Well done, Ed Balls. He’s opened up space for a proper welfare debate. Lib Dems now need to claim that space.

by Stephen Tall on June 10, 2013

Ed Balls has done us all a favour. His announcement last week that if he were Chancellor he would put a stop to winter fuel allowances for well-off pensioners means Labour has joined the Lib Dems in saying we need to focus the welfare budget where it’s needed most, not keep on re-distributing from the worse off to the better off in the name of universalism. It’s why I chose him as my 38th Liberal Hero.

And yesterday he was at it again, highlighting quite how much of the welfare budget the state pension represents — some £74 billion out of a total welfare budget of £159bn — when saying a future Labour government would include pensions within its new welfare cap. He was quick to add that he supports the ‘triple lock’ on pensions introduced by Steve Webb. He’d square the circle by allowing the pension age to increase to generate the savings that can then be used to fund future years’ pensions increases while at the same time lessening the cuts needed in other areas of the welfare budget.

It’s a sensible approach. Spending on the state pension in will increase by nearly 20% in real terms between 2010–11 and 2017–18. The impact of the current cuts is to redistribute on a large scale to pensioners from some of the most vulnerable young people who rely on benefits. That approach cannot be justified, especially with austerity likely to linger until at least 2020.

Nick Clegg long ago stuck his neck out to argue that pensioner benefits needed to be looked at. Ed Balls has now joined him. The Tories, until now too frit to risk the wrath of a key voter demographic, have hidden behind their panicky 2010 pledge. Expect them now to join the Lib Dems and Labour in approaching the welfare budget in a more rational way.

The Lib Dems deserve credit for having initially opened up this debate. Yet the party’s approach to welfare remains confusing (as I argued here in April).

We insisted on a 5.5% benefits rise in the Coalition’s second year, then voted for a real-terms cut the following year. Ministers defend Coalition policies like the ‘bedroom tax’ which they know would likely face defeat if put to the vote at party conference. We (rightly) point out that we have stopped the Tories imposing the wrong sort of cuts (for example, ending housing benefit to under-25s), but have gone along with illiberal cuts to legal aid.

In short, we are a long way from having a liberal approach to welfare enabling everyone to get on in life. There’s less than two years to the next election and the clock is ticking.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, a Research Associate for the liberal think-tank CentreForum, and also writes at his own site, The Collected Stephen Tall.

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