=================================================================================== ON THE RECORD ALISTAIR DARLING INTERVIEW RECORDED FROM TRANSMISSION: BBC TWO DATE: 16.5.99 .................................................................................... JOHN HUMPHRYS: Good afternoon Mr Darling. ALISTAIR DARLING: Good afternoon . HUMPHRYS: Paul Wilenius has a point there doesn¹t he. I mean this is a serious revolt, not just a small handful of the usual suspects. Are you absolutely certain that you¹re going to win the vote first of all in the Commons tomorrow? DARLING: Yes, because our proposals are right, they¹re right in principle, they¹re the right thing to do, and you know I¹m bound to say to you that if you looked a little bit further I think you could have balanced that report a little bit more because there are quite a lot of my colleagues who agree with the point of view that I¹m putting forward. And incidentally there¹s one thing that is wrong in that report, we are not cutting benefit rates, and the other thing is of course, no existing claimants will be affected by the changes Š. HUMPHRYS: No, I didn¹t say they were. DARLING: No, but you did, or someone did earlier in the report suggest that we were cutting benefit rates and we¹re not doing that. HUMPHRYS: Well, let¹s come to - a little bit to it - I mean presumably the reason that you¹re not offering any compromise at all is you¹re absolutely certain that you¹re going to get this vote through. I mean that is the key - that is why no compromise. DARLING: The reason that I intend to press ahead is because we¹re doing the right thing. Now, can I just explain what we are doing. There is a twin track approach to our welfare reform. What we want to do is to provide more help for those who can¹t work, the severely disabled, and we¹re increasing the amount that young severely disabled people get by about twenty-six pounds a week, we¹re extending the help we give to three and four year olds by about thirty-four pounds a week, we¹re extending other benefits as well. We¹re also, unlike the Tory Governments of the past, for the first time we¹re providing real help to enable those people who can work to do so. The Disabled Persons Tax Credit for example would give somebody a-hundred-and-thirty-five pounds a week. We¹ve extended the amount of time that somebody can try out work before they would lose their benefit entitlement from the present eight weeks to up to two years. So right across the board what you¹ve got here is a balanced, well thought out programme, and of course at the same time we are bringing benefits up to date to ensure they reflect changing conditions. HUMPHRYS: Frank Field acknowledged that there were, I think the way he put it was Œa few good things, tempting things in the window¹ but once you¹ve got them into the shop then you¹re going to give them a jolly good thumping¹ or words that effect. DARLING: No,. that¹s not right. HUMPHRYS: Alright. Well let¹s go through the bits where he thinks you¹re thumping them, and in the first place it is that you are being quite simply unfair. If you look at Means Testing Incapacity Benefits, now we¹re talking about people here who become unable to work, as you say new claimants. They have paid their stamp all their lives, their National Insurance contributions all their lives, they¹ve been perfectly good citizens, they expected to reap the benefits of that if they needed to. And now they¹re not going to be able to. That isn¹t fair. DARLING: Well, let me tell you what we are doing with Incapacity Benefit, and what we¹re doing is we¹re making two changes to reflect changed conditions. The first one is Incapacity Benefit was always meant to be a benefit there for somebody who was at work, who became sick or injured and was unable to work. Now over the years as you know, what happened was that more and more people under the Tories in the nineteen-eighties were shifted off unemployment onto Incapacity Benefit because it was embarrassing for the Conservatives at the timeŠ.. HUMPHRYS: But that¹s not the point I¹m making. DARLING: And what we now want to do is to ensure the benefit is restored to its original intention, but let me just explain what that means. It means that you¹ve got to have made some contributions in the two years prior to your claiming IB, and if you¹re on average earnings you can satisfy that condition by paying just four weeks contributions in any one of the preceding two years. If you¹re on the National Minimum Wage then you can satisfy that condition by having worked for some twelve weeks. So that¹s the first part of what we¹re doing. The second thing we¹re doing is we¹re taking account of the fact that nearly half the people who retire on IB with an occupational pension are in the top forty per cent of the income distribution, now if you were staring from scratch, if you were designing a new system today you would not ignore the fact whereas you