Benefit rises unfair - Ian Duncan Smith

Wed, 02/01/2013 - 14:41 -- nick

Secretary of State for Work and Pensions Ian Duncan Smith has called benefit rises 'unfair'.

Over the last five years they have risen by 20% while wages in the private sector have only risen by 12%.

Mr Duncan Smith released these figures in advance of a vote in parliament on breaking the link between benefits and inflation.

The government wants to increase benefits by 1% per year for the next three years, below the likely inflation rate, costing the average Jobseeker's Allowance claimant £386 over that period.

The Labour party highlighted figures showing that, over a ten-year period, benefits had risen by less than wages.

Mr Duncan Smith said that working families had experienced years of pay restraint while watching benefits rise - and that, he said, was not fair.

"The welfare state under Labour effectively trapped thousands of families into dependency as it made no sense to give up the certainty of a benefit payment in order to go back to work.

"This government is restoring fairness to the system and universal credit will ensure it always pays to be in work."

Labour's shadow work and pensions secretary Liam Byrne said cuts to tax credits - introduced by his party - had pushed millions of working people into poverty and now meant thousands of part-time workers were "better off on benefits".

UnemployedNet says:

Behind these figures lies a wider story of five years of economic hardship across Britain and the world. The government's figures - showing that benefits are rising faster than wages - provide an insight in to a malfunctioning economy in which salaries for those at the top of companies have continued to rise at a time when the wages of the majority have been losing pace with inflation.

Tax credits have been cut for the low-paid at the same time as benefits are being cut in real terms, meaning both working and workless people are getting poorer at the same time. The government needs to address the low pay issue, either through improving tax credits or more direct action making companies pay the living wage. This would help it to ensure that work always pays - a key aim of the coalition.

Cutting benefits is a way of placating those workers understandably looking for scapegoats for their own financial struggles, but, given that many unemployed and low paid people interchange and move from one status to the other, this is unlikely to be successful. Average salaries were already far higher than average benefits, but minimum levels of each struggle to cover life's basics and increases in both are needed.

It is worth restating that no benefit claimant has been made richer because of the previous inflation-linked rises. The UK already has some of the lowest benefits in Europe, and eroding them further will entrench poverty and could lead to real hardship.

The government has some influence over the inflation rate, through tax increase controls, direct price controls, and Bank of England appointments and direction. Inflation has missed its target 2% rate for many years, going over 5% in 2011, and this is a key factor in why benefit rises have been higher than wage rises recently. Rather than punish claimants the government may be better advised to use this influence to get inflation under control, benefitting all of us.

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