Tony Blair has placed Birkenhead MP Frank Field in charge of reforming the welfare state. But will this advocate of 'self-interest' politics be remembered for helping people get off benefit or for demonising the poor?
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The tall metal fence stretches in either direction as far as the eye can see, cutting brutally across a gentle slope that is top-ped by a windmill and a curious-looking Victorian observatory. It is, in its own small and stark way, a monument to a divided Britain.

On the up-slope side of Birkenhead's iron curtain the new executive homes of Bidston and Noctorum, with their double garages and leaded lights, nestle between the larger Victorian villas that once housed this Merseyside port town's mercantile elite. If the owner-occupiers lower their gaze as they sit on their patios, they see the Beechwood estate, a soulless Sixties dumping ground for many of Birkenhead's most deprived families and, by association, its social problems. Despite a recent refurbishment with European funds, almost 40 per cent of residents live below the poverty line and crime is rife. So rife, indeed, that the good folk of the white highlands insisted that a footpath that breached the fence be closed off to protect their homes and property prices after an epidemic of burglaries, all blamed on lads crossing the border from the Beechwood.

So now, while the middle classes can sleep safer in their beds, sound in the knowledge that their investments in bricks and mortar are once again appreciating, the drug addicts and bored youths of the Beechwood - some as young as eight - either roam further afield to fill the void or turn on their own, breeding a sense of fear and suspicion that pervades the whole estate.

The fence and all it symbolises is not unique to Birkenhead. It is reproduced in many depressed industrial towns around the country where the decline of large-scale industry has created pockets of long-term unemployment and an underclass. But in Birkenhead it takes on a special significance because the local MP, Frank Field, has been entrusted by Tony Blair with the high-profile task of reforming the welfare state, "thinking the unthinkable" as the Prime Minister put it, in such a way as to break down the barriers that have caused the economic and social apartheid of Bidston.

Field is convinced that the current benefits arrangements have contributed to the physical and mental gulf between the haves and the have-nots, between those who see themselves as net contributors to the system and those perceived widely as recipients and sometimes as "spon-gers". He is worried by the appetite he detects among tax payers to draw a line under the whole of William Beveridge's 1942 report, which led to the founding of a welfare state that now costs pounds 96 billion each year - more than the NHS, education and law-and-order budgets combined.

Birkenhead is the backdrop to the plans Field is formulating to tackle what he has termed "the big issue in domestic politics". No imminent unveiling of his proposals is expected - he refused to discuss dates - but anyone wanting a sneak preview of what the Minister for Welfare Reform might propose in his "second Beveridge", building on the Welfare-to-Work initiative of Gordon Brown's first budget, has only to look at his highly individual and often controversial response to the problems of his constituency.

It isn't that Birkenhead is all Field knows. Before he inherited the seat in the dying days of the Callaghan government, he had been director of the Child Poverty Action Group for 10 years and the Low Pay Unit for six. For the last two parliaments, Field chaired the select committee on social services and, later, on social security, its successor. And he has written widely on the subject.

Yet the problems that Field has faced week-in and week-out in his constituency surgeries these past two decades are the self-same problems he is now charged with addressing on behalf of the Government. His casebook is full of clues as to his future intentions.

"I saw a woman a few weeks ago at one of my surgeries," he recalls. "Her son had left home two years ago and she had written to the council asking whether she was still entitled to the same level of housing benefit on her council-house rent. She heard nothing and the money kept coming. It took the council two years to respond, but when they did they wanted her to pay back arrears at the rate of pounds 20 a week. But when we worked it out, she only had pounds 26 a week to live on."

Field's response to her dilemma can hardly be classified as the traditional Labour approach to the public rented sector. Why didn't she get a mortgage, he suggested? Terraced properties in central Birkenhead go for as little as pounds 18,000. The repayments of her debt and her mortgage combined would still cost her less than her rent. It would free up her council house and it would leave her with more disposable income, less dependent on benefit.

