Labour pledges to tackle UK’s ‘low-wage economy’

Mr Miliband said the public’s faith in the welfare system had been “shaken”, and pledged to tackle underlying problems by cutting housing costs, boosting wages, and making people contribute more before becoming eligible for jobseeker’s allowance.

Parents in workless households should also be obliged to attend Job Centre interviews and undertake training in return for the free nursery education their children receive, he added.

Yesterday’s intervention, in a keynote speech in Newham, east London, came as the Labour leadership seeks to counter Tory criticism that it is the party of welfare, rather than work.

Earlier this week Shadow Chancellor and Morley and Outwood MP Ed Balls said the party would stick to the coalition’s 2015/16 departmental budgets if it wins the next general election, and announced that wealthier pensioners would be stripped of winter fuel payments.

Mr Miliband effectively ruled out reversing the coalition’s child benefit cuts for high earners, saying other priorities would come first.

He warned that the country’s finances were likely to be in a dire state in 2015, and Labour would need to have a “laser focus” on how each pound was spent.

Setting out an ambitious plan for fundamental reform, and repeatedly deploying the term “social security” rather than “welfare”, he said voters would have a stark choice between the Labour and Conservative approaches.

“We will tackle the deep, long-term causes of social security spending and tackle the costs of failure, like housing benefit. They will not,” he said.

Mr Miliband said that while he believes a minority who should work do not, David Cameron regards anyone looking for work as a “skiver”.

“Controlling social security spending and putting decent values at the heart of the system are not conflicting priorities.

“It is only by reforming social security with the right values that we will be able to control costs,” he insisted.

Mr Miliband hailed the Blair and Brown governments’ introduction of tax credits for low-paid workers, but conceded there should have been earlier action to address the rising incapacity benefit.

“Successive governments did not do enough to deal with the rise in people on Incapacity Benefit. It was a legacy of unemployment from the years Mrs Thatcher was in power,” he said.

“But the last Labour government should have acted on it sooner.”

He added: “We didn’t do enough to tackle Britain’s low-wage economy, a low-wage economy that just leaves the taxpayer facing greater and greater costs subsidising employers...

“To tackle the problem of poverty at work and to control costs, we need to create an economy that genuinely works for working people.

“I want to teach my kids that it is wrong to be idle on benefits when you can work.

“But I also want to teach them that the people in this country who work 40 or 50 or 60 hours a week, do two or even three jobs, should be able to bring up their families without fear of where the next pound is coming from.”

Chancellor George Osborne has already signalled that the Government will bring forward a cap on much benefits spending.

And Mr Miliband said Labour wants a limit on social security spending that would operate over the course of each three-year spending review – although he said the details still needed to be worked out.

Comment: Page 13.