Analysis of George Osborne’s budget from the Institute for Fiscal Studies.
Stephen Crabb has been appointed as the new work and pensions secretary, after Iain Duncan Smith resigned in a flurry of controversy on Friday.
Mr Duncan Smith has said the latest planned cuts to disability benefits were “not defensible” in a Budget that benefited higher-earning taxpayers.
David Cameron said he was “puzzled and disappointed” that Mr Duncan Smith had decided to go when they had agreed to have a rethink about the policies
Iain Duncan’s Smith’s letter of resignation must be a BIG embarrassment to the Government. It was certainly designed to inflict maximum damage particularly on Chancellor George Osborne. I’ve previously noted that the Chancellor has a tendency to regard the Department for Work and Pensions as little more than an annex to the Treasury, and the welfare budget as the Treasury’s disposable income, but I never anticipated that Duncan Smith would come to say that he sees it that way, too. This is, after all, a minister that has invented statistics and told some pretty far-fetched fibs to prop up justifications of his policies that entail some pretty draconian measures, such as sanctions and work fare, after all.
Yet surprisingly, Duncan Smith has also quite willingly and very publicly provided the government’s opponents with ammunition. He has effectively denounced not only Osborne’s budget, but also, his targeted austerity measures, yet curiously, Duncan Smith has until now been one of the most ideologically devout Thatcherite Conservatives, which is reflected in every policy he has formulated.
He has basically said what many of us have been saying for a long time: that the cuts are political and not because of economic necessity, nor will they help the economy. He also as good as said he doesn’t think we are “all in it together”. It turns out that Osborne blamed Duncan Smith for the Personal Independence Payment (PIP) and Employment Support Allowance (ESA) cuts. But Duncan Smith has been a very quiet man recently, often conspicuous by his absence during parliamentary debates, with Priti Patel left defending the ESA cuts in particular in the Commons.
However, the Department for Work and Pensions did a review of PIP last year, and that’s where the “justification” for the cuts came from – a sample of just 150 people, which was hardly a representative sample. It’s difficult to imagine that IDS didn’t order that review. But it was Osborne who announced the cuts to PIP, not Iain Duncan Smith. Just who carries the original responsibility for the proposed PIP cuts is probably never going to be fully untangled from the crossfire of accusations and counter accusations. But surely Cameron is ultimately responsible for Conservative policies?
In his resignation letter, Iain Duncan Smith says:
“I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled, and the context in which they’ve been made are, a compromise too far. While they are defensible in narrow terms, given the continuing deficit, they are not defensible in the way they were placed within a budget that benefits higher earning taxpayers. They should have instead been part of a wider process to engage others in finding the best way to better focus resources on those most in need.
I am unable to watch passively while certain policies are enacted in order to meet the fiscal self imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest.
Too often my team and I have been pressured in the immediate run up to a budget or fiscal event to deliver yet more reductions to the working age benefit bill. There has been too much emphasis on money saving exercises and not enough awareness from the Treasury, in particular, that the government’s vision of a new welfare-to-work system could not be repeatedly salami-sliced.
It is therefore with enormous regret that I have decided to resign. You should be very proud of what this government has done on deficit reduction, corporate competitiveness, education reforms and devolution of power.
I hope as the government goes forward you can look again, however, at the balance of the cuts you have insisted upon and wonder if enough has been done to ensure ‘we are all in this together’ “
You can read the letter in full here
You can see Cameron’s response in full here
Many Conservatives have suggested that Duncan Smith – a supporter of Brexit – had been looking over several weeks for an opportunity to resign, and claimed that he wanted to find a moment when he could inflict maximum damage on the campaign led by Cameron and Osborne to keep Britain in the European Union. But writing in the Observer, Bernard Jenkin, a Tory MP and chair of the Commons public administration select committee, says that Duncan Smith was not prepared to tolerate another raid on the disability budget.
Referring to the prime minister’s letter to Duncan Smith, in which Cameron said he was “puzzled” by the resignation, Jenkin says: “What that letter does not make clear is that the £4bn savings in the budget from welfare still stands and, once again, Iain was being told to find similar cuts from other benefits for working-age people – including for the disabled – again undermining the positive incentives that make it worthwhile for them to take work. That is what he finds morally indefensible.”
However, Debbie Abrahams, the shadow minister for disabled people, who has faced Duncan Smith many times during Commons debates and Work and Pensions Committee inquiries, says she does not accept the reasons Iain Duncan Smith has given for resigning, and believes he chose to resign so he could “embarrass the government as much as he can”.
She adds that planned cuts to disability benefit payments in the Budget were “grossly unfair” and would hit “the most vulnerable in society at the same time the highest earners are getting tax cuts”.
She says she is grateful that many Conservative MPs are critical of the proposals, but adds:
“We must make sure that this last cut that has been announced around Personal Independence Payments is stopped and does not carry on.”
