Welfare reform - we haven't seen anything yet

Donald Macintyre on Harman's crusade

It isn't her fault, but Nicola Horlick has become something of a codeword in Whitehall for the idiocies of the welfare state. A woman earning pounds 60 per week at the check-out at Tesco is below the lower earnings limit for national insurance. As a result she receives no state-funded maternity benefit. By contrast a high-flying woman City executive is entitled to receive 90 per cent of her full pay - reimbursed by the taxpayer - for 14 full weeks every time she has a child. In the case of an executive earning pounds 1m, that means pounds 18,000 per week. And that's despite the fact that she - like every other higher earner - stops paying national insurance above pounds 25,000 per year.

The injustice of this - which DSS officials are currently working on ending in a shake-up of the pounds 500m maternity pay budget - is worth mentioning because it's a reminder of the many aspects of welfare reform that having nothing at all to do with grinding the faces of the poor. It also underlines that for a Government whose first hard choice on welfare reform blew up in its parliamentary face, it shows every sign of being restless to find others to make.

Let's take a few examples: the leaked David Blunkett letter betrayed deep unease about some of the DSS's proposals on disability benefit and these arguments have not yet been resolved. But I detect no sign that Ms Harman has been pushed off her determination, while ensuring that the genuinely disabled are protected, to seeing to it that less of the pounds 23m disability budget is spent on those who do not need or deserve it. There is a strong case for loading much more of the bill for industrial injuries compensation on compulsory no-fault insurance for employers, but in any case Harman is determined to spend more on preventing accidents in the workplace and less on paying for the consequences of them. There are already longer range, second-term thoughts on the huge difficulty of whether to means-test the old age pension: should, for example, the old age pension be inversely related to earnings so that the higher earners get less from the state when they retire? All these and many more sacred cows look distinctly threatened. The surprising thing about Ms Harman is how fast she bounces back. She is busily telling colleagues that there isn't a single aspect of the welfare state she regards as working properly.

I do not mean to suggest that there are no problems. One is that there are still serious disagreements between Frank Field and Harriet Harman over the draft he has produced for the Green Paper on welfare reform - which ought now to be close to publication, but isn't yet. One version is that this is less about principle - after all Field and Harman are both arch-modernisers - than about the intensely cerebral nature of the current draft. But it matters, because ministers badly need a text that can form the basis of the campaign to persuade the party and the country that welfare reform is about a lot more than being more right wing about social security than Peter Lilley. Both the row over lone parents' benefit and the leaks over planned cuts in disability benefit descended on the Government without it having set out in a clear and accessible way what it is trying to do. And that is a task that cannot be left to Harriet Harman and Blair himself.

Blair has told his most senior ministers that the Government will be judged on the success of welfare reform; he himself stressed its central importance in a speech at Sedgefield before Christmas. Blair has been reading intensely on welfare over the festive period. But to sell it, not least to the party, the John Prescotts, the David Blunketts and the Frank Dobsons, as well as the Gordon Browns, need to be making at least as many speeches in favour of radical welfare reform as Blair himself. And to do that, there has to be Cabinet agreement on its firm outlines. There also has to be recognition among some of the toughest-minded on welfare reform that some of the fears - for example over disability benefit - are shared by those who are not against reform of any kind. Which is one reason why the Cabinet Committee which Blair will chair, and which he also announced before Christmas, is so important. There are some policies that Harman and her close ally Brown could not, however hard they tried, persuade Prescott and Dobson of on their own. Only Blair has the capacity to do that, and although the composition of the committee has not yet been finalised, both men should be on it.

Having eschewed the seductive path of having an easy life in the party, Ms Harman is extraordinarily unbowed by the criticism she took over the cuts in lone parents' benefit. She appears as convinced as ever that the current social security system is in dire need of reform and that it can, in time, be made as popular as the NHS. And this is an important point. The most modernising ministers, Harman included, are convinced that while there will be endless aggravation within the party over the famously hard choices that the Government will have to make in the coming months, the electorate is more than ready for it.

Many people think the wheelchair-bound and the severely disabled get less than they deserve. They worry intensely that many severely handicapped children are virtually abandoned by the state when they reach working age. Many of those same people are equally annoyed when they notice that the man who is drawing a handsome whack of benefit because of his bad back seems to have no trouble digging his garden. Much of the party will shiver; but Harman remains convinced that among as many in Labour's natural constituency of core supporters as among the traditional Daily Mail readers of Middle England, the demand for a cleaner, fairer welfare state is irresistible.