Last year I got a call from someone at DWP. The call went roughly as follows:
DWP: We’ve got a story for you. Figures show that the benefit cap is working and it hasn’t even been brought in yet.
Me: Really? How do they do that?
DWP: Well the number of people who have come off benefits since we announced the policy is XXX thousand. [I forget the actual number the person used.]
This morning we reported in the FT that bishops in the House of Lords are leading an attempt to exempt children from the below-inflation rise in benefits. This follows on from the comments of Justin Welby, the Archbishop of Canterbury, over the weekend, who said:
By protecting children from the effects of this bill, they can help fulfil their commitment to end child poverty.
But just as interesting as the bishops’ response to government attempts to slash the welfare bill has been the reaction of Tory MPs to the archbishop’s comments.
Labour continues to pile the pressure onto Iain Duncan Smith over reductions in housing benefit to those who have one or more spare bedrooms in their social housing. At DWP questions today, Labour MP after Labour MP stood up to ask a question about what they call the “bedroom tax” (Tories hate the label but their “spare room subsidy” label misses the point).
Amid the barrage of questions, it became clear that DWP is about to offer a concession. IDS told the Lib Dem MP Greg Mulholland that guidance would be going out to councils tomorrow about what they can do for severely disabled children.
Iain Duncan Smith was once more on the attack this morning against critics of the government’s work experience scheme, under which young people are told to sign up to a four-week placement at one of a range of businesses or lose their benefits.
The scheme has been controversial for two reasons. One is that it meant young people who were claiming benefits while looking for a job were not able to do work experience in their own chosen field; instead they had to go on a government-mandated scheme at a company such as Boots, McDonald’s, Argos, Tesco or Primark. The second is it meant some of the countries’ biggest companies profiting from free labour, which is why one activist referred to it this morning as “slavery”.
Writing in the Daily Mail, the work and pensions secretary has dismissed such criticisms however, saying:
Armed with an unjustified sense of superiority and sporting an intellectual sneer, we find a commentating elite which seems determined to belittle and downgrade any opportunity for young people that doesn’t fit their pre-conceived notion of a ‘worthwhile job’.
David Cameron was asked in today’s prime minister’s questions about the critical report from the government’s auditors on the government’s flagship back to work scheme.
The National Audit Office warned that providers of the £5bn Work Programme are working to overly-ambitious targets which they might not meet. They believe that out of the group of people who are easiest to get into work, only just over a quarter will be successfully placed. That compares to government estimates of 40 per cent.
The prime minister tried to brush off the problem during PMQs, sayign the risk was not to the taxpayer, but to the providers themselves:
The basic point is the Work Programme is not putting the taxpayers at risk, it is putting providers at risk. It is about payment by results, it is about getting things the previous government never did.
Unless there is a last minute U-turn in Whitehall tonight, one of the ways which George Osborne will pay for the various jobs and infrastructure schemes in Tuesday’s growth review will be to squeeze tax credits.
This is a result of protracted bargaining – Osborne wanted to freeze benefits, but the combined efforts of the Lib Dems and Iain Duncan Smith put a stop to that. Eventually the compromise was made that credits would come under the axeman’s blade instead.
So who suffers if these are frozen or cut?
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:
And now for the big story of the day…
A row has been rumbling since the beginning of the year between cabinet ministers Iain Duncan Smith and Eric Pickles about $4.8bn worth of benefits.
To recap: Last year’s spending review decided the government should localise council tax rebates, giving councils the right to cut rebates for poorer residents and use the money instead on tax cuts or service provision. But that could lead some low-earners paying an effective tax rate of 90 per cent, something IDS worries will undermine the incentive to work that he is trying to create through the single universal credit. IDS wants instead to roll council tax benefits into the universal credit so it reflects claimants’ earning status.
Yes, that headline is right. Labour, half the Lib Dems and some Tories have been calling for the timetable to raise the women’s state pension age to 65 and 66 to be delayed. This would avoid penalising 330,000 women who were expecting to claim their pensions up to two years earlier.
Labour admits this will cost money, so in order to pay for it, Liam Byrne, the shadow work and pensions secretary, has asked whether DWP has looked at bringing forward the dates on which the pension age is due to rise to 67 and 68 by two years.
It is a smart move in one way, as it avoids the accusation that Labour are full of uncosted economic policies. But it nullifies their argument that changing the system is unfair to those who suddenly see the goalposts move and their planned retirement fade into the distance. DWP officials say such a change could affect millions of people, not just the 330,000 hit by Iain Duncan Smith’s proposals.
We revealed this morning that Iain Duncan Smith is less steadfast than he might appear on when the controversial changes to women’s state pension might take effect. Under current plans in the government’s pensions bill, it will gradually rise to 65 by 2018 and 66 in 2020.
The bill is back in the Commons today, where the work and pensions secretary will say:
We’re heading towards an unprecedented burden being placed on the next generation who will have to pay for their parent’s retirement on top of paying for the national debt. It’s not fair. This bill will address the realities of our increasing longevity by sharing the costs between the generations.
We will stand by the 2018 and 2020 timetable.
Iain Duncan Smith declared this morning that “nobody will be worse off” under Universal Credit.
That is quite a claim, particularly given 1.7m households will lose out, at least in terms of their notional entitlement to benefit.
He was referring, of course, to the protection that will be provided so no family loses in cash terms at the point of transition.
This promise is both the midwife to this dramatic reform plan, and one of the most tricky measures to implement.
Here are some of the highlights from the DWP impact assessment:
1) Higher bill: The reforms in total will add £2.6bn to the welfare bill overall. There could be other “dynamic benefits” not included in the model.