Iain Duncan Smith speaks at the Conservative conference in Manchester last year. Photograph: Getty Images.
Show Hide image

Duncan Smith: welfare cap will force ministers to choose between families and the disabled

The Work and Pensions Secretary says the policy "is not about punishing people, it's about saying that the money we have is finite."

Other than an attempt to trap Labour, what is the point of the government's new cap on welfare spending? That was the question put by Evan Davis to Iain Duncan Smith on the Today programme this morning. Duncan Smith explained that the cap, which will apply to all welfare spending except the state pension and cyclical unemployment benefits, was an attempt to bring "control" to a previously unlimited area of spending and to ensure that the government is more "accountable" to taxpayers for its decisions. 

When challenged on what would happen if a rise in spending in one area, such as disability benefits, led the cap (set at £119.5bn for 2015-16) to be breached, he said that the government would either "make adjustments" within the budget (i.e. cut benefits) or, if there was "a very strong and compelling reason" for the increase, would go to the House of Commons and seek MPs' approval for a rise in the limit.

It was when Davis responded that this meant the cap was not much of a restriction at all (since the government can usually rely on backbench support on budgetary matters), that Duncan Smith revealed his preference. "I wouldn't want to do that because it would show that we've failed," he said of the prospect of a vote on raising the cap. Asked whether he would, for instance, be prepared to cut spending on family benefits if disability spending rises, he bluntly replied: "I'd adjust that internally". He added that the policy was "not about punishing people" but "about saying that the money we have is finite." In others words, if welfare spending rises faster than expected, someone will always have to pay the price. 

It's for this reason that a significant minority of Labour MPs are so opposed to their leadership's decision to support the cap (as The Staggers first revealed on Monday), with party whips expecting around 20 to rebel when the vote is held this afternoon. But as Duncan Smith went on to argue, Miliband's backbenchers may have less to fear than they think. He derided Labour's support for the cap as "a scam" on the basis that it had failed to say how it would pay for the £465m cost of abolishing the bedroom tax. Labour's response is to point out that many housing experts expect the policy to cost more than it saves (due to an increase in homelessness and housing benefit claims for private properties) and that measures such as its living wage contracts would help to bring the benefits bill down.

But Duncan Smith's broader point stands: there is nothing to stop a future Labour government adjusting the cap to make it less punitive. As Gavin Kelly noted on The Staggers yesterday, the coalition's fiscal mandate, of which the cap is part, automatically dissolves at the end of this parliament and will be replaced by whatever arrangement the new administration sees fit. Labour has pledged to accept the coalition's spending totals for 2015-16, which would mean maintaining a cap of £119.5bn, but expect the Tories to argue that, after this point, the opposition could not be trusted to be wise spenders. 

George Eaton is political editor of the New Statesman.

Show Hide image

How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.