Labour moves to counter electoral damage with new welfare policy

A Labour government would cap social welfare spending, end winter fuel payments to better-off pensioners and keep cuts made by the Conservatives and Liberal Democrats to child benefits, Labour leader Ed Miliband has said.

In a major speech, which has been weeks if not months in the drafting, Mr Miliband sought to counter charges led by British prime minister David Cameron that have struck a chord with British voters that Labour is now "the benefits party".

Welfare cap
The pledge to cap welfare spending for three years is subject to some caveats, since it is not clear what action will be taken if the cost of one, or a number of benefits spirals out of control – as housing benefit has in recent years.

Mr Miliband said Labour would begin the reintroduction of the contributory principle – where people’s benefits depend on past payments, and where new applicants would be required to have paid stamps for five years rather than two.

The housing benefits bill would be cut by building more local authority-owned houses, along with forcing landlords to accept lower rents – a move, he said, that was already taking place in Labour-controlled districts.

Accepting that the public’s faith in welfare rules had been damaged by the sight of seeing some people “get something for nothing”, Mr Miliband said unemployed people with children would lose benefits if they repeatedly refused to try to get jobs.

Meanwhile, “There needs to be proper notice, but as people live longer, the age at which people retire will have to increase,” Mr Miliband said in a speech in east London.

Tax exemptions
Companies and State bodies, he said, would get tax-exemptions, or grants in return for paying a living wage – one significantly higher than the £6.31-an-hour minimum wage, which would save money as workers would pay more tax and receive fewer benefits.