LIAM BYRNE – Social Security reform
Thursday, 06 June 2013
Speakers: Liam Byrne
ED: I want you to avoid critiquing the Conservatives, the coalition’s, welfare policies because we’ve got a lot of debate about that…
LB: I’ll do my best…
ED: Tell us what you think is most important in this speech today.
LB: First that the way to put the system back on the even keel for the long-term is to get people back to work so you are absolutely right to highlight that core-argument. Long-term worklessness is now at the highest level for 16 years. We’ve got to do more to get people back into jobs and that is why we are saying people should only be allowed to spend a couple of years on JSA and at that stage they should have to get a job and you are right to say we are also saying we’ll invest in helping make sure those jobs are available. Second, we do think that a cap on structural social security spending is a good idea because it forces you to make some long-term reforms and what Ed is doing today is he is setting out what Labour sees as the Labour way to do this, so we’re saying, we spend £30bn on tax credits, that bill is going up, not least because of levels of low pay in many firms so if we did more to actually force through a living wage in different parts of the country you could bring that bill down, but we are also saying, as you rightly highlight, the Housing Benefit bill is going up and up and up, we’re spending 95% of the money we spend on housing on Housing Benefit and only 5% on building houses. That doesn’t make sense and what a lot of councils are saying to us is that if they had more power to regulate and control prices in the private rented sector, they could create some savings which we could recycle into building more homes. And then finally we’ve got to do something about raising the employment rate amongst disabled people. The current Atos assessments are failing very badly, you are ten times more likely to end up in court than you are in a job and I’m afraid that isn’t good enough so we need some fast and fundamental reform of those systems too.
ED: Ok. Can I ask you just to give a very brief assessment of what you think the last Labour government did wrong because clearly it is a pretty big change in direction. This government is trying to change direction, you want to change direction, I mean it starts in a sense doesn’t it, with a sense of what you didn’t do when you were in office, so what is your analysis now of the last Labour government?
LB: If I was reliving, if we were going through that period again I suppose there are two things that we would have done differently in my view. I think we would have moved faster on Incapacity Benefit reform. It is a highly sensitive issue, you have got to do it carefully, the government frankly is making a mess of it but I think we should have moved faster on that, and second I think we should have done more to put the ‘something for something back’ in the social security system. One of the really important arguments Ed is highlighting today is that a lot of people feel they put a lot of money in and they don’t really get much back out when they need it and that is especially true for working parents and it is especially true for people in their 50s and so we are just beginning to float a few ideas today about how those who put more in do get more out, particularly support that might help them get back into work and retrain for a different career if they lose their jobs.
ED: Let’s look at some of the proposals here and I’m assuming by the way that these are not detailed policy yet, there are approaches that you are outlining and you haven’t…
LB: Correct, these are the principles that will guide Labour’s approach to long-term social security reform.
ED: One of the areas which is sort of, a bit difficult for you is of course, that times are going to be financially constrained, and that much has been agreed by everybody and quite a lot of the proposals look like they involve spending more money rather than less, or at least spending more in the short-term rather than less, because, for example, if you want to deal with the problem of low-pay in order to save welfare support for the low-paid, and if you propose to pay companies to pay their workers less, that is more money to less money isn’t it, and there are a number of other things, if you want to, for example, build more houses, I mean obviously it is not quite the same kind of extra spending, but that is more money rather than less spending isn’t it?
LB: Great question. So if you take for example, low pay, lots of people say to us, ‘why are we subsidising low pay with tax credits?’ And I think people have got a point and so we can deal with this partly by tackling abuse of zero-hours contracts, tackling abuse of the agency workers freedom’s too, but the idea of living wage zones is that you bring employers together to say ‘look, if you’re prepared to put people on a living wage, which in London is about 1/3rd higher than the national minimum wage, over the course of time as savings are made we’ll recycle some of those savings into helping you upgrade skills and upgrading capital equipment, basically making your firms more productive.’ So you are right to say there isn’t upfront money to ‘prime the pump’ as it were but there is a shared savings way of doing things. The same is true on Housing Benefit. A lot of councils are saying, if you take my home council in Birmingham, they spend about £200m on Housing Benefit in the private rented sector, and what councils like Birmingham are saying is ‘if we had some more power to regulate the private rented sector, used some kind of collective purchasing, we could drive that bill down and what we could then do is use the savings to help build more social housing which would bring rent-levels down over the long-term.’