The resignation is particularly surprising given that, just hours earlier, the Treasury shelved the proposed cuts to PIP – following threats of a Tory backbench rebellion. Three Tory MPs – including mayoral candidate Zac Goldsmith – have also been asked to resign as patrons of disability charities over their support for the recent welfare cuts. The complete failure of the austerity project is finally unravelling the Conservatives, and at a time when the Brexit faction of the party is already causing considerable disarray.
Even some of the most loyal Tories were finding it difficult to defend taking money away from sick and disabled people – particularly since many of those who receive PIP are in work, and in fact some rely on it to stay in work. The cuts to ESA and PIP take place in the context of a Tory manifesto that included a pledge not to cut disability benefits. In fact in March last year, the Prime Minister signalled that the Conservatives will protect disabled claimants from welfare cuts in the next parliament (this one). Cameron said the Conservatives would not “undermine” PIP, which was introduced under the Coalition to save money by “targeting those most in need.” Now it seems those most in need are not the ones originally defined as such.
Controversially, the cuts to disability benefits were planned to fund tax cuts for the most affluent – the top 7% of earners. The Chancellor raised the threshold at which people start paying the 40p tax, in a move that will see many wealthier people pulled out of the higher rate of income tax, in the coming budget. Mr Osborne said that he wants to “accelerate progress” towards the Conservative’s manifesto pledge of raising the threshold for the 40p rate to £50,000 in 2020. The average annual income in the UK is around £27,000.
The Labour Party have urged Stephen Crabb to appear before MPs on Monday to announce formally that the cuts to disability benefits had been dropped. Owen Smith, the shadow work and pensions secretary, said: “His very first act as secretary of state must be to come to parliament on Monday to announce the full reversal of cruel Tory cuts that will see 370,000 disabled people lose £3,500 a year.”
He also urged Crabb to “stand up to a Treasury that is intent on cutting support for those most in need to pay for tax breaks for those who least need them”.
The main retaliation from the Conservative frontbench has been that Duncan Smith knew about the disability cuts (which he did) and that this is an act of mischief and sabotage designed and timed to destablise Cameron regarding Europe. It may well be. But the divisions had already caused wobbles, Duncan Smith just delivered a swift and hefty kick to the “in” crowd.
However, it’s also clear there has been a rising tension between the Treasury and the Department for Work and Pensions for some time. Duncan Smith felt that the benefits system could be scaled back only so far. Osborne and Cameron would prefer to see the welfare state completely dismantled.
Nonetheless, we have witnessed Duncan Smith’s long term disconnection from the impacts of his policies. He has persistently refused to engage with critics raising serious concerns about the consequences of the welfare “reforms”. He has refused to carry out a cumulative impact assessment of his policies and absolutely refused to monitor the impacts, most of which have been dire for sick and disabled people, and when the specifics of negative consequences were pointed out to him, he has typically reacted with denial, anger and accusations of “scaremongering.”
Duncan Smith used the mantra “there’s no proof of causality” to dismiss those who recognised a correlation between his welfare “reforms” and an increase in premature mortality rates and suicide. He has consistently and quite unforgivably shown that he is more concerned about hiding evidence and stifling criticism than he is about conscienciously investigating the harmful and sometimes devastating consequences that his policies have had on many people.
On the day he resigned, Duncan Smith’s department lost a four year legal battle to keep the many potentially humiliating problems with Universal Credit from the public.
Whatever the reasons may be for Duncan Smith’s resignation, he has certainly highlighted very well that Conservative budget decisions are partisan, taken for party political interest rather than with consideration for the national interest. But in more than one way.
It’s also worth bearing in mind that it is Iain Duncan Smith’s “reforms” that have prompted a United Nations inquiry into grave and systematic violations of the human rights of disabled people. It’s highly unlikely that Duncan Smith’s reputation will be enhanced in the long-term regarding his legislative legacy, particularly regarding disabled people. He has collaborated with other ministers in designing and extending techniques of neutralisation to attempt justify what are extremely prejudiced, discriminatory and punitive policies aimed at the poorest citizens.
This is a man who has removed people from a structural socioeconomic context and then intentionally blamed them for their individual socioeconomic circumstances, most of which have been created by this government’s actions since 2010. Every single Conservative budget has taken money from the poorest and gifted it to the wealthiest. It’s inconceivable that Tory ministers don’t understand such policies will invariably extend and perpetuate inequality and poverty.
Duncan Smith has damned himself, but nonetheless, a Conservative minister resigning and stating that it is because of a Conservative budget, publicly citing reasons that correlate with the opposition’s objections regarding the government’s ideologically driven and targeted austerity, is a particularly damning turn of events for the Conservative Party as a whole, that’s for sure.
Now that Duncan Smith has publicly denounced the Conservative austerity project, I wonder if he will also recognise and embrace the rational expertise and economic competence of a real party of social justice, which rescued this country from the consequences of a global recession by the last quarter of 2009, whilst Osborne had us back in recession by 2011, and lost us our triple A Fitch and Moody credit ratings after promising not to. I wonder if Duncan Smith now supports the fair party with a track record of verifiable economic expertise – that would be the Labour Party.
Picture courtesy of Robert Livingstone
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