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Coffee House Uncategorized

Iain Duncan Smith resigns in protest at the Budget

18 March 2016

8:55 PM

18 March 2016

8:55 PM

In the last few minutes, Iain Duncan Smith has released a letter of resignation from his post as Work & Pensions Secretary. The proximate cause is the Budget cuts to disability benefits. He knew about them, but had wanted a consultation paper to be published so the government could make the argument carefully, over many weeks, given that this is a hugely controversial topic. Instead, George Osborne presented the disability cuts as a £1.3 billion fait accompli in the Budget and these cuts to finance tax cuts for higher-rate earners and lowering capital gains tax. IDS said in his letter to David Cameron that this is ‘not defensible’. It was the juxtaposition, rather than the cuts on their own, that made him walk.

In his letter, he says he has had enough of decisions taken for party political interest rather than in the national interest – by which he means the ring-fencing of pension-age benefits, child benefit, winter fuel allowance and other electoral promises which meant that IDS had to focus the pain of the cuts on the working-aged. To an extent that he thought went beyond what was fiscally necessary, and just plain mean. Moreover, he has had enough of seeing his Universal Credit welfare reforms salami-sliced so much that the working poor are now no better off than they were under the old system.

This decision to resign has been tough for him. But it is the result of cumulative budgets: year after year, he has found the Treasury coming after benefits while refusing to touch pensions. His resignation letter is pretty excoriating. He fought (and won) battles to try to stop Osborne tearing tax credits away from the low paid a few months ago. But he has now tired of fighting, and concluded he has achieved as much as he is going to achieve.

Fair enough, but the standard thing to do is see the Prime Minister and agree a civil exchange of letters. That’s the normal resignation choreography. It has not been observed tonight: we have his letter, and no reaction from a No10 which (I suspect) didn’t expect it.

[Alt-Text]


He says that he is…

…unable to watch passively whilst certain policies are enacted in order to meet the fiscal self-imposed restraints that I believe are more and more perceived as distinctly political, rather than in the national economic interest

Iain Duncan Smith was only ever interested in welfare reform: it was his last mission in government. He saw in Universal Credit a way of creating a new system that always rewards extra work, rather than a system which imposes an effective tax rate of 90 per cent. But he has ended up with a system that is almost as bad: 75 per cent isn’t a whole not better. During the Autumn Statement, he managed to win his battle over tax credits – but the price was having the in-work allowance of Universal Credit reduced further. This was pretty much as bad as the tax credit raid, but caused less uproar because no one understands UC.

If you look at the effect of the cumulative salami-slicing of Universal Credit, you have to ask: are workers better-off now than they were under the old system? And if not, what’s the point?

Let’s not forget that this resignation comes at a time of civil war within the Conservative Party: IDS is a Brexiteer, Cameron and Osborne are leading the ‘in’ campaign. So the timing is highly relevant. When the retaliation comes, it will be argued that IDS knew about the disability cuts (which he did) and that this is an act of sabotage from the ‘in’ cam

Unkind souls might say that his resignation is a piece of mischief designed to destabilise the Prime Minister over Europe by the very guy who destabilised John Major over Europe. But for those who have been following the rising tension between the Treasury and the DWP, his departure had started to look inevitable. Although the matter of it will have surprised everyone. The question, now, is whether things will escalate further: that’s for No10 to decide.

UPDATE Here’s Cameron’s reply – saying he is “surprised” and “puzzled” because the IDS agreed to all the disability benefit reform last week.

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