Labour is Coalition Lite

So the race to the bottom continues as Labour and the Tories try to outflank each other by getting tough with the unemployed, the disabled and “benefit scroungers” in general. How will the readers of the Daily Mail and other right-wing papers distinguish between the two?

It’s a question made more difficult by today’s announcement by Ed Balls, the shadow chancellor and his colleague Liam Byrne. Balls, who devoted his time in the New Labour government to deregulating the banks, says the long-term unemployed will have to take a designated job or lose their benefits if his party is returned to power.

The private sector will be given the money by the state to employ people for six months at the minimum wage. Labour would fund the scheme by reducing pension scheme tax deductions claimed by high earners. Labour’s workfare proposal is a variation of schemes already in operation by the Coalition government under which many claimants have to work for their benefits.

Labour is, in essence, Coalition Lite.

Balls’ scheme has nothing to do with solving unemployment as a social question and everything to do with impressing “swing voters”. Demonising vulnerable groups like the jobless and the disabled who depend on state benefits is always considered good for a few votes.

Labour's shadow work and pensions spokesman Byrne said the long-term unemployed needed to be "working or training and not claiming". Ah, music to the ears of Angry of Surbiton. "There is a vital principle at stake here," he added. Yes, there is Byrne. It’s called taking out on the poor and disadvantaged.

Not that Labour needs an economic crisis to launch its reactionary ideas. During 13 years in government, the Blair regimes set about “reforming welfare” along the lines they had picked up from the Clinton administrations in America.

Social security as a percentage of GDP fell. Many benefits for lone parents were terminated. Out went the Department for Social Security in favour of Work and Pensions, relegating the concept of the welfare state to the past. Directly in the firing line

were people claiming disability benefits.

In 2008, New Labour introduced the employment and support allowance (ESA) in place of disability benefits and instituted the dreaded work capability assessment (WCA). Firms like Atos have been paid millions since, with the incentive of forcing the disabled into work. Naturally, the ConDems picked up on all these initiatives and reinforced the attack. Iain Duncan Smith, the current work and pensions secretary, won’t be satisfied until he’s buried the welfare state for good.

Leaving aside the fact that Labour appears to have already earmarked cuts in pension tax relief for another policy, it is clear to anyone who cares to think about it that an Ed Miliband government would be just as reactionary as the present one.

The recent “one nation” rhetoric is a thin mask for another great deception. If elected, Labour would continue to make the cuts to reduce the budget deficit and appease the money markets. Miliband’s vision of a “one nation economy” is one where employers and workers collaborate in a kind of a corporate state.

Britain is a low-wage economy in the midst of a systemic global economic and financial crisis. That fact goes unsaid by Miliband and his party. Better to attack an easy target than identify capitalism itself as the problem. Which makes you ask again, what is the point of Labour? What is the point of electing a party whose policies are in essence indistinguishable from those of the Tories or Lib Dems? They are all in it together and we should have no truck with the whole sordid business of traditional party politics.

Paul Feldman

Communications editor

Welfare to profits as contractors cash in

That the results of the government’s welfare-to-work scheme have turned out to be worse than if it hadn’t existed at all is certain to be a disappointment for the ConDems, but for the rest of us it shouldn’t be a surprise.  

As most people are only too well aware, the economy is contracting, jobs are disappearing, real incomes declining. But the targets for the scheme were set in the run up to last year’s launch in the absurdly optimistic expectation that the economy would improve.

The target set for the 18 contractors  of getting 5.5% of the 2.4 million long-term unemployed and people on sickness benefits a job for at least six months was hardly going to make a dent in the jobless figures, but not one of them has achieved anything like it.

Only 3.5% - that’s one in every 28 - of the people referred to the Work Programme have found long-term jobs. In spite of this the work and pensions secretary Iain Duncan Smith defended the scheme, claiming that over 50% of those who have been referred to the scheme have been taken off benefits. 

Either somebody is not doing their sums, or there’s now an awful lot of people out there without jobs or benefits – just like in America.

And although the scheme is supposed to work on a payment-by-results basis, making the contractors’ profits dependent on forcing people off benefits, hundreds of millions of pounds have already passed into their hands.

They include A4e – the subject of systemic fraud accusations from its own internal auditor earlier this year, G4S - the company that failed to supply the promised Olympic security force – and Ingeus, part of a global corporation founded by the wife of Kevin Rudd, former Australian prime minister.  

There’s a group of voluntary sector groups also signed up to the scheme which includes Mencap, the Citizens Advice Bureau, the Prince's Trust and Action for Blind People. Well meaning? Maybe, but they’ve become willing accomplices to this £5 billion torment of the sick and unemployed. Even Charles Dickens would be appalled.

So what has gone wrong? The Employment Related Services Association (ERSA), the lobbying group for the array of predatory companies feeding off the unemployed and sick, claims that things are now getting into gear and are set to improve.

The latest World Economic Outlook from the Organisation for Economic Co-operation and Development promises something very different. Already in July they predicted that unemployment in advanced economies would remain high until at least the end of 2013, with young people and the low-skilled bearing the brunt of what they euphemistically termed “the weakest economic recovery in the past four decades”.

But four months later, things have got a whole lot worse. The OECD has slashed its forecast for next year’s growth in the world’s advanced economies from 2.2% to 1.4% and warned that the risk of a serious global recession cannot be ruled out.

The OECD expects the seriously troubled eurozone economy to contract further in 2013.  Growth in the US is forecast at 2% next year down from a May estimate of 2.6 per cent – but only if Obama can pull off a deal with the Republicans and prevent the country falling over the “fiscal cliff”. Japan’s economy is expected to expand 0.8%, little more than half the growth expected in May.

Greece is expected to be the worst performer among the membership, with the OECD expecting its economy to shrink 4.5% next year. The Spanish, Italian, Slovenian and Portuguese economies are also predicted to contract over the course of 2013.

And the UK? The OECD predicts an expansion of 0.9%. But as far as the budget deficit is concerned - the subject of all the austerity, and the welfare-to work programme in particular – the UK will be performing worse than every other member except Japan.

So, in effect, the contractors – private sector and charities alike – have really been contracted to manage the contraction. They get state funding and the unemployed get state harassment and benefit cuts. More like welfare to profits than welfare to work.

Gerry Gold

Economics editor