Brave move, Mr Darling, pity you may not succeed

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The Independent Culture
ONE OF the more chilling passages in the grippingly disloyal if relentlessly gossipy memoir by Janet Jones, the wife of the deposed leader of the Lords, Lord Richard, chronicles the inexorable slide of Harriet Harman's fortunes as she sinks further and further into the quicksand of lone parent benefit cuts.

Here she is on 11 December 1997, sitting next to Lord Richard at the cabinet meeting and telling him how upset she is to find herself engulfed by rebellion. "It was all part of the deal she had made with Gordon Brown. In exchange for that, other things could go through... she should never have been put in that position... Harriet won't last long... except Blair does seem to have a soft spot for her. He's extraordinarily loyal to her."

Just six days later the Prime Ministerial mood seems to have changed, at least according to Lady Richard. First she reports that Lady Hollis, the social security minister, has separately found - in response to a Treasury demand - "one and a bit billion" cuts in disability-related benefits, but that Harriet Harman is pressing for six billion in cuts and has apparently "gone mad".

Then her husband gives Peter Mandelson, the then Minister without Portfolio, "the shock of his life" by estimating to him that half the Labour peers will vote against the proposed cut in the benefit of pounds 6. Then, at the cabinet meeting the following day, Nick Brown, then Chief Whip, tells the Prime Minister of the unease of the Labour peers. The Prime Minister, urging discretion about this unwelcome news, then walks over to Lord Richard and tells him crisply: "Go away and sort it out."

After the meeting Nick Brown asks Lord Richard whether he had noticed the way the Prime Minister was "looking at" his social security secretary. Lord Richard and Mr Brown both agree that "he is fed up to the back teeth with her".

If even half of this is accurate, there are one or two interesting comparisons to be drawn between that period and the current one, in which the Government is facing large-scale revolt in both the Lords and the Commons over the issue of cuts in disability-related benefits. As it happens, the savings sought by Alistair Darling are significantly less than Lady Hollis managed to find in her exercise in 1997 - about pounds 750m over five years, as it happens. Nevertheless the first important point, oddly, is that the current problem the Government faces is more serious and fundamental. The cuts in lone parent benefit were indeed a botched job, not least because they were shown in many cases not to do the Blairite job they were supposed to do - providing an incentive to lone parents to go out to work.

When it comes to welfare reform this is the big one, in a way in which the lone parent cut was not. Even if ministers manage to contain the revolt in the Commons tomorrow night, there is still the strong possibility that the Lords will stand firm; Jack Ashley, whose credentials as a campaigner for disability rights are not in doubt, has said that the latest concessions from Darling are not enough. And that could mean that if the Government decides not to back down, it could yet have to invoke the Parliament Act to ensure that the Bill goes through next year, leaving the Conservative- dominated Lords in the interim, as one peer put it yesterday, like "a grenade with the pin taken out of it".

But, equally, it is safe to assume that Alistair Darling has not simply been dragooned by the Treasury into making cuts he thinks he cannot defend. Chief of all the controversies is incapacity benefit.

It is quite important to understand what the most contested Darling proposal does and does not mean. It applies only to people who have retired early and receive both incapacity benefit and an occupational pension - a category vastly more common now than when the benefit was first devised. It does not affect current claimants. It will not (now) even affect claimants who have occupational pensions worth up pounds 85 per week - or about pounds 7,940 per year. And while it will halve the benefit for those receiving higher pensions than that, it will not remove incapacity benefit altogether for those receiving pensions up to the average of about pounds 11,360 a year.

Why is Darling doing this, apart from merely saving money? Well, because of a harsh, unpalatable and difficult fact: that in the last 20 years the number of people receiving incapacity benefit has much more than doubled, from about 600,000 in 1979 to 1.6 million - at a cost of pounds 7.2bn. While many of Darling's critics argue that part of this growth is because unemployment makes people ill as well as the other way round - undoubtedly true - very few people think that this growth reflects a parallel growth in real disability among the claimants. Instead, it has almost certainly been a means of keeping people on benefit while letting the unemployment figures rise more slowly than they otherwise would. The populist tinge to this, ugly as it may be to admit it, is that many MPs have anecdotal evidence of constituents resenting the payment of incapacity benefit to those who, they believe, are not incapacitated.

The critics say, well, if that is the case then why not make the tests more effective, instead of penalising through a means test those who are incapacitated as well as those who are not? That sounds reasonable. The problem is that this is just the route the Tories went down. It provoked a huge backlash because of the arbitrary nature of the criteria - and ended up not making much difference. Means-testing may not be neat, but it does at least mean that the worst off will not suffer. And that the problem needs tackling is not in doubt among politicians of any party.

For that reason, whatever the last-minute negotiations between now and tomorrow, and before the Lords debate next week, Darling is not now going to back down on the principle. There is, as it happens, an oddity about the current crisis. Arguably the least defensible part of the Bill is the ending of the widow's pension, to be replaced by a bereavement allowance that will now last a year instead of the originally planned six months. This won't apply to women over the age of 55. But the idea that widows long out of the labour market will be able to get jobs at, say, between 50 and 55 - paying as well as their pension - is hardly credible. Yet the rebels have not mainly concentrated on that. One commendable idea, promoted by the Liberal Democrat Lord Russell, is that this should take effect only when there is legislation against age discrimination. But there is as yet no amendment tabled to that effect.

The greater oddity, however, concerns the Tories, who have opposed the Darling proposals throughout the piece - and have themselves suggested more than pounds 2bn's worth of amendments during the legislative process.

This sits uneasily, to put it politely, with David Willetts' promise that the Tories would cut the welfare bills. The Tories have made a lot of Labour's alleged failure to reform welfare. But if it fails this time - still a possibility - they will have to take a lot of the blame because of their dominance in the Lords. And conversely, if Darling wins, the one charge that they surely will not be able to make is that Labour were timorous about welfare reform.

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