Labour's benefits reforms are absolutely necessary and long overdue
One overcast Saturday morning in 2002, I was holding an advice surgery for constituents in Castlemilk, the poverty-stricken housing estate in the south-east corner of my Glasgow Cathcart constituency.
It was a relatively quiet session, but a visit by two young men has remained in my memory ever since. They were about sixteen, had just left school and one of them (his mate was only there to offer moral support) wanted to know how to claim out-of-work benefits.
The boy was explicitly looking for long-term financial support that would excuse him from the task of ever having to seek work or full-time education. When I asked him what physical ailment prevented him from getting a job, he replied with a knowing smirk towards his friend: 'Bad back.'
I didn't ask if any of his own family members were claiming what was then known as Incapacity Benefit; I didn't have to. There were few families in the area, then or now, whose income didn't rely at least in part on the largesse of the state, despite the fact many members were of working age.
Even before I became an MP, I had toured my local constituency Labour Party branches urging members to support the Blair Government's efforts to reform the system.
I probably used many of the clichés and blithe assumptions that Labour MPs use today to defend their support of the Work and Pensions Secretary, Liz Kendall, and her plans to institute genuinely radical reform: that Labour is the party of work, not of benefits.
The clue in the name! Many people on out-of-work benefits want to work; they just need more support to do so.
Neither of these statements is strictly true. Yes, Labour was founded to represent the working classes in Parliament. It's also true that one of its founders, Keir Hardie, had little time for those who chose worklessness over employment.
But culturally, today's party is dominated by middle class activists to whom the prospect of a Labour Government forcing benefit claimants into work is anathema. And while the claim that 'many' might prefer work to benefits is in some degree true, it is far too small a degree to make much difference to the economic necessity of reform.
And that is the fundamental challenge that Kendall and the Government face: if Britain is to be transformed in a way that will radically reduce the numbers claiming out-of-work benefits, it will need to disappoint – nay, enrage – many of its supporters.
It will need to annoy a large proportion of the people within the party itself, and also a considerable number of (well-paid and productively employed) media commentators and other stakeholders.
There is, of course, an economic case for reducing the cost to the state's finances. And this is especially crucial now because the excuses people come up with are getting more absurd.
In previous decades the preferred excuse of my young constituent and many others for claiming benefits was 'a bad back'. This is a conveniently unevidenced malady. But today more psychological – and therefore even less provable – ailments have become more popular among those hoping to leave the burden of honest labour behind them for a life of watching daytime TV.
The numbers claiming to suffer from stress, depression and even PTSD (which, oddly, affects many who have not served in the Armed Forces) has swelled the claimant numbers.
Britain simply can't afford to continue to fund a situation in which a large proportion of the population is allowed to claim benefits rather than earn a living and pay taxes. This is a truth that can either be faced now, when there remains some opportunity to address it, or in the future, when the rot will have gone too far to stop the country from sliding into national decline and bankruptcy.
Which is where the moral case for Kendall's mission comes in. Labour's Left-wing has been most vocal in its opposition to reform, which is only to be expected: what is the point of being on the Left at all if you don't seize every available opportunity to broadcast your morally superior concerns for poor people that callous Right-wingers, even in your own party, don't care about?
But there is no moral case for living off the hard-earned taxes of those who actually have a job. And there is nothing noble about allowing those who suffer from a range of mental illnesses to remain at home when you know that having a job and working side-by-side with colleagues will do far more to improve their mental health than the status quo ever could.
These are hard truths that previous Governments, including the Labour Government I served, managed to avoid. Electoral considerations always prevailed over the optimistic rhetoric of ministers. This meant that reform was downgraded to a mere tinkering at the edges of the benefits system.
Kendall's appointment as Work and Pensions Secretary was one of Keir Starmer's most astute decisions. She is ambitious and supremely capable. But more importantly she understands what is at stake if she fails. She is far from the heartless caricature that her opponents in the Labour Party describe. In fact she could well be the saviour of countless working class communities that have been scarred by generations of political failure.
But that success depends on difficult short-term decisions that will be drastically unpopular and which will have some painful consequences for some people. It would be easy for the Government to abandon this project for the sake of electoral advantage and popularity. That would be more than a mistake: it would be a betrayal of the very people the Labour Party claims to represent.
Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
36 minutes ago
- Yahoo
Ed Miliband's bet on mini nukes risks backfiring – unless he goes all in
Depending on who you ask, it's the breakthrough technology that will be key to net zero – or a risky, expensive folly. But now, Ed Miliband has placed his bet: Britain is backing mini nuclear power plants. On Tuesday, the Energy Secretary confirmed that the Government will provide billions of pounds towards the development of the country's first small modular reactors (SMRs) as part of a new 'golden age' for atomic energy. They will be designed by Derby-based Rolls-Royce, which emerged victorious from a two-year competition, and come online in the mid-2030s, providing crucial 'baseload' power to the grid. Each reactor will be able to power around 1m homes, one third of the output from a larger, Hinkley Point C-sized reactor. In effect, Mr Miliband is betting that smaller reactors will boost his net zero plans with smaller price tags and faster build times than big nuclear plants - with their size also meaning they can be built in locations much closer to people's homes. Yet with SMRs still to be proven, the key question is: can they actually deliver? Nuclear power has been staging something of a comeback in recent years, as countries including Britain and America endorse it as a way of significantly reducing the costs of the green energy transition. This is because having more 'firm' power on the grid from nuclear reduces the need for extra wind and solar farms, grid infrastructure and backup storage. But nuclear projects in the West have a patchy history, with schemes tending to bust through both their budgets and their construction schedules. Hinkley Point C, in Somerset, for example, was originally meant to cost £20bn – but the final figure may have ballooned to as much as £47bn by the time it is finished, including inflation. It will also have taken much longer to build than anyone had expected, with its original completion date in 2025 likely to be pushed back until the early 2030s. Mini nuclear plants are meant to solve both of these problems by reducing complexity and construction times. They would use the same proven light water reactor technology as large plants. But instead of building them on-site, large sections would be produced in factories and then transported to the site for final assembly – like a high-tech piece of Ikea furniture. Their smaller footprint should in theory bring other potential benefits too, such as more flexibility in where they can be built. In February, Sir Keir Starmer vowed to 'push past the Nimbys' and open up more sites to potential nuclear development, ripping up a previous policy that said only government-chosen sites were suitable. 'Because SMRs are a fraction of the size of a traditional nuclear power station, they can be built in many more locations, providing secure, home-grown energy for our traditional energy-intensive industries to state-of-the-art data centres,' says Sam Richards, of Britain Remade, a pro-growth campaign group. Under Boris Johnson, who was strongly supportive of SMRs, the government previously floated the idea that households could have money deducted from their energy bills if they lived near the football stadium-sized plants, in a bid to quell a backlash. Each Rolls-Royce SMR will generate about 470 megawatts (MW) of power, putting the plants at the larger end of the scale for mini reactors. By comparison, those proposed by rivals such as GE-Hitachi and Holtec International would generate about 300MW. This is far less than the much larger reactors used by under-construction plants such as Hinkley Point C and Sizewell C, which will both house two reactors with capacities of 1,600MW each. On a per-megawatt basis, the mini plants will also be more expensive. Because of their smaller size, the economic case for SMRs only stacks up if the Government ensures they are built at scale and the designs remain highly standardised, experts say. According to a 2024 report by the US Department of Energy, this means at least 50pc of the spending for each plant should be on the factory-made modules. 'The value proposition for SMRs centres around maximising design standardisation and factory production,' the report says. 'Without this, an SMR risks being a civil works construction project without the benefit of economies of scale.' Ministers will also have to be prepared to open up far more sites for SMR development. The first SMRs are likely to be built at either Wylfa, Anglesey, or Oldbury-on-Severn, Gloucestershire, both of which were acquired by the Government last year in a £160m deal, although that is yet to be confirmed. Other options that are already licenced include Bradwell in Essex, Moorside in Cumbria; and existing nuclear sites such as Heysham, Hartlepool and Torness. However, one industry insider suggests the Government should also consider former coal power plant sites and industrial estates that host factories. 'You need to have sites that are closer to population centres, places that cannot take larger plants, that is the sweet spot,' the insider adds. 'To get the efficiencies of scale, you also need to build a fleet. For 'Nth of a kind' costs you would eventually be aiming for, we are talking something like a minimum of six to eight reactors. 'If that happens, this could be a real breakthrough for the industry – but it has to happen at scale.' However, nuclear power still faces huge opposition from some quarters, with no guarantee that households across the country will welcome the prospect of a mini plant nearby. And many critics argue that there is no reason that SMRs should prove any different to larger plants. A project being developed by NuScale in the US, for example, saw multiple budget increases before it was eventually cancelled, while GE-Hitachi's proposed reactor in Ontario, Canada, was recently given an updated price tag of C$21bn. Rolls-Royce has previously said it expected its SMRs to cost between £2bn and £3bn each, but the first one is likely to be significantly more expensive. The Government has already budgeted £2.5bn of spending for the UK programme, up to 2029, before construction is expected to begin. 