Labour is being urged to embrace radical welfare reform in an attempt to stop George Osborne laying another “political trap” for the party by challenging it to support his £12bn of benefit cuts.
John Healey, a candidate in the election for Labour’s deputy leader, has proposed that the party reduces the welfare budget by switching part of the £24bn-a-year housing benefit bill to housebuilding.
Writing on The Independent’s website, the former Housing Minister argued that Labour should outflank the Chancellor so that he cannot bounce the party into backing more welfare cuts. Mr Osborne will unveil some of the £12bn of savings in his Budget next month. In the last Parliament, Labour backed some of the Tories’ cuts but was still seen by some voters as “the welfare party.”
Mr Healey said: “Instead of waiting to be hit by the Tories’ questions, we have to hit back hard and establish a bigger argument that we deal with welfare costs by getting to grips with the root causes of those costs.”
He added: “We can’t spend this parliament debating welfare costs on Tory terms again, so our challenge is to sidestep the narrow Tory narrative and start making a bigger case for bringing benefits down.”
Mr Healey revealed that he drew up a 60-page report for Ed Miliband on a “benefits to bricks” policy last year. It argued that the Government’s decision to raise council and housing association rents to 80 per cent of market rates would increase the housing benefit bill by £5.4bn over 30 years on the homes built in the last parliament alone. The report said Labour could pledge to build 100,000 new social housing properties a year by 2020, funded by housing benefit savings over 27 years. It calculated that over 30 years, every £1 invested in such homes would generate £1.18 of savings.
Mr Healey said the Labour leadership told him the party could “do more after the election that we can say before it.” But he said: “People weren’t convinced we had a plan or could do the job. They couldn’t see we had a different vision or believe we’d make a difference to them.”
Nominations for Labour’s leadership election open on Tuesday and the five candidates seeking to succeed Mr Miliband are staking their claim at a hustings meeting for the party’s MPs and peers tonight.
Andy Burnham, the shadow Health Secretary, and Yvette Cooper, the shadow Home Secretary, warned that Labour should not become too close to the Tories - a sideswipe at Liz Kendall, who is seen as the Blairite candidate.
Mr Burnham said the party should not distance itself from everything it did under Mr Miliband’s leadership, saying he was right to address inequality. Ms Cooper said the party should not “fall into the trap” that Britain’s economic problems were caused by overspending by the previous Labour government.
Ms Kendall told the Parliamentary Labour Party: “We didn’t lack lots of policies in the last five years. We lacked a clear vision. That is the job of a strong leader – to set the direction and build a strong team. That is what I will do.”
The shadow Care Minister said: “We could have won in 2015. We can win in 2020 but only if we make the change we need. If we stick with the politics of the last election we will lose the next.”
Also taking part in the hustings were Mary Creagh, the shadow International Development Secretary, and Jeremy Corbyn, a left-wing backbencher.
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