John McTernan: Welfare cuts a vote loser

The Chancellor delivered his speech during a visit to a manufacturing company in Birmingham. Picture: PA Wire
The Chancellor delivered his speech during a visit to a manufacturing company in Birmingham. Picture: PA Wire
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Judging by George Osborne’s latest austerity message, the Tories have not learned that most benefit payments go to the old and very young, writes John McTernan

IT’S a political cliche that by the time a politician is sick of saying something the public are only just starting to hear it. Well, we live in unprecedented times and I think we’re all going to feel heartily sick of some slogans just about the same time that the politicians do. “Hard choices” and “hard-working families” spring to mind.

The Labour Party’s manifesto in 1983 was dubbed the longest suicide note in history by MP Gerald Kauffman. We have entered the longest election campaign in British history – 16 months still to go – and many of us will be well and truly bored before the votes are cast.

This week is back to school week for politicians, and there’s been a car crash as the Tory part of the coalition government tried to frame the coming year. First David Cameron went on Sunday morning television to assure pensioners that they would be protected by any future Tory government.

The triple-lock on pensions – the promise that they would rise by prices, wages or 2.5 per cent, whichever was highest – would be kept by the Tories. Pretty uncontroversial stuff; all political parties seem committed to throwing cash at older people and debt at young people.

And all in line with the Tory narrative that took us into Christmas – mission accomplished. The economy is back on track. All, within reason, shall have prizes. So far, so good. With the obvious downside that young people – and their families – are starting to work out that they will get no breaks because there are fewer of them, and even fewer bother to vote.

Then, just 24 hours later George Osborne appears in a factory in a hi-vis jacket and proceeds to make a speech designed to make our flesh creep. Sunlit uplands are banished, blood sweat and tears are back on the agenda. And not just anybody’s tears – it’s the poorest who will bear the burden, and that’s a promise. But before getting into that, let’s take a moment to reflect. Either the economy is doing well so we can start to distribute the proceeds of growth or it’s all dicey and we need to be in it together.

Cameron and Osborne are setting out conflicting narratives. Now, we’ve obviously got used to contradictory messaging from the coalition – but it’s normally from one or other of the parties involved. The fact that the two leading Tories in the government are at odds is revealing about the continuing lack of strategic grip at the centre of the government.

Osborne’s game is clear. He wants to disrupt the narrative that Ed Miliband has been carefully constructing. In the face of an economic recovery – albeit one delayed by government austerity – Miliband has chosen his own “never mind the width, feel the quality” strategy. Channelling Ronald Reagan, he asks voters “do you feel better off?” It’s a fair bet that at any time voters will say No in thunder to that question – they are a notoriously grumpy and ungrateful lot. And considering we’re going through the longest fall in living standards since the 70s – the 1870s, that is – you can be sure voters will be angry. Hence Miliband’s brilliantly British, half-apologetic populist slogan at his conference last year – “Britain can do better than this”.

This frame is a tar-baby for the Tories – if they fight it, it sticks to them. Osborne knows that they have to break the frame. Pick another fight. Hence the move back to doom and gloom. He is also clearly worried that if the mood changes, and the country believes that there is a real and established recovery then voters will ask for the pain to ease. In other words, if it’s good enough for pensioners, what about me? There was a perfectly sensible way of doing this.

It was a speech that talked about how much the government had done, but how much more there was to do. The classic pitch for a second term – we’re proud of what we’ve done, but not satisfied. The simplest emblem of the task would be spelling out the distance covered in deficit reduction and then outlining how much further there was to go. Not new information, the think-tanks the Resolution Foundation and the Institute for Fiscal Studies (IFS) have set it out based on the Spending Review. But the figure of £25 billion would be an explicit challenge to Labour – come clean, what are your plans?

But if George Osborne has a problem, it is his tendency to be too clever by half. He wouldn’t settle for lobbing a grenade into the middle of Labour’s shadow cabinet. No, he wanted to start a full-scale war. Welfare, he is convinced, is a potent dividing line in British politics. So he declared that of the £25bn to be cut in the first two years of the next government some £12bn would come from welfare. “What a brilliant wheeze”, he must have thought. “Either Labour supports me, which will humiliate them, or they will have to promise to raise taxes to support lazy dole cheats.” Like many great plans, this one fell apart on first contact with reality.

The problem is in the very term “welfare”. We don’t have a welfare system, we’ve got a social security system with a range of benefits aimed to support a wide range of needs. It is a large budget – more than £200bn – but then it does go to about half the population. Perhaps that seems over-generous but when you realise that social security claimants include 13 million pensioners, almost all children through child benefit, and a good 30 per cent of households through housing benefit it doesn’t seem so surprising. The challenge of cutting so much money starts with pensioners. They receive the majority of social security – £110bn – so all the cuts fall on less than half of the total. Very little of that money is spent on the unemployed. The big money goes to children – through child benefit and tax credits. Then there is a large amount of money going to housing benefit – the fastest growing element of which is to low-paid workers in the private rented sector. Finally, there is a large amount of money spent on people with disabilities. So what’s it to be? Kids, workers or the disabled? Doesn’t look so easy now, does it? From outside it looks simple to shave billions of a multi-billion pound budget. The brutal fact though is that every billion saved is equal to £1,000 a year from a million people. Do the maths. £12bn is that much from 12 million people. That is the high road to electoral disaster. Even if you thought there were scroungers in the system, there are not that many. No wonder Iain Duncan Smith is in open revolt and Tory backbenchers are feeling nervous.

It’s 11 years since Theresa May told a stunned Tory Party conference that their problem was that they were seen as the nasty party and needed to change to win elections. She was right then, and is right now. The trouble is that George Osborne’s new year surprise shows he, for one, has not learnt that lesson. He may well be taught it at the ballot box.

• John McTernan was political secretary to prime minister Tony Blair