September 21, 2012 9:59 pm

Duncan Smith promises to deliver

Iain Duncan Smith©Charlie Bibby

In the past few weeks Iain Duncan Smith has been prematurely “sacked” as work and pensions secretary, and seen reports that Number 10 and the Treasury fear he is losing control of his sweeping welfare reforms. But he seems phlegmatic.

“Nothing demoralises me,” he told a news conference this week. “I was leader of the Conservative party once: I’m way past that.”

But the strains in the coalition are starting to show as Mr Duncan Smith prepares to implement a massive overhaul of the £60bn working age benefits system and an equally all-encompassing reform of the £80bn state pension.

Only the health service consumes more of taxpayers’ money and the government has already tried to reform the NHS: David Cameron, prime minister, and George Osborne, chancellor, remember how that went.

This week Mr Duncan Smith went on the offensive, insisting that everything was under control. But his reforms would be brave even at a time when there was plenty of money around to iron out problems and reduce the number of “losers”; they are even more courageous when the government’s coffers are empty.

Inevitably, Mr Cameron and Mr Osborne are getting jittery. This week the FT reported the prime minister had put the brakes on the plans to create a £140 a week single tier state pension, a simplification of the system drawn up by Mr Duncan Smith’s Lib Dem ministerial colleague Steve Webb.

Mr Cameron fears that better-off pensioners – the vocal “grey vote” – could lose out; Mr Osborne wants to be sure that the costs are under control. A white paper on the reforms is now expected to outline options for further consultation.

Meanwhile Sir Jeremy Heywood, Mr Cameron’s senior civil servant, was reported last week in the Sunday Times to be “sceptical” about Mr Duncan Smith’s ability to deliver his plan to amalgamate a host of working-age benefits and tax credits into a single universal credit, intended to make work pay.

Clare Lombardelli, a former Treasury civil servant described by Mr Duncan Smith as “that woman” after a series of clashes on the reforms, is now working at Number 10 as one of Mr Cameron’s welfare advisers.

To add to the impression of a minister under siege, Mr Cameron asked Mr Duncan Smith if he would like to move to the Justice Ministry in the cabinet reshuffle this month.

While Mr Duncan Smith asked to “sleep on it”, Danny Finkelstein, a journalist with close links to the prime minister and chancellor, appeared on the BBC’s Newsnight to declare Mr Cameron might want “a different person to implement the reform”.

The next day, a seething Mr Duncan Smith told the prime minister that he wanted to stay put to see through his cherished work; his press conference this week (in the company of a host of IT specialists working in his universal credit “red team”) was an attempt to show his critics that he is firmly in charge.

However, allies of both Mr Duncan Smith and Mr Osborne deny reports that the two ministers are engaged in political warfare.

While tensions over policy implementation exist, government insiders say they need to be separated from the question of whether the two ministers are feuding over Mr Osborne’s hunt for an extra £10bn of welfare savings by 2016-17.

Mr Duncan Smith insisted this week that whatever happened to his budget, he would not allow any cuts to disrupt the introduction of the universal credit: “Everything we do is about delivering it,” he said.

But Treasury insiders say they believe “hefty cuts” from the benefits bill can be found and that Mr Duncan Smith has constructive ideas on how to make savings – if not the full £10bn. Formal discussions have not yet started.

When Mr Osborne suggested last year breaking the link between benefits and inflation – then running at 5.2 per cent – he was open to the idea. Only a veto by Nick Clegg, Liberal Democrat leader, led to Mr Osborne targeting tax credits instead – a compromise opposed by Mr Duncan Smith.

A cut in the benefits bill seems inevitable, given the growing pressure on the public finances and a growing antipathy among voters – picked up in the new Social Attitudes survey – towards the welfare state.

“It’s one of the most significant shifts in public opinion in the last 20 years,” says one government insider. Mr Clegg opposes an outright freeze in working age benefits next year, but accepts that some cuts are necessary.

As Mr Cameron’s coalition moves into its “delivery phase”, no minister is under more pressure than Mr Duncan Smith. But, as the former Tory leader said this week, he has been here before.

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