John Oxley: In Labour’s uncomfortable search for benefit cuts there are opportunities for the Tories

John Oxley is a consultant, writer, and broadcaster. His SubStack is Joxley Writes.

There are few comforts in opposition, but watching the government steer into a political row is one of them.

It serves as a reminder that governing is hard, that politics is changeable, and that there is a route, however long and hard, back to electoral success.

The Labour fight over disability benefits is a delectable example, with Starmer’s authority now clashing with backbenchers. It is perhaps the first real internal test of his premiership and will likely require deft political management. There’s a real chance of a rebellion and of the Prime Minister being forced to back down in some way.

For a Conservative Party so used to its own squabbles, it is gratifying to watch Labour flounder like this. The challenge, however, is turning this into a political opportunity. It is often said that governments lose elections rather than oppositions winning them. It is true to an extent, but a good opposition knows how to kick the shins in these situations, exploiting the government’s inner turmoil and demonstrating their capacity to take charge.

The nature of the conversation right now makes it hard for the Conservatives. There is little space for them in the debate.

One of the consequences of losing power is that your ability to shape the narrative is harder. We are seeing this now. In the press, this is playing out as a battle between a forthright (or cruel, depending on your perspective) PM and MPs campaigning for “fairness” for claimants. There is little space for our argument that these cuts should be deeper.

This also plays into what is likely to be the battleground for the next election. We saw in 2024 Labour losing votes to their left. Greens and independents picked up swathes of votes in cities, flipping long-held Labour seats with big majorities. Come the next election, there is every chance Starmer faces as much of a fight with those who think he hasn’t taxed enough or spent enough as those who feel squeezed by his budgets.

Those voters will never go Tory, but their presence makes it easier for the Conservatives to come through the middle of divides on the left. To do this, however, the party needs more than just talk of cuts.

It needs to build back its reputation for competence but also avoid slipping into a place where it can be accused of wanton cruelty. If Labour is paying a political price for cutting benefits, many moderate and floating voters might still be put off the idea of making things worse.

As we look towards our grand plan for policy renewal, this presents a real challenge to the party. First, the disability benefits bill has ballooned on our watch. We can argue about why, but the surge came in our last period in power and was an international outlier. No other OECD government saw the same post-pandemic increases. Whatever has afflicted us since then seems to be a peculiarly British sickness.

More than that, however, the politics of it are difficult. The party needs something more to say than “spend less”.

That risks being drowned out in a battle between Labour and its left, making the PM look like the voice of moderation and perhaps endearing him to voters who are worried about both the bill of government largesse and the welfare of those who rely on benefits. The Tories need a bigger, more comprehensive plan.

Spending less money should be at the heart of this, but it must go further.

We need a better idea of how our benefits system should operate, where the incentives lie and how it interacts with the world of work. There should be a clearer idea of how we support those people who are genuinely unable to support themselves and how we empower others.

Rolling back Labour’s measures that discourage businesses from hiring is part of this, as well as perhaps using the tax system to make it easier and more affordable to employ those who need support or who have been out of the workforce. It’s part of getting back to presenting as a party that can fix things.

There is another political dimension here, too.

Conservatives need to think about how these issues play into the new electoral landscape. It is a chance to differentiate the party from Reform and push the latter into an awkward position.

Farage’s outfit has different political incentives around this than the Tories do. The areas where he wants to fight Labour and where Reform’s chances of expanding their base are best are constituencies where benefit claimant rates are highest.

To be a serious threat to Labour, Reform must seize on dissatisfaction with the government in places like Blackpool and Merthyr Tydfil, both among the most benefits-dependent parts of the country. We should force the insurgents to nail their colours to the mast – do they want to cut benefits in these places, slash spending elsewhere, or else keep taxes higher?

The benefits row offers some real opportunity for the Tories.

This is more than just a chance to watch Labour squirm; it is also a chance to build up our economic programme for when we return to government.

To restore credibility on this issue, we need to look at where we lost control –how NHS waiting lists and the failings of social care have kept people out of the workforce. We also need a plan to address this, which is not merely punitive but which wavering voters can feel comfortable voting for. Not just more extreme than Labour, but that makes it clear we can fix it when they cannot.

This lets Labour and Reform ensnare themselves on the issue.

It is true we can probably form a government without the inner-city seats where Labour faces left-wing rivals and without the very deprived Reform/Labour marginals. But if the debate around this becomes one merely of generosity versus cruelty, the Conservatives will get little traction saying they want more, deeper cuts than Labour will countenance.

Instead, the party should harness the opportunity to demonstrate that it has regained the capacity for a well-developed policy. Get into the, as yet unanswered, question of why so many people in Britain are too sick to work?

Push on the options in other departments and incentives away from the benefits system to help remedy that and find workable ways to bring the spending down while maintaining the dignity of those who need support.

As Labour and Reform are squeezed by a different set of political pressures, we should not just watch them flounder but demonstrate how we can do it better.