In many articles and editorials in the past, Left Horizons has described Keir Starmer’s disastrous leadership of the Labour Party as “Tory-lite”. But in his government’s approach to welfare benefits Starmer has gone full Tory. There is absolutely nothing being said by Labour ministers over cuts in welfare benefits, or by their loyal supporters in the Parliamentary Labour Party, that could not have come out of the mouths of any Conservative leader of the last fifteen years and indeed his approach is winning praise from former Tory ministers.
There are reports in the press today that the government is rowing back on some of the cuts it had proposed, specifically the freeze on ‘PIP’, Personal Independence Payments, which many disabled people receive. But there is still a threat that PIP will be made more difficult to obtain, so no-one should be fooled by this minor climbdown.
It is not incidental that both Rachel Reeves and Keir Starmer have ‘form’ on the issue of benefits. In October 2013, long before she was Chancellor, she made it clear that on welfare benefits, her version of ‘Labour’ “would be tougher [than the Conservatives]. If they don’t take it [the offer of a job] they will forfeit their benefit”.
Only a month before this, Keir Starmer, who was then the Director of Public Prosecutions, announced a ‘crackdown’ on benefit fraud. “Benefit cheats in England and Wales” the BBC reported, “could face longer jail terms of up to 10 years, following new guidance from the director of public prosecutions”.
Liz Kendall is to confirm the detail of the benefit cuts in the Commons next week, but it seems clear that the government is planning to do what even Tory Chancellor George Osborne didn’t dare to do, despite his years of cuts in other welfare benefits, that is to attack PIP on which so many disabled people depend. The new cuts may also include reductions in incapacity benefits, which go to those who are too ill to work. Altogether, a total of £6bn of benefit cuts are expected to be announced.
There is no ‘moral’ case for cuts in welfare to the disabled
Echoing George Osborne and other Tory axe-wielders in the past, Starmer makes the ritual promise to protect ‘the most vulnerable’. But this is just the usual smokescreen for hitting the benefits for the big majority – the Times thinks a million disabled may lose benefits. Aware of the growing disquiet among Labour MPs, Starmer is even trying to present a “moral” case for cuts in welfare benefits.
While misgivings and anger are growing within the Labour movement, Tory politicians are full of admiration for what Reeves and Starmer are doing. One “Tory Treasury veteran” was quoted in the Financial Times, as saying “Labour can do things that we couldn’t do because people don’t question their motives: they can wrap up tough stuff in social democratic language.”
Unsurprisingly, those charities that support the disabled have reacted with anger against what is planned. No fewer than seventeen disability charities wrote a collective letter to Rachel Reeves, urging a “rethink”.
“For millions of disabled people”, the charities say, “these benefits are a lifeline. They are the difference between surviving and being pushed deeper into poverty”. Despite the empty promises of “encouragement” and looking after the “most vulnerable”, these are going to be cuts in benefits, plain and simple. Disabled and long-term sick people are going to face the same harassment, interviews, pressure and sanctions that have been faced by the unemployed and others on benefit for years.
Many disabled are alreay in great poverty
“Making cuts to disability benefits would have a catastrophic impact on disabled people up and down the country,” the charities’ letter adds. “Scope’s analysis of government figures shows that without PIP, a further 700,000 more disabled households could be pushed into poverty…”
Large numbers of disabled people, currently dependent on PIP, are already in great poverty. For the disabled, there are already extra costs and overheads in their everyday lives and the impact of cuts to benefits for many will be devastating. Moreover, as the charities point out, “there is little evidence to suggest cutting benefits increases employment outcomes.”
This is not an exercise in “helping people into work”. It is cost-cutting, pure and simple, in an attempt to manage a burgeoning government budget deficit. For ministers and MPs used to living a different life-style far removed from that of working class people, cuts to welfare are simply ‘low hanging fruit’.
They are ‘easy’ cuts to make, because the poor, the sick and the disabled are the least able to fight back. There is not even a whisper of an attempt to cut the government deficit on the backs of the rich and super-rich, or by plugging the huge holes that leave the rich dodging taxes on an industrial scale.
It is not as if benefits in the UK are high – in comparison to other advanced capitalist countries, they are not. A recent report from the National Institute of Economic and Social Research explains that welfare benefits in the UK are among the worst of comparable countries.
In terms of living standards in general, the NIESR report says, “The poorest households in Slovenia and Malta are now better off than the poorest in the UK: whereas real incomes grew consistently before the 2008 financial crisis, the stagnation afterwards has meant that other countries have overtaken the UK standard of living”.
The UK has some of the least generous welfare in the OECD
When it comes specifically to welfare payments, the research of the NIESR is also quite clear: “The UK has some of the least generous welfare across the OECD: the UK ranks in the middle of OECD countries for welfare spending (as a per cent of GDP) and third lowest for welfare value (per cent of average wages)”.
