George Osborne and Ed Balls walked through the Commons division lobbies together on Wednesday as MPs from all parties voted for a £119.5bn cap on key parts of the welfare bill.
A total of 22 MPs refused to support the cap, including 13 Labour backbenchers who claimed the chancellor had imposed the new discipline as part of a trap designed to portray the opposition party as “the party of welfare”.
Mr Balls has been determined not to fall into the trap; he supports a cap on most benefit spending and is at pains to prove that Labour would be a competent and tough steward of the public finances.
The sight of some prominent Labour MPs, such as Diane Abbott and Tom Watson, voting against the party line was seen by Mr Balls’ supporters as a useful signal that the shadow chancellor was prepared to take tough decisions.
The welfare cap of £119.5bn was added to the government’s fiscal mandate by a vote of 520 to 22, but this was only the first stage of Mr Osborne’s attempt to put Labour on the “wrong” side of the welfare debate.
The chancellor will go into the 2015 election with a plan to lower the cap to reflect his plan to make a further £12bn of welfare cuts in the next parliament: he says the cuts are needed to eliminate the deficit.
The Conservatives, who have not been clear about how they would achieve such a large saving, would nevertheless challenge Mr Balls to say whether he would match the cuts and – if not – which alternative cuts or tax rises he would implement.
Ms Abbott said she would not support the welfare cap, claiming that the concept had been promoted by Mr Osborne solely to create dividing lines with Labour.
“This is not a game, this is people’s lives,” Ms Abbott said. “Social security, people’s lives, should not be a matter of short-term political positioning.”
Mr Osborne believes the new welfare cap is already forcing Labour to confront difficult choices.
For example, Mr Balls wants to reverse the “bedroom tax” or “spare room subsidy” introduced by the coalition, a policy the Tories claim would add £460m to the welfare bill.
The shadow chancellor has indicated he would withdraw winter fuel payments from richer pensioners, but that would only save about a quarter of that amount.
Mr Balls argues that Labour’s plans would be fully costed and argues that Mr Osborne is blocking his suggestion that the independent Office for Budget Responsibility be allowed to audit the manifesto promises of each of the main parties at the next election.
Welfare is expected to be a big dividing line at the next election between the three parties; while the Tories want to cut a further £12bn from the benefits bill, both Labour and the Liberal Democrats believe higher taxes on the wealthy should shoulder at least some of the burden on cutting the deficit.
Posted: Wed Mar 26, 2014 10:54 pm