Deborah Orr: Has Blair lost faith in his agenda?

All the hullabaloo surrounding the resignation of David Blunkett and all the hysteria around the defeat of the 90-day-detention clause have been drenched in gossipy speculation about Tony Blair's political future. I wonder, though, if the tendency towards analysing the power plays, set pieces and personal integrity of Westminster and its actors is actually obscuring the real reason why Blair's third term now looks so rocky. Can it be that Blair has at last lost faith in his own guiding principles? Has Blair simply stopped being a moderniser?

It is rumoured that the Green Paper on welfare form, promised in the Queen's Speech during the first six months of this Parliament, is now going to be quietly shunted back to some time next year. The practical reason for this is that John Hutton has only just taken over as the minister for Work and Pensions, and can't possibly turn round an important document such as this one in a matter of weeks. The political reason is that Blair fears that, having "tasted blood", the rebels on his back benches will now ensure that the Government's "radical reforms" won't get through.

The real reason, perhaps, is that Blair is no longer interested in the complex challenges of welfare reform. There was a time when New Labour's rule was to carrot-and-stick people back to work. It was the carrots that carried the left of the party and also the huge swaths of the electorate who had become sickened and disgusted by Thatcherism. The carrots were the really radical part of New Labour's radical reforms, the bit that stopped them being conservative and retrograde.

What are these "radical reforms", though, that Blair is said to want? The leak of the cross letter he scribbled to Blunkett in the run-up to the latter's resignation, over which the men were said to be at loggerheads, had no trace at all of a modernising agenda. Instead, Blair's ideas were entirely conservative. They were, as the welfare wonks put it, "negative activation policies".

Blair demanded incapacity benefit payments be cut to the bone, that employers should be given the right of appeal against an employee who was signed off as sick by a doctor, and that doctors writing many such notes should be audited and named and shamed as if they deserved to be put in the 21st-century stocks. He requested, too, the stepping up of means- testing for the better-off disabled, and that those on benefits should be paid partly in vouchers, redeemable only against job-training schemes.

Not a word of this tirade chimes with the avowed aims of the Department for Work and Pensions, which continues to espouse the idea that citizens should be coaxed towards work in a welfare system that is designed to "help people to help themselves by offering a ladder to self-reliance and self-determination, not merely a safety net in time of need".

This has so far been the humanising guide to government welfare policy. There can be much criticism of how some of it has been implemented - tax credits are too often a complicated and inaccessible way of means-testing wealth redistribution, while overly targeting benefits tends to leave out whole swaths of the population, such as the poor and single, whose plight is ignored in the semi-successful rush to "lift children out of poverty".

A lot can still be done with this progressive agenda, though. There are plenty of ideas around that will fit in with this programme, that have not yet been implemented. Indeed, the trouble with Blair's welfare reforms is mainly that the progressive ones have been too quiet and cautious (like parenting classes) while the regressive ones have been too bluntly unhelpful and highly publicised (like Asbos). Blair's idea, of cutting incapacity benefit so that it equals Jobseeker's Allowance, clearly punishes those genuinely unable to work along with those who might need more of an incentive to work. Blair's impatience may derive from the fact that, after years of reform, Britain still has one of the lowest rates of employment for the disabled - as well as single mothers - in Europe.

But the observation of Scope, the charity representing people with cerebral palsy, is that people are frightened of risking going back to work in case they lose their benefit. It favours the adoption of a lengthy period of "permitted work" that can be undertaken without losing the right to return to incapacity benefit. The department favours six months, while the charity suggests two years is about right. It makes, among other salient points, the very good one that a chunk of time encourages employers to make the investment they may need to in catering for the needs of disabled people.

While the disabled are clearly a group who need and deserve the advocacy of a strong welfare state, many people, including Blair apparently, now have the idea that the large bills of the welfare state are mainly going into the pockets of scroungers and ne'er-do-wells. Certainly, there is a significant element in the country of people who do not balance their "rights and responsibilities". But it is dangerous to structure policy around these people, rather than designing it to suit the needs of the people it is there to support.

The main reasons for increased demand for welfare services are common across Europe. They include the changes brought about by globalisation, ageing populations, changes in job patterns, in people's expectations of government and in the structure of family life. The radical approach would be firmly and fairly responsive to these changing patterns, not to tailor programmes simply to deter those suspected of abusing them. As has been seen only too well at the Child Support Agency, with its amazing 70 per cent rate of failure to collect payment, the Government is at its least successful when it sticks to a punitive, coercive approach.

After all, it is the punitive, coercive approach that got us into trouble in the first place. The reason Britain faces such intractable social exclusion is in no small part due to the fact that the huge new populations of socially excluded people created in the 1980s are now entrenched in their exclusion unto the third generation.

All this was clearly apparent to New Labour when it came into power. The sad fact is, I suppose, that Blair has gradually lost touch with that unhappy reality. What John Hutton ought to be doing, in his Green Paper, is steering Blair back towards the modernising agenda, and concentrating on developing further systems that will give the best possible support to those who can help themselves, and the most supportive acceptance to those who clearly can't. Only this approach, honest and positive, straight and empowering, can leave the poor, hated minority of true lead-swingers and real dodgy-dealers exposed for what they are.

d.orr@independent.co.uk