Labour's line in the sand on benefits

Every so often there comes a political moment when a line has to be drawn in the sand. Last week's announcement of a three-year cut in the real value of most social security benefits and tax credits is just such a moment. It represents the latest move in the government's war of attrition against the social security system and those reliant on it.

It appears that Ed Miliband will draw that line. He must not listen to the siren voices of some in the party warning against walking into the cunning trap set by George Osborne in order to brand Labour as defending "scrounging skivers". There is both a principled and pragmatic case for Labour making clear its opposition to the forthcoming welfare uprating bill. In doing so, it must reframe the debate and reclaim the flag of fairness from Osborne.

Cutting benefits is unfair and does not make economic sense. Benefits are already too low to meet people's needs. This is partly due to existing uprating policies which, until wages stagnated and with the exception of the boost that Labour gave to support for children, allowed benefits to fall further and further behind average living standards.

The single rate of the safety net of social assistance represented 20% of average earnings in the late 1960s; by 2011 it had fallen to 11%. This is the context in which to judge Osborne's reference to out-of-work incomes rising twice as fast as in-work over the last five years. Moreover, over that same period, the Joseph Rowntree Foundation's work on minimum incomes standards shows that the gap between the incomes and needs of the worst-off households widened. It is mothers, as the managers of poverty, who bear the main strain in families with children.

Cutting benefits does not make economic sense because, as the IMF has pointed out, this reduces demand: people on low incomes are more likely to spend their money, and in the local economy. Thus the multiplier effect of changing benefit levels (for good or ill) is twice that of personal tax allowances, according to the Office for Budget Responsibility.

There is also a pragmatic political case for Labour taking an unequivocal stand. To the dismay of some of us, the party refused to oppose the principle of a benefit cap for fear of falling into another of Osborne's traps. Yet its message was so ambiguous and confused that it allowed the government to claim that it opposed the cap – a lose-lose situation if ever there was one. Nor is it axiomatic that siding with Osborne against people in poverty would benefit Labour electorally. A recent Observer poll found just over half the public are opposed to further benefit cuts. And other polling suggests that voters do not respect inauthenticity in politicians. They may not look kindly on a one-nation Labour that, for political gain, turned its back on those already struggling to get by.

The biggest trap set by Osborne is to lure Labour into colluding with his framing of the debate through a divisive rhetoric that pits one group of low income people against another, "the person who leaves home every morning to go out to work and sees their neighbour still asleep, living a life on benefits". Or in the parlance of the moment, "the strivers" v "the skivers".

Much has rightly been made of the fact that approximately 60% of the effects of the benefit cut will hit working households. But in using this argument we must not imply that the other 40% is hitting "skivers" who don't deserve our support. The language of strivers and skivers ispernicious and misleading. Striving is not synonymous with paid work in my dictionary. Generally people on benefits are also striving: to find work; to care for their family. Moreover the demonising division of the world into strivers and skivers belies the constant movement in and out of work at the bottom of an insecure labour market.

Osborne peppered his speech with the new F-word: fairness. But there is nothing fair in asking for a sacrifice from the poorest members of society while using the money saved to help better-off taxpayers through the rise in personal tax allowances and cut in the top tax rate. And to the extent that the rich are being asked to make a sacrifice, it's a pin-prick they'll hardly notice. There is no equivalence with pushing people at the bottom into the hands of food banks at best and loan sharks at worst.

Ed Miliband knows that this is not the politics or economics of one nation, and he is right to draw his line in the sand. We should all support him.