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The Guardian Monday January 5, 1998
BENEFIT CUTS REAP £3.2BN EVEN BEFORE WELFARE REVIEW
By David Hencke Westminster Correspondent
Benefit cuts totalling £3.2 billion are to be imposed by Tony Blair's
government over the next two years before the Prime Minister has even
started implementing Labour's welfare state review, according to figures
produced by the House of Commons library.
The findings show in detail the effect of the Government's decisions not
to restore recent Tory benefit cuts and to continue to pursue the
Conservatives' policies by imposing more cuts later this year on an annual
welfare bill which stands at more than £90 billion.
The biggest 'windfall' for ministers comes from cutting benefits to the
disabled by keeping to the policies of Peter Lilley, the Tory former social
security secretary, who replaced invalidity benefit with incapacity benefit.
Here an expected £2.5 billion expenditure savings by 2001 would allow
Gordon Brown to introduce a tax-cutting budget to woo electors. The cuts
are before ministers consider huge savings that could be made by limiting
the new disability living allowance or taxing benefits for better-off disabled
people.
Ministers will also save over £700 million by not restoring Tory cuts
affecting the children of lone parents, the unemployed, war pensioners and
even £3 million from the destitute, who need to apply for loans to get
basics.
Two measures to help the poor have been introduced at a cost of £600
million: the £400 million help for winter fuel bills for the next two years;
and help for lone parents and families in low-paid work to set childcare
costs against claims for family credit, council tax benefit and housing
benefit. Even so, the Government is on course for a net saving of more
than £2 billion.
The figures were obtained by Ann Clwyd, Labour MP for Cynon Valley,
after a Labour Party parliamentary liaison committee meeting failed to
persuade Mr Blair to change his mind on lone parent benefit cuts.
She said: "I have been shocked by the scale of the cuts. Some of them -
like taking away industrial injury benefits from retired miners and factory
workers - are really mean and I expected a Labour government to reverse
them, not continue to follow Tory policies."
"I think these figures will bring home to people the scale of the
economies. They are likely to lead to the stiffening of resolve among the 47
Labour MPs who have already refused to support the lone parent benefit
cuts."
Alice Mahon, Labour MP for Halifax, who resigned as parliamentary
private secretary to Chris Smith, the Culture Secretary, over the lone
parent benefit cuts, said: "This is totally unacceptable. These are Tory cuts
being implemented by a Labour government and will be bitterly resented
and fought not only by Labour MPs but by many members of the Labour
Party."
She said they would oppose measures such as cuts in backdating benefits
that were still to be put before the Commons by Harriet Harman, the Social
Security Secretary.
The analysis also discloses that Labour has overshot Conservative
spending targets because if rising inflation.
Ministers have had to spend an extra œ600 million above Tory targets to
compensate pensioners, children, the disabled and the short-term
unemployed. Higher inflation triggered a 3.6 per cent rise in benefits for
these groups, instead of a planned 2.5 per cent rise. The long-term
unemployed, who receive housing benefit as well, got a 2.4 per cent rise
instead of the planned 2.25 per cent.
According to the research, Labour has only overturned one proposed
Tory benefit cut - the plan to force the single homeless to share
accommodation which John Major planned to extend to 25- to 59-year-
olds. Labour also exempted severely disabled people aged 18 to 24.
David Brindle adds: "The Government's welfare policies are today
endorsed by the right-wing Institute of Economic Affairs."
The institute says Labour is showing courage, lacked by Tory
administrations, to break a remorselessly rising trend of benefit
dependency.
In 1951, the IEA calculates, about 4 per cent of the population relied on
national assistance - the means-tested precursor of income support. By
1996, almost 17 per cent of the population was receiving income support.
Taking account of housing benefit, council tax benefit, incapacity benefit
and severe disablement allowance, as much as 30 per cent of the population
is said to live on benefits.
Up to two 2 million more people could fall into poverty in the next five
years unless Labour restores the link broken by the Tories between social
security benefits and incomes, according to new research published today.
The introduction of a national minimum wage and the welfare-to-work
programme for the young unemployed, which starts today in 12 pilot areas,
will do little to prevent the gap between rich and poor widening, says
Professor David Piachaud, of the London School of Economics, writing in
the Guardian.
