and made up of, mainly, Oxbridge graduates and supposedly imtelligent men and women, are no better able to articulate the problem and offer a solution. I would argue that we should be cutting more and faster, that welfare should be pared to the bone, that the ‘skivers’of Rochdale should come and replace the eastern Europeans in my local Pret A Manger, but on this single issue I totally and unreservedly support the coalition and IDS.

    • SirMortimerPosh

      Interestingly, a Durham man was on Radio4 this morning, complaining that being unemployed, his total benefits were greater than the income his father received for working a forty hour week. ‘It’s ridiculous,’ he said.’What these people who are complaining don’t tell you, is that as well as getting the dole, they get their rent paid, their council tax paid and they get paid money for having children.’

      I was very pleased to hear an honest man speak about these things and how unfair it seemed to him as a recipient of welfare, that it was more than others got for going to work. What chance that Labour will come clean as this fellow did? Just about nil, I’d say. The difference between and honest man on the dole and Labour politicians is that unlike them, the honest man is prepared to tell the truth instead of dissembling in attempts to distort reality.

    • Noa

      Well, he can see a reduction in his total income, without any balancing incentive. If he had received a wage increase because of a child or married tax allowance, he would not feel he was unfairly treated.
      Taxpayers would also benefit from the commencement of the dismantling of Labour’s horrendous bureaucracy.

Can't find your Web ID? Click here