Thursday, October 7, 2010

Conference round-up: making work pay

On Tuesday I sneaked away to Birmingham for one day of the Conservative party conference and made a beeline for Iain Duncan Smith's speech on reforming welfare.

If the Conservative party has any point in existing it is to fix the broken society, in particular the problems emanating from a welfare trap with marginal tax rates that stop work from paying. And if there's any doubt about the party's seriousness in fixing the problems which government after government have ducked then just look at the warmth of reception that Duncan Smith gets whenever he addresses our conference.

Tony Blair's labour party was elected in 1997 to reform welfare but ducked the challenge, and his successors in Ed Miliband's union dinosaur-dependent Labour party are in denial about the problem.

The financial cost of welfare is clearly a problem but the social cost is higher. As ever, the Conservative solution revolves around 'more for less', but that dividend will only come in the long term. With a brave commitment from the chancellor to fund higher short term welfare costs we can break out of this local minimum and make work pay.

The 'universal credit' will make sure that it always pays to work, will simplify benefits and in the long term reduce the cost of welfare. It is being introduced by extending benefits as people get work to eliminate those massive marginal tax rates - that is an extra cost initially to the treasury.

Iain Duncan Smith has launched three 'contracts' (abridged):
A contract with those out of work - who should be in work.
I am delighted to announce the introduction of the Universal Credit, which will, I believe, restore fairness and simplicity to a complex, outdated and wildly expensive benefits system. A real time system which will also help cut the cost of fraud and error

Today we are going to go further... I can announce that I will set up the New Enterprise Allowance... If you have been unemployed for 6 months and want to start your own business we want to support you. We will provide business mentoring and a financial package worth up to £2000 to get your business up and running.

A contract with Britain's most vulnerable people.
I say to those watching today and who are genuinely sick, disabled or are retired. You have nothing to fear. For pensioners it is this government that has moved quickly to re-link the basic state pension with earnings - something we should all here be enormously proud of.

And a contract with the taxpayer.
I want to look every taxpayer in the eye and be able to say that their money is either going to people who are on the path back to independence or their money is going to people who, without question, deserve society's care.
As Duncan Smith said in 2007, "They want power to destroy us. We must want power to rebuild Britain and to care for British people," so it is for Labour in Coleridge - are they, as their by-election candidate is, just here to "smash the Tories"? If they think that Coleridge's working population has no aspirations and buys into Labour's narrative that where we are now is just down to the banks and not Labour's borrow-and-spend largesse towards what it perceived as its client groups then they clearly haven't been listening enough on the doorstep...

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