Labour's very own poverty trap

The party's latest spat over welfare and the poor exposes the damaging lack of a coherent policy
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The Independent Online
Anyone who wishes Labour well and has high hopes for a Blair government - an increasing band of people - should be deeply alarmed about the latest spat between Michael Meacher and the party hierarchy about poverty and welfare. This wasn't a personality-driven tiff. It was a disagreement which goes to the heart of Labour's purpose. And what it showed was that after years of agonising and debate, and perhaps only months from taking office, the party is nowhere near a consensus.

We have had Gordon Borrie's Commission on Social Justice. We have had Donald Dewar's rethinking of policy. We have had repeated radical critiques from Frank Field, the backbench crusader. We have had cautious, careful speeches from Gordon Brown. We have had more than a whiff of the modish new moralism from Tony Blair and Jack Straw. We have had a fierce private defence of core Labour positions from Chris Smith and a public speech to the same effect from Robin Cook.

We have had pamphlets by the score from think-tanks; ground-breaking visits to Washington; unreadable articles in clever magazines. But what we haven't had, and apparently don't have, is a coherent and agreed policy for the poor from Labour, which once gloried in its role as the party of ''the bottom dog''.

The traditional welfare argument could be caricatured as a disagreement between the left, who saw poverty and unemployment as being basically the fault of the capitalist state, and the right, who saw it as basically the fault of feckless and idle individuals. For most of the post-war era, the left's morality held sway. Conservative governments here and Republican administrations in the US - including, notably, Richard Nixon's - built and sustained relatively generous welfare systems. This would not have been possible without two things: strong economic growth to fund them, and a particular political ethic to explain them.

For the poor, the bad news is that both are under threat. The long Western boom of post-war times is unlikely to recur; and if it did, ageing populations and more expensive treatments mean welfare states would swallow even more of taxpayers' wealth than they do now. Though Britain could fund today's welfare state from higher taxes, without indulging in radical reform, today's welfare state isn't very good.

At the same time, that particular political ethic which created welfarism has been unravelling. That ethic was a peculiar mixture of guilt and hubris - guilt about the failures of capitalism, and the political pride that believed state action could cure everything short of old age and the common cold.

The shift in thinking is happening not because of a savage crusade by followers of Hayek, but because memories of the two big events of mid- century have faded. The Depression provided the political push for welfarism. From that came the guilt. The Second World War demonstrated the organisational power of modern states; and that reinforced the hubris.

But human memories are short and without a lively recall of those events, the welfare ethic is weakened. The weakening is coming at a time when the West faces fierce competition from Asian countries, some of whom have much less developed welfare systems than ours, and when global competition is accelerating. Both politics and economics are driving the ideological shift which says, "blame a little more, understand a little less".

All this may seem a long way from the current struggles over Labour's thinking on the welfare state, and longer still from the daily lives of Britain's unemployed and poor. But it isn't. Labour's welfare dilemmas are directly connected to these big shifts in world power and political thought.

Let us take, just for starters, the two dilemmas that have caused the Labour party hierarchy particular angst in recent weeks. At first sight, Gordon Brown's proposal to remove child benefit from 16- to 18-year-olds and substitute new training projects has little to do with the subject of the Michael Meacher furore, the Jobseekers' Allowance, which replaces unemployment benefit from October.

Meacher - or rather, we are told, his research assistant - said that Labour would scrap the Jobseekers' Allowance, which runs for only six months rather than the year of unemployment benefit. This would cost Labour pounds 240m a year. Gordon Brown was cross, at least inwardly. Mr Meacher was penitent, at least outwardly.

These subjects aren't simple. One could argue that in suggesting taking child benefit from wealthier families, as well as poorer ones, and targeting the money on training for the less well-off, Brown was being more redistributive than his left-wing critics. Alternatively, because cutting the amount of time unemployment benefit is paid drives people more quickly into means- tested benefits, and therefore the poverty trap, you could argue that Meacher (sorry, Meacher's researcher) was being more of a moderniser than Brown and Blair.

But in both cases, the question is the same - whether or not to go from a universal benefit (a staple of post-war welfare policy) towards a more closely targeted form of welfare, intended to change people's behaviour. Child benefit and unemployment benefit are part of the previous consensus. Training programmes, with an element of financial compulsion, and the tougher Jobseekers' Allowance are very definitely not.

The other unresolved big policy issue affecting poorer voters is help in old age. Labour attacks the current pathetic level of the state pension, caused by breaking its old link with earnings. But it won't restore the link, because that would be too expensive. It has toyed with the idea of a national minimum pension, rather like the basic minimum wage. But again, it has not moved towards an actual, ink-on-paper commitment. On long-term care, in just the same way, Labour attacks the Conservatives but without a clear alternative plan of its own.

Granted, it is very hard to plan rationally and explain yourself if you can never, ever discuss extra state spending. Brown's decree is politically rational, given what Conservative Central Office has done in the past to Labour manifestos. But it produces a skewed, purblind view of welfare policy.

But the basic trouble is philosophical and moral, not about the short- term politics of taxation. If one can imagine a slope that stretches from pure statist compassion to the ultimate right-wing self-helpery of the kind being tried by Democrats in the US, Labour has no real idea where to place itself.

Tony Blair himself is a moralist who believes in self-improvement and buys some, at least, of the argument about state dependency. But he is much exercised by the age of anxiety caused by globalism. And you can hardly blame the idle poor for financial deregulation, even if you are the very newest of new Labour.

So there is, to put it mildly, a bit of work for Blair's team to do in explaining its attitude to poverty. This is not a matter that should be on the edge of the agenda, only propelled into the mainstream because of rows over articles written by researchers in Red Pepper. And it is worrying that Labour, after thinking for so long, is still so far from coherence or conclusion. It is time for the Shadow Cabinet room to echo with the sound of heads being knocked together.

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