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The myth of difference

Posted on April 06, 2013 by

This site often reflects on the absence of real political choice available to the UK electorate, but it has rarely been more clearly illustrated than it was on this morning’s BBC breakfast news in an interview with Labour’s shadow chancellor Ed Balls.

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Interviewed by presenter Charlie Stayt, Balls first clarified Labour’s position on the top-rate tax cut taking effect this week. Refusing to commit Labour to restoring the 50p rate if elected in 2015, Balls nevertheless made the meaningless pledge that if an election were to be held tomorrow it would be in Labour’s manifesto.

(An interesting distinction from “We would actually do it”, of course.)

We’re a bit puzzled by this. Either a 50p tax rate brings in more money or it doesn’t (and it does – even George Osborne’s own budget statement noted that it raised an extra £1bn for the Treasury compared to the 40p rate that preceded it), so what does it matter what the country’s general economic condition is? Shouldn’t Labour be committed as a matter of principle to wealth redistribution by taxing the rich?

Instead, Balls said that reducing the rate to 45p was “not my priority” (rather than, say, “I think it’s wrong”), suggesting that it was nevertheless something he’d want to do. But it was on welfare reform that he was most revealing.

CHARLIE STAYT: The government’s now saying that no-one should get more than £26,000 on household benefits. Is that something that you agree with, having that cap of £26,000?

ED BALLS: We support a benefit cap. It applies to a really rather small number of families, just a few thousand – the government thinks it might actually end up costing more, rather than saving any money. We support a cap if it’s done in the right way, and that means the cap needs to be different in London where rents are much higher compared to the rest of the country.

A blanket flat benefit cap the same in every part of the country makes no sense. We support a benefit cap. I would like to go further, though, on welfare reform. I would like to say “Let’s have a jobs guarantee for every young person and adult, take a job, we’ll guarantee the job, if you don’t you lose your benefit.” That would be a much tougher approach than George Osborne’s approach.

(Our emphasis.) Note that Balls says no fewer than THREE times in that short passage that Labour supports a benefit cap. Note that his only stipulation is that it should be “different” in London. He doesn’t say whether that means it would be £26,000 in London and lower everywhere else, or £26,000 everywhere else and higher in London. He doesn’t mention any of the other parts of the UK where rents are almost as high as London.

And then we get to workfare. This isn’t a new revelation – Balls set out his plan in (slightly) more detail back in January. It would provide a guaranteed minimum-wage job (lasting an unspecified period) for over-25s who’ve been unemployed for more than two years – a criterion which according to Balls covers just 129,000 of the current unemployment figures of 2.52 million.

That’s on top of an earlier pledge to do the same thing for “at least 100,000” younger people who’d been unemployed for one year, giving them a minimum-wage part-time job (of at least 25 hours a week for six months) on pain of removal of all benefits should they refuse the offer. (“No ifs or buts.”)

Paying people the minimum wage for forced labour sounds at least an improvement on sending them to stack shelves for nothing. But the plan starts to fall apart quickly under even a moment’s scrutiny.

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For a start, the minimum wage for those aged 18 to 20 is only £4.98, which at 25 hours is just £124.50 a week. Clearly anyone earning so little will still need substantial help in the form of benefits, so it’s highly debateable that it would save the taxpayer any money.

(And it won’t be much different for over-21s at the £6.19 top rate either – nobody can pay for rent, bills, and food on £154.75 a week, so people will still need benefits.)

Secondly, Labour was already having trouble explaining how it would fund the policy when it was only for 100,000 young people for six months, let alone expanding it to another 129,000 older people on higher wages for unspecified periods. (Curiously, Balls claims the cost of the “adult” policy as £1bn – exactly the same amount raised by the 50p tax rate he refuses to pledge to restore.)

But finally, there’s an obvious question. If it saves the taxpayer money to have the government create jobs for the unemployed, why only do it for six months?

There’s a valid argument to be made that creating state-funded jobs – even if you’re paying people to dig holes then fill them in again – is a sound economic strategy, because paying people minimum wage is barely any more expensive than paying them benefits, plus any extra money you do give them is ploughed straight back into the economy anyway (poor people can’t afford to save, so they spend everything they earn, keeping businesses alive), plus at least some of the work can’t help but be useful and generate further economic benefit.

That would be a genuine ideological alternative. Labour, however, isn’t making that argument. It is, in fact, merely copying the Tories’ “tough on scroungers” rhetoric but giving it a face-saving coat of minimum-wage paint.

Forcing a small percentage of the unemployed into slightly-better-paid workfare for a few months ultimately does no more good than the nasty Tory flavour. As with so many other policies, it represents Labour standing the tiniest possible distance to the left of the Tories that they think they can get away with, while also conceding the moral ground by pretending to actually be to the right of them. (“I would like to go further on welfare reform… that would be a tougher approach”.)

