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How Osborne Can Turn the Tables on IDS

21/03/2016 12:16 GMT | Updated 22/03/2017 09:12 GMT

The resignation of Iain Duncan Smith (IDS) is a damaging blow to the Chancellor's plans to become leader of the Conservative Party and a future Prime Minister. IDS can now pick through the wreckage of his career, benefiting from his declared good intentions, while blaming any failures on his ex-colleagues. The Brexit campaign can present itself as an alliance of moderates who are opposed to social injustice and the extremes of austerity.

Certainly, as the diagram below indicates, there are a vast range of cuts that have targeted disabled people, sick people and those living in poverty:

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However the Chancellor does not need to accept his fate. He could turn the table on IDS by following this simple 10 point plan.

  1. Close down the DWP and absorb its function into the Treasury while committing the Government towards the development of an integrated tax-benefit policy. This will save money and create the right organisational basis for effective future reforms.
  2. Apologise for the harm done by the DWP to sick and disabled people under the leadership of IDS.
  3. Reverse IDS's decision to refuse to calculate the combined impact of all Government cuts. Instead launch a full enquiry into the level of harm done over the past 6 years and commit the Government to reverse these policies.
  4. Explore in more detail whether IDS might be prosecuted for 'Misconduct in Public Office' for pursuing policies which are so closely linked to increased deaths and suicides.
  5. Dump the failed Universal Credit project, with its enormous waste and complexity. Ensure instead that IDS is given full responsibility for its conceptual and practical failings.
  6. Begin to progressively implement a basic income. Child benefit and the state pension already provide the platform for basic income; they are efficient and effective. Use the same principles to integrate all working-age benefits, tax credits and tax allowances into one income stream.
  7. Begin by converting Employment & Support Allowance into a form of Basic Income Plus by stripping out all the wasteful means-testing and sanctions. Millions of disabled people would welcome such a progressive reform, one which will encourage full inclusion, without the vicious side-effects of current Government policy.
  8. Abandon the expensive privatised disability assessment systems currently run by Maximus and Atos. The Treasury already knows that self-assessment is far more efficient and it would never consider privatising the tax inspectorate.
  9. Put the Work Programme and other support services into the hands of local government. This is the logical consequence of the Government's commitment to devolution and there is strong evidence that these services are better delivered by local services, in partnership with local businesses.
  10. Commit the Government to reduce income inequality. The UK is most unequal country in Europe, with low benefits, low salaries and low productivity. The Treasury can address this problem with progressive tax and benefit policies, and without all the mess and disincentives caused by the current benefit system.

Of course, only a cynic would commit themselves to such a policy merely to win a victory over a political foe. There are other important reasons why the Chancellor should close down the DWP and absorb its functions into the Treasury.

As it stands macroeconomic policy in the UK is trapped by the limited tools at the disposal of the Treasury. In order to try and reflate the UK economy the Chancellor has propped up mortgages and the banking system; his hope is that the banks will create more money by increased borrowing. The paradox of course is that the weakness of the UK economy is based entirely on excessive private debt. So the Chancellor's policy is effectively to hope that the UK economy will be cured by the hair of the dog that bit it.

If IDS takes over the benefit system then this means he can, instead of injecting money into the pockets of bankers, inject money directly into the hands of ordinary citizens - starting with the poorest. As his economists will tell him, this is the best kind of spending, going directly into the UK economy - not into savings, tax scams or offshore developments.

If the Chancellor does nothing, or too little, he will be forever tainted as the worst kind of Tory - the kind that merely seeks to entrench advantage for the benefit of his own class. But if the Chancellor were to adopt this simple 10 point plan he could become the best kind of Tory - a new Peel or Disraeli. The choice is, almost entirely, his.