Labour’s cut to disability benefits is not the mark of a government making “tough decisions”, but desperate ones, writes Will Cooling
One cannot go far at the moment without finding Labour ministers and their outriders bragging about their willingness to take tough decisions. Whether it be desperate foreigners, cold pensioners or quango bureaucrats, the message is being clearly communicated that no one is safe from a government committed to confronting this country’s problems head on.
Perhaps the most controversial aspect of this push has been its mooted cuts to disability benefits, with the government looking to secure as much as £7bn through a combination of freezing the benefits and changing the eligibility criteria. We are, however, told that this is not about saving money, but about saving people from being left to live on benefits for the rest of their life. That the government is planning to reinvest only a seventh of these savings back into measures to support disabled people in the workplace, and is indeed focusing its attack on the Personal Independent Payments that are paid to severely disabled people for support they need to live independently regardless of employment status, calls this claim into question.
That Labour daren’t consider more broad-based changes shows they are focusing this raid on the disabled, not because it’s hard, but because it’s easy
Disability benefits are another blow after National Insurance rises
But leave all that to one side for the moment. How does this fit into the government’s broader economic policies? When they’re not desperately scrambling for money to invest in public services, Labour is in the process of making it much more expensive to employ people, most infamously by increasing employer national insurance contributions by both increasing the headline rate and lowering the threshold at which payments start. But they are also increasing the minimum wage and eliminating the discount for younger workers, loading onto employers the cost of a new entitlement to sick leave for lower paid workers, and ensuring more workers have access to the rights that established employees enjoy. When challenged by employers that this will force them to eliminate low-paid jobs, ministers apparently welcomed this, believing it would increase national productivity.
The worrying thing is that this is exactly what George Osborne claimed to be trying to do when he paired brutal cuts to working tax credits with his decision to ignore the Low Pay Commission by increasing the minimum wage by diktat. Funnily enough, unlike poverty or inflation, productivity was the one economic metric that didn’t go up after his reforms. These are of course all connected; wages went up but employers passed the cost onto customers which meant prices went up which negated the wage increases and made benefit cuts hit all the harder. There’s no reason to think that Labour haven’t just successfully cooked up a larger version of this hot dose! Worse, these measures are justified on the basis that they don’t cost the government money, even though public services feel the full force of Labour’s workplace reforms as much as any private company.
An alternative solution: changing the retirement age
It’s not hard to think of a better alternative. For example, many of the people being placed onto disability benefits are people who are approaching retirement but whose bodies break down before they quite get there. This, of course, exposes that the retirement age is only a crude heuristic we use to determine when someone is too old to expect them to work. Why not reform the system so that those over 60 years old can apply to receive their pension early if they are found to be medically unfit to work. This could be paid for by raising the standard retirement age to 70 years old, so that we pay fewer healthy older people to stop working. Such a measure would be focused on prolonging the careers of people at the top of their professions, and would so have a strongly positive impact on national productivity.
Of course the problem is that given the way we’ve typically phased in changes to the retirement age, such a change would not save money now. That Labour is only considering measures it can persuade the Office for Budget Responsibility will save money in the short term highlights that it is desperation to avoid tax rises or cuts to public services that is motivating this demand for benefit cuts. That Labour daren’t consider more broad-based changes shows they are focusing this raid on the disabled, not because it’s hard, but because it’s easy.
Will Cooling writes about politics and pop culture at It Could be Said Substack