So far, it could be a minister in Margaret Thatcher's Eighties administration spouting with libertarian largess. Then comes the twist. "The biggest problem," Field says, "was that she needed a deposit. So why couldn't she borrow against her National Insurance pension, the entitlement that she had been building up all her life, and gradually pay it back? Of course she couldn't, at the moment, because of how it's set up, but wouldn't that be one solution? It would make National Insurance contributions seem as real and as personal as any other form of saving, and then people might set more store by them."

It's a good example of what Field likes to call a "third way", between the Devil-may-care approach of the prophets of market forces and old nanny- state socialism, a balance between rights and responsibilities, between the state and the individual. At the simplest level, if everyone who pays National Insurance contributions genuinely saw that money as a form of saving - akin to a building-society account or a PEP - rather than a tax, then all the inhabitants of Bidston would have a common interest in their stake in the welfare system.

In the needs of Birkenhead, Field has already identified what he believes is a vast, untapped potential for radical reform. "The most important thing about being the Member for Birkenhead," he admits, "is that it has changed my whole view about how the world operates. I'd been brought up when the dominant view was that our welfare system was neutral on behaviour. Now I realise it isn't. It can be positive or negative, depending on how it is operated." His aim is to transform the negatives of the current arrangement into positives.

THE VICTORIAN ship-builder and philanthropist William Laird was convinced that Liverpool had been put on the wrong side of the River Mersey. To prove the point he decided to build a "city of the future" on the opposite bank at Birkenhead. In the middle decades of the 19th century, out of nothing, this visionary created, alongside his thriving shipyards and the docks, a model town with wide avenues, decent housing, grand civic buildings and a public open space designed by Sir Joseph Paxton, soon- to-be architect of New York's Central Park. The first trams ran here. Disraeli likened visiting it to taking the road to the Damascus of the industrial age, while an 1845 magazine article referred to Birkenhead as "one of the greatest wonders of the age".

It was a flash in the pan. Laird died young and, with hindsight, it could be said that Birkenhead all but died with him. The intervening century- and-a-half has been cruel to the town known as Liverpool's ugly little sister, the other end of the ferry 'cross the Mersey, and home to football's eternal "almost" club, Tranmere Rovers, and drag queen Lily Savage. The shipyard that turned out the Ark Royal closed in the early Nineties after decades of decline, though a local ship-repairing business has taken on the once-celebrated name of Cammell Laird. The docks employ less than 100 where once there were 5,000, and are littered with rusting ships and even a beached sub- marine. Unemployment, at almost 17 per cent, is three times the national average and has been stubbornly resistant to all government, European and local initiatives to bring it down. Failure and despondency hang heavy in the breeze off the River Mersey.

Field's constituency base is in Hamilton Square, the vast neo-classical monument to Laird's vision that is one of the few remnants of the "city of the future". His front door gives out onto a statue of Laird gazing benignly from his pedestal over "his" town. Like Laird, Field has taken Birkenhead, and more importantly its people, to his heart. "When I was first an MP here," he recalls, "one of the local workers came up to me and said: 'Is it true, Frank, that you want to live here?' 'Oh yes,' I replied all bright-eyed and bushy-tailed. 'You must be mad,' she said, 'we're all trying to get out.' "

The years have done nothing to dim that enthusiasm or his determination to stop the haemorrhage of jobs, bright young people and families, attracted to the town's hinterland, the leafy suburbs of the Wirral. And by sticking at it Field has won the most unlikely admirers. Life-long Tory voter Sam Vickers, a former chairman of Birkenhead Conservatives, praises him as "a man of integrity. You can believe what he says and, as a result, many of our supporters hold him in high regard, if not perhaps affection."

Unlike Laird, a doer who imposed from above, or the socialist ministers under Attlee who translated Beveridge's vision into an unwieldy and smothering state bureaucracy, Field won't be building the welfare system of the future himself. On past form, he will be giving others the incentive and the tools to do it for themselves. It's an approach that he is comfortable with intellectually and which, moreover, suits his personality.

A quiet, scholarly man from a working-class background - his father was a factory labourer - he is a classic product of the old grammar-school system. Though 55, he has a wiry energy that makes him seem 10 years younger. He is not one for grand gestures or rash promises. Only when Militants - or "the Trots" as he calls them - infiltrated his constituency party in the Eighties, and tried unsuccessfully to unseat him, did he court national publicity.

