‘Do you know what they used to call us?’ asked Theresa May ten years ago. ‘The nasty party.’ No one used that phrase, but ‘they’ had a point. The Conservatives seemed to be a group of efficient mercenaries, useful for fighting the economic war that broke out in the 1970s. But in the good times they seemed robotic, Spock-like and heartless. The message was: if you work, we’re with you. If you shirk, you’re the enemy. This was summed up by Peter Lilley’s infamous ‘Little List’ skit, above. ANd again in George Osborne’s 2012 Tory conference speech, where he invited his audience to imagine the anger of a worker passing “the closed blinds of their next door neighbour sleeping off a life on benefits”. It was the same idea: conjure up a demon. And this revived the danger of the ‘nasty party’ returning, as I say in my Telegraph column today.

Iain Duncan Smith developed the social justice agenda outside the Tory Party, and sometimes it seems as if it has been bolted on to the party, rather than become integral to it. He talks about saving lives, not money. And this certainly seems to grate with George Osborne. The two best books about this government: Janan Ganesh’s biography of Osborne and Matthew d’Ancona’s In It Together both reveal – in vivid terms – the Chancellor’s deep suspicion of both IDS and the social justice agenda. They are worth quoting in full.

‘Osborne questioned the analytical rigour of the Christian conservatives who hovered behind the [welfare reform] project. “He thinks the people pushing this are such total advocates and evangelicals that they blind themselves to any downside” says a colleague… As Osborne hopes to make further cuts in welfare, his quarrels with IDS are not over.’

And d’Ancona…

‘It was becoming depressingly clear to [Osborne] that [IDS] did not regard welfare cuts as his priority but was engaged (as Osborne saw it) in a quasi-religious programme of mass redemption. “He resists every cut I propose” the Chancellor complained to his colleagues.’

There is a strong Conservative traditionScreen Shot 2014-01-24 at 11.27.28 that regards any moral cause – religious or civic – with suspicion. In his famous 1960 conference speech, Iain Macleod (right) summed it up nicely: ‘The socialists can scheme their schemes and the Liberals can dream their dreams. But we have work to do.’ His point: that Conservatives were practical people, not ideologues. Harold Wilson was happy to accept that dividing line, and told his conference the next year that ‘the Labour party is a moral crusade or it is nothing’. Both men echoed John Stuart Mill who famously said that the Conservatives were the ‘stupid’ party – they don’t really do big plans, and attract people who are (in his view) too stupid to appreciate the beauty of political schemes.

And there is a large strand of Conservatism that believes it has cause to fear ideology: religious or not. Didn’t Gordon Brown bang on about the “moral arc of the universe” while trashing the economy and isolating the poor? There is a danger that moral crusades are, in fact, aimed only at establishing the virtue of the crusaders. As TS Eliot put it:-

Half the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm – but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle.

I suspect Osborne agrees with Eliot on this. Many Conservatives can see themselves as level-headed remedy to this idealism: the party of getting the deficit down, and the work done. So Osborne’s approach fits into a long and proud Conservative tradition. He has seen his party forget about electability, in pursuit of crazy aims. He’s rightly determined that this doesn’t happen again.

But IDS represents another Conservative tradition: one that does have ideals, and moral missions. To him, welfare reform is not just about Screen Shot 2014-01-24 at 11.25.34what’s expedient, it’s about what’s right. The famous Wisconsin ‘tough love’ welfare experiment that he based his reforms on actually didn’t save that much money. It wasn’t an exercise in hacking back the state: the definitive book on Wisconsin reforms, by Larry Mead, was entitled “government matters” (pictured, right).

Welfare reform, if done properly, is expensive: it means coaching people back to work, it means several false starts and giving them a 2nd, 3rd, 4th and 20th chance to get it right.

IDS was mocked in some quarters for invoking Wilberforce in his speech yesterday, but I think his analogy stands. If Wilberforce were around today, he’d cheer on Theresa May in her addressing modern slavery. (It’s defined as someone who has to work, but in such conditions that the person doesn’t get to keep any money for the work they do). But he would also see a few parallels in Channel 4’s Benefits Street. As a single mother with two kids, White Dee is in a welfare trap – that is to say, if she found work, and wanted to increase her hours, she’d lose every penny of the extra she earned. She wouldn’t get to keep any extra money for the work they she’d do. Here’s the graph:-

White Dee

There is a time for Conservatives to be cool, practical and eschew ideology. Then there is a time for them to look at the above, and grow outraged at the very notion of 100 per cent tax rates. And the people being failed are those right at the bottom of our society. That the Conservatives (as Churchill said) are the party of the ladder: it’s time to extend the ladder of work to those in the welfare trap, so they can climb out. The above graph shows that the current system (that would be abolished by Universal Credits) kicks them down, every time they try to climb. And this isn’t just an economic failure, it’s a moral failure.

So I’d argue that IDS is right to get angry at the abuses, and to view welfare reform as question of doing what’s right. But Osborne would be right in arguing that snarling at those on benefits now and again may help win the party votes with the C2 workers, who (polls show) resent the way so many seem to be able to choose welfare dependency as a lifestyle. But this is only one way of looking at it. Overall, do voters warm to a Tory party that emphasises (sometimes with relish) welfare cuts? Or one that emphasises the need to change lives? From what I gather, Lynton Crosby believes the latter – and has polling data to back him (and IDS) up.

IDS says in a Telegraph interview today that the Tories are not really against anyone. Not the idea you see from the Tory advert( below) contrasting a picture of a family on benefits (hooray!) with ‘those who won’t work’ (boo!). It’s nasty, divisive and – in effect – updating Lilley’s ‘little list’ ditty for the 21st century.

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That’s why David Cameron needs to step in, and set the tone on welfare reform once and for all. This is a struggle between two Tory traditions, but in this case I think it boils down to a contest between principle and expediency. I suspect the Prime Minister knows that there really is only one choice to be made.

Tags: Benefits, Benefits Street, DWP, George Osborne, Iain Duncan Smith, Janan Ganesh, Marginal tax rates, Matthew d'Ancona, Single parents, Treasury