New clash looms over benefits


The Sunday Times October 30, 2005

New clash looms over benefits
Andrew Porter, Deputy Political Editor



TONY BLAIR faces a new clash with his cabinet over plans to curb welfare spending by means-testing claimants of incapacity benefit.
The prime minister has been pushing for measures to cut abuse and improve efficiency in the system under which 2.8m people are paid to stay off work because of sickness or injury.



However, it is understood that David Blunkett, the work and pensions secretary, has yet to be convinced by some of the proposals.

Incapacity benefit costs £6.6 billion a year and has the biggest budget in the welfare system. One measure under consideration is to pay part of the benefit in vouchers to be redeemed for certain services — mainly education and training to get back to work.

It is thought the government has an even more far-reaching plan — to give long-term claimants vouchers for essential goods such as food.

The most controversial proposal still under discussion is the introduction of income-based means-testing for those on long-term benefit.

One Whitehall insider said: “This is where there will be some serious concern. It would hit people, for example, like a 40-year-old policeman who has been injured and had to retire early but who has a decent police pension and a house.

“If he has his incapacity benefit cut because his means test shows he has a reasonable income then the logical consequence is he has to start dipping into savings or move to a smaller house to free some money just to live.”

Downing Street also plans a fixed time limit on claimants with short-term incapacity.

The shake-up will be announced in a green paper next month. The measures are certain to anger some Labour MPs who feel those on incapacity benefit are being unfairly targeted by ministers desperate to save money.

MPs are certain to watch the plans closely and, given Labour’s lower majority than in the last parliament, may face a rough passage through the Commons. One of the few serious rebellions of Labour’s first term in office came over its plans to cut benefit to single mothers.

Critics of the current system say there are too many disincentives to work accompanying benefits.

Blunkett acknowledged the problem when he said: “If 2.8m people are entitled to incapacity benefit at this moment in time but 700,000 were entitled to the equivalent 25 years ago, something very strange has happened to our society.”

In one recent example of Blunkett’s attempted crackdown, his department targeted Islamic clerics who work for extremist movements but still claim benefits.

Omar Bakri Mohammed, founder of the banned Al-Muhajiroun group, is reported to have claimed about £250,000 in benefits. This included about £300 a month in incapacity benefit for an ankle injury sustained in his teens.




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