Duncan Smith defends benefits squeeze

http://www.guardian.co.uk/politics/2013/jan/08/duncan-smith-defends-benefits-squeeze

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Iain Duncan Smith has defended the government's decision to restrict social security and tax credit payments to below-inflation rises, saying it will bring about a rebalancing of wages and benefit payments, ahead of a Commons vote on the proposal.

The work and pensions secretary said the coalition's decision to limit increases in working tax credits and some benefit payments to 1% until 2016 had not been taken lightly and was being carried out on behalf of low-paid workers who would otherwise pick up the bill for higher government debt.

Although the government will win Tuesday's vote, Labour says it will oppose the three-year squeeze. The Liberal Democrat former children's minister, Sarah Teather, said she would vote against the coalition and government sources were said to be anticipating a rebellion by about five Lib Dem MPs.

Speaking on BBC Radio 4's Today programme, Duncan Smith said: "We don't take this decision lightly. Nick Clegg myself, the prime minister, the chancellor accepted that when we discussed this we're doing this because we have to get the deficit down.

"We've seen a gap growing between those in work with their [wage] rises and those in welfare. The reality is we're trying to bring that back into a balance," he said.

Public sector workers have had salary rises pegged at 1%, while the CPI rate of inflation in September – the measure used to calculate benefit upratings – was 2.2%.

Duncan Smith also lambasted the tax credit system, which he described as "outrageously messy", saying that 70% of the tax credits bill was down to child tax credits, which did not have a work condition applied to them.

"They [Labour] did that because they were chasing a child poverty target which they never achieved," he said.

Labour will vote against the below-inflation rise, which was first outlined in the chancellor's autumn statement in December. Ed Miliband, the Labour leader, said it was a "tax on strivers".

A day after the coalition's much-hyped relaunch, Duncan Smith sided with the Lib Dem leader, Clegg, in stepping away from characterising those on benefits as either shirkers or strivers.

He said that through his universal credit reform, his department would ensure that "money would go to the lowest paid".

He also gave one of the strongest hints yet that pensioner benefits – which make up more than half of the total welfare spend – could be cut in the future.

Pensions and universal old age benefits such as winter fuel payments, free TV licences and free bus passes, have been left untouched during several heavy rounds of spending cuts.

Duncan Smith argued that if cuts were to be made to this age group, they needed to be given time to adapt to reductions in income.

"The problem with pensioners is that they have less flexibility. They find it far less easy to make provision to change if things are changed for them. So you need to take more time and take longer over changes to pensioners," he said.

Recently both Conservatives and Lib Dems have suggested hundreds of millions of pounds could be saved by cutting or means-testing the annual winter fuel payment introduced by Gordon Brown in 1997, but Cameron has explicitly rejected these calls.

Duncan Smith said any such changes would have to be in a government manifesto before being introduced. "If there are going to be any changes made as a possible, then those are the sort of changes that have to go into a manifesto but you'd have to be talking about those in advance," he said.