Coffee House

The next Labour welfare policy?

4 January 2013

As he was selling his party’s plan for a jobs guarantee on the airwaves today, Liam Byrne made a passing reference to something that could form another part of Labour’s welfare policy offer. The Shadow Work and Pensions Secretary was talking about myths and misconceptions about the benefits system, and said:

‘I think a lot of people are surprised when they find out that jobseeker’s allowance is a little bit above £70 a week, and I’ve had constituents who’ve been frankly shocked when they’ve lost their job, they’ve gone down the jobcentre and they’ve discovered what the true rate of JSA is. So I do think there are misconceptions around, but I do think the British public is right: they believe in welfare reform, they want to see welfare reform happen.’

One of the policies that Byrne hinted at in his interview with Coffee House in December was a contributory principle: it’s something that those advising Labour on its policy review have been examining, too. In the interview, Byrne said the welfare system was ‘completely out of whack’ because ‘working people don’t feel they get those things back out of welfare in spite of what they put in’, adding:

‘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.’

Claim your gift

One of the big debates in all three parties at the moment as they look to 2015 is how to ensure that those on higher incomes still feel they have a stake in the welfare state that they are paying into. It’s one of the arguments that those who oppose scrapping child benefit for higher earners use, and it’s also one of the reasons the Tories tremble every time someone starts talking about the winter fuel payment and other pensioner benefits.

Byrne’s words today and before Christmas suggest that there could – if his colleagues allow it – be some kind of higher-tier offer for those who have paid a great deal more into the system but find themselves unemployed. The welfare policy review is not yet finished, but it will be interesting to see how well the Labour grassroots take to any attempt by Byrne and co to reward aspiration through the benefits system.

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
  • PierrePendre

    The scrapping of universal benefits is the only way out of the deficit trap and the gap between government tax revenues and spending. Co-pays will also have to become part of the future financing of the NHS.
    Many of the better off already opt out of public health and education, continuing to pay the taxes needed to fund them but buying private provision for themselves and their children. So the stakeholder argument isn’t watertight.

    Making the NHS free at the point of delivery for all was a bribe Labour devised deliberately when it set the service up precisely in order to give everyone a stake.
    The problem now is that welfare and entitlement spending has got so far out of control but none of the political parties dares to be upfront with the public about the inescapable nature of the fix.
    This is understandable since large numbers of voters on the wrong side of coming means testing thresholds are going to be extremely aggrieved. Not only that, those who do the paying but get less back are going to demand that benefits and entitlements are focused in future on those in genuine needed of them.
    What are future governments going to do for example about the many thousands of unemployed who are unemployable because the education system has been unable to cope with their lack of educability and becomes ever less so? If they don’t qualify for benefits and can’t get jobs, how will they survive?
    One can see that it’s an exquisitely sensitive and difficult problem for the politicians to solve and one might feel some sympathy for them had they not been so craven and self-serving over the last 50 or so years in running away from the responsibilities that have now caught up with them.
    Given the history, my bet would be on more running, more fudge and more failure to do the right thing. But they can’t escape for ever.

  • Iain Hill

    Fine words as usual from Byrne, but selective. He wants to use the contributory principle when it suits his own purposes, ie to reduce benefits for some of the poorest people , but when it comes to discussion of payment for social care for elderly people, he, like all politicians, seems to forget that many of us have paid royally all our lives , and taken nothing out!

  • michael

    Cant get a job….so its starve or 6 months community / national service.

    Political graffiti, but at least its a policy.

  • Troika21

    Frankly, I don’t doubt Mr Byrne when he says some people are shocked to discover what the state thinks they can live on when they become unemployed.

    But the recent welfare policy proposal from Labour just highlights the thinking of their policy makers; the whole thing was political positioning and nothing more.

    They look like they’re holding out a supporting hand to unemployed people, but are really just boosting the welfare bureaucracy.

  • Justathought

    I am reliably informed that the talk around the dinner tables of Britain (hat tip Warsi) is solely focused on how the latest arrival is entitled to a plethora of welfare benefits without ever having contributed a brass farthing.

  • barbie

    People have often said those who don’t have NI or stamps on their card should not have the same benefits as those that have years on. I agree. If you work for 44 years and have that many stamps on you deserve some benefit when your out of work, and the same goes for pensioners who have a full card on. There are far to many people, mostly foreigners who are having benefits far to easy for a few months work, this should be stopped. Surely with the technology we have today surely we could come up with a better system than we have today. There are to many taking out of the system who haven’t put anything in, that’s the problem. Perhaps its time to make benefits only for British citizens.

    • Davey12

      Nowt to do with technology, your money is needed to bribe Labour voters. Your money has now been spent. We now see more and more attacks on the pension system, 150K today, give it a few years and by the time many come to collect those pensions, they will find that they are no better than the pensions of those who contributed zero. You think fairness comes free?