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So what will the policy actually offer the long-term unemployed? After a year or two years under a benefit cap, they’ll briefly be made to go out and work, for what in practice will still amount to nothing.

(Because if you’re getting, say, £200 a week, it doesn’t actually make any difference if that’s made up of £150 wages and £50 in tax credits, or £150 in Housing Benefit and £50 in JSA, or whatever – it’s the same amount of money in your pocket, and it’s all coming from the government either way.)

After six months they’ll be back on the dole queue, with a new work ethic and valuable practical experience of shelf-stacking, except all the shelf-stacking jobs will be occupied by the next lot of long-term unemployed doing their stint of workfare. Why, after all, would companies ever bother to fill those positions with permanent jobs they’d have to pay for, when they’ve got a never-ending cycle of government-funded conscripts to do them at no cost to the company?

In practice, then, Ed Balls’ plan for welfare reform is functionally identical in every respect to what the Tories and Lib Dems are doing now, despite its bewilderingly-simultaneous claims to be fairer, more humane and tougher. It does absolutely nothing to create real jobs – indeed, just like the Tory version of workfare, it actively and obviously incentivises employers NOT to create them.

Voters of the UK, take your pick.

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    29 to “The myth of difference”

    1. Malcolm says:

      His haircut looks like a roman senator’s.

    2. Jiggsbro says:

      His haircut looks like a roman senator’s.
       
      Looks like a roman senator wearing a cheap syrup.

    3. Barontorc says:

      Is the reality sinking home now that there is no ‘cure’ for what ails rUK? What will now happen of course, is that they will try to undermine Scotland’s potential for looking after its people, because when compared side by side, it casts rUK’s plight into the ugly spotlight of reality. Who wouldn’t want:-
      Better ratio of employment opportunity.
      Working and efficient NHS.
      Free eduction to university level.
      Free prescriptions.
      Free elderly bus passes.
      Who’s to say there couldn’t also be a better tax and collection system.
      A country that’s going somewhere upwards.
      National and personal esteem on the rise.
      No unwanted and wasteful wars.
      No nuclear waste generation or WMD.
      Better fishing policy.
      Real participation at the EU, or whatever is a better economic organisation.
      Etc, etc. – watch this space!

    4. Indion says:

      Well, that’s at least 4 no takers already.

      I’d bet more on any horse in the National than the one he gets off on

    5. BillyBigbaws says:

      I wish that more working people (especially low-paid and low-skilled workers) would realise that the current benefit changes are not really an attack on “scroungers” at all, but an attack on them. Their already low standards of living will plummet further as workfare and the other cuts really kick in.

      What will their jobs be worth when the unemployed can be forced to do the same work for less, or for nothing? What will their employment rights be like?

      They should be afraid, very afraid, but too many have been gulled by the compliant right-wing press, and are cheering on the destruction of their own meagre job security.

    6. panda paws says:

      Labour and Tories – two cheeks of same arse. They are actually more venal than you think. I was at a referendum discussion for disabled people recently with Yes and No reps. The Labour MSP spoke against welfare reforms for disabled saying she could only work because her DLA funded a mobility car. Now can someone tell me how much an MSP is paid? I though it was c£50k. Then when Lamentable’s famous “something for nothing” speech was cited – she said yes we had to look at universal entitlements. So folk below the poverty level can pay for prescriptions but it’s only DLA keeping her in her job!

    7. Dave McEwan Hill says:

      “There’s a valid argument to be made that creating state-funded jobs – even if you’re paying people to dig holes then fill them in again”

      I don’t think there is any valid argument for this approach at all. It costs money and lumbers the state with expense without return at all.
      There is however a very powerful argument for providing jobs in any form of manufactoring. If I can put it in simple terms If we set up factories making pencils and it costs, all costs including decent wages included, 10p to make a decent pencil and we sell them at 9p it is still hugely cheaper to the state  than paying benefits to unemployed people (or paying them to dig holes and fill them in again).
      Lloyd George understood this in 1917 when he said “It is cheaper and better to pay men for productive work than to pay for them out of work”  
      Actually I think that is what Germany did while Mrs Thatcher was killing our “lame ducks”. Kept its employment up by helping its industry to keep going under limited subsidy while it sorted out its efficiency and modernised itself.

    8. Rev. Stuart Campbell says:

      ““There’s a valid argument to be made that creating state-funded jobs – even if you’re paying people to dig holes then fill them in again”
      I don’t think there is any valid argument for this approach at all.”

      Clearly it’s shorthand for jobs of even limited apparent value, not meant to be taken absolutely literally.

    9. creag an tuirc says:

      OT: Liz Cameron is the chief executive of the Scottish Chambers of Commerce answering Independence questions http://www.bbc.co.uk/news/uk-scotland-22039034
      I found it to be the most balanced views on the referendums effect Scottish business I’ve seen to date.

