Rank-and-file resist Labour benefit changes: Shadow Cabinet faces row over plans to target welfare at poor. Colin Brown reports

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The Independent Online
SENIOR members of Tony Blair's Shadow Cabinet are facing a showdown with rank-and-file supporters over plans to drop Labour's traditional commitment to the universal uprating of benefits, such as the state pension, in favour of targeting higher payments to the poor.

The move to modernise the party's most sensitive policy commitments is set to cause a storm at the party's annual conference in October. Proposals emerging from Labour's Commission on Social Justice have provoked protests from constituency supporters, who have tabled motions opposing any move to end universal uprating.

Resolutions for the Labour Party conference make it clear that Mr Blair and the Shadow Cabinet will face a battle if they move towards targeting of benefits. A resolution by the Pudsey constituency Labour party warns against using the commission study 'to provide a progressive cover for any limitation of universal benefits.'

Littleborough and Saddlworth CLP 'regrets that the Commission on Social Justice has questioned the need for universal benefits and by this action has provided ammunition for the Tories'.

Other constituencies have tabled hostile resolutions, including Birmingham Ladywood, the seat of Clare Short, which 'opposes all moves towards means testing including of child benefit, disability entitlements and state pensions'.

Some of Mr Blair's senior colleagues believe universal uprating is wasteful, giving cash to wealthy people who do not need the benefits. They are keen to ensure that Mr Blair resists the pressure to hold to the status quo.

'The whole of the welfare system should be geared to getting people into a position of self-reliance. The issue of universality versus targeting becomes an irrelevance. We should be doing something much bolder,' said one senior Labour source.

Shadow Cabinet supporters of radical reform concede that there are problems in delivering higher levels of benefit to the poor.

The option favoured by some modernisers backing Mr Blair is for taxes and benefits to be merged for pensioners, which would enable the poorest to receive more than wealthy pensioners, without resorting to means-testing.

'At the moment you have universal payments with a top-up through income support. Under a tax-and-benefits system, you automatically get a higher payment unless your income is higher, in which case there is a clawback,' the source said.

Such a system could also be applied to child benefit, which is paid to all families regardless of wealth. The advantage of universal uprating is that it ensures high take-up, but it is very expensive.

The commission is due to deliver its final report on 24 October.

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