SKY NEWS – MURNAGHAN – 10.00 – 29.01.12 – INTERVIEW LIAM BYRNE, SHADOW WORK AND PENSIONS SECRETARY

DERMOT MURNAGHAN: The government faces another key vote this week in the Commons on its plan to cap welfare benefits to that £26,000 a year. Labour, while agreeing in principle, want to see regional variations as I’ve just been discussing, but for some this might not be enough with reports this morning that Frank Field MP is pushing for an even tougher cap. Well Liam Byrne, the Shadow Work and Pensions Secretary joins me from Birmingham, a very good morning to you Mr Byrne. David Willetts has pointed it out, I don't know if you just heard that interview and you and I had a discussion I remember the morning of that vote in the House of Lords. You said you supported a benefits cap, Labour voted against it in the House of Lords, what’s going on?

LIAM BYRNE: Well we voted against it in the House of Lords to make sure that the issue came back to the House of Commons because what we are saying to the government is very simple – you need to think this through and give us a cap that isn’t going to backfire but is actually going to work in practice. So the government will put down a motion this week I think to disagree with the Bishops and unless we see a better from them, we will vote against that and put on the table an amendment that actually delivers a local benefits cap because this reform is important but it’s important because we need to send a very clear message, that you are better off in work no matter where you are. The problem with the government’s proposal, as everybody knows, is that Housing Benefit costs which make up most of the benefits people get, are much, much higher in London so what you would get in Housing Benefit in central London would be very, very different to what you would get in Birmingham for example. So what we are saying is why don’t you take the politics out of this, set up an independent commission like the Low Pay Commission, to look at how you get a local benefit cap in place that actually works in practice.

DERMOT MURNAGHAN: Well flowing from that then, what about regional pay which has been talked about by the Chancellor which Labour has opposed?

LIAM BYRNE: Well that’s very different because you have to remember that the benefits system has actually recognised the differences in costs . For about 70 years now Housing Benefit has always been figured out locally and we’re saying look, wouldn’t that make more sense for a benefits cap? If you want to send the message that you are better off in work rather than benefits, it just seems to make sense the very big differences that there will be in levels of housing benefit in different parts of the country.

DERMOT MURNAGHAN: You just talked about differences in costs of living around Britain, that applies to pay and benefits as well.

LIAM BYRNE: Yes, but if you are looking at the benefits cap specifically, we want a cap that works in practice, we don’t want a cap that backfires and causes a whole load of homelessness because everyone knows who has to pay the homelessness bill, it’s the hard pressed taxpayer and frankly nor do we want lots of families with lots and lots of children being forced out of their homes and having to move schools and that kind of thing. What we want is a cap that works in practice. But the government in its kind of rush to judgement if you like, has decided to set just one arbitrary national figure and we all know that that figure is being pushed up because it’s got to take into account the very high levels of housing benefit in London so we’re saying hang on, try and think this through, let’s get in place a cap that is set locally and let’s get a proper independent look at this and maybe a commission like the Low Pay Commission that has worked quite well for low pay, so that no matter where you are in the country, you know you are better off in work than on benefits.

DERMOT MURNAGHAN: But it seems your aspirations there are in conflict with your political tactics because a lot of people are going to say, well we heard Liam Byrne the morning of that vote in the House of Lords yesterday that they support this cap and others within your party frankly are saying it should be a lot lower, and that seems to chime with the voters, yet there the Labour Lords go and vote against it. It does smack of political opportunism, you saw a chance to give the government a bit of a kicking and it was irresistible.

LIAM BYRNE: No, we wanted this issue back in the Lords. The Welfare Reform Bill is an important bill, it’s got things in it that we support and which build on many of the changes that we made, changes like making sure that work pays but I think what’s clear from today’s news is that the government is now very wrong-headed on responsibility. They seem to be very relaxed about giving giant great bonuses to bankers and resolute about taking away vitally needed benefits for cancer patients. The Welfare Reform Bill is good in parts but it’s very wrong elsewhere so cancer patient’s benefits will be cut even while they are still in chemotherapy, you have got this problem of actually taking away tax credits from people who have actually squirrelled away £11,000 in savings, it locks in place cuts to childcare that will hurt families that want to do the right thing and go out to work and then you’ve got this big problem of a national cap, one cap fits all if you like, which we don’t think will be right in lots of different parts of the country. So that’s why we wanted this issue back in the Commons this week, to give the government a final chance to get some of these big questions right.

DERMOT MURNAGHAN: You mentioned the bankers bonuses and of course everyone thinking of Steven Hester at the Royal Bank of Scotland at the moment. Of course you were in the Treasury team that was here when he was hired, you don’t really have a leg to stand on on that one, do you?

LIAM BYRNE: Well I just listened to your interview with David Willetts and I have to say it is remarkable how wrong Mr Willetts has got his facts. We actually I think set out quite clearly a day or two ago the details of Mr Hester’s contact and it says there, in black and white, that the bonus regime is set by the remuneration committee and bonuses are set every single year. Now this is a bank that the government owns almost all of. The government is the biggest shareholder, Mr Cameron has been talking about how shareholders need to flex their muscles and have a bigger say in the actually that executive pay is set. Fine, let’s be good to your word Mr Cameron. Step in now and say that this bonus payment for Mr Hester is wrong and should be stopped. You have to remember that last year in February I think, George Osborne came to the House of Commons and said that the way bonuses should be set is dependent on the levels of lending to small businesses. That’s what everyone knows we need, that’s what people and the business community says to me here in Birmingham, we need the lifeblood of credit flowing to small businesses again. Well the banks aren’t delivering that so why is this bonus being handed out to Steven Hester at RBS and why on earth isn’t the Prime Minister, who if you like is in charge of the shareholdings owned by the taxpayer, why isn’t he stepping in to stop this? As I say, here is a week where the government appears to be pretty relaxed about giving these bonuses to bankers and in the House of Commons on Wednesday we suspect they’ll press ahead with this idea of taking away benefits from cancer patients. They’ve just got very muddled views now on how you restore responsibility in our country.

DERMOT MURNAGHAN: Last issue for you on bail outs I suppose and this idea that the International Monetary Fund will need more funds and George Osborne the Chancellor seems to be indicating that he is prepared to put in more British money, particularly when it comes to dealing with crises in some eurozone countries, is that something Labour would support? More money from the UK for the IMF?

LIAM BYRNE: Well we’ve got to see more details of the plan. We’ve seen a little bit in the press today about how EU leaders are being much more determined to put on the table a proper plan to get young people back into work. We wish the government in Westminster would listen to a few of those ideas, it’s a real priority so we wait to see what the details look like this week before coming to a view on that.

DERMOT MURNAGHAN: Okay Mr Byrne, thank you very much indeed. Liam Byrne, Shadow Work and Pensions there.