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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The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

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