Two-nation Britain

WHEN Iain Duncan Smith resigned on March 18th in protest at curbs to disability benefits, eyes in Westminster rolled. How odd for the man who has run the Department for Work and Pensions (fairly incompetently) for the past six years to turn on his own policies. How transparently his animus towards George Osborne, the chancellor of the exchequer, motivated his accusations. How conveniently these bolstered Mr Duncan Smith’s complaints, as a pro-Brexit campaigner, about an aloof and elitist Europhile establishment. “Disappointed” by the resignation and using sturdier language privately, a red-faced David Cameron went before his MPs in the House of Commons on March 21st to offer his retort and confirm that the disability cuts would not go ahead. He also reminded them of his government’s “one nation” achievements, including falling inequality, soaring employment and school reform.

Mr Duncan Smith’s motives may be dubious and his complaint off-target (the proposed disability cuts were less egregious than some others). But he has stumbled on something that matters. The budget was regressive, cutting welfare as it reduced income tax for the top 15% of earners and capital-gains taxes mostly paid by the asset-rich (see article). Ministers say that a forthcoming increase in the minimum wage compensates for the cuts. In fact it most benefits middling households (since its recipients often support a higher-earning partner) and is part of a wider post-election tilt towards the better off. According to one estimate, changes announced since the Conservatives won a majority last year will leave the average annual income of the top 30% of households £280 ($400) higher and that of the bottom 30% £565 lower. Meanwhile the jobs engine is slowing, wage growth is faltering and the wealthiest are roaring ahead. The fall in inequality over the previous parliament will probably be wiped out over the course of this one.

Blame politics. The Conservatives won the election partly by pledging a rush to budget surplus through welfare cuts so stringent that the Labour Party could not bring itself to match them. It also promised to ring-fence sensitive budgets like hospitals, schools and foreign aid, and committed to a “triple lock”, increasing the state pension by the rate of inflation, earnings growth or 2.5% a year, whichever is greatest. Such promises have left Mr Osborne with little option but to dip into the pockets of poorer, younger Britons who, conveniently, are less likely to vote. And with a divisive EU referendum looming in June, local Tory associations in revolt and a leadership election on the horizon (see Bagehot), no minister wants to sting the plump, grey Conservative base. The Labour Party may have trooped into the left-wing wilderness under Jeremy Corbyn, but the centrist overtures with which the prime minister has recently wooed the opposition’s more moderate supporters have been confined to safe schemes like improving mental health and sprucing up sink estates.

Fools to the left, jokers to the right

This newspaper cheers politicians who reduce dependency and sharpen the incentives to work, as the Tories have. We recognise the need to be mindful of Britain’s deficit, which some in Labour appear to disregard. But as long as the country’s belt-tightening disproportionately squeezes the worse-off, there will be a hole in the prime minister’s “one nation” rhetoric. If he wins the EU vote, Mr Cameron will face few threats and, having pledged to step down by 2020, no more general elections. He should use that freedom to spring the pensions “triple lock”, ease cuts to working-age benefits and release his party from the rigid promise to be in surplus by 2020. Today, swathes of the centre ground are vacant. The country would be better off if the Conservatives did more to seize it.