know, fifty years ago very few people have occupational pension and other provision. The fact is now that something like eighty per cent of people who work do have it, and I think it is entirely fair and reasonable to take that into account, having regard to the fact that you know, you¹d have to be - have an early pension of nearly ten thousand pounds a year before you¹d lose your entitlement. It is reasonable to take that into account so that you can do more for people that have nothing, those poorest whom on any view need to be helped. So I think both these reforms are thoroughly justified. HUMPHRYS: But the point is that you are not staring from scratch, that¹s the whole point. I mean there are people as I say, who thought they had a contract with the Government . In effect they were paying their contributions, paying their stamp, then they thought they would get something as a result of it, and these are the people that you¹re penalising. DARLING: No. HUMPHRYS: It is a simple question of fairness isn¹t it? DARLING: All governments look at the contributory conditions and look at the benefits available under them. That¹s always been the case - there¹s nothing new in that prospect. You mentioned in your film for example that we¹re making changes to windows¹ benefits. Now that is a contributory benefit, at the moment it¹s only payable to women who lose their husbands with young children. What we¹re doing is doubling the lump sum that everybody gets so that for the first time a young man left with young children will also get benefit, so there¹s an example that we¹re actually extending the benefits available under that contributory benefit. Now lookingŠ. HUMPHRYS: Now just before Š.me that, if I may, I mean you suggest that everybody¹s delighted about that - they¹re not, there¹s deep disquiet over it, because you¹re means testing those benefits too. DARLING: No. You see what you will find in all these changes that I¹m making is that the things that people like, they are welcomed and sort of put in the back pocket, and people say Œthank you very much, now we¹d like to concentrate on the things we don¹t like¹ HUMPHRYS: Well of courseŠ. It goes. DARLING: I accept that, you know it¹s a fact of life. But what I¹m saying to you is look at our reforms in the round. Look at the better pensions provision, look at the fact that for the first time we¹re making sure with bereavement benefits that they go to men that are left alone with young children, look at the amount of extra money we¹re giving to the young severely disabled children who up until now haven¹t been helped. Look at the huge help we¹re giving through the welfare system generally to help people who can work do so. That¹s entirely new, you¹ve go to look at all these things. HUMPHRYS: Well I¹ve acknowledged that, yes, I have acknowledged that there are things in the package that people like, but it still doesn¹t get away from the fact that you¹re breaking a contract that people thought they had Š.. DARLING: What I¹m saying to you is - if you look at Incapacity Benefit, or indeed look at any other contributory benefit, the people who vote in governments expect them to ensure that the contributory benefits, the deal between individual and citizen is brought up to date. Now look at the two things we¹re doing on Incapacity Benefit. It is quite clear to me that the original intention of Incapacity Benefit, there for people who were to become sick or injured at work has moved away because so many people are now coming off unemployment onto IB, people are retiring early onto Incapacity Benefit. That was never the intention of the benefit. Now, if you¹re saying to me yes, you know all that¹s going on but just ignore it, because you can never change it,. That seems to be nonsense. HUMPHRYS: It¹s not a question of ignoring it, it¹s a question of your changing the rules. Let me.. DARLING: I¹m changing them in a way that I think most people would think is absolutely right. HUMPHRYS: And there are some people who feel they are losing out as a result of it and shouldn¹t. I mean not only they would argue - they are arguing - not only is it unfair because you¹ve changed the rules but it¹s also very harsh because the means testing figure kicks in at a very low level. I mean in case people don¹t understand it, if you are getting fifty pounds a week from other sources - a pension perhaps - then for every pound above that you are..you have fifty pence taken away in effect. Now that is higher than if you are a terribly rich people, the highest rate of income tax you can pay is forty pence. They are being penalised and it is a very harsh way of doing it. That¹s the point they are making. DARLING: The benefit system at the moment, whenever there is any element of targeting does mean that as you have more income or more capital then you start to lose the benefit. Now, what I say to you is, that you can¹t ignore the fact that if you look at the