IDS is in trouble over his strivers’ tax – and he knows it

Unable to justify the government's decision to cut support for families, the Work and Pensions Secretary has resorted to myths.

You can tell ministers are in trouble when they start peddling distortions on the scale we've seen from Iain Duncan Smith this week. IDS is in trouble. And he knows it.

Next week, the beleaguered Work and Pensions Secretary comes to the Commons to defend the indefensible. The comprehensive failure of George Osborne's budgets has forced the independent Office for Budget Responsibility (OBR) to revise up its forecasts for the claimant count by a third of a million. That's pushed up welfare spending by an eye-watering £13bn. To pay that bill, IDS has been asked to push through a strivers' tax - more than 60 per cent of which will come from working families -  on top of the £14bn already removed from tax credits, while Britain's richest citizens get a £3bn a year tax break.

It’s unjustifiable. And IDS knows it. So this week, we've had a very muddled attempt to make up some kind of case.

First, we had a made-up story that tax credit fraud had jumped by 58 per cent. This claim lasted about as long as it took Channel 4's FactCheck to gently point out, that IDS couldn't actually add up and the sums were wrong. Then we had a new line of attack. Benefits are rising faster than earnings. Except they're not. In the last ten years wages have risen faster than Jobseeker's Allowance, and the OBR tells us wages will power ahead of inflation in the next four years.

Then Nick Clegg tried to claim Labour was being inconsistent to low paid public service workers. We back a 1 per cent pay freeze, so why not a 1 per cent benefits cap? Because we've always said that 1 per cent should be an average with a tougher squeeze for the best paid public servants to fund higher pay rises for the lowest paid.

It's all fairly desperate stuff from a government that's trying at all costs to avoid admitting that the lion's share of the savings will come from working families' tax credits. So the real question in next week's debate is this: how can the government justify cutting working families' tax credits to pay for their failure to get Britain back to work - when millionaires are being given a tax cut? Right now working people are being hit with a double whammy. Wages are stagnant and tax credits are being slashed whilst at the same time the cost of living goes through the roof as anyone who boarded a train today will tell you.

The basic truth that IDS won't confront is simple. The best way to get welfare spending down is to get Britain back to work. But his much vaunted welfare revolution is in tatters. The Work Programme is literally worse than doing nothing. Universal Credit is beset with IT problems and has already been raided to pay for rising dole bills. Now the benefit cap is being pushed to the back end of the year because it’s a mess. Next week's Welfare Uprating Bill does nothing to address any of this. It does nothing to create a single new job.

More than half of the people currently out of work have been so for more than six months but the government isn’t lifting a finger to help. The Youth Contract is nowhere to be seen and the all too predictable result is youth unemployment still hovering around a million. That's why this government should be looking at far more concerted action to get Britain back to work with ideas like Labour's proposed tax on bankers' bonuses to create a fund big enough to get over 100,000 young people back into jobs.

There will plenty more smoke and mirrors from the government over the coming months but they can't disguise the reality of this Bill. It is a strivers’ tax which hammers hardworking families. The vast majority of the households hit are in work. Those are the people this government wants to cover the cost of their failure whilst 8,000 millionaires receive a tax cut worth an average of £107,500. If this government wants a battle over fairness whilst they are taking from hardworking families to fund a tax cut for the wealthiest, Labour is ready to take it on.

Work and Pensions Secretary Iain Duncan Smith outside Number 10 Downing Street. Photograph: Getty Images.

Liam Byrne is Labour MP for Birmingham Hodge Hill, cofounder of the UK-China Young Leaders Roundtable and author of Turning to Face the East: How Britain Prospers in the Asian Century.

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage