Memo to Duncan Smith: low wages are not an argument for cutting benefits

The fact that benefits have risen faster than wages is an argument for higher wages, not lower benefits.

The latest argument deployed by Iain Duncan Smith in favour of the government's plan to cap benefit increases at 1 per cent for the next three years (below the rate of inflation) is that benefits have risen faster than private sector wages. The Work and Pensions Secretary is highlighting figures showing that the former have increased by an average of 20 per cent over the last five years (in line with inflation), while the latter have increased by 12 per cent. The statistics aren't new but the government's decision to publicise them shows that it fears Labour, which has denounced the policy as a "strivers' tax" (60 per cent of the real-terms cut falls on working families), may be shifting public opinion against the bill. While the polling results are mixed, one recent survey by Ipsos MORI found that 69 per cent believe that benefits should increase in line with inflation or more. (Conversely, a YouGov poll found that 52 per cent believe Osborne was right to increase benefits by 1 per cent, while a ComRes poll put support at 49 per cent.)

Duncan Smith said today: "Working people across the country have been tightening their belts after years of pay restraint while at the same time watching benefits increase. That is not fair. The welfare state under Labour effectively trapped thousands of families into dependency as it made no sense to give up the certainty of a benefit payment in order to go back to work."

In response, Labour has rightly pointed out that over the last ten years, as opposed to five, wages have risen faster than benefits. Jobseeker's allowance, for instance, has increased from £53.95 a week to £71, a rise of 32 per cent, while wages have increased by 36 per cent, from an average of £347 a week to £471. The current trend is a temporary quirk caused by the recession.

But even if we accept Duncan Smith's baseline, his logic is profoundly flawed. The fact that benefits have risen faster than wages is an argument for increasing wages (for instance, by ensuring greater payment of the living wage), not for cutting benefits. Many of those whose wages have failed to keep pace with inflation actually rely on in-work benefits such as tax credits to protect their living standards. The government's decision to cut these benefits in real-terms will further squeeze their disposable income. In the case of those out-of-work, ensuring that benefits rise in line with inflation is essential both as a matter of social justice - cutting support for the poorest means forcing even more families to choose between heating and eating - and of economic policy. Most claimants can't afford to save, so spend whatever they receive and stimulate the economy as a result. If anything, the government should be considering above-inflation increases in benefits to maintain consumer demand.

When Duncan Smith complains that benefits have risen faster than wages, he is really complaining that wages have risen more slowly than inflation (and are expected to continue to do so until at least 2014). But rather than prompting the government to slash benefits, this grim statistic should prompt it to pursue a genuine growth strategy that ensures more people have access to adequately paid employment. That, however, remains a distant hope.

Work and Pensions Secretary Iain Duncan Smith said it was "not fair" that benefits had risen faster than wages. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Ukip needs Nigel Farage to stand in the Stoke by-election

Despite becoming a global political celebrity, the party's former leader has been waiting 25 years for this moment to win a Commons seat. 

When Ukip's 20 MEPs - back at school today in Strasbourg to elect a new EU President - wave (no fists please) at each other today at lunch across the various dining rooms of the EU Parliament, their main subject of interest will not be the eight candidates they will be voting for by secret ballot to replace bearded German socialist Martin Schulz.

For the record, these eight MEPs include four Italians (the favourite is centre-right 63-year-old Antonio Tajani, a former Italian air force pilot and EU insider regularly seen at the best tables of VIP watering holes like the Stanhope Hotel in Brussels), two Belgians, a Romanian and, yes, a Brit. Thats's 66-year-old Jean Lambert of the Green Party. But nobody in Ukip really cares. The party has the worst attendance and voting record of any political party in the EU - ranked 76 out 76.

Electing a new EU president today in Strasbourg is not nearly of so much concern to Ukip MEPs as the upcoming by-election in Stoke - not the least as quite a few of them (especially representing the Midlands) will be thinking of standing. The central Midlands seat of Stoke Central is a dream seat to have come up for Ukip just as Theresa May is setting out her 12-point "clean Brexit" plan stall.

Ladbrokes still have Labour 4/5 favourite with Ukip 9/4. It's worth a bet as the stakes are so much higher for Ukip if they lose. If they do, many will ask whether Ukip really can supplant Labour in 2020? 

With the prime minister making it clear today in her Lancaster House speech that her government want a hard Brexit, this presents a potential dilemma for Ukip. If the Tories deliver a clean Brexit with no membership of the single market, or EEA, then does the purpose of Ukip "holding the Tories' feet to the fire" over Brexit become less relevant? 

