Labour’s all-carrot, no-stick approach to welfare

The good news is that the Government is changing the test for incapacity benefit. The bad news is that the changes will apply only to new claimants.

Just now there are 2.7 million incapacity claimants, who cost the taxpayer almost £12.5bn last year, said James Kirkup in The Daily Telegraph. About 40,000 people apply each year and Peter Hain, the Work and Pensions Secretary, claims the new test will cut that figure by 20,000.

Responsible politicians of all parties know the benefit has become a racket, with an "absurdly high number" of pay-outs for conditions such as obesity and "vaguely defined stress", says The Daily Telegraph. But "the misuse of this benefit is not entirely the fault of claimants". Governments have been happy to see unemployment statistics fall, thanks to the benefit, while GPs have been "unwilling to monitor the system with sufficient rigour".

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But with Britain's booming economy attracting thousands of immigrants, there is "no excuse for a national sick note culture'". Unfortunately, the new Work Capability Assessment, to be introduced next October, is so "benign" as to be "pointless". Claimants are to be assessed on what they can do, not what they cannot, and will be given help in finding a job. However, there will be no deadline by which they must be in work or lose their benefit. "As so often with Labour's attempts at reform, this one seems to be all carrot and no stick".

The other problem is how we will afford schemes aimed at getting claimants back to work, said the FT. The Government's willingness to tackle the issue has coincided with real-terms cuts to the Department for Work and Pensions' budget. Plans to involve the private sector, by getting firms to stump up virtually all the initial investment needed in the welfare-to-work schemes, and then be paid entirely on results from the benefit savings made, look increasingly shaky.

Since David Freud proposed them early this year, the credit squeeze has made the money to invest in these programmes much more costly, and the uncertain economic climate makes the risk to the private sector greater. This is deeply unfortunate, as it is clear that without private sector help, public sector reform will fail.