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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For a mayor who will help make Londoners healthier, vote for Tessa Jowell

The surgeon, former Labour health minister and chairman of the London Health Commission, Ara Darzi, backs Tessa Jowell to be Labour's candidate for London mayor.

London’s mayor matters. As the world’s preeminent city, London possesses an enormous wealth of assets: energetic and enterprising people, successful businesses, a strong public sector, good infrastructure and more parks and green spaces than any other capital city.

Yet these aren’t put to work to promote the health of Londoners. Indeed, quite the opposite: right now, London faces a public health emergency.

More than a million Londoners still smoke tobacco, with 67 children lighting up for the first time every day. London’s air quality is silently killing us. We have the dirtiest air in Europe, causing more than 4,000 premature deaths every year.

Nearly four million Londoners are obese or overweight – and just 13% of us walk or cycle to school or work, despite half of us living close enough to do so. All Londoners should be ashamed that we have the highest rate of childhood obesity of any major global city.

It’s often been said that we don’t value our health until we lose it. As a cancer surgeon, I am certain that is true. And I know that London can do better. 

For that reason, twice in the past decade, I’ve led movements of Londoners working together to improve health and to improve the NHS. Healthcare for London gave our prescription for a better NHS in the capital. And Better Health for London showed how Londoners could be helped to better health, as well as better healthcare.

In my time championing health in London, I’ve never met a politician more committed to doing the right thing for Londoners’ health than Tessa Jowell. That’s why I’m backing her as Labour’s choice for mayor. We need a mayor who will deliver real change, and Tessa will be that mayor.  

When she invited me to discuss Better Health for London, she had the courage to commit to doing what is right, no matter how hard the politics. Above all, she wanted to know how many lives would be saved or improved, and what she could do to help.

In Tessa, I see extraordinary passion, boundless energy and unwavering determination to help others.

For all Londoners, the healthiest choice isn’t always easy and isn’t always obvious. Every day, we make hundreds of choices that affect our health – how we get to and from school or work, what we choose to eat, how we spend our free time.

As mayor, Tessa Jowell will help Londoners by making each of those individual decisions that bit easier. And in that difference is everything: making small changes individually will make a huge difference collectively.  

Tessa is committed to helping London’s children in their early years – just as she did in government by delivering Sure Start. Tessa will tackle London’s childhood obesity epidemic by getting children moving just as she did with the Olympics. Tessa will make London a walking city – helping all of us to healthier lifestyles.

And yes, she’s got the guts to make our parks and public places smoke free, helping adults to choose to stop smoking and preventing children from starting.   

The real test of leadership is not to dream up great ideas or make grand speeches. It is to build coalitions to make change happen. It is to deliver real improvements to daily life. Only Tessa has the track record of delivery – from the Olympics to Sure Start.   

Like many in our capital, I am a Londoner by choice. I am here because I believe that London is the greatest city in the world – and is bursting with potential to be even greater.

The Labour party now has a crucial choice to make. London needs Labour to choose Tessa, to give Londoners the chance to choose better health.