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IDS, the one-man labour party - in the real sense of the word

By Paul Goodman
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Duncan Smith September 2011The formidable Conservative backbench support for transferable tax allowances shows how crucial marriage is to Tory thinking about social policy.  It's often accompanied by a preoccupation with the position of one-earner couples within the tax and benefit system, and a certain sympathy for universalism and hostility to means-testing: hence the Daily Telegraph and Daily Mail's hostility to George Osborne's treatment of child benefit.  Iain Duncan Smith's support for marriage is well-known.  And although he isn't in charge of family policy - no-one is: a glaring weakness - he is central to its formation as delivery in his role as Work and Pensions Secretary.

At first glance, it might be assumed that Duncan Smith's position is aligned to his backbenchers, the Mail/Telegraph axis, and right-of-centre social policy writers such as Laura Perrins and Kathy Gyngell - who have recently set out similar views on this site.  But I have been discovering recently that it ain't necessarily so.  The Work and Pensions Secretary is carving out his own distinctive view, shaped by his experience with the Centre for Social Justice and evident in what his department is putting into practice.  He is certainly an enthusiast for transferable allowances, which he sees as helping to level the taxation playing-field for one-earner couples.

But his backing for them isn't only shaped by a concern for fairness and marriage.  It is part of a bigger theme that runs through much that he does: using the instruments of policy to get people into work and keep them there.  To him, transferable allowances are partly a means of supporting the single earner who works.  To him, too, housing benefit should not be paid to people under 25, precisely because it can be a disincentive to work.  He takes the same view of the effects of child benefit, which is why he believes it should be restricted to two children only.  (It should be emphasised that these proposals would apply only to new claimants, not present ones.)

Duncan Smith put these plans on the table during the recent spending round, but they were rejected by the Liberal Democrats.  None the less, they are all of a piece - and represent a remarkable change in Tory thinking.  The stress on work has always been present within it.  But so, during the Labour years, was a vehement hostility to Gordon Brown's cats-cradle of tax credits, and the means-testing philosophy that lay behind it.  The Conservative front bench rejected it completely over pensions: hence the decision to link pensions with earnings and Steve Webb's plan in government for a simple and flat state pension system.

The Work and Pensions Secretary is as hostile to Brown's tax credits as any of his colleagues.  But he hasn't sought to junk them so much as reform them, since the centre-piece of his changes is the Universal Credit - which is a piece of means-testing from start to finish.  For Duncan Smith, it is an incomparably better one, because he believes that the combination of the tapers in the credit and the advice which claimants will receive will help them to find and keep work: once again, the beneficial effects of work, both for the individual, the taxpayer and society as a whole can be seen to be at the core of his thinking.  He is a one man labour party, in the real sense of the word.

A question arises from his vision.  If, in his perfect world, the universal credit is the foundation of the social security system, and child benefit and housing are restricted, what becomes of the universality principle?  And what, in particular, happens to incentives to work if universal payments such as child benefit is withdrawn as the income of those who receive it increases?  Isn't the Work and Pensions Secretary open to some of the same criticisms that he and his Party made so recently of Brown: are you Gordon, are you Gordon - the song might run - are you Gordon in disguise?

Part of Duncan Smith's answer is that the universal credit is superior to tax credits, so that last question doesn't arise.  But I think the one about universality lingers in the air.  It's a leitmotif of this site that the free bus pass, the winter fuel allowance and the free TV licence are Brown boondoogles that make no sense (as Peter Hoskin never tires of pointing out).  But where do you stop?  What about payments to better-off disabled people?  What about the state pension? (Webb has rightly aimed for less means-testing, not more).  The Work and Pensions Secretary has no view himself of this wider question: he is concentrating on incentives to work.

None the less, some of his supporters are asking whether the universality principle, designed for a more uniform society, is right for the modern age - and say that research suggests that once people earn a certain income (£50,000? £60,000?), the disincentive effects of the withdrawal of some universal payments is slight.  But whether this is so or not, it's time to grasp how central work is to Duncan Smith's vision of social justice.  Liberal Democrat help in delivering his reforms, declining support for the post-war welfare settlement and - not least - his own poverty-fighting reputation -  are helping him to deliver policies that aim to put it first and last.


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