Sunday, August 22, 2010

Will Iain Miliband-Smith please stand up?

According to this morning's Mail on Sunday, Welfare Secretary Iain Duncan-Smith and the Chancellor, Gideon Osborne have had a bit of a slanging match about IDS's proposals for making work pay better than welfare.

Apparently it all comes down to the fact that IDS's plan would cost the taxpayer an extra £3bn to implement and the benefits of that spending would not be seen for quite a few years yet. IDS has been told he needs to find cuts before he can get the money.

Meanwhile, Ed Miliband, when he's not encouraging rumours about Charles Kennedy defecting to Labour, is reported in the Observer as being in favour of offering tax breaks to companies that guarantee to pay a "living wage" of £7.60 per hour.

Apparently, companies that only pay the minimum wage results in the taxpayer subsidising earnings with tax credits and costs between £5.9bn and £6.3bn a year. According to research by the Institute for Fiscal Studies, if companies took up this idea then it could reduce that cost by between £3.4bn and £4.1bn a year.

Hmmmm let see now.
  • We have two ideas.
  • Both ideas are intended to put more earned money in people's pockets thereby reducing benefit dependency in the long term.
  • One is about nudging people with the incentive of work paying more than benefits.
  • The other is about nudging companies with the offer of tax breaks.
  • One will cost around £3bn.
  • The other will save around £3bn.
Do I need to get a pen and paper to draw a diagram titled quid pro quo?

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