For the rest, he is more your backroom boy, totally absorbed in his work as an MP and his long-time crusade on welfare reform, married to the job. In the last parliament Tory MPs named him as the Labour opponent they most admired. He is known as a maverick - he got into trouble on the eve of the 1987 general election for breaking ranks and predicting a Labour defeat - and, until Blair's announcement, was widely considered too much of a loner to get a job in government. At his 50th birthday party, Labour colleagues were thin on the ground while the Tory guests included John Gummer and his House of Commons pair, Chris Patten.

"Never mind about Martin Bell being the first independent MP in however many years," says one Labour backbencher, "Frank's been doing it for years." His refusal to curry favour with the hierarchy of his party has been both his strength and his weakness. It has given him personal authority but deprived him of real influence.

Yet now the red ministerial box sits on the desk of his book-lined Hamilton Square home. Later the ministerial car is coming to take him off on official business. He has been made a Privy Councillor and a member of the key cabinet committee that decides long-term government expenditure.

He has come in from the cold three times over: from opposition to government, from being such a semi-detached member of Old Labour that he almost lost his seat to being the essential New Labour man, and from, as he puts it, sending out press releases about what was wrong with policy, to deciding it with cabinet colleagues. It's as if a newspaper columnist has been given the job of practising what he preaches. Field should be reeling with the shock, but he is as calm as the empty docks round the corner from his house.

"From the first second I've enjoyed it. From the first second it is as if I've never had any other life. You're making me think back now. But it is not a natural process for me. It's not a surprise but sheer joy." Peter Mandelson would be proud of the sentiment and the sound-bite, but there's no doubting Frank Field's sincerity. The maverick who spoke his mind even when it was uncomfortable is now a Blairite through and through. "I was only ever about having a Labour Party that could win, and where there was then a point in us winning."

In one sense you could argue that Field was New Labour before Tony Blair even joined the party. He has been using the same arguments for almost 20 years. It is Labour that has moved towards him. But there is a special bond between Blair and Field. The Prime Minister's unashamedly Christian position and moral rhetoric chime well with his new minister's devout and unabashed Anglicanism.

Now Blair has given Field his chance, it will be a test of his political maturity to see if he abides by collective responsibility, breaking the habits of a lifetime by, occasionally, saying what is correct - ie expedient - rather than what he feels is right. His relationship with Harriet Harman, Social Security Secretary and his boss, will be a case in point. She is a controversial figure dismissed by some as lightweight and a Blair blind-spot, but so far Field is fiercely protective.

On policy, Field has certainly never been afraid to use slogans associated with the Tories. The phrase he repeats most often in connection with welfare reform is not equality, rights or altruism - which he dismisses as "running round minding other people's business" - but self-interest.

"For too long," he says, "we've viewed welfare as a ghetto subject - something we do to the poor. Increasingly people have felt this is a subject that has nothing to do with them. What we have to do with the reconstruction of welfare is recreate the mass of support as well as protect the vulnerable. And the key is self-interest. I see it as the great driving force in human nature."

It is a somewhat cynical view for a regular church-goer and one-time member of the Church of England's General Synod, but one that he defends. Self-interest, he says, cuts both ways. The people on the top of Bidston Hill are currently getting "an unbelievably good deal out of what they pay into the welfare state. It is their children, by and large, who get their fees paid at university by the state. And self-interest can be generated for the people on the Beechwood, he believes, by simple reforms like giving youngsters control of the money that is spent on their vocational training courses, or supporting self-help money unions and co-operatives that keep them out of the hands of loan sharks.

Wasn't self-interest the slogan of the Eighties and the Thatcherite revolution? Field is keen to make a distinction. "It's not an unclean thought to talk of self-interest, it's a most fundamental one. And it is possible to distinguish between self-interest and selfishness and there was a fair amount of kicking people into greed as well."