      When the chance occurs take every penny out of your pension scheme you can. Your government is sadly your enemy. If you have it you can decide what to do with it.

      • LB

        Quite. I can see them doing a Hungary or Argentina. Taking the lot.

        The EU courts have ruled that Hungary’s theft is legal.

        Also expect 1% on property, each year. If interest rates are 2% think what that does to your payments.

  • andagain

    One of the policies that Byrne hinted at in his interview with Coffee House in December was a contributory principle

    Successive governments have spent at least seventy years eradicating this, without ever actually admitting it. So forgive me if I feel skeptical.

  • ToryOAP

    This is a useless and sterile debate about process and not about the real issue. Europe and the USA are drowning in an unsustainable debt and productivity morasse caused, in the main, by an unaffordable expectation of high-living and a population and political class addicted to universal welfare and excessively high taxation. These are not significant problems for Africa, most of South America and Asia and this is why the ‘west’ will continue to decline and (primarilly) the East will emerge as the new economic and industrial superpowers. Unless we drastically cut welfare and government spending now it’s game over and all the liitle Ballses, Millibands, Byrnes, Owens and Toynbees can scweam and scweam and scweam until they make themselves sick but it won’t change a thing.

    • LB

      Well, I think its game over anyway. The result is going to be Greek style austerity.

      However, I disagree with the unaffordable expectations bit.

      If a median worker, 26K had put their NI into the FTSE, after 40 years they would have had a fund of 560K, enough for an inflation linked income of 19K a year.

      The state pays out just 20% of that.

      The expectation is valid, the reality is the state have robbed people.

      • ToryOAP

        The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled,and the assistance to foreign lands should be curtailed, lest Rome become bankrupt. People must again learn to work instead of living on public assistance.”

        – Cicero , 55 BC

        So evidently we’ve learned nothing.

        • LB

          Balance budget – 30% cuts across the board. Pretty much problem solved.

          Public debt reduced? Never going to happen bar a massive default. It’s too large to pay off.

        • ButcombeMan

          This alleged quote from Marcus Tullius Cicero that began circulating on the Internet in October, 2008, is based on a true statement from the great Roman orator, but someone added a lot to it to make it match some of what the United States was facing economically.

          The actual quote is:
          “The arrogance of officialdom should be tempered and controlled, and
          assistance to foreign lands should be curtailed, lest Rome fall.”

        • barbie

          Companies too must pay their taxes instead of trying to avoid it. Many big ones are not paying their tax bills, is this really fair? As I see it all are trying to deceive, its honesty that as been lost and we have seen the emergence of greed.

      • Fergus Picklering

        I am quite prepared to say the State has robbed people but you have to tell me where the money’s gone. Have they spent it on ridiculous things like the army and the police or has it all gone on inflation-proofing MPs pensions. If the State were an African dictator then te money woud have gone on palaces and Swiss bank accounts, but I don’t think that could be the case here. So where did it go? Waste is not an answer.

        • Lb

          They’ve spent it. Pure and simple. Remember too that they are overspending by 30%

          What they haven’t done is invest it in anything that produces an income or produces saving in excess of the debt payments.

          I.e it’s gone on everything.

          So now there is 7,000 bn of debts, tax of 550 bn and spending of 700 bn.

          What’s your plan for getting out of the mess?

          Remember printi g doesn’t work. 6,200 bn is inflation linked. Printing isn’t a way of defaulting by stealth on inflation linked debts.

          Perhaps more interesting is what individuals can do to protect themselves against a kleptomaniac state. Why would the state do when it can’t pay the state pension? What would people do without their giro?

        • LB

          There are other ways to run up debts like this.

          1. Offer pensions way excess of the money paid in. Since its off the books, people don’t notice until its too late.

          2. Don’t. Invest the contributions. So no compound interest which is 70% if the return.

    • steppenwolf2010

      I agree with what you say but “an unaffordable expectation of high-living and a population and
      political class addicted to universal welfare and excessively high
      taxation” have become industries in themselves, from which many people are making great sums of money. It will be difficult to change their practices.

  • Colonel Mustard

    Oh no, not this ego-inflated non-entity again. How’s the departmental coffee and minions these days, Byrne, now the money’s all gone? The only guarantee from you and your New Labour chums I’m interested in is a guarantee that you will never set foot in a ministry again.

    • Dimoto

      Don’t worry, “Big Len” McCluskey and the brothers will soon put bureaucrat Byrne to rights.

  • Archimedes

    “One of the big debates in all three parties at the moment as they look to 2015 is how to ensure that those on higher incomes still feel they have a stake in the welfare state that they are paying into”

    This is completely the wrong way to be looking at this. It’s the naked refusal of politicians to let people decide how best to look after themselves, under the assumption that some twat in Westminster knows best.