    10. Krackerman says:

      One of my favourite comedians lays it out in plain English – applies to the UK as much as the US. http://www.youtube.com/watch?v=acLW1vFO-2Q

    11. Bugger (the Panda) says:

      This useless piece of mediocrity is reason enough to abandon the sinking ship aka HMS United (All Together) Kingdom.
       
      He is the epitome of all that is wrong with London Labour (he and Murphy plus a few others).
       
      He is a parvenu, hasn’t had a real job and thinks that we have the intellect and memory of a goldfish.
       
      He hasn’t an honest bone in his body and remember, this is the clown who was  Brown’s buddy and bag carrier as well as Darling’s intellectual muse, yes I know it is usually a woman, at the Treasury.
       
      He will do anything, say anything, to get get his ugly mug on the TV, so he can raise his profile to that of a low slung alley cat.

      He is also an expenses cheat, remember that his wife is also an MP and certain mistakes were made sorting out who had incurred what were shared or common expenses, like mortgage interest. They also flipped their homes three times in two years.

      http://www.telegraph.co.uk/news/newstopics/mps-expenses/5325590/Ed-Balls-and-Yvette-Cooper-flipped-homes-three-times-MPs-expenses.html

       
      A pox on him.
       
      Sorry if this sounds a bit bitter but he deserves all of it, and more.

    12. Bugger (the Panda) says:

      Having  calmed down a bit I would like to, again, advance that it would be in both Labour and the Conservative’s best political and economic (personally for Balls et al) interests to have Scotland bugger off and allow them to progress to a full blown red pill blue  democracy, both financed by City money.
      Their model is the USA.

    13. http://www.guardian.co.uk/commentisfree/2013/apr/05/labour-draw-sting-welfare-or-lose-2015 
      Article in Guardian today about the problems that Labour have over welfare.

    14. Marian says:

      Labour’s achilles heel is its constant pandering to wealthy “middle englanders” in the south east corner who have wealth and standards of living that most Scots can only dream of, whilst trying to persaude their usually loyal block vote in Scotland that they are still the so-called “peoples party”, because the two into one just will not go.
      The closer we get to the referendum the harder we will make it for Labour to justify its facing both ways at once position.

    15. Morag says:

      Excuse me, this is off topic, but if I’m not mistaken today is the anniversary of the signing of the Declaration of Arbroath in 1320.  “Scotland Day” in the USA.
       
      If the Scottish government is serious about having the 2016 Independence Day in “late March”, I hope they will at least consider letting it slip to 6th April.  I’d prefer a day in high summer, for the barbecues you know, but failing that, well, it’s nice out this morning and the spring flowers are in bloom.

    16. pmcrek says:

      On the digging holes and filling them in again, I am reminded of a Bill Hicks joke, he’s standing around in work doing nothing and his boss says,
      “Hicks, why arent you working?”
      “‘Cos there’s nothing to do.”
      “Well pretend like you’re working.”
      “No, YOU pretend like I’m working, you get paid more than me.”

    17. Rod Mac says:

      The quickest way to remove 6 million people in work from the welfare budget is to bring in a Living Wage ,not a minimum wage that needs the state to top up earnings.
      The lie that this would cause unemployment to grow I strongly dispute.
      If there is more money in the real  economy more money will be spent in the High Street.
      As you alluded to in your article the poorer in our society spend all their money they cannot afford to save and certainly do not have off shore accounts.
      Tesco will still need shelf stackers and cashiers, McDonalds will still need burger flippers etc.
      Will their profits drop?
      Yes of course ,however as the majority of these large corporations have used every trick in the book to avoid paying tax, who cares?
      The only people affected will be the fund managers and the spivs in City of London.
      They do save their money OVERSEAS and do not spend in the real economy.
      i truly believe if there is more money in the real economy ,more jobs will be created ,not lost as those opposing a Living Wage maintain.
      We reduce the Welfare Bill ,increase the tax base ,what is there not to like?

    18. ianbrotherhood says:

      Ponder this:
      ‘The amount of tax annually avoided, evaded or uncollected from the extremely rich.and big business is £120 billion.That would pay for 4.8 million NEW jobs on £25,000 a year..and doesn’t even.account for savings on.benefits, or the income tax such jobs would pay.’
      Richie Venton, SSP

    19. Hetty says:

      Also remembering, the con-dems have capped housing benefit for under 35yr olds, I think it’s £200 or less? So they cannot afford to live even in shared accomodation with rents as high as they are. The main reason for keeping people in a state of poverty and then forcing them to work for free or almost free is very sinister, as you say in the article, a constant stream of workers for companies at no cost to them, it’s a very negative outlook for the unemployed and underemployed. It’s a very negatiive way to treat your own people and smacks of a dictatorship.

