Labour must stop just writing a cheque for benefit claimants, says McFadden

Labour must move beyond simply increasing benefit payments and focus on getting people into work, the Chancellor of the Duchy of Lancaster has said, in remarks that signal a significant hardening of the government's welfare stance.

Pat McFadden, one of the Prime Minister's most senior and trusted lieutenants, told a conference of business leaders that the welfare state needed fundamental reform rather than incremental increases in payment rates. "We have to stop just writing a cheque," he said. "The best anti-poverty programme is a job, and the best thing government can do for people who can work is help them into one."

The remarks are the clearest indication yet that the government intends to make welfare reform a defining theme of its second half-term, and they place McFadden at the centre of a debate that will test the coalition that brought Labour to power. The party's left wing has consistently argued for higher benefits as the most effective way to reduce poverty, and any move to tighten conditionality or reduce entitlements will face significant internal opposition.

McFadden argued that the current system was failing both taxpayers and claimants. Spending on working-age benefits has risen by approximately 40 percent in real terms over the past decade, but the proportion of working-age people in employment has not increased correspondingly. The extra spending, he said, had not delivered the outcomes it was supposed to.

The government has asked the Office for Budget Responsibility to model several reform options, including tighter work-search requirements, a shorter assessment period for incapacity benefits and increased investment in employment support services. A white paper is expected in the autumn, and the political battle over its contents is already underway.