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 most British thing happened when this hassled Piccadilly line worker had had enough

"I try so hard to help you Soph, so hard."

Pity the poor Piccadilly Line. Or rather, pity the poor person who runs its social media account. With the London Underground line running with delays since, well, what seems like forever, the soul behind Transport for London's official @piccadillyline account has been getting it in the neck from all quarters.

Lucky, then, that the faceless figure manning the handle seems to be a hardy and patient sort, responding calmly to tweet upon tweet bemoaning the slow trains.

But everyone has their limit, and last night, fair @piccadillyline seemed to hit theirs, asking Twitter users frustrated about the line to stop swearing at them in tones that brought a single, glittering tear to this mole's eye.

"I do my best as do the others here," our mystery hero pleaded. "We all truly sympathise with people travelling and do the best we can to help them, shouting and swearing at us does nothing to help us helping you."

After another exchange with the angry commuter, @piccadillyline eventually gave up. Their tweet could melt the coldest heart: "Okay, sorry if your tweet mixed up, I won't bother for the rest of my shift. I try so hard to help you Soph, so hard."

Being a mole, one has a natural affinity with those who labour underground, and I was saddened to see poor @piccadillyline reduced to such lows especially so close to Christmas. Luckily, some kind Londoners came to their defence, checking in on the anonymous worker and offering comfort and tea.

And shortly after, all seemed to be well again:

I'm a mole, innit.