    • LB

      Partly People are very quickly realising that the state is screwing them.

      The rich have moved their assets. When the middle class does the same, its well and truly game over.

      Since the true government debt is 7 trillion, not the 1.1. reported, its game over anyway. Taxes of 0.5 trillion can’t pay a debt 14 times income, partlularly when you’re overspending by 30%

      • treborc

        The UK has 7 trillion in debt that’s interesting tell us how…..

        • LB

          Page 4.

          5,010 bn on pensions alone
          1,100 bn on Gilts
          Nuclear decommission?
          Expected losses on guarantees?

          If you think its otherwise, then you’re in cuckoo land along with the fraudsters in Westminster

          • Gareth

            By that same logic, I must personally be significantly indebted because I still have to fund (hopefully) decades of food, clothes, bills etc. There is a big difference between a debt and a future obligation.

            • LordBlagger

              So by your logic, because debt payments are all in the future, they aren’t really a debt, We can load up with debt, and because its going to paid in the future, its irrelevant how much debt we have.

              Clearly bonkers.

              So what’s a debt. You need to look at what the GAAP and FRS17 say – that accounting standards that the government says it will adhere too, but doesn’t. The reason being that people would realise they are bankrupt if they did.

              1. Borrowing. The obvious debt

              2. If you buy something now, but agree to pay in the future, its a debt. This is different from spending in the future.

              3. If someone buys from you now, for delivery in the future, that’s also a liability.

              4. Associated with the last one, is insurance contracts. If you take premiums now, and agree to insure something, then you have a liabaility. Not for the total insured, but for your expected payouts.

              Those are the categories of debts that have to appear in a set of accounts that are open, honest and truthful.

              So why are these accounts important? Well the stakeholders in an organisation need the accounts to be truthful in order to work out whether or not they will get what they are promised.

              In the case of the state, they aren’t. They have missed off the pensions. That deceives people into thinking they will get their pension, when its clear the state cannot afford to pay because the payments exceeds the tax paying ability of the population.

              Why would you want to hide that from people?

              • Gareth

                I don’t deny that the affordability of pensions is a significant issue going forwards. But I think it would be poor accounting to include this in the debt figures. There is a difference between, say, entering into a PPI agreement through which the government gets a new hospital on which it will subsequently owe payments, and the expectation that the government will continue to pay pensions in the future. My taxes go to pay for today’s pensions, not my own in the future. In reality, I expect that by the time I retire, there will be no meaningful pension for the majority of people. Hence, I need to make my own provision.

                • LordBlagger

                  Future pension contributions to get an entitlement are not included in the ONS figures.

                  They are just what is owed for past contributions.

                  It’s just the same as a bank. Deposit money in a savings bank, and they have record that they owe you that money back, plus interest.

                  The state however says, look at all this money, we have a surplus/profit, lets spend it. It’s illegal book keeping.

                  There is no difference between using PFI to fund the capital cost of a hospital. Even that is hidden off the books.

                  My taxes go to pay for today’s pensions, not my own in the future.

                  And the problem that the true debt figure reveals is that in the future, other people can’t pay for your pension. Not because people are living longer, but because the money was spent. This is to the extent that people will be destitute.

                  Now, even if you make provision, you have to look at what governments will do and have done. Hungary, in the EU, took all private pensions for the public good. I suspect even your provision will be taken. If its in property or in a pension, its a non tradeable good. You’re a sitting duck.

                  7,000 bn on income of 500 bn. 14 times geared, and that’s just for the debts.

                  No services included. None. No future NHS. No future schooling, etc, Just what people have paid for up front. ie. Debts.

                • LordBlagger

                  Why is it poor accounting?

                  GAAP and FRS17 are the appropriate accounting standards. Why should the accounting standards be poor accounting?

                  It’s the other way round. Creating your own ‘accounting’ that doesn’t follow the general principles is poor accounting.

  • LB

    ‘I think a lot of people are surprised when they find out that jobseeker’s allowance is a little bit above £70 a week, and I’ve had constituents who’ve been frankly shocked when they’ve lost their job, they’ve gone down the jobcentre and they’ve discovered what the true rate of JSA


    And the housing benefit, and the income support, and the council tax payments, and the automatic contributions to their pension, free prescriptions.

    However for those with savings and who have worked, they’ve been defrauded. Handed over tens of thousands of pounds, and they get back 70 * 26 weeks = 1,820 quid. Then when they retire, they will discover that for a 26K a year worker, they’ve been diddled out of 420,000 pounds by the friendly state.

  • Noa

    Political Principle No 1:- Always appease the majority voter base.

    When the number of people in work exceeds those who are not, introduce a contribution based welfare system. When it does not, appease the anger of those in work by talking about introducing such a system.

Can't find your Web ID? Click here