How though in practical terms, given the culture of dependency that now surrounds the benefits system, can that distinction be made? Is, for example, the Birkenhead mother who Field suggested might buy her own home with a deposit from National Insurance contributions not acting selfishly? "The selfishness would have been if she had gone ahead thinking that she would never have had to pay the loan used as the deposit back, that either the officials are too soft in the head to ask for it, or that she'll get a full pension by using income support as a top-up."

Integral to Field's determination to ring-fence self-interest is his commitment to a policy of zero toleration of benefit fraud. Again this sounds suspiciously Tory, the theme of many a musical interlude by Peter Lilley on the platform of Conserva-tive party conferences. Field believes his way is distinctly different. "I'm trying to keep a balance between not blaming those who commit fraud, but not also humiliating them by suggesting they have no free will and no values themselves."

OVER AT Pauline Vogiatzis's terraced house at the top of Holt Hill, overlooking the old shipyard, the members of the Lairdside Residents' Association are just as keen as Field on stopping the benefit cheats. While some left-wing commentators have suggested Field's talk of zero toleration is a way of demonising the poor, making a workhouse distinction between the "honest poor" who are grateful for the inadequate benefits and the "dishonest poor" who play the system, his constituents are right behind him.

Sean McGuinness is in his late thirties with three children. He has spent eight of the past ten years "going from training course to signing on to job club to training course". Of all the problems that Birkenhead faces, he considers benefit fraud to be the worst. "People claiming unemployment, working on the side, lying about their savings, not living with their wife so as to get double benefit, they all get my goat. They should be brought to book before they teach their children that this is the way to behave."

Pauline, a widow in her fifties who is spearheading community involvement in plans to regenerate an area where 38 per cent of the housing stock is unfit for human habitation, is equally hard-line but she can see why some people are tempted to cheat. "I don't condone it but people don't want to cheat the system. Often they're desperate. They can't feed their families. And often, too, they fall in with gangs who run fraudulent rackets on housing benefit."

The Rev Stephen Mansfield, vicar of St Oswald's parish which includes the Beechwood estate, takes Pauline's argument one step further. "You have to understand the outlook of people caught in a poverty trap. They're suspicious of the outside world, fearful, and they look after their own. It's dog eat dog. If some are on the fiddle - and it's a small minority - then it is because the game is survival. And the benefits system is forcing people to act in a way that they perhaps would not choose to in an ideal world. For instance, parents get more benefit if they are seen to be living apart."

The balance Field talks of striking will then be a tough one to achieve in practice. You can humanise the system, build in incentives, give the job centres an overhaul - all ideas he floats - but without a fundamental change from the culture that has overrun the welfare state in recent times, it will all be in vain.

Field is, however, a pragmatic man. In the past when he judged it in the best interests of his constituents, he would pitch up and seek Margaret Thatcher's help, however unpopular it made him with Labour colleagues. And that pragmatism stretches to casting a critical eye over some of the claims of his constituents - especially their oft-repeated demand for jobs.

"Someone wrote to me recently," he recalls. "They're based in Birkenhead and they have a 'phone service. They wanted 100 people and advertised through the job centre offering pounds 4 per hour plus commission, and they said they hadn't had a single enquiry."

It's the sort of story that is the staple fare of every middle-England dinner party when unemployment is discussed. What's going wrong? Are the job centres failing to pass on the vacancies, are people lazy, or are they too comfortable on benefit? "Generally speaking it's a combination of all three," Field says unflinchingly, "and for individuals that combination will be weighed in different ways." He is no bleeding-heart liberal who feels society owes people a living.

"People have come to see income support as a right. And it is against that income support that people make judgements about whether it pays them to work. That's been the most dramatic change I've seen in 20 years. Before, people paid in their taxes and when they needed help from the welfare system they got it. It was never devised that this was a life-time pension, yours as soon as you became an adult, to be surrendered only if you think you can be very substantially better off."

Such talk will be music to the ears of New Labour's new supporters, to the folks at the top of the hill. How it will play with Labour traditionalists and the people down on the Beechwood remains to be seen. Field once famously condemned Robert Runcie for nailing his colours to the fence in the disputes that divided the Church of England. In seeking to find a third way on welfare reform, the second Beveridge could just find himself impaled on the fence on Bidston Hill.