LONDON CITY

Blair faces revolt over plans for Ł23 a week cut in disability benefit

By Patrick Hennessy, Political Editor (Filed: 12/09/2004)

More than one million claimants are to lose benefits of Ł23.30 a week
in a clampdown by Tony Blair on welfare abuse. The Prime Ministers
advisers have drawn up plans to scrap the disability premium, paid to
about 1.1 million people, as part of a strategy to save Ł2 billion in
the welfare budget.

The money is a top-up benefit paid to those under 60 who also claim
a range of other payments. Downing Street advisers believe that it is
an incentive to hundreds of thousands of workers, mostly men, to give
up their jobs, pleading such conditions as stress, depression and back
pain (aka work is a pain in the arse.).

The reform would deprive many claimants who receive benefits totalling
about Ł100 a week of about a quarter of their welfare income. Axing
the disability premium would save around Ł1.3 billion a year.

The restriction of the benefit, which is expected to be included in
Labours election manifesto, was last night said to be the real
reason for the surprise resignation last week of Andrew Smith as Work
and Pensions Secretary. He proposed a less drastic reform of the
benefit, based on offering claimants help, advice and training to
get back to work.

Close colleagues said Mr Smith, who was replaced by Alan Johnson, was
unable to stomach the prospect of another big battle over policy -
with the new Downing Street plan likely to provoke a Labour backbench
revolt. In 1999, 67 Labour MPs voted against a plan to cut access to
incapacity benefit for people with disabilities.

The Prime Minister wanted a much more aggressive attack on a benefit
that he regards as an invitation to welfare abuse. This month Mr Blair
signalled his desire to reform incapacity benefit, which is claimed by
2.7 million people, by listing it as one of seven key challenges
facing Britain in 2004. Mr Blair wants the number of claimants cut by
one million.

A recent survey by the Bank of England found that 500,000 men of
working age left the labour market during the 1990s, almost all of
them aged between 25 and 54. The survey said: The generosity of the
disability insurance system relative to that of unemployment insurance
appears to have encouraged such workers to exit the labour market.

Incapacity benefit can be up to Ł74.15 a week, compared with the
jobseekers allowance of up to Ł55.65. Incapacity benefit costs the
taxpayer more than Ł7 billion a year.

The reform proposals would force those who claim incapacity benefit to
have medical check-ups every three months and to undergo continuous
reassessment. If claimants turned down suitable work over a set
period, they could have their payments reduced or, in extreme cases,
axed altogether.

A friend of Mr Smith told The Telegraph: Basically he couldnt face
another big battle over policy. Everybody knows incapacity benefit
needs reforming. There are too many people on it and we are not doing
enough to get them back into work.

Andrews strategy was based on offering help, advice and training,
but Number 10 just wants to cut the money that claimants receive and
they were not willing to spend more money on more advisers.

With that, and the fact that he had spent three months being briefed
against, with people being told he was in the departure lounge of the
cabinet, he just became sick and tired of it all. This is an attack on
some of the most vulnerable people in society.The disclosure of Mr
Smiths reluctance to carry out the Prime Ministers reform proposals
is a foretaste of the probable hostility of Labour backbenchers.

Louise Ellman, MP for Liverpool, Riverside, said last night: I would
be very concerned about anything targeted at those in need.

David Willetts, the shadow Work and Pensions Secretary, said: We have
been warning for years about the spiralling costs of incapacity
benefit, with people moving off unemployment benefit and on to
disability benefits.

Every few years Tony Blair suddenly discovers he needs to reform
welfare, but he never does anything about it. Why should this time be
any different?

7 September 2004: Pensions minister forces early reshuffle by quitting
2 September 2004: Blairs list of priorities ignores war in Iraq 28
June 2004: One in two on disability claim for five years

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