Blair pitches welfare reform at middle class

TONY BLAIR, the shadow Home Secretary, yesterday stepped up the battle of ideas to capture 'Middle England' with a keynote analysis of an updated welfare state under Labour. Geared to generating fairly paid employment, not benefit dependency, it would be a 'helping hand to success and achievement throughout life', he said.

The Labour leadership front-runner said Labour would retain the values of Beveridge's welfare state - but had to be more ambitious. 'We must make welfare not just an ambulance service for when things go wrong.'

Wading into the territory sought by Kenneth Clarke, the Chancellor, who spoke on Tuesday of 'enlightened Conservatism which promotes civil bonds', Mr Blair said: 'Every word he utters has the fear of electoral failure written all over it.'

While avoiding specific policies - still less the start- up costs of such a switch of approach - Mr Blair said a future Labour government had to seek to end disincentives to taking paid work. Beveridge had assumed a man would spend his entire career in one firm and that a woman's place was in the home.

He would ask the Labour- sponsored Social Justice Commission to study the Australian JET scheme (jobs, education and training) which had been highly successful with single mothers.

Labour would examine the disincentive of loss of benefit for jobless people who trained for more than 21 hours. Other planned initiatives would include examining ways of encouraging women to stay in work even though their partners were unemployed.

Mr Blair said in a leadership address in Southampton that families were caught in the poverty trap because most of every pound they earned went in tax, national insurance and lost means-tested benefits. 'The answer surely comes from reducing dependency on means-tested benefits by getting both partners into work and earning an income through a minimum wage, better incentives for women and help with childcare and training.'

Giving a commitment to enabling more people to escape the welfare state, he said: 'A large social security budget is not a sign of socialist success, but a necessary consequence of economic failure.'

He attacked the Tories for relying on now discredited 'trickle-down' economics and benefit cuts and the left for over-concentration on increased spending.

Passages in the speech - coining a new catch-phrase 'Labour's modern welfare' while avoiding the word 'state' - could equally have been penned by Mr Clarke.

In a pointed appeal to the middle classes and middle incomes he said: 'Middle managers need to be able to count on the stability that comes from the opportunity to get another job if the previous one disappears.'

He also repeated his pragmatic appeal to self-interest. 'I quite understand that resentment of every taxpayer who has to pay pounds 20 a week in taxes to keep three million unemployed. Inequality is expensive. It is expensive in taxes. It is expensive in crime. It is expensive in health care. Social justice is in every taxpayer's interest.'