Welfare spending cap: a political game?

Pound coins and notes

"The Tories will cut maternity pay".

"Labour will cut your pension." "Mummy tax". "Granny tax" "Nur nur nur nur nurrrrr" (or should that be "Na na na na na"?)

If you ever doubted that the next election campaign is already under way, think again.

Today a Labour MP, Fiona O'Donnell, asked the Prime Minister "to confirm if maternity and paternity pay will be included in the benefits cap?"

David Cameron was clear that all welfare spending - beyond the basic state pension and those benefits directly affected by cyclical increases in unemployment - would be covered by the new welfare spending cap - the details of which are to be announced next Spring.

Hey presto! Miss O'Donnell concluded that the Tories are "picking on families that are working hard to try to get on in life". Newspapers are already running stories about maternity pay being cut if there's a baby boom.

At almost the same time Labour's shadow welfare secretary Rachel Reeves confirmed on BBC2's Daily Politics that the state pension would be in their version of a welfare cap.

Bingo! The Tories are now declaring that the state pension is not safe in Labour's hands.

Both parties have ignored one small inconvenient fact. Neither have spelt out the level they will set the cap - higher than current spending or lower? How much higher or lower?

What's more, neither have spelt out exactly how their cap will work except that it would not, in truth be a cap at all.

It would be a spending limit which could be breached but only with red-faced ministers forced to go to the Commons to ask for the cap to be lifted or to announce cuts to one benefit to protect another.

So, for now, this feels more like a political game than anything that actually reveals what would happen if either party is in government on their own.

Remember that according to the Institute for Fiscal Studies the real value of a cap on overall welfare spending is to act as a discipline on governments and to force them to confront the rising cost of certain benefits before, not after, they get out of control eg incapacity benefit under the Tories in the 80s and housing benefit under Labour in the late 90s.

The more either party excludes from its cap the less their government will be forced to make hard choices and, you might think, the more pointless their cap would be.

On the other hand, both parties' strategists know that Gordon Brown's warnings that a Tory election victory in 2010 would pose a threat to free bus passes for pensioners and winter fuel payments moved votes. Lots of them.

PS The Treasury argue that it is logical to keep the state pension out of the cap since its costs are policed by rolling reviews of the age at which you can claim your pension. Labour's Treasury team now insist that the state pension will not be included in its plans for a three-year cap on welfare spending.

Nick Robinson, Political editor Article written by Nick Robinson Nick Robinson Political editor

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