Saturday, 31 January 2015

Cast aside 'illusions' of lingering on benefits under Labour, says Reeves

The new shadow work and pensions minister has said in her first interview that Labour will be tougher on welfare than the Conservatives.

Rachel Reeves said a Labour government would cut the welfare bill and that ‘nobody’ should be under any illusions that they will be able to ‘linger on benefits’.

Speaking to the Observer on Sunday, former Bank of England economist Ms Reeves said the long-term unemployed would have to take up a guaranteed job offer or lose their state support.

‘Nobody should be under any illusions that they are going to be able to live a life on benefits under a Labour government,’ she said. ‘If you can work you should be working, and under our compulsory jobs guarantee if you refuse that job you forego your benefits, and that is really important.

‘It is not an either/or question. We would be tougher [than the Conservatives]. If they don’t take [the offer of a job] they will forfeit their benefit. But there will also be the opportunities there under a Labour government.

‘We have got some really great policies – particularly around the jobs guarantee and cancelling the bedroom tax – that show that we are tough and will not allow people to linger on benefits, but also that we are fair. Where there are pernicious policies like the bedroom tax, we will repeal them,’ she said.

Labour’s jobs guarantee scheme would offer under-25s a job after one year of unemployment and over-25s will be offered one after two years out of work. Ms Reeves claimed this scheme, which she said would be paid for by a tax on the bonuses of bankers,would take 230,000 long-term unemployed people off benefits.

She continued: ‘Compared with 2010 the government is spending £9 billion more now on social security. More people are long-term unemployed, more people are on housing benefit, and 4.8 million people are being paid less than a living wage, up from 3.4 million in 2009.

‘So you have got more people in work claiming tax credit and housing benefit to make ends meet. You have got a million people on zero-hours contracts… you have got 1.5 million who are working part-time who want to work full-time.’

Ms Reeves hinted that her party would make a manifesto commitment that procurement contracts in the public sector would go to companies which pay a ‘living wage’.

‘You could absolutely do things through procurement. You could make a decision that all your contracts could be living-wage contracts. It is something I think is a good and really exciting idea,’ she said.



Readers' comments (12)

  • Any UK PAYE individual receiving a bonus is already paying between 32% and 47% in Tax/NI.

    In principle the insistence on a living wage being paid by any company tendering for outsourced public sector work sounds good - but simply means that the cost of those tenders will be higher! Remains to be seen if you can then claw back that wage increase from extra Tax/NI on wage increases and/or reduction in welfare entitlement for affected individuals.

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  • Daedalus

    Sounds good in theory - can't see it actually working.

    The scheme will be funded bu a tax on banker's bonuses. They will quite easily find another way to pay the bankers to avoid this tax.

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  • This is brilliant news for the majority of benefit dependents who are low waged. Clearly, this is not a commitment to rob them of their ability to meet the cost of living so this declaration can only mean at long last the Labour Party is committing to a policy of making work pay by ensuring wages cover the cost of living free of benefits. Well done, and not before time.

    I look forward to seeing the details of how a minimum wage worker will be able to afford a market rent without benefit under this scheme.

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  • Melvin Bone

    As Daedalus said the bankers are cleverer than the government and will sidestep the legislation I'm sure...

    BTW is there an actual figure for this 'living wage'?

    Will Labour just raise the minimum wage up to this figure?

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  • and they weren't so tough when in power because? I'm personally bored with all parties toughening up when it suits them. I'm also bored with the idea that all the long-term unemployed are choosing to be so over working.

    Something else that doesn't seem to have been thought is that shoving them anywhere to get the figures looking good is not likely to do any good in the long term.

    Many long-term unemployed, such as my partner for example, have specific skill sets and would not want be shoved into jobs that are well beneath those skills (that he worked hard to get). I wouldn't like it either.

    Like many he has paid into the system for many years until ill-health forced him out and if it were not for the haphazard and quite frankly often lousy support he got from those that were meant to help him, he'd have got back in a lot sooner. I'm sure he's not the only one!

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  • F451

    Being tough on the victims of economic policy failure and the failure to bring about a fairer income from work does not equate with being tough on the causes of failure.

    Labour should be the one party against victim abuse not siding with the abusers and demonisers. They are behaving like the worst Toryphiles out eviling the Tories.

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  • Let’s correct a few neo-liberal myths shall we?
    Low wages means less spending in the wider economy so a vicious downward spiral of economic decline (Why did Henry Ford pay his workers $5 an hour? So they could buy the cars they were making).
    Any 'savings' in contract costs through lower wages are illusory - wages have fallen far more than any notional savings achieved through out-sourcing. Check out the cost of any outsourced contracts you have and compare to the wages of staff. Don’t forget that profits have taken a growing share of national income since 1980 BUT investment has steadily fallen. Why invest when the state happily subsidies wage costs or provides free, compulsory labour (you will note that the New Labour Jobs Guarantee now no longer mentions anything about the mandatory job having a minimum wage)?
    Social security to people working is not subsidising those people - it is a subsidy for employers who won't pay a decent wage. And the vast majority of these employers are not in global businesses (e.g. manufacturing) but in the service sector where it is unlikely that we face an onslaught of Chinese pizza delivery firms or care home providers.
    Low wages are creeping up the income scale – how long before what we happily call the middleclass no longer exists? Even in Surrey…
    What is saddest of all though is that the best Labour can come up with is more spiteful, savage attacks on the unemployed (the vast majority of whom do not choose to be unemployed) and the weakest of warm words on raising wages for people who are working. Can anyone anywhere tell me what Labour is for other than to create an illusion of multi-party democracy?

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  • Existing Tax/Welfare systems combine to mandate a doubling or maybe trebling of NMW - before all working welfare recipients earn enough to come off welfare.

    If a working welfare recipient earns an extra £100 weekly - they take home just £68 after Tax/NI - then lose 85% of that £68 in welfare clawback - keeping just 10.2% of their gross extra earnings - assuming that extra £100 is in excess of the "applicable amount" ie JSA.

    That clearly is a massive disincentive to especially those needing to work extra hours to increase earnings - and more so where child care is involved.

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  • New labour are the political organisation that represent a coup
    whereby the upper and middle class establishment have been able
    to take over the working class party and turn it into another
    conservative party, and furthermore ,New labour also aim to
    oppose and diminish the stabiltiy of the working classes.
    New labour have been totally awful for tenants and working class
    communities during their 13 years in power, as they allowed
    housing rents to go up by over 200% as well as collassal
    price rises in all basic necessities and services.
    New labour have also rung up a £1 trillion national debt by spending
    these sums on the upper and middle classes, as well as creating
    a hugh deficit by bailing out mega rich bankers........the British poor
    are now being devastated by the "con dems " reducing the welfare
    state to pay off New labours/ Bankers debts.

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  • Richard Mandunya

    If you believe this, you'll believe anything! It's like the cat saying a pet mouse can expect it to treat the mouse better than its owner. I know who I might believe.

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