This is the conundrum: if IDS doesn’t find £10bn in savings, he will not get the £3bn needed to enact his reforms to make work pay. There is something quite heart-warming about IDS’ fight against the institutionally overbearing Treasury, but George Osborne is right: it is unacceptable to give one department, however well intentioned, carte blanche to keep spending when others face 40 percent cuts.
IDS will find the £10bn, predominantly by cutting middle class benefits. But Dizzy suggests that George Osborne could make additional savings to fund IDS’ welfare reform. The Observer reports that Ed Miliband is proposing to incentivise companies that pay a ‘living wage’ of £7.60 an hour; the Institute for Fiscal Studies estimates that companies paying below the living wage cost the taxpayer around in excess of £6bn in tax credits and other forms of income support; Miliband will argue, with the IFS’ help, that if companies take up his idea it will save the taxpayer between £3.4bn to £4.1bn. If that is the case, then George Osborne should consider adopting a similar plan.