ED: I think there has been some scepticism about whether that is going to make any difference. I mean if you re-introduce rent controls it might make a difference but you are not going to help the long-term problem of supply by capping rents and making it less profitable to build and to produce rented accommodation I wouldn’t have thought.
LB: But these are medium-term changes, these are not kneejerk, overnight success stories…
ED: Are you talking about a regulated rental sector, the re-introduction of rent controls and the like.
LB: I think that might be going a bit far. What we are saying is that local councils are saying that they’ve got lots of ideas for how they can make savings and they’d be prepared to crack-on with that if there is a promise on the table to share in the savings to build more houses but, I guess, the reason that we are saying that a long-term cap on social security spending makes sense is because it forces you to engage in these long-term reforms and these long-term reforms are quite a contrast to the kind of kneejerk, salami slicing un-strategic approach the government is taking…
ED: Long-term reform, no-one is going to disagree with that. What happens if you have a cap, say measured over a three year period and in the end of the second year you can see blatantly you are going to breach the cap, where would you be looking to claw back the savings, is it going to be tougher eligibility requirements, is it going to be reductions in the level of benefits for those who might have suspected to get quite generous benefits?
LB: I think this is at the core of the debate and what we’re saying is if you have got a long-term cap it forces you to plan ahead and grip things that are not working, so I’ll give you an example. The Work Programme at the moment, we know is not doing especially well. Now at the moment the government, arguably, is taking a bit of a hands off approach to sorting that problem out, if you have got a cap on social security spending I’m afraid you just don’t have that latitude, you have got to get a very quick handle on things that are going wrong.
ED: I fear you haven’t really answered the question as to where you look to sort of claw things back… because the cap isn’t a target as I understand it, it is different from a target isn’t it that you are allowed to breach a target, and you say ‘well, that is disappointing.’ But a cap is a cap.
LB: A cap is a cap and obviously you set your social security budgets each year within that cap but what a long-term approach forces you to do is not let problems lie. It forces you to get absolutely stuck into fixing things…
ED: Doesn’t avoid the difficult decisions…
LB: It certainly doesn’t avoid the difficult decisions but what it does force you to do is actually get a grip on stuff that frankly is failing.
ED: Now what this new approach to welfare, let’s call it a new approach to welfare and let’s assume that you can put flesh on all these sort of ideas that are out there, they are not going to get you out of some very ordinary decisions that have to be made and that the current government is going to confront you with. I mean most notably they have removed Child Benefit for higher rate tax payers, is that something the Labour Party believes is a good idea or a bad idea.
LB: If we were in office today that is not a change that we would have made, we think it is the wrong idea. But we are being completely candid that the inheritance in 2015/16 is going to be bleak. The budget that we inherit is our starting point; any changes that we make to that budget have got to be fully funded. We are going to be introducing some quite tough long-term controls on social security spending, a triple-lock if you like which means a 2 year limit on JSA…
ED: But basically Child Benefit for higher rate taxpayers is not coming back under Labour is it, it is gone now.
LB: We can’t make any changes that are not fully funded and this is a couple of billion quid, that is a large amount of money and there will be a big queue of things that we want to get done.
ED: Just one other quick one, there’s been a bit of a debate about whether people who have more children than they can support themselves, than they could reasonably have expected to support themselves. Whether how much generosity the benefits system should bestow upon them. Would you ever agree with the idea that people who have, say more than two children should get no more benefit than those who stick with two.
LB: I personally think it is a very bad idea. Because one of our proudest achievements in government was lifting a million children out of poverty all that good work is being undone by this government and what we should be doing, frankly, is helping parents work and indeed, one of the things Ed is talking about today how we do more to help lone-parents prepare for work as their child approaches school age so, look, child poverty remains a great cause and crusade for the Labour party and we are not going to back away from that.