Welfare reform has been postponed, but it isn't going away

Independent

12 hours ago

In a human sense, it was impossible to watch Rachel Reeves fighting back the tears as she sat, as usual, next to her friend and ally Sir Keir Starmer during Prime Minister's Questions, and not to feel for her. Nonetheless, and with the best will in the world to her personally, there are some legitimate questions that arise from the welfare bill fiasco, in which she has played a key role.
One of those questions, thrown at Sir Keir by Kemi Badenoch, is whether he will keep his chancellor in place for 'many years to come', as he said he would in January.
Sir Keir, for whatever reason, declined to confirm that, which must have dented Ms Reeves's confidence; certainly, it didn't help the markets, which saw borrowing costs rise, gilt yields spike and the pound plunge amid speculation over the chancellor's future.
Of course, Sir Keir should never have made such a remark in the first place, as prime ministers shouldn't limit any of their personnel options, but his reluctance to repeat it at the despatch box was deafening.
We do not yet know the full details of Ms Reeves' role in this latest damaging policy U-turn, but it is plain that, as chancellor, she must carry her share of the responsibility, just as she must for the decision to restrict the pensioners' winter fuel payment, a universally hated move that inflicted disproportionate electoral damage on Labour.
One of the obvious reasons why this welfare reform failed was because it was so clearly not an attempt at welfare reform at all but a traditional raid by the Treasury looking for some savings in a hurry. If, as the secretary of state nominally in charge, Liz Kendall, pleaded, it was really all about getting people with disabilities into work – a laudable aim – why was there so much talk about saving a very specific sum of money in the process, some £5bn? Why the rush in such a sensitive field? Why, if it was to help some of the most vulnerable in society break through a wall of discrimination and towards a secure living, did the government's own assessment suggest it would push 250,000 people, later 150,000 people, with disabilities into poverty?
Ms Kendal's plans suffered greatly from being associated with plugging a hole in one of Ms Reeves' spreadsheets, and once this was twigged by Labour backbenchers, the policy was in grave trouble. A half-baked attempt to fool the Labour rebels by promising a review of the personal independence payment (PIP) points system was immediately rumbled when it was soon discovered that the review, a co-production with disability rights group, would probably only be ready after the already-planned changes to PIP entitlement were implemented.
That revelation, made so late in the day of the crucial vote, only made matters worse. To save anything, the bill had to be gutted. In the end, what's left of the welfare bill will cost Ms Reeves more money.
Given that the disability rights groups have now also been given an effective veto on welfare reform, along with the numerous Labour rebels, it is perfectly possible that no serious attempt to reform the social security system will be made in this parliament. That cannot be allowed to happen. The pressure on the public finances caused by ever greater numbers of people claiming PIP, and the welfare system generally, has the capacity, bluntly, to bankrupt the nation.
What should have happened is for two comprehensive reviews to be undertaken properly, and urgently, by the government. One would be into the social security system as a whole. The second, also in an area neglected for too long, would be into paying for adult social care.
They are of course related, and both would seek to be fair to vulnerable people and the taxpayer. A great reforming government, as this one should aspire to be, could have produced a Beveridge Report for the 21st century, and a modernised welfare state that commanded wide public, if not cross-party, consent. The landslide Labour majority should cement it in place.
Instead, the Commons majority has suffered a major landslip towards Corbynism. In the long run, it may mean welfare reform will be forced through by the radical Right, either under Ms Badenoch or Nigel Farage – the ultimate calamity.
Such are the dangers, and the challenges remain. Welfare reform remains unavoidable – a 'moral imperative', as the prime minister said last week. The public demands it.
The rate of outright social security fraud remains relatively low, but there is public disquiet about whether the funds are being put to best use, and whether all the criteria attached to schemes such as PIP are well designed. In-person assessments, for example, would help build confidence in the system, as would a more transparent Motability scheme.
There is as yet no satisfactory consensus on whether mental health conditions, among the young especially, are being over-diagnosed. One system that tries to cover everything from ADHD to arthritis needs a great deal of work.
Hence the review of PIP now being led by the respected welfare minister Sir Stephen Timms, which should always have preceded the welfare bill. He will need to listen to groups representing disabled people, but he must, as an overriding priority, produce a plan for a system that cannot expand beyond the nation's ability and willingness to support it, economically and politically.
Welfare reform may have been postponed, but it isn't going away.