If Ukip alternatively wishes to re-invent itself as the new working class party of the north and Midlands, it will need to show that it can beat Labour - now at its lowest ebb under Corbyn - in key seats like Stoke. Ukip know this and are very good at their by-election ground game with veteran by-election campaign managers like Lisa Duffy as good as any strategist. In Stoke, expect a full expeditionary force of Ukip's colourful and Falstaff-like army of by-election activist troops - arriving by train, coach and foot - to campaign and out manoeuvre Corbyn's New Left Red Army. 

Stoke Central is probably the most important by-election for Ukip since Heywood and Middleton in 2014 which became a watershed moment for the party. Even Ukip was taken off-guard by the result. Without much cash and without campaigning with the full Ukip army zeal, they lost by just over 600 votes and got a recount. 

Looking back, Heywood was a pivotal moment in Ukip's short history. It was the moment the party realised that its future lay not so much in persuading Disgusted with Dave of Tunbridge Wells to vote for Nigel, but rather with disaffected Labour voters wanting something down about immigration that they saw was changing the very face and identity of their local towns, estates and cities. 

But can Ukip really win Stoke? Well, they really have to try as this is their best chance they might get for a while. Which means that the really interesting question being asked by Ukip MEPs today to Paul Nuttall is "Are you running?" The deadline for candidates on the party's Approved Candidates List to put themselves forward is 4pm on Wednesday 18 January.

So far Nuttall's official line - as told to the Daily Express - is that he is not ruling out standing. As a no-nonsense northerner himself (a working class boy from Bootle in Merseyside who played "junior", not professional, football for Tranmere Rovers), Nuttall would appear to be an ideal working class candidate to empathise with the voters of such a socially dispossessed pottery town.

As Chris Hanretty, a political scientist at East Anglia University wrote in the Guardian: "If Ukip doesn’t win, or doesn’t run Labour close, that calls into question its ability to win parliamentary seats...it would suggest that the referendum, far from being a staging post on the road to supplanting Labour, might signal Ukip's peak." 

Ouch. But Hanretty has a point: if Nuttall stands and fails to win in a working class Midlands seat where 69 per cent of the electorate voted to leave, it does raise issues about how much impact can make on the Westminster electoral landscape should there be a snap election in the next few months as a result of repeated constitutional challenges to Article 50 (the Supreme Court ruling is expected to be announced this week) and legal challenges such as the Article 127 challenge brought by the pro-EU pressure group British Infuence, now postponed until February.

This case revolves around the claim that Parliament must be consulted not just over the UK's exit as a EU member but also (and separately) its exit from the European Economic Area (EEA) – and by definition from the Single Market. In her speech today, Theresa May made it clear that the UK will be leaving the Single Market, so this challenge is unlikely to go away. All this political jousting and legal posturing is likely to make for quite a political circus when the Stoke by-election date is announced (usually within three months of an MP dying or standing down). Should Ukip not win this by-election prize fight - or give Labour a very bloody nose and lose by a few hundred votes as they did in Middleton and Heywood in 2014 -  it would certainly be damaging for Ukip. 

Not the least if the party's leader and chief general (an MEP commander for the north west) chooses to stand himself. But Nuttall is faced with a tricky dilemma. If he stands and loses, the idea that that UKIP is the new party of choice for working class former Labour voters in the North and and Midlands may not look so convincing. Yet if Nuttall doesn't stand and the party puts up another strong candidate who goes on to win like deputy chairman Suzanne Evans (born in the Midlands) or West Midlands MEP Bill Etheridge (who has a strong personal following in the Black Country and industrial Midlands), then Nuttall's own position as leader of a party with two MPs could be frustrated. 

So it is going to be an interesting day for Ukip in Strasbourg that's for sure. Ukip is a strange party in that two of its most senior and high profile politicians - deputy chairman and Health spokesman Suzanne Evans and the respected former Ukip mayor candidate Peter Whittle (culture spokesman and excellent film critic for Standpoint) are not even MEPs although Whittle is proving to be an adept member of the London Assembly.  

If Ukip win in Stoke, and Nuttall's name is not on the ballot, this could have political ramifications. There is a significant difference in Westminster powers and patronage in having two MPs in Westminster rather than one (as currently with Douglas Carswell with whom Suzanne Evans worked closely with as a Ukip member of Vote Leave, which was pointedly not the party's official designated Leave camp). With two MPs, Ukip becomes a party as opposed to a one man political solo show. 

If the newly-elected MP were to be, say, Suzanne Evans - one of the party's star performers on Newsnight and Have I Got News For You - Nuttall's power base as leader (no longer an MEP in 2020 after we exit the EU) might be diluted by another senior party member becoming a star performing Commons MP. 

