The price of money for nothing

One reason for scepticism is that we have been here before.

When New Labour came to power in 1997, Tony Blair promised to reform welfare, but with his backbenchers revolting and people in wheelchairs demonstrating outside the House of Commons, it all proved too difficult and very little got done.

The same could happen again. Many Labour MPs feel uneasy about these proposals, and the welfare lobby could again cause trouble. It is probably easier for a Labour government to introduce reforms such as these than for the Tories to attempt it, but the dynamic young Work and Pensions Minister, James Purnell, will have his work cut out getting these proposals through.

Even if he succeeds, there is the obvious danger that progressing to work could get interpreted very loosely, in which case the reforms will achieve little. There is also the problem of how to apply financial sanctions to single parents who refuse to comply with the new activity conditions.

The Government says it will withhold payments from them, but when children are involved, this is easier said than done.

Australia's experience here is instructive. When Howard decided to penalise inactive parents by reducing their benefits, he ended up having to compensate them to ensure their children did not suffer. Money withdrawn with one hand was given back with the other.

Finally, there is the question of what jobs people expelled from welfare might do.

One reason why disability numbers have increased in all Western countries is because demand for unskilled labour has fallen as a result of technological progress and globalisation. Rather than swelling the dole numbers, many unskilled, jobless people got redefined as disabled.

What jobs will these unskilled, “incapacitated” people do if they must now leave welfare? Reskilling might help some get jobs, but training is rarely effective for those with few qualifications who have been on benefits for a long time.

It seems likely that many will be pushed through useless training schemes to prepare them for jobs that don't exist, or for which they are unsuited.

The time to reform welfare was during the past 10 years, when the economy was strong. With a severe recession looming, it will be much harder to move people off benefits and into work, and welfare numbers are likely to trend upwards, not down.

This week's welfare reform proposals may therefore prove to be too little too late.

Yet it has to be worth trying, for something urgently needs to be done to halt the growth of the welfare underclass. If these latest reforms fail, Brits can expect to see many more dulled, hardened faces like that of Matthews staring out from the front pages of their newspapers in the years to come.