THE GUARDIAN

Michael White, political editor
Wednesday February 2, 2005

Crucial to the proposals by the work and pensions secretary, Alan Johnson, which are to be revealed this morning, will be plans to shift financial incentives away from long-term incapacity towards the active search for work.

This will almost certainly be by cutting the extra incapacity benefit (IB) which claimants get after both six and 12 months.

Ahead of the first phase of Mr Johnson's five-year plan - he will tackle pensions reform later this month - the prime minister used a speech at the communities conference in Manchester yesterday to set the scene.

He proclaimed that, across all public services, he wants "a system that rewards work, rewards learning, targets abuse and has respect for the local community in which we live."

The measure of the challenge facing Mr Johnson, work and pensions secretary since last July, was evident in the pre-emptive scorn poured on his expected plans by Tory, Lib Dem and even Labour experts. They called it empty rhetoric and not radical enough.

At stake are the 2.7 million people on incapacity benefit, roughly the same number Labour inherited from the Conservatives, who encouraged IB claims in the 80s to keep down the jobless totals, especially in old industrial areas.

But the cost of IB has fallen from £8bn to £6bn since 1997.

Mr Blair declared that Mr Johnson's Commons statement today would explain "that for people who can work we should give them the help so that they can go out and earn a decent living. For those who can't, and there will be people who are severely disabled or for one reason or other simply cannot work, we should give them the support they need."

This was coupled with the familiar New Labour warning that voters have mutual rights and responsibilities.

He said: "The system should be there for people who are playing by the rules. If they can work, they should; if they can't, we look after them as a community."

That boils down to what Mr Blair called three key elements:

· Reform of the rules which increase benefits for long-term IB claimants in future, though not for existing claimants;

· Targeting more help to the 20% of IB claimants who are so severely disabled that they cannot hope to work, while helping the 1 million or more who can and wish to do so;

· Adopting proactive policies pioneered in Gordon Brown's New Deal to ensure that no one is "written off" and all must "fulfil their responsibilities" to work if they can.

Mr Johnson believes that people slide into IB and can get stuck. The last thing depressed people need is to be left in social isolation at home, he points out.

But the former Labour minister Frank Field urged him to go further by cutting long-term IB rates to the rates paid by the jobseekers' allowance, so as to remove the incentive to "try and migrate themselves not from benefit to employment, but from one benefit on to a higher rate of benefit."

While the TUC warned that the devil would be in the detail of Mr Johnson's announcement, the Lib Dem spokesman, Steve Webb, argued that in the existing IB set-up, "one size doesn't fit all".

Mr Webb added: "Disability has shades of grey, but the current system is black and white. We need a system that fits people rather than the other way around" - namely a partial capability benefit that allowed for fluctuations in health where people could do some work without losing benefit.

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