by John Woodcock

By sitting on his hands while Ed Miliband spoke for the public over Stephen Hester’s bonus, David Cameron has failed an important test over fairness at the top.

As the welfare reform bill returns to the House of Commons, Labour has an opportunity to show that we are the party best placed to deliver fairness at the bottom too.

To start at the top. The prime minister ought to be worried by the way he has allowed himself to seem out of touch and evasive on an issue that has symbolised people’s resentment of unjustified rewards for the highest paid. As an opposition leader, Cameron was adept at understanding and reflecting the public mood. He often moved swiftly on emerging issues, leaving the then Labour government struggling to catch up. Yet on banker’s bonuses he has shown both a flat foot and tin ear – failing to show leadership over the specific issue of the Royal Bank of Scotland chief executive, and refusing Labour’s call for a repeat of the bank bonus tax to get more young people into work.

Were it not for shadow business secretary Chuka Umunna revealing the element of discretion over bonus payments in the Royal Bank of Scotland chief executive’s contract, the government might still be effectively hoodwinking people by suggesting that its hands were tied. Ed made the point last week that Cameron has left himself vulnerable by talking big on the subject of excessive pay while shirking the necessary action to tackle it. The PM’s failure to speak up over the scale of rewards at the top of a troubled state-owned bank is a prime example of that; it may linger in the public’s mind.

Ed has been clear from the outset, though, that leading the way in calling for action against unfair rewards at the top must be matched by a determination to address unfairness at the bottom too. When we stood on their doorsteps at the last election, voters were unsurprisingly angry about the way irresponsible bankers had inflicted so much damage on the British economy. But while the practices of the City of London were alien to their lives, many expressed a sharper resentment at the sense that people in their own neighbourhood who could be paying their way were able to get something for nothing from the benefit system.

We forget that at our peril. The Conservative-led government is set to lock in a nationwide maximum annual benefit level of £26,000 – a figure that seems incomprehensibly high to many working families struggling on modest incomes in parts of the country with lower housing costs than the capital.

Many MPs are finding that the reaction from their constituents to the proposed benefit cap is not full throated praise that ministers are acting; rather, many working people cannot believe that the cap is being set so far above the wage level that they work their socks off to earn.

That is why shadow work and pensions secretary Liam Byrne is right to suggest independently set local variations on any benefit cap this week. Determination to confront this issue head on is a necessary part of our commitment to fairness at all levels. It is equally necessary if we wish to remain in touch with the working majority who we were elected to represent.

John Woodcock is Labour and Cooperative MP for Barrow and Furness and a shadow transport minister.