'Nuclear power is a white elephant and a terrible legacy to leave behind – for countless generations to clean up,' says Dale Vince, the tycoon behind Ecotricity and a Labour donor. 'With nuclear, it's always the same story; decades late, massively over budget and never meets the hype. 'We need more affordable energy – the wind and the sun are our fastest, cheapest, cleanest sources. We don't need new nuclear power stations. It makes no sense to spend vast sums of time and money on them.' Rolls-Royce argues that SMRs can provide 'a British solution to a global energy crisis'. The company is hoping to grab a slice of an expected £500bn market for mini reactors for Britain, generating thousands of skilled jobs and a stable source of work for domestic suppliers. The company has already secured a deal to build SMRs for the Czech government and is vying for business elsewhere in Europe, with the British Government's endorsement of the technology likely to be viewed as an important vote of confidence. At home, however, the biggest obstacle to the rollout of SMRs may ultimately be political, depending on how willing ministers are to reform the planning system and overhaul the approach to building nuclear plants. Currently, nuclear meets around 14pc of the UK's electricity needs. Under the Government's plans, this could rise – although the scale of the SMR programme has already been trimmed back from an expected two to three developers to just one. 'Now that Rolls-Royce has been selected, we need to rekindle the nuclear ambition of the 1950s and 60s, when Britain led the world in nuclear innovation,' says Richards, at Britain Remade. 'That means moving at pace and identifying sites immediately, cutting red tape, and ensuring SMRs don't face the same planning delays that have held back their gigawatt-scale cousins. 'If we get this right, SMRs can help power a new era of energy security, reindustrialisation, and net zero – delivered faster, cheaper and more widely than ever before.' It is a bet that Mr Miliband might just win – but only if he and his Cabinet colleagues are willing to go all in. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Yahoo
38 minutes ago
- Yahoo
Rachel Reeves Unveils Record NHS Cash Boost As She Turns On The Spending Taps
Rachel Reeves has announced a record-breaking cash boost for the NHS as she went on a huge spending spree to secure a second term in office for Labour. The chancellor said the health service will receive an extra £29 billion a year from the Treasury – a rise of 3% after inflation. It means that health secretary Wes Streeting is the big winner from her spending review, which sets out Whitehall budgets for the next three years. She said previously-announced changes to her fiscal rules, allowing her to borrow more for major infrastructure projects, have allowed her to allocate £190 billion more to the day-to-day running of public services. On her plans for the NHS, she said: 'I am proud to announce today that this Labour government is making a record cash investment in our NHS, increasing real-terms, day to day spending by 3% per year for every year of this spending review. 'An extra £29bn per year for the day to day running of the health service. That is what the British people voted for and that is what we will deliver: more appointments, more doctors, more scanners. 'The National Health Service: created, by a Labour government, protected, by a Labour government and renewed by this Labour government.' Effectively firing the starting gun on the next general election campaign, the chancellor said her spending review would 'deliver the priorities of the British people'. Reeves said that overall, Whitehall budgets will grow by 2.3% a year in real terms. But with the NHS and the Ministry of Defence receiving the biggest increases, it means other departments will see their budgets squeezed. The MoD will receive an extra £11bn increase, meaning military spending will hit 2.6% of gross domestic product (GDP) by April 2027 – slightly more than had been previously announced. Reeves also confirmed previously-announced plans to spend £39 billion on a 10-year affordable house building programme, £15bn improving transport links in the north and Midlands, and £14bn for the new Sizewell C nuclear plant. She said she was 'increasing police spending power by an average 2.3% per year in real terms', but that is unlikely to be enough to satisfy police chiefs who wanted substantially more. Throwing down the gauntlet to the Tories and Reform, Reeves said: 'I've made my choices. Tough decisions, yes, for stability. Changing Britain's fiscal rules, yes, for investment. 'And today, delivering that investment – for the renewal of Britain. Now it is time for the parties opposite to make their choices' Labour To Scrap Asylum Seeker Hotels By 2029, Rachel Reeves Announces Rachel Reeves Monsters Nigel Farage For Backing Liz Truss's Disastrous Mini-Budget Rachel Reeves Announces £39 Billion Housing Boost As She Vows To 'Renew' Britain
Yahoo
2 hours ago
- Yahoo
Britain's pensions mess won't be resolved by the latest stab at reform
