Labour MPs attack Ed Balls' regional benefits proposal

Shadow chancellor Ed Balls says he wants to look at the idea of regional benefit caps

This was the week Labour looked to show it could be trusted to control the welfare bill, with speeches by both Ed Miliband and Ed Balls.

But one aspect of what Ed Balls called "iron discipline" has already run into trouble within the party.

The shadow chancellor floated the idea of regional caps on benefits.

He suggested the Low Pay Commission could advise on where to set the cap in different parts of the country.

Housing costs

The result could see the current £26,000 benefit cap maintained or raised in London and the South East, but lowered in areas like the North East, Yorkshire, the North West and South West.

The argument is that housing costs vary widely across the country, and it would make sense to differentiate.

But the idea has gone down like a lead balloon amongst Labour MPs in the North East.

They spent much of last year fighting the government's idea of regionalising public sector pay, so the last thing they want to see is a similar proposal for benefits.

Newcastle East MP and former chief whip Nick Brown says the idea is completely unacceptable.

He told the BBC's Sunday Politics: "I am firmly and irrevocably opposed to regionalisation of pay and regionalisation of benefits. A large number of other back bench MPs from the region feel the same way.

"It's about the income of individual constituents. I have people in my constituency who want to work but can't.

"There are not enough jobs for the people who need them. That is the problem we should address, not cutting their benefits."

Cutting benefits

Instead, Mr Brown believes the solution to cutting the housing benefit bill is to control rents in areas like London and the South East.

And in his speech, Ed Miliband did place his emphasis on just that rather than cutting benefits.

He also suggested councils could block-lease private properties for tenants in order to drive down rents.

And that does seem to suggest Labour will be taking a different approach to the coalition.

The government's under-occupation charge - or 'bedroom tax' to its critics - has focused on cutting the amount paid to claimants rather than landlords.

Ultimately it may end up affecting rents if it lowers demand for certain types of properties, but initially if the tenant doesn't move they will lose money.

Ed Miliband believes controlling rents is the key to driving down the housing benefit bill

Ed Miliband's proposals seem much more focused on the supply-side - driving down rents, increasing the number of available homes and cutting the benefit bill in the process.

But of course, Labour hasn't said it will abolish the under-occupation charge if it gets into office - merely that it wouldn't have introduced it in the first place.

That was one omission from the speeches this week.

Not credible

But Labour is hoping it has taken a big step forward in convincing voters that it could oversee a fair but affordable welfare system.

Critics though have dismissed the speeches as being too little too late and claim Labour's position still isn't credible.

But for Ed Miliband, this is a balancing act. He needs to show Labour isn't soft on welfare, but also carry his party with him.

Perhaps that may explain why he didn't talk about regional benefit caps.

It's too early to say the idea has been ditched, but the leader must now know that if he presses ahead, Labour's stack of MPs in the north will fight it tooth and nail.

More developments - since this article was published the Labour Party has been in touch with the following statement:

"The proposal for a benefit cap adjusted for housing costs in different areas of the country would not mean different benefit rates in different parts of the country any more than is the case currently.

"Housing benefit by definition varies with housing costs at the moment - and our proposal is simply that an independent Low Pay Commission style body would recommend how to adjust the cap in London and the rest of the country based on housing costs in a similar way".