A row is brewing over the Welfare Uprating Bill, following Osborne's decision to downgrade benefit payments. It's a chance to nail the myths about 'shirkers' vs workers
In last week's Autumn Statement, the government announced that Job Seekers’ Allowance and Employment and Support Allowance would be uprated by 1 per cent rather than by the rate of inflation, as measured by the Consumer Price Index, for the next three years.
This is troubling for a number of reasons – the first being that while this actually makes only a small different next April (1.2 per cent less than expected, as CPI currently is at 2.2 per cent) we shouldn’t forget that these small losses - of perhaps less than £1 per week - make a big difference to someone counting every penny at the checkout.
On the back of a raft of other benefit reductions and caps, it only adds to the larger cumulative effect being felt by those who are unemployed and/or disabled. Also, according to the Office for Budget Responsibility, CPI will increase in both 2013 and 2014, so the margin of loss between the inflation rate and the artificially capped 1 per cent will increase.
But the second point is one of principle. In its Emergency Budget, the government announced that benefits would be uprated by CPI, rather than the traditional (and more generous) Retail Price Index. However, when CPI peaked in September 2011 at 5.2 per cent, reports in the press suggested the Chancellor was considering on reneging on this policy, as it would cost the Treasury more than predicted.
Some suggested Osborne was considering freezing benefits rises altogether, though a 2.5 per cent rise – in line with average earnings – was identified as the more likely alternative.
To back-track on a policy so soon after it has been implemented, just because the rule does not work in one’s favour, certainly smacked of moving the goal posts at the time – and it still does now.
Once a new uprating rule has been implemented, with apparently robust justification, it seems ludicrous to scrap it a year later for a random 1 per cent increase - with no economic reasoning whatsoever, other than that the CPI link didn’t cut the benefits bill fast enough.
One per cent seems arbitrary, selected only because it is a round number, and it is far below the cost of living.
But the government seems set on this course, and moreover, will force the Opposition to declare their position on this measure by presenting it in a Welfare Uprating Bill in January.
This is Labour's opportunity to clearly define their position on an important welfare issue, something they have equivocated about on a number of occasions in the past - torn between the obvious negative effects and the inherent populist appeal of the government's bold, 'round numbers' policies.
Certainly, Labour has to tread carefully: the narrative around the 1% uprating – which contrasts benefit with wage inflation - has exacerbated the ongoing 'shirkers versus strivers' debate. On the back of a flurry of evidence about the growing numbers of working poor, it is more emotive than ever.
However, the government's approach of pitching the employed against the unemployed to justify an arbitrary below-inflation benefits increase is, in this instance, evidentially flimsy.
The fact is the working poor are, often, those most vulnerable to job insecurity. Many work in junior, part time or temporary positions, in sectors such as retail and hospitality - easily buffeted by seasonal economic trends.
Many working poor 'strivers' are just a poor Christmas on the high street away from finding themselves on the wrong side of that 'shirkers/strivers' fence, and then the 1% uprating won’t seem so fair after all.
In the current economic climate, today’s striver can be tomorrow’s ‘scrounger’ – so with the right messages, Labour can oppose the benefits uprating plan and be seen as the party of the working poor: by standing up for them now and in an uncertain future.
An earlier version of this post appeared on the Demos blog
