Cuts AND Reform. Not Cuts Or Reform

On Friday evening, Iain Martin from the Wall Street Journal broke the news that the Chancellor and Secretary of State for Work and Pensions were close to agreeing a compromise on welfare reform.

“Under the proposals, If IDS can deliver the multi-billion savings that the Treasury demands, close to £3 billion of the savings will then be ring-fenced for him to use for his welfare reform programme.”

Welfare reform is an important indicator in signalling how the Coalition will square the circle of having to deliver both budget cuts and long lasting reform. In one corner you have the Treasury, focused on cutting state spending. In the opposing corner is IDS, the ‘quiet man’ who has spent much energy contemplating how to end state dependency. In the middle there is a £110 billion annual spend, which has failed to deliver opportunity, respect or engagement.

It is an open secrete that IDS threatened to resign if George Osborne had announced a benefits freeze in June’s emergency budget. That IDS is being an iron-willed Secretary of State should not have come as a surprise to anyone. This is his chance to implement the vision he has been working so hard on in the last four years, through his think-tank, The Centre for Social Justice. It is understandable if IDS believes that David Cameron appointed him because our leader wanted IDS to ‘CSJ’ the system.

But, having said all that, we are not in 1997. There isn’t an over-heating financial sector that the Government can use as a never-ending cash machine to fund projects. Politics is the art of the possible and at the moment it is not possible for a non-ring fenced department to ignore its budget tightening responsibility. The state of the economy cannot be ignored otherwise the long-term consequences will be negative for all of us.

Compromise is key, and the news that IDS and George Osborne are close to agreeing a deal is important as it signals a possible path for the inevitable other disputes that will arise. Cuts without reform will not resolve the problems this country faces. Reform without cuts is pointless because if the state continues to head towards bankruptcy all the good work will eventually be undone.

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