The report, written by Frank Field, Labour MP and chairman of the Commons Social Security Select Committee, attacks Conservative social policy and challenges the Opposition's support for the post-war Welfare State.
The document, called "Making Welfare Work" shows that there were nearly 16 million claims for means-tested help in 1993. These include income support, family credit, housing benefit and council tax benefit. When those claiming more than once are removed, the net figure was just under 9.8 million - equivalent to half of all households in Britain.
Mr Field argues that the Welfare State is creaking at the seams; few, except those who abuse it, can make sense of its 25 benefits and its six-page means-test application forms. Means-tested benefits, he says, reward passive acceptance of handouts, rather than encouraging people to better themselves. In language that some Labour Party members will find uncomfortably similar to that of right-wing Tories, Mr Field says the system is riddled with fraud and that identity cards and SAS-style task forces are needed to stop it.
In 1950, according to Mr Field's report, there were just 1.2 million people claiming the "safety net" social security benefit of national assistance, given to those without other means of support. Today 5.4 million people claim its 1990s equivalent, income support. Half the means-tested claimants are aged between 19 and 39.
Since the Conservatives came to power 16 years ago, the social security bill for income support payments has risen from £12.9bn to £34.8 bn.
Other benefits include family credit (570,000 claimants) to heads of households on low pay; housing benefit (1.6 million claimants) to those who cannot afford their rent; and council tax rebates (2.23 million claimants). All these are discretionary and entitlement depends on a means test. Others, such as child benefit, are universal. Including these, around £90bn a year is spent on welfare payments. Mr Field argues that the result of Tory policy has been the creation of underclass ghettos where people live in poverty and endure a culture of crime, drug-dealing and benefit fraud.
The report says: "The time has come to revolutionise the Welfare State. The system we have penalises those who work hard and have savings. We don't reward honesty. The time has come when we need to reconstruct welfare. We need to encourage self-interest, self-improvement and altruism once more." Payment of income support, it says, should be linked to a plan for career development.
Tony Blair, the Labour leader, will study the report this week. Last year he called for Labour policies which would "reduce dependency", and argued: "The world has changed since 1945, there is no turning back."
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