Miliband changes Labour welfare stance in speech

Mr Miliband said a Labour government would impose a three-year cap on welfare spending and force the unemployed to take jobs after a year on the dole.

He accepted Tory reductions on child benefit, which Labour had previously criticised, and announced a system of variable unemployment benefits, with people who have worked longer and paid more national insurance receiving more.

He accepted his party had failed to tackle incapacity benefit when it was in government and said a future Labour administration would prioritise helping the disabled back to work.

The move has drawn huge opposition from many of his own backbenchers and trade unions, but Mr Miliband has been under pressure from the Tories to say how he would save money.

In the speech in east London yesterday, Mr Miliband said: “The next Labour government will have less money to spend. If we are going to turn our economy around, protect our NHS, and build a stronger country we will have to be laser focused on how we spend every single pound.

“Social security spending, vital as it is, cannot be exempt from that discipline.”

He accepted Labour would have to take a structural approach to welfare spending highlighted in a speech by shadow Chancellor Ed Balls earlier this week,

Mr Balls had said that while the coalition cap should be raised in places like London with high rental costs, it should be lower in other parts of the UK. He had also attacked the concept of universal benefits for the elderly stating that the rich would no longer get winter fuel payments.

Mr Miliband insisted that welfare could not be “a substitute for good jobs and decent employment”.

He said faith in the welfare system has been “shaken” by the appearance that a minority were getting “something for nothing and other people nothing for something”.

Mr Miliband said that while he believes a minority who should work do not, Prime Minister David Cameron regards anyone looking for work as a “skiver”.

“Controlling social security spending and putting decent values at the heart of the system are not conflicting priorities. It is only by reforming social security with the right values that we will be able to control costs,” he said.

Mr Miliband hailed the Blair and Brown governments’ introduction of tax credits for low-paid workers, but added: “We didn’t do enough to tackle Britain’s low-wage economy, a low-wage economy that eaves the taxpayer facing greater and greater costs subsidising employers. To tackle the problem of poverty at work and to control costs, we need to create an economy that genuinely works for working people.

“I want to teach my kids that it is wrong to be idle on benefits when you can work.”

Labour share deal defended

ED Miliband defended taking a major donation in shares amid Tory demands for Labour to hand over up to £1.5 million in tax it allegedly dodged.

John Mills donated a stake in shopping channel JML. Chancellor George Osborne told Mr Miliband this was “directly at odds” with his criticism of internet giant Google’s tax arrangements.

Mr Miliband said Mr Mills “gave us shares because he wanted the party to have a steady stream of income from dividends”.