“Welfare has only covered the cost of essentials in two out of the last 14 years”, the report says, “only during the pandemic did welfare cover the costs of essentials due to the £20 per week uplift to Universal Credit”.
Overall, between 2010 and 2019, the Financial Times, points out, the UK is in 21st place among the advanced economies for the amount spent on welfare as a percentage of GDP. In short, the Institute points out, “The UK is neither a high wage nor high welfare country…”
These cuts have not come from a clear blue sky – they were predictable and were predicted. It has been clear for some time that the general trajectory of this government is towards cuts in living standards, beginning with cuts in the ‘social wage’ – that is, cuts in the services and benefits on which workers depend. The very first Left Horizons editorial after last July’s election made that clear. “…the economic realities of British capitalism will begin to bite”, we wrote. “That will spell more austerity – this time ‘Labour’ austerity – dressed up as hard choices”
Big business ‘strike’ of capital pushes up interest rates
As long as Labour policy is based on capitalism, it is inevitable that the system, will dictate to Labour. Rachel Reeves and Keir Starmer have no conception of any strategy that goes outside the bounds of the market economy, and under the circumstances where the system is unable to squeeze out profits any other way, cuts are inevitable.
The relatively modest increase in National Insurance payments for business, which was announced in the last autumn budget, has led to a backlash from the big corporations, hedge funds and the financial wheeler-dealers, so that that they have pushed up interest rates on government borrowing. There has been a ‘strike’ of capital and the government is only able to sell bonds – and therefore finance current spending – by raising interest rates. From having been 3.75% six months ago, 10-year government gilts are now at 4.67%.
This increase means that interest paid by the government on the National Debt, ie on the government bonds, has risen far above original expectations. The Office for Budget Responsibility, which more or less dictates fiscal policy to Rachel Reeves, estimates that current government payments on interest will be well over £110bn a year, more than four times higher than they were four years ago.
As long as the Chancellor sticks to her ‘financial rules’ about borrowing not exceeding current expenditure, then this hike in interest payments to the financial institutions, hedge funds and assorted parasites, has to be paid for by government cuts. As interest rates have shot up, suddenly, as if by magic, Starmer and Reeves have ‘discovered’ that welfare payments are ‘excessive’, and need to be cut. Moreover, they have been cheered on by Labour’s right wing.
In addition to paying off bankers and finance houses, Starmer is making the government’s financial position worse by his determination to raise UK Defence spending by an additional £13bn a year. So to pay off bankers and to buy more Typhoon jets, Reeves and Starmer are going to make sure a million disabled people will be forced deeper into poverty.
Ministers all accept the logic of Reeves’ fiscal restraint
We have to ask the obvious question, where is the opposition, besides an angry letter from a group of charities? It will not come from within the Cabinet; although some ministers complained about ‘their own’ department cutbacks, not a single one objects to Reeves’ fundamental approach of ‘balancing the books’ or increasing Defence spending.
Neither will Labour MPs offer much opposition. The Parliamentary Labour Party, apart from a minority on the left, is overwhelmingly dominated by careerists, carpet-baggers and chancers many of whom were parachuted into constituencies against the wishes of local Labour members.
There may inevitably be disquiet among MPs, because so many of them can see which way the wind is blowing, and they look like being one-term MPs, as Reform UK rises in the polls, and even the Tories make some headway.
There is even a group of thirty-six ultra loyalist backbench MPs who have formed a new parliamentary group, called the Get Britain Working Group. This reasonable-sounding name is camouflage for a group that should really be called the Let’s Slash Welfare Payments Group, as they cheer on Liz Kendall, wielding the axe.
But even those MPs with misgivings – and some may abstain or even rebel in parliament – will only whine and bleat about government policy, essentially because their own political outlook is so wedded to capitalism and the status quo that they can conceive of no alternative.
The key to opposing Starmer’s policies is the trade union movement. The overwhelming majority of trade union members will be opposed to these welfare cuts. It is doubtful if there is a single trade union affiliated to the Labour Party that does not have official policy opposed to them. The problem is, however, with a few exceptions, most trade union leaders have swallowed the Starmer/Reeves strategy hook, line and sinker.
Right wing union leaders have backed Starmer at every step
The representatives of the big three right wing unions on Labour’s NEC – the GMB, USDAW and UNISON – have backed Starmer every step of the way. They supported the unconstitutional exclusion of Jeremy Corbyn, they collaborated in freezing out local parties so hand-picked right-wing candidates could be parachuted into constituencies and they upheld all the moves the party leadership made to the right – even though these shifts were against the interests of their own members.
It will be within the rank and file of the trade union movement that opposition will develop. Labour’s right wing are already feeling the heat and that is why they are muttering, mostly in private and to themselves, about these welfare cuts. If the ground is shifting under their feet now, it is nothing to what these Tory infiltrators will feel when anger erupts at union conferences in the coming months.
Feature photograph from BlueSky post of Disability Rights UK.
