Today’s Daily Mirror carries a report that Iain Duncan Smith’s welfare reforms could include “localised payments”. Meanwhile, Ed Miliband is reported by the Northern Echo as potentially favouring higher tax credits in the South to reflect higher costs of living. He said:
“We can look at the level of tax credits, so they benefit people in the South who haven’t benefited from the minimum wage.”
Duncan Smith’s attitude is far from unsurprising; since the Conservatives did not make a ‘northern breakthrough’ to the extent they hoped they know its their Liberal Democrat pupp…err partners that are going to pay the electoral price for cuts they make. Liberal Democrats are now complicit in feathering the nest of southern Conservative base at the expense of their own supporters; something that no doubt makes them immensely proud. Nothing is wrong with benefits for the south but the kind of favouritism that saw Michael Gove save school re-building in Somerset while ignoring the North is unacceptable.
Both make the same fundamental assumption that a lower cost of living means lower ‘cost of living’ makes lower benefits justified. Of course, ‘cost of living’ is an arbitrary term so cannot be used as a justification for anything substantial. How do they define ‘living’? Also, both factor out the relative social deprivation of the north which counterbalances the higher cost of living. Miliband, put simply, has got it wrong and is in danger of looking like he is using tax credits as a somewhat cynical bribe in his quest to win southern seats for Labour. It is an entirely different matter to regionalise something like the living wage compared to benefits; a wage is an income earned and a benefit is a safety net; and besides, the younger Miliband has obviously not thought through the implications of his own policy which, in resulting in higher prices will necessitate higher, across-the-board benefits.
The real problem with tax credits is they are fantastically hard to get; so hard to get in fact that they do not really support people coming off abject poverty level benefits back into work; and into contributing through taxes. They do not exist to ‘top-up’ the wages of the middle classes in the south; they exist for the purpose I outlined. Any other purpose is to fundamentally misunderstand benefits and welfare. Mr Miliband, I am sure, would not want to show the same crass and class based disregard for the North exhibited by Duncan-Smith. If he wants to avoid the impression of that he needs to go back to the drawing board on tax credits and welfare.