Leading Article: Tony Blair's worst enemy

MINISTERIAL MISHANDLING of the much disputed Welfare Reform Bill strengthens the impression that Tony Blair's Government has become its own worst enemy. The Bill's history suggests, on the one hand, a brave determination to put right some of the worst failings of the benefits system, and on the other, a cynical judgement - or misjudgement, more likely - of where the political payout is to be had.

Being tough on welfare benefits might have seemed like a popular cause with Middle England. But if that was the calculation - as a Government aide indicated in a well-publicised off-the-record briefing last week - then why do it in such a way as was bound to annoy 50-something early- retirers with a company pension and a bad back: Middle England personified? For we are not looking here at the benefits paid to what right-wingers routinely called `scroungers'. Rather what is being proposed - and what Labour backbenchers have rebelled against and the unreformed House of Lords threatens to chuck out again tomorrow - are changes to the welfare entitlements of a third of a million disabled people.

The Government's argument is that many of them are not actually disabled but merely people in early retirement. The roots of the problem reach back to the deeply cynical move of the last Tory Government in the 1980s to fiddle the unemployment figures by transferring hundreds of thousands of people off the Job Centre register on to social security. This then played into an unhealthy culture of redundancy leading to early retirement, with reduced early pensions topped up by incapacity benefit. It was all in tune with the fashion for downsizing companies in the false pursuit of productivity gains (or a quick flip to the share price), and the wasteful, cruel and stupid assumptions behind the phrase "too old at 50". Incapacity benefit has become a financial lifeline for the victims of such unfair manipulation of the labour market.

Of course welfare reform is urgently necessary and much in this Bill is good, even generous; but the changes in payments for workers who genuinely have become incapacitated seem mean-spirited with their insistence that benefits will be docked for those with an income of more than pounds 85 a week. There seems a serious political miscalculation here. For those who are being hit are those very Middle Englanders the Government hopes to impress with its tight rein on public spending. Here is a constituency that Labour could have gone for with a vengeance - natural Tories who are victims of social injustice, and most of whom have paid their national insurance contributions for decades and now feel entitled to draw their incapacity benefit. Instead the Government is making even Mr Hague's lot look caring. If the "misuse" (Mr Blair's word) of incapacity benefit had to be corrected, the right way was first to address the problems that caused it - people losing their jobs, with no hope of another, 10 or 15 years before they qualified for a full pension. The wrong way was to blame the victims, and make them poorer by stripping away entitlements they felt they had earned. Such people would not normally identify with the wheelchair activists of the "disabled community", but they have been forced to make common cause against a common enemy. It takes a perverse talent for a government to play a political hand as badly as this.