IDS Drives a Dagger in to the Heart of Deficit Reduction

So what to make of the resignation of Iain Duncan Smith? The former work and pensions secretary resigned on Friday evening, ostensibly as a result of the fall-out from this week’s budget, most notably the proposed reduction in personal independence payments (PIPs). Set against a further cut in corporation tax to 17% (a penny for our local politicians’ thoughts?), a cut in capital gains tax and an increase in the threshold at which the 40% tax rate is paid, the optics really didn’t look good. As a result, IDS decided enough was enough.

As has been well documented, IDS was previously happy to oversee the implementation of policies such as the welfare cap, universal credit and the bedroom tax in the name of deficit reduction. In his resignation letter IDS made clear that:

“Throughout these years, because of the perilous public finances we inherited from the last Labour administration, difficult cuts have been necessary. I have found some of these cuts easier to justify than others but aware of the economic situation and determined to be a team player I have accepted their necessity.”

However, IDS now feels he can no longer sit idly by as the outworkings of deficit reduction continue to fall on those least able to carry the burden.

This very public resignation can’t be anything other than extremely damaging for the Government and their prevailing policy goal of deficit reduction. On Marr this morning IDS stated that the change to PIPs that was announced in the budget “juxtaposed as it came through in the Budget, that is deeply unfair and was perceived to be unfair. And that unfairness is damaging to the government, it’s damaging to the party and it’s actually damaging to the public.” He has therefore very publicly questioned the tactics adopted in the pursuit of deficit reduction. He even suggested that his party are targeting those that do not and will not vote Conservative when he proclaimed “it just looks like we see this as a pot of money, that it doesn’t matter because they don’t vote for us.” This statement more than any will no doubt be seized upon by Labour if – and it’s a big if – they can devise a coherent strategy to do so, particularly as many on the right of the party were happy to support many of the welfare changes.

And what about the PM and his chancellor? David Cameron will surely now face a leadership challenge following the EU referendum in June. For Osborne, who is ultimately the master of departmental spending in Whitehall and who’s politicking has ensured that it’s working age benefits that are returned to time and again to meet the targets set – the pension triple-lock, the desire for a budget surplus, the moving feast that is the welfare cap – his leadership ambitions could be dealt a serious blow. I wrote a piece last year where I suggested that Osborne’s career was on an upward trajectory, but it has clearly hit the buffers. This week alone he has seen the makings of a Tory rebellion, a policy u-turn and the resignation of a senior cabinet minister. And all this hot on the heels of his tax credit u-turn. This morning’s Sunday Times for example led with the headline “IDS attack shreds unfit Osborne’s dream of No. 10”.

Set against the backdrop of the EU referendum and tentative signs that Labour are beginning to make inroads (although one poll lead does not a summer make!), the next few weeks and months could prove very difficult for the Tory party and may yet prove the old adage correct: opposition parties don’t win elections, governments lose them.   We’re a long time off that, though!