It's the absence of ambition that really gets me. Labour may be trailing badly in the polls, yet there are still four years to go before the Prime Minister has to call another election, and for the time being he commands the sort of majority that would normally allow him to do truly radical things. But he doesn't. Instead, ministers sit on their hands, seemingly frightened of their own shadows, and allow Reform UK, with just a handful of MPs, to make all the running. Nigel Farage is probably right to claim that without Reform snapping at its heels, the Government would not have about-turned on the winter fuel allowance. Yet it is not just on entitlement spending that the Government appears incapable of doing anything of significance. On wider pension reform too, there's little sign of the resolve needed for meaningful change. The Government's Pension Schemes Bill – published last week – is more notable for what it doesn't do than the changes it seeks to bring about. This may seem a little unfair. There are few areas of public policy where the old joke that 'you wouldn't start from here' more aptly applies than pensions. Decades of meddling has left the UK with a hopelessly confused array of different pension arrangements that collectively fail to serve the country as they should. It is also fair to say that there is no silver bullet likely to deliver optimum outcomes. Let's take gold-plated, final-salary public sector pensions, widely thought to be unfair on the great hinterland of taxpayers who don't enjoy such perks but are required to underwrite them. These are left completely unaffected by the new pensions legislation. Richard Tice, Reform's deputy leader, said last week that the party would consider moving all public sector employees out of their 'Rolls-Royce' defined benefit pension plans and into the defined contribution schemes common to much of the private sector. Sadly, this is much easier said than done, which is why successive governments have – beyond trimming benefits a little – steered clear of significant reform. Putting public sector workers on the same basis as those in the private sector might sound fair enough in principle, but it would be hugely challenging in practice, and not just because unions would throw their toys out of the pram at the mere whiff of it. Public sector pensions have been compared to a Ponzi scheme, in that retirees are paid from the contributions of those still in employment. But actually the two things are quite different. In a Ponzi scheme, the existing investor doesn't know that their promised return is being paid not from investment gains but from funds collected from new investors. The arrangement is therefore fraudulent. But with public sector pensions the process is completely transparent. What's more, these pay-as-you-go arrangements conform much more exactly with the founding principle of occupational pensions than the defined contribution model – namely that the employee pays for the retirement income of his predecessor rather than saving for his own pension. Go back to the origins of the modern-day pension, and in some professions the individual job would be sold by the incumbent to the new entrant as a way of funding retirement. Alternatively, the newcomer would agree to pay his predecessor a proportion of his income for a set number of years. If you were lucky, the old codger would quickly pop his clogs. These days, workers can expect to live 20 years or more in retirement, making the arithmetic of pay-as-you-go pension arrangements much more challenging. The last set of 'Whole of Government Accounts' showed the total present value of public sector pension liabilities at a jaw-dropping £1.415 trillion. This was down from £2.639 trillion the year before, a fall accounted for largely by the fact that owing to higher interest rates many local authority pension schemes have swung into surplus. For unfunded public sector pensions, however, there is still a massive and rising liability. If this had to be paid all in one go, it would pretty much bankrupt the country. Yet in practice, it is spread out over decades, and ought therefore to be manageable assuming contributions are raised in line with outgoings. The more important number is perhaps therefore the difference between what employees and employers are paying into their schemes and what is being paid out in retirement benefits. This has been in negative territory for some years now – more money going out than in – making public sector pensions a net cost to the taxpayer. The shortfall is expected to be around £1.6bn for last financial year. But the Office for Budget Responsibility forecasts a swing back into surplus from here on in, reaching a net positive of £3.6bn by 2030. Where it heads after that is anyone's guess. If the Government succeeds in cutting the public sector headcount, it may well turn significantly negative again. But the point is that this is hardly an emergency for the public finances. If on the other hand all public sector workers were put, as Tice suggests, on defined contribution arrangements – where contributions are invested into a personal pension pot – it would quickly become one, as there would be no money coming in to fund those already in retirement. Taxes would have to rise significantly in the short to medium term to fund the gap. Furthermore, to properly compensate public sector employees for giving up their present, very favourable pension arrangements, you would need significantly to increase their pay, further adding to the travails of the public finances. As on much else, Reform doesn't seem to have thought things through. Best, perhaps, not to poke that particular hornets' nest. Of course, the Government's Pensions Schemes Bill doesn't touch on these concerns. Rather it is about private sector pensions, and in particular it is about attempting to get them to invest more in productive UK assets, forcibly if necessary. Personally, I see nothing particularly wrong with this objective provided it is not pushed to extremes. The UK is almost unique in how little its pension funds invest in home-grown equities and infrastructure, and indeed in the lack of coercion currently applied. Given the tax breaks this form of saving enjoys, it's reasonable to expect investors to give something back. But there is also a good reason why trustees are as reluctant as they are; it is because relative to the alternatives, the returns on British assets are low. It's chicken and egg, and perfectly explains why the London Stock Market is dying on its feet. It's not lack of a big stick; it's lack of opportunity. Breaking this vicious circle of decline requires not Labour's go-to solution for all challenges of this sort – strong-arming investors into doing what they don't want to do – but making the UK an attractive place to invest. Much work to be done on that front, I fear. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
