James Forsyth
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Welfare reform is an ever more emotional issue in this age of austerity. As one Conservative Cabinet minister observes, when money is tight, people become more ‘right-wing’: more concerned about looking after their own and angry at the 300,000-odd families with no members who have ever worked.
The political fact is inescapable. When I went to watch Ed Miliband meet a group of manufacturing workers in Sunderland late last year, it was striking how many of their questions were essentially diatribes about how those on benefits had the same standard of living as they did. This is why Miliband and the ‘Blue Labour’ thinkers are trying to revive the idea of a contributory welfare system — what you put in is linked to what you get out. They think that will be the best way to preserve support for the welfare state, and perhaps the only way.
The other plank of Miliband’s strategy is to link irresponsibility at the bottom to irresponsibility at the top; to describe the welfare cheat and the ‘predatory’ capitalist as two sides of the same coin. This is clever politics. In the same way that Labour is vulnerable to being seen to defend ‘welfare scroungers’, the Tories are at risk of appearing to be for ‘the undeserving rich’.
Every focus group, one senior Tory says, reports the same complaint from voters: people at the top and the bottom are putting too little in and getting too much out. The people in the middle have come to believe that they are being squeezed from both ends.
If welfare reform offers some answers to what to do about irresponsibility at the bottom, the question of what should be done about irresponsibility at the top is much more complex. The rhetoric of the Occupy movement — the 99 per cent vs the 1 per cent — has a certain political appeal; Miliband has used it at Prime Minister’s Questions. But if the top 1 per cent is calculated in terms of household income all three party leaders would be in it.
In the next few months, Labour will try to build on Miliband’s much-mocked conference speech attacking ‘predatory’ capitalists. There will be more suggestions about how Labour would try to curb executive pay and more attacks on supposedly irresponsible business behaviour. For his part, David Cameron will talk more about the need for fairness in terms of rewards at both the top and the bottom. He’ll stress the need for transparency on executive pay and people’s obligation to put back into society. This will form part of his long awaited speech on ‘moral markets’.
But perhaps the most interesting development is a planned address by Nick Clegg on ‘responsible capitalism’. It is easy to mock speeches with titles like this — politicians don’t praise irresponsible capitalism. But this speech marks an effort by the Deputy Prime Minister to move on to territory that the Labour leader has tried to make his own. Allies of his are dubbing it ‘the speech Ed Miliband should have given’.
Clegg will argue that the way to foster a more responsible capitalism is to change the power structure within companies, to create more checks and balances. He’ll advocate far greater shareholder control over executive pay and push for an increase in employee ownership in the private sector.
The intention is to set out a distinctly liberal position on the issue that contrasts with both Labour’s commitment to a more active state and the Tory belief that what is needed is more transparency and a greater sense of morality. This is typical of the new approach that the Cleggites are taking to coalition. They believe that they have now shown the country and the markets that the coalition is stable and will last the course. This, they say, has earned them the right to ‘ramp up the differences on issues that don’t threaten the coalition’. So while the two parties will continue to present a united front on deficit reduction and foreign policy, Clegg will articulate a more distinctly Liberal Democrat view on other matters.
But amid all this politics, the coalition mustn’t miss the wood for the trees. For all the emphasis on the top and bottom 1 per cent, the real challenge is to foster a popular capitalism that can deliver rising living standards for the population as a whole.
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