Badenoch blunders into the welfare trap

Today the Tories have launched their welfare reform agenda. Like Reform’s plan, the savings are wildly optimistic given the political obstacles. I expect immediate u-turns on more than three of these reforms. They are necessary reforms but will push some families into genuine hardship. They won’t have the political capital or the guts to withstand the propaganda onslaught. Even the suggestion of disability benefit cuts will cost them seats. That’s the problem with a welfare state democracy. Everyone thinks benefits should be cut, just not the ones they receive.

Moreover, cutting benefits can only work in conjunction with wider economic liberation such as deregulating the labour market and freezing minimum wage, but an economically illiterate electorate won’t allow it. Even if they can get elected, they’re not getting re-elected.

Essentially, socialism is self-reinforcing. As people get poorer (because of socialism) they demand more socialism, and if the Tories are cutting workers “rights” and benefits while the cost of living is still going up because of energy costs, they are toast. It’s all contingent on getting energy costs down, but that means building power stations and you can’t do that in a single term. You can cut taxes on energy but then you have to find commensurate spending cuts elsewhere.

Since the Tories are pledging more defence spending, and welfare cuts are politically unsustainable, it is difficult to see where the cuts can be made. Cutting back statutory obligations will help, giving local authorities more freedom in how they spend their money, but essential functions of the state are already cut to the bone to fund welfare, so the Tories are going to have to think hard about cutting infrastructure spending. Hard choices with no quick wins and no easy answers.

There is also a bit of a minefield here. The Tories have pledged to end access to benefits for foreign nationals. They say, though, that "A large portion of foreign nationals in the UK who claim Universal Credit are from the EU and have EU settled status. As part of the UK’s withdrawal from the EU, it was agreed in Part Two of the Withdrawal Agreement that EU citizens in the UK – and UK citizens in the EU – would under new settled statuses continue to receive equal treatment. We will honour that commitment, providing certainty to British citizens living in the EU and avoiding an unnecessary rehashing of the Brexit negotiations".

This is perhaps more politically significant than the reforms themselves. Reform’s welfare paper explicitly says they would renegotiate to end that equal treatment for welfare purposes. That's clear blue water between the Tories and Reform.

I doubt there is any scope for renegotiating with the EU so Reform will have to state explicitly whether it is their intent to rip up the withdrawal agreement and, consequently, the TCA. If that is the plan, what is their mitigation strategy?

This matters because it could easily turn 2029 into a re-litigation of the Brexit wars, with Labour wanting to take us closer in, Reform presumably wanting to trade on WTO terms (and ripping up the Northern Ireland Protocol in the process), leaving the Tories in the middle of the road with nothing much to say.

This is where the Tories do need additional policy because if they have the vaguest intention of sorting out energy, deregulating, and scrapping Net Zero, they're also on a collision course with the EU - particularly TCA Level Playing Field provisions. They also need to specify what they will do in the event that ECHR withdrawal does not result in agreement over a rights framework for Northern Ireland.

Neither party of the right has been especially forthcoming with detail on these matters but it's the sort of thing we need to know if either wants our votes. Certainly, the Tory party needs to be clear that they will reverse Burnham's EU reset or lose the entire Brexit voting cohort.

Either way, though, it rather smells like the whole reason Burnham is engaging in this EU reset process is to seed further divisions over Brexit on the right. The Tories will paint Reform as Brexit extremists, and Reform will accuse the Tories of selling out to Brussels, maintaining a settlement that stands in the way of vital reforms, meaning that the Tories are lying about their radical energy and planning reforms.

Both will be essentially correct about each other, meaning that the split on the right is irrecoverable; divided over Europe (as usual), and not being entirely honest or detailed about what they will do in office.

Meanwhile, the last thing the British electorate wants is another protracted debate about Northern Ireland customs, tariffs, sausage regulations and fishing. Especially as the country slides into the economic abyss. With Labour broadly united under Burnham, and the Green threat seen off for now, Labour might well win by a landslide.