So there is much at stake both personally and party-wise for Nuttall. Should Ukip be defeated in Stoke Central by some margin, this would be picked up by Tory and Labour strategists as offering evidence that Labour might not be wiped out by so many seats under Corbyn should May go to the country in say March or April to settle the Brexit mandate. Polls have been saying that under Corbyn Labour could lose as many as 80-100 seats should Ukip prove (with Stoke) that the party is, indeed, the number one threat to traditional Labour vote in the north and midlands.

Whatever happens in Stoke, the Tories won't win. They will be watching to see how the working class vote splits. This is why it is so improbable that May will attempt to call an 'early election' this year, even if the polls continue to show she would win by a landslide. 

The truth is she can't realistically call an election under the Fixed Term Parliament Act even if she she wants to. The Act (one of the worst legacies of the Coalition govt which many MPs want repealed) requires two-thirds of MPs to vote for going to the country - something that not even the most suicidally inclined of Labour MPs will be prepared to do as they will be joining MEPs in being out of a job. 

In the event that Labour take the view that a political blood bath - with Ukip the likely winner in many seats like Stoke Central - is the only way to purge the party of Corbyn, then they will also have to swallow the fact that May (if pushed into an election by troublesome, unelected peers) is likely to spike her election wheel with a manifesto pledge to abolish most of the powers of the House of Lords, as well as booting many of the eldest, most pompous and idle. Such a mandate for radical reform of our largely unelected Lords would hardly be difficult to secure. More blood on the carpet. 

In the event that the Supreme Court rules this week that Article 50 must be signed off by both the Commons and the Lords, any Lib Dem and Labour pro-EU zealots will know that any attempted Kamikaze-style amendments (which could technically delay Parliamentary assent for up to thirteen months) will be met with punitive retribution from Downing Street. 

Ukip only lost in Stoke to Labour's Dr Tristram Hunt in 2015 by around 5,000 votes - largely thanks to disaffected working class voters feeling that their once proud industrial "pottery" city - once a Victorian symbol of industrial creativity and production - had become a symbol of a working class British city in decline. Faced with immigration, housing and other social issues, Stoke voters have felt for some time that the pro-EU metropolitan leaning Labour Party has abandoned them.

Not so Ukip, which is exactly why Nigel Farage chose to stage a major Brexit rally hosted by Grassroots Out (GO!) last April at Stoke's Victoria Hall urging the good people to vote to leave the European Union.

Addressing the packed hall, against his political opponent Tory Chris Grayling MP, and Labour's Kate Hoey (herself a Leaver), Farage drew applause from the Stoke crowd when he said: "This is not about left or right – this is about right or wrong." Farage then started up the audience of hundreds in a chant of "We want our country back." 

In other words, Nigel he knows perfectly well that Ukip can win Stoke. Which leads to the obvious question in Strasbourg today: "Are you going to stand Nigel?" 

Officially, Farage has ruled himself out saying he wants to focus on his international and speaking, broadcasting and advisory career. But as Farage said after picking up the leadership reins after they came loose following the resignation of Diane James: "I keep trying to escape ... and before I'm finally free they drag me back". 

The truth is that in his political heart, I suspect Nigel must be going through a dark night of his political soul over whether he should have stood for Stoke Central. Or still can? In so many ways, he has been waiting over 25 years for this moment. By the time the all-important Heywood and Middleton by-election result came on October 2014 (Ukip share of the vote up 36 per cent), Farage had already committed to standing for the south of England seat of Thanet South - his seventh election campaign to become an MP. Had Nigel stood in the Heywood by-election, he probably would have won. 

All his Ukip parliamentary election campaigns have been in the South, South-West or Home Counties, beginning with Eastleigh in Hampshire in 1994 when he won just 952 votes. But the interesting trend to note is that in his last two attempts to get into the Commons,  he has doubled his vote each time. In 2010 election, standing in Buckingham he won 8,410 votes (almost the same number as I won taking votes of Midland labour voters in North Warwickshire in 2015). In 2015, Nigel got 16,026 votes in South Thanet. 

My point is that had Nigel Farage stood for a solid Labour Northern or Midlands seat in 2015, he may well have won then. Yes, Nigel has said that he wants to get his life back after his extraordinary years as the "Mr Brexit" Ukip leader - apparently now the subject of a Warner Bros Bad Boys of Brexit comedy biopic. 

But as somebody who knows how much the pull of the green leather Commons bench - the true seat of western parliamentary democracy - means to Nigel, I sincerely hope he will re-consider standing for Stoke Central. Yes, he wants to earn money and become a global political superstar. But it will certainly be something to think about as he flies through the night to take up his front row seat in Washington on Friday's inauguration. 

And just think, after what Nigel did for Trump campaigning in Mississippi, how could Donald Trump possibly not campaign for his Brexit friend in Stoke? Now that really would be political theatre.