Political Promise

Coalition’s Welfare Reforms Will Hurt The Poorest

In Jonny Roberts on October 4, 2010 at 7:00 am

Duncan-Smith doesn’t want to hurt the poor but Osborne will force his hand, says Jonny Roberts.

Iain Duncan Smith, the right-wing former Conservative Party leader has spent the past 6 or so years dedicating his time to understanding ‘Broken Britain’. IDS has gone to Britain’s most destitute estates and met their most desperate residents, rightly, he has been appalled. Myself and IDS come from very different sides of the political spectrum but even I can admit that IDS has mellowed, he may never truly understand the lives of the poor, though it would be a stretch of the imagination to say I will fully understand it either but we both agree too many people in 21st century Britain are trapped in poverty.

My relative affection for IDS makes it all the more painful for me to watch his ambitious plans as Secretary of State for Work and Pensions being attacked by George Osborne, who is relishing every cut he can find as he takes on the task of slashing Britain’s public spending to pieces. Osborne will tell Britons on October 20th that this is all very necessary, patriotic even, to cut so ruthlessly. He doesn’t want to do it, but he ‘has to because of Labour’ he’ll say yet he will smirk his way through his Spending Review announcement, wearing each billion pound cut as a badge of honour. The Chancellor has become the chief sheriff of cutsville with cowboys such as Jeremy Hunt begging to impress by cutting further and deeper than anyone imagined. No minister should ever want to slash spending like this, cut waste and use the cash more efficiently yes, but not choke his or her department to death; this is all positively masochistic.

Someone who doesn’t want to cut his budget with relish is IDS. He wants to reduce it certainly but he wants to do so by moving all benefits and tax credits into a single ‘universal credit’. This is sensible. It makes life easier at the means-testing end (not least in moving from a system administered by both the Treasury and the Department for Work and Pensions to just the DWP) and much simpler too for the benefit claimant. The trouble with this is that up front costs are relatively high (IT systems and such I suspect) at £9bn at a time when Osborne wants him to be cutting not spending. IDS says it will make back the cash in savings from the simplification but I don’t think this is true – simplifying the system will mean more people claiming. The myriad of credits and benefits created under Gordon Brown’s chancellorship left many puzzled and not claiming all they are entitled to, with one form, that won’t happen – certainly not in the same numbers. When the savings don’t materialise Osborne will want more blood, deeper cuts, less money assigned to this ‘universal credit’. The other way IDS’ scheme should make savings is by taking away benefits incrementally to encourage jobseeker’s to go into and stay in employment and be better off financially for it. The trouble here is that Osborne’s cuts elsewhere will swell the unemployed and there won’t be the jobs for these seekers to find, when they do they will be in such numbers I find it hard to believe IDS will find his savings for 10 years let alone within the lifetime of this parliament. Worst of all, in exchange for the capital for the introduction of the ‘universal credit’, Osborne has bullied IDS into slashing housing benefit, taking away child benefit for children over 16 and a raft of other cuts that will defeat much of the gains of his grand idea.

Ed Miliband’s call for a living wage will be ridiculed by some in the right-wing press and business but it could be the key to reducing the welfare budget even more drastically than Osborne’s proposals without the hardship thrust upon the vulnerable. Instead the weight of welfare would lie with the employers whose wages would lift everyone working full-time out of poverty. The gap between living wage earnings and the dole make it enough of an incentive to work without needing IDS’ additional incrementally reduced handouts.

A bizarre battleground could be about to emerge in welfare – Labour cutting welfare faster than the Tories but still keeping their heart and values? That would be an embarrassment for Osborne and a sad blow for IDS.

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