Labour admits it would not end benefits freeze, after day of confusion

'I don’t think we can reverse it entirely. We shouldn’t be promising things we cannot afford'

Rob Merrick
Deputy Political Editor
Tuesday 16 May 2017 18:23 BST
Emily Thornberry said lifting the benefits freeze is unaffordable
Emily Thornberry said lifting the benefits freeze is unaffordable

Labour has been accused of failing to wage an all-out war on poverty, after the party said the Government’s punishing four-year freeze on benefits would continue.

The freeze – due to run until 2020 – is widely recognised to be a key driver behind forecasts of rising poverty to come, as the bottom 20 per cent of society sees its incomes fall.

But Labour, after a day of confusion which marred its manifesto launch, finally admitted it would not end the freeze if it wins the general election, insisting the move was unaffordable.

Emily Thornberry, the shadow Foreign Secretary, said the party would only “offset the impact” of the freeze, but without explaining how the policy would work in any detail. “I don’t think we can reverse it entirely. We shouldn’t be promising things we can’t afford,” she said.

“We will look at the worst affected and those most at need, we will increase the living wage which will mean that those on in-work benefits will not suffer in the same way as they were.”

The Joseph Rowntree Foundation charity said the freeze, unless reversed, would add to poverty, especially as prices rise – making a freeze even more painful.

“Our view is the four-year freeze on most working age benefits should be reconsidered, in light of rising inflation and stagnant wages,” a spokesman told The Independent.

The respected Institute for Fiscal Studies warned, earlier this month, that absolute child poverty is poised to rise back to rates last seen in the early 2000s, also pinpointing the benefits freeze.

“Cuts in the real value of benefits will reduce incomes among poorer working age households,” it said. “Real incomes are projected to fall among the poorest 20 per cent of households over the next five years, with households with children being particularly affected.”

Earlier, Labour spent the day scrambling to explain whether it would axe the freeze or not – setting out no fewer than four different positions, as confusion mounted.

Speaking at the manifesto launch in Bradford, Mr Corbyn indicated the benefits freeze would be lifted, saying “clearly we are not going to freeze benefits, that is very clear.”

However, moments later, Mr Corbyn rowed back when asked if lifting the benefits freeze was costed in the manifesto, replying: “We have not made a commitment on that.”

Labour then issued a statement, again insisting there would be “an end to the freeze”, before Ms Thornberry said it would continue – the fourth position on the policy in a single day.

The party ran into the difficulties after unveiling a £2bn-a-year fund to “reform and redesign” universal credit, which could alleviate some benefits cuts. However, the benefits freeze alone is saving £4bn annually by the end of the decade – which means the fund could not pay to lift it.

In one interview, Mr Corbyn said the plan was to help the people affected by raising the living wage and by building more affordable housing.

Asked why the Labour leader had sparked such confusion, by pledging to lift the freeze, Ms Thornberry said: “He’d just made a speech, there were lots of questions.”

The freeze targets jobseeker’s allowance, income support, employment support allowance and housing benefit, as well as child benefit and tax credits - affecting 11 million families across the UK.

Laurence Guinness, chief executive of the Childhood Trust charity, said there had been a “lack of honesty” from all parties on the issue of child poverty. “Low pay and the universal credit system is making working families’ lives a misery. It needs to change. It’s gone too far against children in poverty,” he told The Independent.

“We’re worried about the increase in child poverty that we’re seeing. Families are living with one lightbulb because they’re afraid of running up the electricity bill. Children are sleeping on bits of cardboard because they can’t afford beds.”

“We’re disappointed that child poverty hasn’t been mentioned by any political party, specifically as an issue – children’s rights have been ignored across the board.”

Liz Sayce, chief executive of Disability Rights UK, said elements of universal credit that apply to disabled people were currently frozen. “We’re calling on all political parties to commit to no further benefit cuts to disabled people – that’s just a minimum. That means no cuts in real terms,” she said.

“We call on all political parties to commit to no freeze to any benefits that affect disabled children or disabled adults and no further cuts in the future.”

Sam Royston, Director of Policy and Research at The Children’s Society, said: “More than 7 million children are affected by the four year freeze to benefits. Almost two thirds live in working households who need benefits to top-up low pay.

"Freezing Child Tax Credits, Working Tax Credits and Job Seekers’ Allowance could see affected families losing up to 12 per cent from the real value of their benefits and tax credits by 2020. This is money that low-income parents need to buy the essentials for their children. The freeze on benefits is a significant factor in the predicted rise in child poverty – set to reach 5 million children by 2020.”

Labour’s manifesto does, however, commit the party to reversing “the worst excesses” of the changes to welfare by the Conservatives.

The party would scrap the “punitive” bedroom tax, reinstate housing benefit for 18-21 year olds and cuts to bereavement support allowances that came into effect last month.

But in a difficult day for Labour, the respected Institute for Fiscal Studies threw doubt on whether the party’s planned income tax hikes would bring in the expected £6.4bn to fund Labour’s spending priorities.

And Len McCluskey, Mr Corbyn’s most important union backer, undermined the Labour leader’s pitch for power, saying: “I don’t see Labour winning. I think it would be extraordinary.”

The Unite chief added: “I believe that if Labour can hold on to 200 seats or so it will be a successful campaign,” – even though that would be the party’s worst result since 1935.

But a defiant Mr Corbyn insisted the 124-page manifesto document offered a “fantastic opportunity” for him to change the course of the country, on 8 June.

“I’m very proud to lead this party, with an opportunity that can give real chance and real hope to every child in this country but can also deal with the grotesque levels of inequality,” he said. “I’m not happy when I see people sleeping on the street, I’m not happy when I see people queuing up at food banks. I don’t want to see foodbank Britain, I don’t want to see homeless Britain. I want to see a country that is thriving for all.”

In total, the manifesto set out plans for extra spending stretching to £48.6bn, including an extra £6bn for schools, £7bn for health and social care, £5.3bn for childcare and £4bn to end the one per cent cap on public sector pay.

Water, energy, railways and the Royal Mail would be nationalised, while a new National Transformation Fund would borrow £250bn over ten years to pay for big rail projects and a housing expansion.

Labour said it would raise £6.4bn from the top five per cent of taxpayers, by lowering the threshold for the 45p rate of income tax from £150,000 to £80,000 and by introducing a new 50p rate for earnings above £123,000.

And companies with employees earning over £330,000 would face an “excessive pay levy” of up to five per cent for each high-paid staff member, raising £1.3bn a year.

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