The Conservatives in Brighton: Lilley signals shift to means-testing

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ANOTHER SHIFT to means-testing and fewer benefits as of right was signalled yesterday by Peter Lilley, Secretary of State for Social Security, as ministers talked of the toughest round of spending cuts that the social security budget has suffered.

Mr Lilley won a standing ovation as he attacked social security scroungers, fraud in the system and girls who get pregnant to jump the housing queue, and warned that 'to escape recession we must curb public spending, including social security'.

His speech came as it emerged that invalidity benefit - the single fastest-growing benefit after unemployment-related payments and now claimed by almost 1.4 million people - has been targeted by some ministers for a freeze, or for only partial uprating, next April.

The tax-free benefit, worth between pounds 54 and pounds 65 a week, has increasingly provided a means of early retirement for those made redundant in their late forties and early fifties. Now costing pounds 5.25bn, it is the third most expensive benefit after pensions and income support. Tougher medical rules to limit the numbers qualifying are also being considered for the legislative package social security ministers believe will be needed when the spending round closes.

Mr Lilley refused to comment yesterday on spending decisions - or even to reaffirm the manifesto pledges to uprate child benefit and pensions in line with prices - saying that to do so would only lead to more questions.

In spite of Treasury pressure, sources say he is taking the manifesto pledges 'very seriously'. But the scale of cuts the Treasury is seeking - apparently trying to take about pounds 5bn out of the pounds 71bn budget over the next three years - led one source to say: 'They are looking for money that just isn't there.'

However, Mr Lilley signalled a further switch to means-testing as he told the conference that a guiding principle of future policy would be 'to focus benefits on the most needy'.

Outside the hall, he said that in the late 1940s only 10 per cent of welfare expenditure was means- tested. Now it was something like 30 per cent. 'I wouldn't be surprised to see continuing evolution in that pattern,' he said.

He delighted representatives by declaring that he was cracking down on fraud. 'I have set a target of tracking down pounds 500m. And I mean to get it back. I'm closing down the something-for-nothing society.' His department confirmed that target compared with the pounds 416m recovered by anti-fraud staff last year.