Why has the Government picked this needless fight with us backbenchers?

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The Independent Culture
LAST MAY'S revolt of backbench Labour MPs over the Welfare Bill was the biggest of this Parliament. Sixty-five Labour backbenchers voted against cuts to incapacity benefit in the Welfare Bill and many others abstained. A government with a seemingly overwhelming majority saw it cut to just 40.

The problem today is that the Welfare Bill before the House of Commons is unchanged. As the Bill returns to the House, so we see the return of soundbites about the ending of the "something for nothing culture", a phrase that many had hoped would never rear its head again.

Since last May's rebellion it has become apparent that the Social Security secretary's proposals were first raised by Michael Portillo in 1993, but rejected at the time by none other than Peter Lilley.

If it is too extreme for Peter Lilley, then it is definitely too extreme for me. As Lord Ashley and Roger Berry MP argued last week: "The proposals to restrict entitlement to incapacity benefit, to means-test the benefit for those with pensions income, and to abolish severe disablement allowance, will result in considerable hardship for thousands of disabled people who are unable to work."

This need not be the case. Over the summer many Labour colleagues have urged the Government to reconsider, and Jack Ashley tabled a number of amendments in the Lords. These were framed as concessions in order to reduce the impact on the severely disabled and thus to assist the Government. Unfortunately, the Government intends to reinstate those parts of the Bill that have been removed in the upper chamber.

As even the most casual reader will observe, this debate is not being whipped up by a group of embittered old backbenchers who are causing trouble for the sheer hell of it. The expected rebellion today will be along the lines of the compromise amendments put by Jack in the Lords. For months, several Labour colleagues have been urging the Government to think again, both in private and then ultimately in amendments to the Bill. This has been done in a spirit of regret rather than rebellion, underlined by a commitment that it is better to safeguard the interests of disabled people than keep quiet.

To put it bluntly, on this occasion it is the Government that is being oppositional, and the backbench critics who are seeking a compromise. The compromise on offer to the Government has always been profoundly reasonable. For example, it was proposed to raise the threshold for the means test to the level of the disability income guarantee (which is currently pounds 128), with a mechanism for uprating, so that everyone who has savings is not penalised for having them. This involves safeguarding the income of any disabled person earning less than pounds 194.75 a week.

Underpinning the whole package proposed by Alistair Darling is the assumption that most people can fall back on second pensions. In reality, fewer than half of those receiving incapacity benefit - 35 per cent - have any pension. The largest number of those receiving it were formerly low-paid manual workers, and of those who do have pensions less than 10 per cent get more than pounds 5,000 a year.

In many respects it is "New" Labour that has wedded itself to the belief that you can get something for nothing. The abandonment of social democracy academics and advisers close to the New Labour "project" means that they have allowed the party's thinking to become hemmed in. All of this stems from the refusal to recognise a basic political fact - that Britain is an undertaxed society.

Last year, DSS briefing papers were still saying that the present system was "absorbing ever-increasing sums of public money while poverty and social exclusion have soared." But behind this is an enormous growth in inequality. Between 1979 and the mid-1990s the rich got richer, while the poor got poorer, in contrast to the steady reduction in inequality in the post-war period. Indeed, it was the richest section of British society who got something for nothing, mainly at the expense of the poorest. On this issue the DSS is unusually silent, because these facts open up the Government's Pandora's box, the question of raising taxes and national insurance contributions from those who got richer.

Between 1979 and 1994, the proportion of Britain's gross domestic product going to wages and salaries fell to its lowest level since records began. Had the share of wages and salaries not fallen, 21 million workers would have been, on average, pounds 17.50 a week better off by 1994. Instead, that wealth became the profits of companies and financial institutions. These rose by 4.8 per cent of GDP in the same period. It goes without saying that this transfer was only possible by means of a brutal attack on trade unions, including the constant threat of unemployment. This trend is all but ignored in the official arguments of either the DSS or the Treasury.

Margaret Thatcher predicted that this greater freedom for companies would mean more investment. Instead, this wealth was consumed by the richest in society instead of wage-earners. By the end of 1994, dividend payments to shareholders had quadrupled, to 5.4 per cent of GDP.

The solution to the current welfare problems is also the most logical and the most progressive - inequality should be reduced and the social security system improved by increasing the tax take from the richest parts of society. No doubt some Millbank Tendency Dalek will be wheeled out to repeat "no return to tax and spend" until they explode, but the alternative to increasing the tax take in our economy is today's welfare debate, in which the Government is posed in opposition to the most vulnerable in society. There has to be a better way.

Alistair Darling no doubt wishes to have a longer shelf-life than Frank Field and Harriet Harman. But to retain the confidence of the Labour movement he must go to the Treasury and insist that the resources be found to accept Jack Ashley's eminently sensible compromise. As a firebrand on Edinburgh council, Alistair made a national reputation denouncing civil defence spending. Let us hope that he rediscovers some of his old Labour reserves in time to satisfy the bulk of Labour members, who are looking on in dismay.

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