After George Osborne began the year by promising to scythe another £12bn from the welfare budget in the next Parliament, Iain Duncan Smith’s speech at the Centre for Social Justice, the think-tank he founded 10 years ago, is an attempt to reaffirm his original “compassionate conservative” mission. The message from the Work and Pensions Secretary will be that reform is not about saving money but about saving lives. In a conspicuous rebuke to Osborne, who frames welfare almost entirely as a fiscal issue, he will say:
We would have wanted to reform the welfare state, even if we had no deficit. As Conservatives, we should hate the idea of people with unfulfilled potential languishing on welfare. Welfare reform is fundamentally about opportunity and life change.
The rhetoric is admirable but, nearly four years into this parliament, the reality is not. After multiple management and IT failures (with £40.1m of assets written off), the introduction of Universal Credit, Duncan Smith’s masterplan to transform welfare and “make work pay”, has been so slow as to render it almost invisible. At the end of last September, just 2,150 people were claiming the new benefit, 997,850 short of the original target of one million. When Duncan Smith complains today that “the present system makes criminals out of those trapped in its clutches” by “withdrawing up to 94 pence of every pound they earn” through means-testing, it will be a reminder of his failure to reform it in office.
Rather than Universal Credit, it is Osbornite welfare cuts such as the benefit cap and the bedroom tax that have defined the government’s approach. Duncan Smith will again defend the abolition of the “spare room subsidy”, but it is something no “compassionate conservative” should. His claim that it has forced people to move to smaller council houses, freeing up space for larger families, ignores the reality that, in most cases, such properties simply don’t exist.
In England, there are 180,000 social tenants “under-occupying” two bedroom houses but just 85,000 one bedroom properties free to move to. Rather than reducing overcrowding, the policy has simply become another welfare cut, further squeezing families already hit by the benefit cap, the 1 per cent limit on benefit and tax credit increases (a real-terms cut) and the 10 per cent reduction in council tax benefit. A survey by the National Housing Federation of 51 housing associations found that more than half of those residents affected by the measure (32,432 people), fell into rent arrears between April (when the policy was introduced) and June, a quarter of those for the first time ever.
Worse, the policy takes no account of those for whom additional space is not a luxury but a necessity, most obviously the disabled. Of the 660,000 social housing tenants that have been affected by the bedroom tax, the DWP estimates that 420,000 are disabled. They now face the unpalatable choice of either falling into arrears (by paying an average of £728 extra in rent) or downsizing to a property unsuitable for their needs. Yet, absurdly, Duncan Smith will claim that his welfare cuts “have helped people feel that bit more secure about their futures, feel more hopeful about their children’s lives and rekindle their pride in their communities”.
The effects of the household benefit cap have been similarly pernicious. To date, there is little evidence that the measure is achieving its stated aim of moving claimants into work (principally because few choose to live “a life on benefits”). In Hackney, one of the London boroughs where the benefit was piloted, a study found that just 74 of the 740 households affected had found work, a number no greater than one would expect without the cap given the regular churn of claimants. In many cases, the lack of affordable childcare continues to represent a insurmountable barrier to employment. Indeed, by requiring councils to relocate families hundreds of miles away, the cap actually reduces work opportunities by forcing them to live in an area where they have no employment history.
Yet for all the human misery they have caused, these policies will save just a few hundred million between them (merely a rounding error in the social security budget of £201bn). But to judge the cuts on these terms is to misunderstand Osborne’s motives. The benefit cap is less a serious act of policy than a political weapon designed to trap Labour (“the welfare party”) on the wrong side of the argument and to perpetuate the belief that the unemployed are to blame for their own misfortune. With new proposals such as the abolition of housing benefit for under-25s and the restriction of child benefit to two children, the Chancellor is doing all he can to sharpen the divide between “the strivers” and “the scroungers”. It is this poisoning of the debate, more than anything, that means today’s speech is not the rebirth of “compassionate conservatism” but its funeral.