We revealed earlier this month that George Osborne was considering slashing the benefits bill by linking them to earnings (which are stagnant), rather than inflation (which is rising fast).
Since then, the chancellor has been locked in a battle, not only with Nick Clegg, but also Iain Duncan Smith, the Tory work and pensions secretary, about whether the government should do this, having previously said benefits would rise in line with CPI.
If Vince Cable is to be believed, it looks like IDS and his Lib Dem allies have won this one. The business secretary told the BBC’s Politics Show:
Of course they will go up with inflation. We believe the most vulnerable people in society should be protected in these very difficult conditions.
There is no doubt; of course they should be indexed and that’s fully understood.
Intriguingly, Cable did leave a little wriggle room for some sort of compromise, adding:
There will be issues about timing and detail that will be clarified in the autumn statement.
Timing and detail? Perhaps he is allowing for another suggestion that has been floated as a way to reduce the benefits’ bill: to put it up in line with inflation as measured over six months, not just the usual September figure (which was particularly high this year).
Jim Pickard
Kiran Stacey
