John Hutton: Fear of change is a barrier to continued prosperity

Our society cannot afford to be denied the skills of all those can and want to work

Our welfare state was forged out of the spirit, hope and grief of two world wars. Today it stands as a tribute to an enduring set of progressive values that have stood the test of time. These values of support for people in times of need; of dignity and fulfilment in old age; of the responsibility to work, if able, are as compelling for the future as they were for the past. It is these enduring Labour values that must continue to shape the debate about the future of our welfare system.

But it is also clear that a welfare state designed around the needs, expectations and social norms of mine and my parent's generation will need to radically renew itself if it is to remain relevant to my children and grandchildren.

We have come a long way already. Since 1997, the Government has begun transforming the welfare state from a passive one-size-fits-all system to an active, enabling service that tailors help to the individual - helping 2.1 million children and 1.9 million pensioners out of absolute poverty, and getting 2.3 million more people in work. Our record stands comparison with any previous Labour government.

But we can and will do more. That is why I am determined to press ahead with the Labour Party's ambitious manifesto programme to renew our welfare and pension systems that we set out at the general election. We promised the British people that we would deliver real improvements to their lives by changing the welfare state and public services; the difficulties of the past week should make us more determined to keep that promise, not less.

Retreating from the challenge of renewal would mean abandoning the most vulnerable members of our community. I am not prepared to do this. Society has a responsibility to support those who are unable to support themselves. We will meet this responsibility.

But less than two weeks into the job, I know I still have a lot to learn. That is why I want to spend as much time as possible over the next few weeks listening to people's views on how we should move forward.

A renewed welfare state must provide the support that enables people to make the transition from one job to another - and from one stage of their career to the next. It must help people balance the multiple pressures of work and family life and enable them to benefit from the opportunities which change creates.

The shift in working patterns and demographics presents a real challenge to our welfare and pension systems. A hundred years ago there were 10 people of working age in Britain for every person of pension age. Today there are four and in 50 years' time there will be only two. We will need to confront these challenges. That's why, after the Pension Commission's report at the end of this month, I intend to consult widely across the country, with all parties and come forward with proposals by next spring.

But we cannot tackle inequalities of income in retirement in isolation from tackling inequalities during working life. The shape of the welfare state, therefore, has a crucial role to play in the way we support people to prepare for their retirement.

So we must bring forward our proposals to reform incapacity benefit as soon as possible. If we are to meet the challenges of supporting an ever-healthier but ever-ageing population, our society cannot afford to be denied the skills and contributions of all those who can and want to work.

That is why we must continue to aspire to an 80 per cent employment rate, building a modern, active and inclusive welfare state that balances rights with responsibilities. In a world, where international market forces can impact on the nature of the work people do, and people can have 10 jobs in a career rather than one, fear of social and economic change risks becoming one of the greatest barriers to our continued prosperity.

I understand that fear. That is why I will do everything I can to support and equip our people with the skills and confidence they need to steer a way through these challenges and take advantage of new opportunities.

Fundamentally, we should not shy away from considering any measure that better helps and supports those who can work to find a job, while giving better protection and security to those who genuinely cannot work.

To do this we must change the focus of the debate on welfare from what people cannot do to what they can. If we get these changes right, we will not only give people the support they need to escape from the trap of long-term benefit dependency, we will also lay the right foundation for long-term reform of the pensions system, allowing people to look forward with confidence to longer and healthier lives.

The writer is secretary of state for Work and Pensions