By Patrick Corby
The political row over welfare cuts and reforms has continued today as the Conservative and Labour parties argued over the traditional linking of benefits to inflation.
Conservatives have contended that the traditional relation causes disparities between the income of the employed in favour of the unemployed. George Osborne voiced his concerns that the income of those on benefits has risen “twice as fast as those in work” since 2007.
Those who work in the public sector have their wage growth pegged at 1%, while unemployment payments are linked to the Consumer Price Index (CPI) which in September rose by 2.2%.
Conservatives argue that, since 2007, benefits have increased 20% while private sector wages have only increased by 12%.
Today, Conservatives proposed to readjust and control this disparity with a three-year growth cap of 1% on benefits until 2016 in order to balance incomes.
Iain Duncan Smith, the UK’s Work and Pensions Secretary, has defended the coalition’s position as a clean-up of an “outrageously messy” welfare system.
“Working people across the country have been tightening their belts after years of pay restraint while at the same watching benefits increase,” he said. “This government is restoring fairness to the system and Universal Credit will ensure it always pays to be in work.”
Labour voted against the pegging of benefits at 1%, instead arguing to keep benefits aligned with the CPI and public wages at the fixed rate of 1%.
Labour’s Shadow Work and Pension Secretary, Liam Byrne, argues that Job Seekers Allowance (JSA) has risen less than private earnings in the past decade. Long-term figures since 2002 show that private wages have risen 36% while JSA has increased 32%.
The coalition’s proposed reform today comes in a long line of welfare cuts including capping child and housing benefits along with universal credit until 2015/2016, saving a total £2.4 billion of UK government debt.
Mr Byrne told the BBC that the government should be trying to cut welfare by targeting unemployment.
“Welfare spending does need to come down, but there’s a different way of doing it,” Byrne told the BBC. “Introduce a compulsory jobs guarantee that means if you’ve been out of work for a couple of years, that’s it, your JSA will have to stop, you’ll have to take a job, and if you can’t find one we’ll invest in making sure there’s one available for you.”
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