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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Labour to strip "abusive" registered supporters of their vote in the leadership contest

The party is asking members to report intimidating behaviour - but is vague about what this entails. 

Labour already considered blocking social media users who describe others as "scab" and "scum" from applying to vote. Now it is asking members to report abuse directly - and the punishment is equally harsh. 

Registered and affiliated supporters will lose their vote if found to be engaging in abusive behaviour, while full members could be suspended. 

Labour general secretary Iain McNicol said: “The Labour Party should be the home of lively debate, of new ideas and of campaigns to change society.

“However, for a fair debate to take place, people must be able to air their views in an atmosphere of respect. They shouldn’t be shouted down, they shouldn’t be intimidated and they shouldn’t be abused, either in meetings or online.

“Put plainly, there is simply too much of it taking place and it needs to stop."

Anyone who comes across abusive behaviour is being encouraged to email validation@labour.org.uk.

Since the bulk of Labour MPs decided to oppose Labour leader Jeremy Corbyn, supporters of both camps have traded insults on social media and at constituency Labour party gatherings, leading the party to suspend most meetings until after the election. 

In a more ominous sign of intimidation, a brick was thrown through the window of Corbyn challenger Angela Eagle's constituency office. 

McNicol said condemning such "appalling" behaviour was meaningless unless backed up by action: “I want to be clear, if you are a member and you engage in abusive behaviour towards other members it will be investigated and you could be suspended while that investigation is carried out. 

“If you are a registered supporter or affiliated supporter and you engage in abusive behaviour you will not get a vote in this leadership election."

What does abusive behaviour actually mean?

The question many irate social media users will be asking is, what do you mean by abusive? 

A leaked report from Labour's National Executive Committee condemned the word "traitor" as well as "scum" and "scab". A Labour spokeswoman directed The Staggers to the Labour website's leadership election page, but this merely stated that "any racist, abusive or foul language or behaviour at meetings, on social media or in any other context" will be dealt with. 

But with emotions running high, and trust already so low between rival supporters, such vague language is going to provide little confidence in the election process.