Why the IFS and the coalition should learn to get along

How to resolve the unending progressive/regressive debate.

You all know the ritual. The coalition publishes a budget/spending review and insists that it is "progressive" and that "those with the broadest shoulders" will bear the greatest burden. The next day, the Institute for Fiscal Studies publishes a study showing that the budget/spending review is "regressive" and that the poorest will be hardest hit. The liberal press and the left-wing blogosphere ("at its ruthless best yesterday", says Tim Montgomerie) splash on the findings and put the coalition on the defensive. The next day, Nick Clegg insists that the IFS study is misleading and that the coalition is committed to "fairness". Last time it was an FT article and today it's a Guardian interview.

Clegg says:

I think you have to call a spade a spade. We just fundamentally disagree with the IFS. It goes back to a culture of how you measure fairness that took root under Gordon Brown's time, where fairness was seen through one prism and one prism only which was the tax and benefits system. It is a complete nonsense to apply that measure, which is a slightly desiccated Treasury measure. People do not live only on the basis of the benefits they receive. They also depend on public services, such as childcare and social care. All of those things have been airbrushed out of the picture by the IFS.

This is what the French call a dialogue de sourds, or a dialogue of the deaf. It arises, in part, from the failure of some to understand that when the IFS terms spending measures "progressive" or "regressive", it isn't making a value judgement. In economics, the terms "progressive" and "regressive" simply refer to the distribution of resources between individuals, they are not intended as terms of political praise/abuse.

Then there's the complaint that those notorious IFS decile graphs "don't tell the whole story". They don't, as the IFS itself pointed out yesterday, nor are they intended to. But few would deny that the distributional effect of tax and benefit changes is a key part of the story. The government acknowledges this by publishing its own decile graphs. It is therefore hypocritical and absurd of Clegg to accuse the IFS of employing a "desiccated Treasury measure".

The key difference between the IFS and the Treasury graphs is that the IFS version includes the third of changes ignored by the government. Among these are some of the most regressive measures, such as the cap on housing benefit, the cuts to council tax benefit and the disability living allowance, and the time-limiting of the employment and support allowance. I've yet to hear a convincing argument for excluding these changes.

Rather than denouncing the IFS report as "distorted and a complete nonsense", Clegg would do well to read the section explaining why it's so hard to model public-service changes and, therefore, why the IFS is unable to make a judgement on the progressivity of the "entire fiscal consolidation".

Clegg's criticisms amount to a demand for the IFS to recognise the coalition's public-sector reforms as inherently "progressive". But because these changes can't be modelled fully, that would involve a value judgement rather than an economic one. You can't help but feel that Clegg's target should not be the IFS, but those who misrepresent its findings.

In any case, with his party languishing on 10 per cent in the polls, Clegg should get out and make his case to the voters, not fire fusillades at a respected and impartial think tank.

George Eaton is political editor of the New Statesman.

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The Home Office made Theresa May. But it could still destroy her

Even politicians who leave the Home Office a success may find themselves dogged by it. 

Good morning. When Theresa May left the Home Office for the last time, she told civil servants that there would always be a little bit of the Home Office inside her.

She meant in terms of its enduring effect on her, but today is a reminder of its enduring ability to do damage on her reputation in the present day.

The case of Jamal al-Harith, released from Guantanamo Bay under David Blunkett but handed a £1m compensation payout under Theresa May, who last week died in a suicide bomb attack on Iraqi forces in Mosul, where he was fighting on behalf of Isis. 

For all Blunkett left in the wake of a scandal, his handling of the department was seen to be effective and his reputation was enhanced, rather than diminished, by his tenure. May's reputation as a "safe pair of hands" in the country, as "one of us" on immigration as far as the Conservative right is concerned and her credibility as not just another headbanger on stop and search all come from her long tenure at the Home Office. 

The event was the cue for the Mail to engage in its preferred sport of Blair-bashing. It’s all his fault for the payout – which in addition to buying al-Harith a house may also have fattened the pockets of IS – and the release. Not so fast, replied Blair in a punchy statement: didn’t you campaign for him to be released, and wasn’t the payout approved by your old pal Theresa May? (I paraphrase slightly.)

That resulted in a difficult Q&A for Downing Street’s spokesman yesterday, which HuffPo’s Paul Waugh has posted in full here. As it was May’s old department which has the job of keeping tabs on domestic terror threats the row rebounds onto her. 

Blair is right to say that every government has to “balance proper concern for civil liberties with desire to protect our security”. And it would be an act of spectacular revisionism to declare that Blair’s government was overly concerned with civil liberty rather than internal security.

Whether al-Harith should never have been freed or, as his family believe, was picked up by mistake before being radicalised in prison is an open question. Certainly the journey from wrongly-incarcerated fellow traveller to hardened terrorist is one that we’ve seen before in Northern Ireland and may have occurred here.

Regardless, the presumption of innocence is an important one but it means that occasionally, that means that someone goes on to commit crimes again. (The case of Ian Stewart, convicted of murdering the author Helen Bailey yesterday, and who may have murdered his first wife Diane Stewart as well, is another example of this.)

Nonetheless, May won’t have got that right every time. Her tenure at the Home Office, so crucial to her reputation as a “safe pair of hands”, may yet be weaponised by a clever rival, whether from inside or outside the Conservative Party. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.