By Peter Hoskin
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Balls’s article
for PoliticsHome
is a grand piece of political positioning. Labour have
already gone down the road of attacking the Coalition for excessive benefit
cuts, but they also don’t want to appear too lenient on welfare themselves; and
so the shadow chancellor offers a policy that caters to both impulses:

“Today we are urging the government to go even further, because we
won't get the costs of welfare down if adults who can work are languishing on
the dole for years and years on end. So Ed Miliband, Liam Byrne and I are today
calling for a compulsory Jobs Guarantee for the long-term unemployed.

This is the One Nation jobs contract Labour would introduce right
now: the government will ensure there is a job for every adult who is long-term
unemployed, and people out of work will be obliged to take up those jobs or
face losing benefits.”

This is, to use Mr Balls’s words, “fair”
because it puts the long-term unemployed into work (for six months), yet also “tough”
because it contains the threat of benefits being withdrawn. But does it make
sense? Three potential problems stand out from a first reading of the article:

1) What’s
Okay, there are two points to make here. The first is that Ed
Balls isn’t actually guaranteeing that a Labour government would introduce this
policy in 2015 — this is, instead, a policy that they would introduce were they
in power now. A charitable interpretation of this is that they are urging the
policy on the Coalition. A less charitable interpretation is that it doesn’t
count as a real policy proposal at all. Take your pick.

the second point is about the wider idea of “guarantees”. Ed Miliband loves
these things — so much so that (as I once
) the last Labour manifesto (which he authored) contained over 50
references to them, from a guarantee over hospital waiting times, to one that’s
more or less identical to the one being mooted today. I guess the allure is
partially political: Labour offer to spend public money to “guarantee” you this
service or that, hoping that the Tories won’t match their pledge. But the implementation
is deeply problematic. As the Economist’s Bagehot column pointed out in 2009, the
Government could face an “orgy of litigation” if people don’t get what they
think is owed to them.

the case of this Jobs Guarantee, the question then becomes whether a Labour
government really could guarantee these new jobs. Are private sector companies
signed up? Or would they be in the public sector? If the latter, might the
taxpayer costs be greater than Mr Balls would have us believe? Ed Miliband’s party
isn’t really saying enough about all this.

2) And how’s
it funded?

The blunt answer to this question is the one provided in Mr Balls’s article: “the upfront costs of Labour’s jobs contract can be
funded by reversing the government’s decision to stop tax relief on pension
contributions for people earning over £150,000 being limited to 20 per cent.”
But, as the Tory Treasury Twitter account has been pointing out,
isn’t this money that Labour have earmarked for spending before now? Back
in March
, Mr Balls proposed reducing the rate at which top rate taxpayers can
claim pensions tax relief from 50 per cent to 26 per cent — and then using the
money to reverse the Government’s cuts to tax credits.

Labour’s response comes in two
: first, that they are no longer committed to using the money to
restore tax credits; and, second, that they now want to reduce the tax relief
to 20 per cent, not just 26 per cent.

But that isn’t really adequate.
The Opposition can hardly claim to be fiscally responsible if they keep recycling
their few ideas for raising revenue. I mean, what’s to say that the same cut to
pensions tax relief won’t be used to fund another policy next year? And, if so,
how would the Jobs Guarantee be paid for then?

3) “Strivers”
and “scroungers”?
One of the most strident claims in Ed Balls’s article is that…

“Day after day we see Tory and Lib Dem Ministers
claim they are targeting the work-shy and benefit ‘scroungers’. But it’s no
wonder even Cabinet Ministers have told the newspapers they are uncomfortable
with these smears. Because the truth is very different.

Two-thirds of people who will be hit by David
Cameron and George Osborne’s real terms cuts to tax credits and benefits are in
work. Millions of pensioners will also pay more in April as their ‘granny tax’
takes effect. And next week child benefit will be taken away from thousands of
middle income families.”

…which rather muddies the
truth itself.

As the Spectator’s Isabel
Hardman highlights,
it’s actually quite difficult to
find examples of Tory ministers using the word “scroungers”. David Cameron dropped it
in 2010, but there have been few — perhaps no — sightings since.

What’s left are examples such
as George Osborne’s most
recent conference speech
, in which he railed against the “next-door
neighbour sleeping off a life on benefits”. But, then, this is also a theme
that Ed Balls’s boss — one Mr Miliband — has developed. In a speech
in 2011, the Labour leader began with the story of a long-term Incapacity
Benefit claimant whom he thought could be in work. “It’s just not right for the country to be supporting him
not to work,” he continued, “It’s not about responsibility to the state, or the
government, but responsibility to your neighbours, your friends and many others
who you may never meet but who are affected by your actions.” And so on and so on.

isn’t to say that the Tories should be incautious with their rhetoric. Far from
it — Osborne & Co. should be very careful not to demonise the unemployed,
and should not risk the impression that they take malicious glee in cutting
benefits. But Ed Balls is still overstating the case.

what of the shadow chancellor’s claim that the Coalition’s benefit cuts will
also affect people who are in work? This is more forgivable because it happens
to be true; but it is also a truth that David Cameron has admitted
, rather than covering it up. No doubt the next election will do much to
reveal whose side the public is really on.

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