    20. Labour support a higher benefits cap in London. Why?
      Because rents are higher in London.
      So, the whole country pays into the national welfare pot through taxes, so that more of it can be paid to landlords in London.
      This is an issue the Yes campaign should be making more of – social security policy is being written by both main UK parties to suit the population of London, and if issues such as the bedroom tax hit other areas of the country because of it, well that’s too bad.
      Skewing any government spending towards the south east of London only further entrenches the inequality which is such a hideously unfair part of the current UK. That Labour/Ed Balls should be happy to commit to this when he’s so mealy-mouthed about everything else shows that there is no chance whatsoever of a Labour government reducing the inequality in the UK.
       

    21. velofello says:

      It may well be the case that England,yes just England is overpopulated and under-productive. Whilst the London City Casino prospered all seemed well and the faults didn’t show, but not now.
      Cameron’s “we’re all in this together’ i wonder, who the we are? His peers, the wealthy perhaps? The higher rate tax cut does sort of demonstrate that the wealthy aren’t planning to give up some of their wealth for the good of the UK. Quite the reverse, to achieve some balancing of the finances ledger of their England they are setting about lowering the living standards of the non-wealthy’s UK. And remember the advantage of wealth is mobility so if their financial measures fail why then there are always countries ready to welcome the wealthy, no questions asked.

    22. muttley79 says:

      @Bugger
       
      Their model is the USA.
       
      Correct, and the Westminster elite and their City of London chums have been moving in this direction since the 1980s.  Conservatives-Labour in the UK and Republicans-Democrats in the USA: both serving corporate interests, and isolating trade unions and social democrats.  That is why our very own Douglas Alexander was/is alsways extolling the virtues of Bill Clinton’s brand of politics.  He also was sent over to the USA.

    23. Arbroath1320 says:

       
      Morag says:
       

      Excuse me, this is off topic, but if I’m not mistaken today is the anniversary of the signing of the Declaration of Arbroath in 1320.  “Scotland Day” in the USA.
       
      If the Scottish government is serious about having the 2016 Independence Day in “late March”, I hope they will at least consider letting it slip to 6th April.  I’d prefer a day in high summer, for the barbecues you know, but failing that, well, it’s nice out this morning and the spring flowers are in bloom.
       
      Agreed Morag! 😆
       
      This is just typical of Labour. They have, as we all know lurched so far to the right that they have out-righted the right of the Tory party. Labour are so desperate to get back into power they will do and say anything that they think will appeal to their, hoped for, new best friends in the South East of England. It is so pathetic of the UK political elite that we are now in a state of two of the three main UK parties are constantly trying to out right each other just to get their grubby little paws on the keys of number 10. NEITHER party gives a damn about the electorate especially the unemployed and low paid. They are too busy snorting at the Westminster trough of gold and smoozing with the rich list in the city of London!

    24. megz says:

      http://orderorder.files.wordpress.com/2012/03/labouremailleak.pdf
      dunno if this has been posted already or not.

    25. CameronB says:

      This is what a race to the bottom must look like, which as always, is ably jockeyed along by those blessed bankers.
       
      And their neck and neck coming up to the line. Blue Labour and Red Tory, Blue Labour and Red Tory, Blue Labour and Red Tory……and its a photo finish at the end to separate these two worthy thoroughbreds.
       
      Vote Yes in 2014. Please.

    26. CW says:

      As William McIlvanney said in The Herald today, there is no Labour Party anymore. There is only the blue team and the red team. They are effectively the same.

    27. Barontorc says:

      Thank goodness Willie has at last come out and said the obvious. This cannot go on. Constantly devaluing all that’s dear and hard fought for is not to be taken away so easily. 
       
      Did we want casino banks? Did we want Trident? Do we want to lose the NHS? Do we need these parasitical money-changers who create absolutely ziltch, but benefit enormously from usury?
       
      Get real folks – this is our future in Scotland we’re talking about and anything we do to change this fu**ed up system will benefit all the rest of the rUK punters who’re gonna suffer under it.
       
      Grasp the thistle!

    28. alexicon says:

      Remember folks, when it come to the 50p to 45p tax rate, Ed Balls, as usual, is talking from a hypocritical stance.
      The Labour party maintaned the 45p tax rate for around 12.5 years of their tenure in power, only scynically putting it up to 50p a few months before the 2010 GE.

    29. cynicalHighlander says:

      Morag says:
      6 April, 2013 at 1:28 pm

      “If the Scottish government is serious about having the 2016 Independence Day in “late March”, I hope they will at least consider letting it slip to 6th April. I’d prefer a day in high summer, for the barbecues you know, but failing that, well, it’s nice out this morning and the spring flowers are in bloom.”
       
      Its still snowing here with the trees laden giving a good xmas scene.



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