The Duncan Smith resignation: fundamentally shifting the economic debate

With the departure of Ian Duncan Smith from the Cabinet, commentators are spending much time and effort analysing how the balance of politics within the Conservative Party has changed.  However, the text of Duncan Smith’s resignation letter raises some absolutely fundamental economic questions – and these have big implications for Labour too.

The key paragraphs are these:

You are aware that I believe the cuts would have been even fairer to younger families and people of working age if we had been willing to reduce some of the benefits given to better-off pensioners but I have attempted to work within the constraints that you and the chancellor set.

I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled and the context in which they’ve been made are a compromise too far. While they are defensible in narrow terms, given the continuing deficit, they are not defensible in the way they were placed within a Budget that benefits higher earning taxpayers. They should have instead been part of a wider process to engage others in finding the best way to better focus resources on those most in need.

I am unable to watch passively whilst certain policies are enacted in order to meet the fiscal self imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest.

In other words, for the first time a key player in the post-2010 Conservative project has said, almost explicitly, that austerity is a political, not an economic choice.  Duncan Smith’s letter fatally undermines Osborne and Cameron’s key claim that austerity is necessary to deal with the financial crisis that Labour allegedly left (although the text is careful to make the obligatory references to Labour’s legacy and the need for deficit reduction).

It’s all the more significant because Duncan Smith’s DWP has been at the ideological heart of the Tory project – the cuts to benefits being portrayed as essential to both restoring public finances and creating a more productive, wealther and, in the Tory view, fairer society in which hard work pays.

Now that has been blown open.  Duncan Smith – who nobody would accuse of pursuing the cuts agenda with anything less than exemplary zeal – is now effectively saying it’s all ideology.  In other words, the economic debate has fundamentally shifted.

And that has huge implications for Labour too.  It’s worth remembering that Labour politicians on the right have been every bit as zealous as the Tories in pushing the “strivers versus strikers” rhetoric; and have been willing to frame their analysis in terms of “hard working families”.  Rachel Reeves said that Labour would be tougher on weflare spending than the Tories; less than a year ago Harriet Harman led most of the Parliamentary Labour Party in refusing to vote againt the  Welfare Bill.

In other words, Duncan Smith’s resignation letter – and the events surrounding it – powerfully endorse the fundamental tenet of Jeremy Corbyn’s and John McDonnell’s economic programme: that austerity is a choice, not an economic necessity.  It wholly destroys the intellectual underpinning of McDonnell’s opponents in the Parliamentary Labour Party.  And it provides clarity – a simple economic message around which all those on the centre-left should be able to unite.

Osborne’s cuts in disability benefits are already being perceived as deeply unfair, and damaging to the Tories.  Now the economic rationale for austerity has been exposed as a sham – by one of its most zealous proponents.  This looks increasingly like the moment when the austerity narrative finally started to fall apart politically; it would be incongruous indeed if those Labour MPs loosely associated with the Progress grouping were the only people left still propounding it.

 

 

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2 thoughts on “The Duncan Smith resignation: fundamentally shifting the economic debate

  1. Thanks for this blog post regarding Iain Duncan Smith’s resignation; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

  2. Pingback: After IDS: some questions for Labour’s Parliamentarians | Notes from a Broken Society

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