Return of the nasty party

"These are not decisions taken lightly or easily," said the devout Catholic millionaire as he clipped jobseeker's allowance to as little as £54 a week.

Work and Pensions Secretary Iain Duncan Smith inspired revulsion and ridicule in the house this week with the Welfare Uprating Bill - a euphemistic plan to deliberately starve vulnerable households over the next three years by restricting increases in a slew of benefit payments to just 1 per cent, less than half the expected rate of inflation.

But Labour's principled opposition is sadly not so principled as it seems.

The Bill comes just two years after the coalition's last con, which swapped a formula based on the Retail Prices Index of inflation for the typically lower Consumer Prices Index - which perversely does not measure rises in housing costs, one of the things benefits are explicitly used to compensate for.

Now the Con-Dems have abandoned even that, overtly allowing inflation to outstrip benefits.

Even on the government's own rosy projections rising inflation will see Britain's most vulnerable households lose around 3 per cent of their already meagre benefits by 2015.

Labour rightly opposed the Bill - but the front bench's recent rhetoric suggests the vote is simply part of the giddying improvised jig that is the "radical centre" rather than ideologically consistent analysis.

Consider their branding of the Bill as a "strivers' tax."

The objection is that the Con-Dems' benefit cuts will hurt working households as much as the unemployed.

They are right, of course. There's far more overlap between "people who work" and "people who need benefits" than most people realise.

Take housing benefit, for instance. Around five million households in Britain receive it, and nearly a million of those claimants are already working.

Even once we take housing benefit out of the picture, official figures for 2009 showed around a fifth of households where benefits are the main source of income already had someone in work.

That last figure came from a long forgotten but genuinely staggering investigation by the Institute for Fiscal Studies (IFS) in June 2011. But the impact becomes even more profound when you do as the IFS researchers did, and break down Britain's population by income over the last decade.

Between 2000 and 2009 - that's almost entirely prior to the financial crisis, remember - around 54 per cent of the entire bottom half of the population depended on benefits as their main source of income.

Basically, at least one in four households in Britain don't just receive a benefit, they depend on them to survive. And it's these benefits that the coalition is furiously chipping away.

But while Miliband et al are factually correct, the constant soundbites pitting "shirkers" against "strivers" betray a philosophy of the deserving poor that's either deeply cynical or deeply deluded.

Such distinctions are meaningless in an era of mass layoffs.

The real argument against the cuts is a simple one. Benefits only increase on paper so that they keep pace with inflation. If that means they increase faster than private-sector pay, that's a reason to improve pay, not demand a fiscal suicide pact.

But this is an unpalatable truth for Ed Miliband and the new Labour diehards since it means confronting the party's complicity in ignoring decades of wage stagnation as union muscle withered away.

As living costs rose and rose, Blairites simply sought to mask the exploitation by benefit top-ups to sponsor poverty wages from employers and increasingly frequent chiding of Britain's "something-for-nothing" culture.

Hence the Labour leader shows no interest in challenging this myth, as his response to long-term unemployment shows.

Just days before the vote shadow work and pensions secretary Liam Byrne was directed to roll out their new jobs guarantee - a six-month "compulsory job" on the barely-subsistence level minimum-wage, as opposed to the starvation level jobseeker's allowance.

Even on face value, this represented a U-turn on last year's tentative support for a living wage.

Bulldog Byrne declared the scheme would be "a culture shock for many people" - presumably not those already on the near-identical Con-Dem work programme - but people had to get used to "working or training and not claiming."

Yet this "culture" that Byrne buys into oddly didn't exist six years ago. The most recent quarterly figures show some 443,000 people in Britain have been jobless for more than two years now.

In 2007, immediately before the financial crisis struck, fewer than 134,000 people had been unemployed for even one year.

In fact at that point unemployment for longer than a year was so rare the Office for National Statistics didn't even bother to track it.

Since then the number of unemployed people has increased by 865,000, while full-time employment has fallen by 399,000.

We are watching a culture shift, but it's a shift back to Britain's vast reserve armies of labour of a hundred years ago.

Moralising about strivers and skivers and uber and untermenschen is nothing short of fantasy, however sober and sensible it sounds to your campaign strategists.

Getting real about market failure - now that's a principled opposition.

• Follow Rory MacKinnon on Twitter @RoryMacKinnon.