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.

Jeremy Corbyn in Crewe. Photo: Getty
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Is it too late to replace Jeremy Corbyn as Labour leader before the general election?

Make no mistake, replacing the Labour leader now would terrify the Tories. 

Received wisdom states that Jeremy Corbyn’s position in the Labour party is guaranteed, at least for the next six weeks, until the general election on 8 June. However, this belief is in large part down to polls conducted earlier this year among the Labour membership, which showed continued support for him.

In light of the changing political landscape, and the looming General Election, these polls should be revisited. It is clear they offer enough cause for hope to Labour moderates who might be willing to take the risk of removing Corbyn before the country makes this decision for them.

If you listen to pollsters talk about their surveys, one of the most common refrains you'll hear is that the results are "a snapshot, not a prediction". During the peacetime years between elections, this claim is made for solid reasons. With an election years away, polls offer the public a risk-free method to register dissatisfaction or support for a political parties and politician without consequence.

Nowhere is this clearer than in the polls we’ve seen in the past week. In every poll conducted after May's announcement on an early election, there has been a rise in the Tory lead. Elections focus minds and the risk-free toying with another party is no more; the public now need to make a decision about who they'll vote for in a little over a month and this decision matters.

Back in March, just 35 per cent of Labour members thought it likely that Corbyn would lead Labour to victory at the next election - yet they still supported him (PDF). Many commentators and Labour moderates asked why. They couldn't understand why the members would support someone who was so clearly electoral kryptonite.

The reason is relatively straightforward. The election was still years off and Corbyn was doing, for the members, a vital job in repositioning Labour on the left. With an election so far away, it didn't matter how Labour were performing in the polls, it was risk-free to support Corbyn.

The early election changes all that and the question is no longer about whether another leader gives Labour a better chance of winning but whether another leader gives Labour a better chance at surviving.

In the last poll published on Labour members, a majority wanted Corbyn to either step down immediately (36%) or before the next election (14%). Just 44% wanted him to lead Labour into the next General Election. With May’s announcement of a vote on 8 June, Labour's existential crisis has been brought forward by three years and it is likely that 14% who thought Corbyn should step down before the next election would side with those who wanted Corbyn gone immediately rather than those who wanted him to fight on in 2020.

There is also an argument to be made that the 44% who wanted Jeremy to fight the next election assumed he would have three more years to grow into the role and turn Labour’s fortunes around and these members could easily be swayed from their support given the change in terms the early election brings about.

What's more, 68% of Labour members felt Corbyn should go if Labour lost the next election and this includes 42% of those who say they would definitely/probably vote for Jeremy at a future leadership election. Only the most hardcore Corbyn supporters still believe he has a chance of victory in a few weeks. So, faced with the prospect of Jeremy going in June, after a heavy defeat, or now - giving Labour a better chance - many would reluctantly go for the latter.  

So how can Jeremy be removed? There are three things that need to happen. Firstly, pick the right candidate. For a new leader to have any impact with the public, it has to be someone who is not associated with Corbyn. However, to win over the members, the candidate cannot be seen as an instigator in the coup last year.  It would also be wise to choose someone the public are at least partly familiar with. This is a narrow pool but there are MPs who meet this requirement and could get through a leadership election and limit Labour losses.  

Secondly, limit the selectorate to the members. There is no time to vet 10s or 100,000s of new voters and they are unlikely to be favourable to an Anyone-But-Corbyn candidate. Among current members, Corbyn can be defeated and that must be the battle on which any leadership election was fought.

Finally, remove the risk of a centrist takeover in Labour members' minds by committing to a further leadership election in six months' time. Make it clear that Jeremy Corbyn needs to go - but that this isn't the end for his supporters. Any new leader is just an interim measure, someone who can limit the losses and give Labour the chance to fight again. Position yourself like the football manager who comes in three matches before the end of the season, promising to save the club from relegation before handing over to someone more suited to their team.

Make no mistake, replacing the Labour leader now would terrify the Tories. Their attacks on Corbyn will be worthless and new leaders typically enjoy a honeymoon period which would come at the perfect time. There are risks, of course, but the greater risk is in allowing Corbyn to lead Labour to a defeat from which there may be no return.

Laurence Janta-Lipinski is a former pollster with YouGov and now a freelance political consultant. He tweets at @jantalipinski

 

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