Labour to overhaul welfare reforms

THE GOVERNMENT agreed to go back to the drawing board over welfare yesterday in an attempt to reassure Labour activists voicing anxiety about its reforms.

A wholesale review of welfare was promised by ministers as part of a drive to head off an embarrassing defeat over pensions at Labour's annual conference in October.

At a meeting of Labour's national policy forum in Durham yesterday, ministers raised the prospect that the review would result in higher state benefits for people who look after sick or elderly relatives. Robin Cook, the Foreign Secretary, who chairs the forum, said carers often missed out on benefits because they were not able to make national insurance contributions.

He also pledged the Government would "look again" at the way disabled people would be interviewed at Jobcentres. The move follows criticism by MPs and activists of plans to extend an American-style approach to the disabled.

The review enabled the Government to avoid any defeats at the Durham meeting, which means that rebel amendments to leadership-backed policy statements on welfare, health and crime will not be discussed by the October conference.

The leadership squashed grassroots demands for higher national insurance payments for middle-income and higher earners; for the basic state pension to be increased in line with earnings rather than prices ; and a Royal Commission on the decriminalisation of cannabis.

But party leaders backed a call by the Transport and General Workers' Union for "a national debate about the future of the welfare state from first principles". Its language was softer than Tony Blair's pledges to pursue "tough choices" on welfare reform.

The motion said the party would discuss how to abolish pensioner poverty and to ensure "a rising basic state pension which will remain the foundation of pension provision". This was aimed at preventing ministers from means testing the old-age pension.

Alistair Darling, the Secretary of State for Social Security, said the debate would involve the Government and Labour "engaging with the public on the difficult issues we have to face on welfare".

But he dashed the hopes of grassroots Labour members that the review would support the state pension being increased in line with earnings rather than prices, which rise more slowly. He said restoring the link with earnings, broken by the Tories in 1980, would cost pounds 10bn if it was backdated. Raising pensions in line with earnings from now would cost pounds 30bn by 2030. "The poorest pensioners do not gain from this, as any increase in pension is clawed back in benefits," he said.

The leadership claimed Labour members had never had such a direct role in policy making, with 10,000 taking part in local discussions. But some activists at the private Durham conference protested against"heavy pressure" on party members to withdraw troublesome motions - even though the meeting was held in private.

"It is not a new way of making policy - it is a very old way, with trade unions being given a concession in return for backing the leadership on other issues," one policy forum member said last night.