Tory welfare reforms are misguided

The Universal Credit will make work cost, not pay.

There is much to praise in Iain Duncan Smith's aspirations for welfare reform, outlined in the bill his department has published today. He wants to make it certain that work pays more than benefits and ensure there are clear obligations to work in the welfare system. The theories behind his big ideas – the Universal Credit and the Work Programme – have the potential to make a real difference to people's lives.

However, the problem for the Work and Pensions Secretary is that he gives the impression of thinking that amending taper rates in the benefits system and devising a smart contracting structure for employment support will be a silver bullet for problems as varied and complex as everything from worklessness to poverty to family breakdown. And he tries to pretend his reforms are taking place in isolation from the rest of government policy and the state of the economy. This is why his good intentions could, sadly, run aground.

The first point is the obvious one. It is much harder for people to find jobs when unemployment is rising. To be fair, this point is sometimes overstated. There is vastly greater movement of people in and out of work than the static monthly employment figures suggest (a point all too rarely reflected in public and media debate). For instance, in January, 325,000 people made a new claim for Jobseeker's Allowance and 344,000 left benefit.

Much more worrying is the staggering 93,000 rise in inactivity during the last quarter – these are people who have basically given up looking for work, many choosing to retire early. These people are the equivalent of the "lost generation" that was left on the scrapheap by the recessions of the 1980s and 1990s. And these are the people who need the government to focus its economic policy on job creation (to increase the overall supply of work) and to entrench a job guarantee as a backstop in the welfare state (to ensure no one drifts into long-term unemployment).

The second problem for Duncan Smith is the cuts to support for low- and middle-income families that he was forced to swallow by the Chancellor as the price for winning Treasury support for his reform plans. An £18bn squeeze on the benefits bill would cause any welfare minister a political headache, but the biggest difficulty is that the impact of these reductions directly contradicts his own policy goals. For a start, over £5bn of the cuts hit working families, reducing their living standards and their incentive to continue working.

And it's not just the measures announced in the Budget and on the Spending Review scorecard that are poised to bite. First, the IFS has confirmed that the Universal Credit will weaken the incentive for potential second earners to work, relative to the current system of tax credits. And now it is reported that the "capital limits" (the level of savings you can hold while still receiving state support) that currently apply to out-of-work benefits will be extended to working families in the Universal Credit.

This means that 400,000 families on a low wage will be stripped of the help they get to top up their wages (and make work pay), simply because they have done the right thing and put some money aside. A further 200,000 will be newly subject to a means test on in-work support for the crime of having savings. This measure will save the government shedloads of cash, but it is disastrous for incentives to work and save. In fact it will make work cost, not pay.

A technical change with a palpable impact on low earners. A measure that is slipped in by stealth and not declared openly by the government. A reform whose impact is directly contrary to the stated goals of ministers. Does that remind you of anything?

If the Social Market Foundation analysis is right – that working families with two children, an annual income of £25,000 and savings of over £16,000 could be £2,600 worse off a year – we could be looking at a Tory 10p tax debacle in the run-up to this year's Budget and local elections.

Graeme Cooke is a senior researcher at the Institute for Public Policy Research.

Graeme Cooke is Associate Director at IPPR

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The most terrifying thing about Donald Trump's speech? What he didn't say

No politician uses official speeches to put across their most controversial ideas. But Donald Trump's are not hard to find. 

As Donald Trump took the podium on a cold Washington day to deliver his inauguration speech, the world held its breath. Viewers hunched over televisions or internet streaming services watched Trump mouth “thank you” to the camera, no doubt wondering how he could possibly live up to his deranged late-night Twitter persona. In newsrooms across America, reporters unsure when they might next get access to a president who seems to delight in denying them the right to ask questions got ready to parse his words for any clue as to what was to come. Some, deciding they couldn’t bear to watch, studiously busied themselves with other things.

But when the moment came, Trump’s speech was uncharacteristically professional – at least compared to his previous performances. The fractured, repetitive grammar that marks many of his off-the-cuff statements was missing, and so, too, were most of his most controversial policy ideas.

Trump told the crowd that his presidency would “determine the course of America, and the world, for many, many years to come” before expressing his gratefulness to President Barack Obama and Michelle Obama for their “gracious aid” during the transition. “They have been magnificent," Trump said, before leading applause of thanks from the crowd.

If this opening was innocent enough, however, it all changed in the next breath. The new president moved quickly to the “historic movement”, “the likes of which the world has never seen before”, that elected him President. Following the small-state rhetoric of his campaign, Trump promised to take power from the “establishment” and restore it to the American people. “This moment," he told them, “Is your moment. It belongs to you.”

A good deal of the speech was given over to re-iterating his nationalist positions while also making repeated references to the key issues – “Islamic terrorism” and families – that remain points of commonality within the fractured Republican GOP.

The loss of business to overseas producers was blamed for “destroying our jobs”. “Protection," Trump said, “Will lead to great strength." He promised to end what he called the “American carnage” caused by drugs and crime.

“From this day forward," Trump said, “It’s going to be only America first."

There was plenty in the speech, then, that should worry viewers, particularly if you read Trump’s promises to make America “unstoppable” so it can “win” again in light of his recent tweets about China

But it was the things Trump didn't mention that should worry us most. Trump, we know, doesn’t use official channels to communicate his most troubling ideas. From bizarre television interviews to his upsetting and offensive rallies and, of course, the infamous tweets, the new President is inclined to fling his thoughts into the world as and when he sees fit, not on the occasions when he’s required to address the nation (see, also, his anodyne acceptance speech).

It’s important to remember that Trump’s administration wins when it makes itself seem as innocent as possible. During the speech, I was reminded of my colleague Helen Lewis’ recent thoughts on the “gaslighter-in-chief”, reflecting on Trump’s lying claim that he never mocked a disabled reporter. “Now we can see," she wrote, “A false narrative being built in real time, tweet by tweet."

Saying things that are untrue isn’t the only way of lying – it is also possible to lie by omission.

There has been much discussion as to whether Trump will soften after he becomes president. All the things this speech did not mention were designed to keep us guessing about many of the President’s most controversial promises.

Trump did not mention his proposed ban on Muslims entering the US, nor the wall he insists he will erect between America and Mexico (which he maintains the latter will pay for). He maintained a polite coolness towards the former President and avoiding any discussion of alleged cuts to anti-domestic violence programs and abortion regulations. Why? Trump wanted to leave viewers unsure as to whether he actually intends to carry through on his election rhetoric.

To understand what Trump is capable of, therefore, it is best not to look to his speeches on a global stage, but to the promises he makes to his allies. So when the President’s personal website still insists he will build a wall, end catch-and-release, suspend immigration from “terror-prone regions” “where adequate screening cannot occur”; when, despite saying he understands only 3 per cent of Planned Parenthood services relate to abortion and that “millions” of women are helped by their cancer screening, he plans to defund Planned Parenthood; when the president says he will remove gun-free zones around schools “on his first day” - believe him.  

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland