IDS & Welfare reform

IDS is not trying to play political chess. He is advancing an agenda that he believes in with all his heart – and the public are willing to give him a try. Labour is intellectually exhausted, and Toynbee knows it. The result is the best chance we’ve had in a generation to make British poverty history writes Fraser Nelson in an excellent Spectator blog.

IDS at #cpc10

Iain Duncan Smith addressed the Conservative conference this afternoon on welfare reform. The Comprehensive Spending Review is still some weeks away, so this was a largely perfunctory speech without much detail. Personally I'm rather glad since in previous years the nature of his work with the Centre for Social Justice has regularly reduced me to tears.

His work though, is just one of the pillars of major reform being undertaken by this extraordinarily radical government - free schools, GP commissioning, AV, fully elected house of lords, police commissioners - the list goes on. But IDS's reforms of the welfare system are at the centre of what Conservatives understand as addressing the

causes of poverty - welfare dependency, educational failure, indebtedness, addiction and family breakdown. This coalition is undertaking the biggest reform of the welfare system for a generation. And at its heart is the belief that work must always pay better than welfare. If you want the slogan, 'changing lives through work'.

Describing this as 'our contract to the unemployed', IDS described remaining out of work as no longer an option, whilst committing the government to full provision of all necessary support to the most vulnerable who are unable to work - 'our contract with the disabled'. 'I will always fight for fairness' he declared, but fairness is a two way process. This he declared as 'our contract with the British taxpayer'.

He also suggested that yesterday's announcement on child benefit being withdrawn for those earning more than £44,000 per year was just one of the necessary measures to ensure that the deficit is reduced, and that if we fail to reduce that deficit, it is the poorest in our society that will suffer the most, '...leaving so many people trapped beyond hope, beyond aspiration'.

He ended with the words that on the 6th May, 'the British people honoured us. Now we must honour them.'

Stand up IDS, your time has come.

Danny Alexander announces at the LibDem conference the spending of £900m by the treasury to introduce new moves to stop tax avoidance. He says the measures will raise £7bn in additional revenue over the lifetime of this parliament. Good news.

And as precedents go, havn't we heard somewhere else about arguments between the Treasury and spending departments looking to spend additional amounts up front in order to achieve greater savings further down the line?

Stand up IDS. Your time has come.

Minimum wage

Back in May I wrote about The Welfare Revolution, a subject Simon Heffer returns to in todays Telegraph. He suggests we need to reduce the minimum wage in order to stimulate jobs and provide growth. But this would serve only as a dis-incentive to finding work as welfare became relatively more appealing. A perverse scramble to the bottom.

There are ways in which the minimum wage could be lowered to stimulate job creation. Raise the tax threashold to this level first - currently £11,400. As I wrote at the time:

A permanent link between these two would provide the greatest incentive for enterprise generally and getting back into work in particular. It would also enable dismantling of the overly-complex and widely abused Tax Credits system, as well as providing a fairer and more balanced tax system which benefits all taxpayers.

The Poverty of Labour

Are we trying to keep people in poverty? asks Janet Daley in her column this week, amid the left's demands that the poor be 'protected' - like an endangered species from extinction - and by doing so, maintaining their dependency on welfare in a self-defeating cycle of poverty.




The Brown government had a catchphrase that still resonates as an embodiment of political nonsense: it would boast repeatedly of its supposed triumph in “lifting people out of poverty”. There is an unmistakeable vision here of the hand of God, with the grateful masses gently cradled in its palm, raising the humble from their destitution.



But being “lifted out of poverty” by government action meant that benefit payments were nudged up by marginal increments so as to push the poor just above the statistical level of relative poverty. The boundary that they crossed might make little difference to their actual quality of life, but, on paper, they were “out of poverty” – at least until the next jump in the general standard of living put them arithmetically back into relative poverty, thus necessitating another increase in benefits to pull them once more across the magic line.



Putting an end to poverty by raising benefits was a statistical conjuring trick.




Daley further explains the ' litigious absurdity' of the Equality and Human Rights Commission pronouncing the Budget to be in breach of the 2010 Equality Act if it showed no regard for the possible impact on “social equality”.

This is tantamount to saying that no government may interfere with the right of people to be dependent on state benefits – and furthermore, that those benefits must be maintained at a level that guarantees the “equality” of recipients will not be damaged. The logical conclusion of this is that it is illegal to alter the tax and benefit system in any way that reduces welfare dependency and creates incentives for people to leave poverty behind.

Absurd or what?

Welfare reform

Don't often see a piece of this length - nor importance - in the Spectator blogs. Well worth a read. It starts with Labour's view from former spad Jo Moore -

'Sorting welfare comes at a political cost – and for what? Helping a bunch of people who tend not to vote. Far easier to shovel money at the poor, and leave them in decaying council estates.'

And that's exactly what they did. But as we all know, it's how you look after those you do not need that defines you. The piece ends 'how serious is he (Cameron) about fixing this broken society? In the next few months, we’ll see.'

Iain Duncan Smith and welfare reform is fast becoming the totemic issue for this coalition. And not before time.

The Welfare Revolution

Michael Meacher presents the old defeatist view of welfare reform, whilst Camilla Cavendish yet another symptom of social disfunction all around us. Meanwhile, Iain Duncan Smith sets out his stall. We'll have to wait a little longer for the solutions.

Complex and inter-dependent social forces are at work here. Iain Duncan Smith's Centre for Social Justice describes the five pathways to poverty, but in truth there are more - mental health for example - which will require multi-layered solutions across several government departments. Did anyone mention prison reform? Why aren't all prisons adult education institutes? And why aren't all prisoners serving more than three years coming out able to read, write and be professionally qualified for work? You get the idea.

With the initial focus on ending welfare dependency and the lack of incentive for work inherently built-in to the welfare system, the coalition needs to look positively at raising the tax threshold not just to £10,000 - as the LibDems are demanding - but to the minimum wage - around £11,400.

A permanent link between these two would provide the greatest incentive for enterprise generally and getting back into work in particular. It would also enable dismantling of the overly-complex and widely abused Tax Credits system, as well as providing a fairer and more balanced tax system which benefits all taxpayers.

Paying for it - around £22bn I understand - will mean substantially increasing the level of redistribution within the tax system. Ending the cap on NI contributions for instance, could raise £8bn, CGT increases to income tax bands around £2bn, the scrapping of tax credits a further £4bn, with the balance paid for by lowering the 40% tax threshold for higher rate payers.

I realise the howls of protest from the Tory right will be both substantial and sustained. But they should understand the real goal in this package. Properly incentivising people off welfare and back into employment not only gives them a real stake in society (and with it at least partly mending some of the broken bits) but enables them to contribute - through the tax system - towards Labour's debts and future public spending.

It might also reduce those welfare payments by around £22bn. Now there's a thought.