Brown bids to slash housing benefit costs

GORDON Brown is bouncing ministers into taking early action on housing benefit, using this week's Green Paper on welfare reform as the trigger for an early decision.

References to housing benefit in Thursday's welfare reform paper will be "few and far between", The Independent was told yesterday. The paper does not even begin to tackle the principles of changing the system of rent and mortgage interest benefit, now costing the taxpayer pounds 12bn a year.

But the Chancellor of the Exchequer is set to drive through his own strategic action plan on welfare. "We want opportunity for all those who have been denied it, and security for all those who need it," Mr Brown said yesterday, providing new Labour's version of Karl Marx's, "From each according to his abilities, to each according to his needs."

The Green Paper will set out the principles of reform, but Mr Brown sees himself as the man to put flesh - the practical policy - on the bones. On the future up-rating of state pensions, nothing can be done until a review has been completed next June. Then, in July, Whitehall's comprehensive spending review is expected to report - along with a review of housing policy, led by John Prescott's Department of the Environment, Transport and the Regions.

That will provide Mr Brown with an opportunity to strike on housing benefit, and he has now

started to soften up colleagues for action, in time for next year's Budget.

It is expected that one of the few references to housing benefit in Thursday's Green Paper will be on fraud and abuse, an issue of long-standing concern for Frank Field, the minister for welfare reform, who has been working on the policy document.

Mr Brown said yesterday that "abuse and fraud in benefits, particularly in housing benefit", would be a target of the paper. Overall, fraud and abuse is estimated at pounds 4bn out of a total benefits bill of pounds 100bn, and between pounds 1bn and pounds 2bn could be accounted for by housing benefit.

But the central issue of reform is fraught with enormous difficulties - and people would be bound to lose out. Losers, often the most vulnerable people in society, tend to create unexpected political waves and backlash. The elderly, lone parents, and the long-term sick and disabled account for three-quarters of all recipients of the benefit.

But Mr Brown showed in last week's Budget that he was not afraid of grasping nettles - as with the working families tax credit. It could be possible, over time, to incorporate housing benefit and council-tax benefit into the tax-credit system, now due to take effect in April 2000.

Outlining his own masterplan for welfare reform, Mr Brown made it clear yesterday that the Green Paper would offer security for all those in need, such as the disabled.

"I have always seen welfare reform in three stages," he told BBC1's On the Record programme, "and the first stage was to get those people who are able to work back to work and provide opportunity to do so. ...

"The second thing, which is what we've done in our Budget, is to make work pay. There's no point transferring people from poverty out of work to poverty in work, and we have made a big difference to that and of course the minimum wage and raising child benefit is part of that as well.

"Now, the third part of the welfare reform strategy is to help those ... if they are incapable of working."