situation today, nearly half the people retiring onto Incapacity Benefit with occupational pensions are in the top forty per cent of the income distribution. Many people have quite substantial incomes. Now I believe that if you want to do more for people who under any view have had a bad deal in the past. Look at people, young people who are severely disabled. They are getting at the moment about fifty-four pounds, thanks to our reforms they will be getting over eighty pounds a week. Now you can only do that, increase the amount of money you are giving to the severely disabled, those who are poorest, if at the same time you are willing to look at the rest of the system and to make sure it changes, it keeps up to date. As I said fifty years ago very few people had this sort of provision, now an awful lot of people do and to ignore that would seem to me to be just a runaway from an issue that needs to be tackled. HUMPHRYS: Let¹s look at why it may not - putting aside the fairness for a moment - why it may not even be sensible to do some of these things because they are going to be counter-productive. You saw Ben there, that young man who¹s got cerebral palsy. Now he has been doing what you in the government have wanted people like Ben to do, all of us to do, he¹s been very responsible, he¹s been saving up in the event that something nasty happens to him. Now something nasty has happened to him, he is going to be penalised because he has saved up and been a responsible citizen. That¹s counter-
productive, it will put people off. DARLING: We want people to save for retirement, for other eventualities and more and more people are in fact doing that. But bear in mind that Incapacity Benefit is meant to be income replacement. You know if you can¹t work anymore. What we are saying is, that given the fact that nearly half the people on IB will occupational pensions are in the top forty per cent of the income bracket, it¹s only right that they should make a contribution to it. Now I think that is entirely reasonable. If you don¹t, if you take the opposition point of view, which I think is probably the view that Frank and one or two others in your programme would take, that is that everything is universal, everything is paid at the full rate, and then you tax it back off people. Now I don¹t think, if you look at the welfare state overall, that that is a sensible proposition. At the moment we have got a mix of contributory benefits, means tested benefits and some universal benefits like disability living allowance. When you bear in mind that we spend twenty-five billion pounds a year on benefits paid to people who are sick and disabled, it makes sense to ask yourselves whether we are spending money in the right way. So I am happy to justify that part of the programme policy changes, just as I am the others. HUMPHRYS: A lot of people would say, including Frank Field, that you may not like it but it is a lot fairer and it doesn¹t discourage people like Ben from saving responsibly. DARLING: I don¹t agree with him. On any view you are going to be fifty pounds a week better off and more than that because of the way the taper operates. HUMPHRYS: Not much more the way the taper operates. DARLING: I think most people would expect a
government to take account of as I say, the fact that half the people on IB with occupational pensions are in the top forty per cent of the income bracket. If you ignore that and if you look at some of the widows benefits for example, where nearly half of the benefit is going to women in the top half of the income bracket. If you ignore that and just forget about the fact that circumstances have changed over the last fifty years, then sooner or later the Welfare State will become unsustainable. I believe that for all of us who have the interest of the Welfare State at heart who believe that the government has a clear role to help those people who can¹t work. To help those people who can do so, then we have to look at the system, benefit by benefit, item by item, to make sure that it¹s kept up to date. HUMPHRYS: Let¹s look at this question of work here, somewhere else where it may well be counter-productive. There is no incentive, is there, to try to get a job if you are disabled, in case you can¹t build up your contributions because once you are off IB you may not be able to get back onto it if you have not held the job for long enough, paid enough contributions. DARLING: Well let me deal with that point. At and do some work for eight weeks. After that you couldn¹t get back onto IB. One of the things that we have done, is to extend that linking rule, which allows you to go into work to see whether it is successful or not, for up to two years, especially if you are on the disabled persons tax credit. And as I said to you earlier, you can satisfy the contribution conditions, if you are on average earnings, or if you are on the minimum wage, by doing about twelve weeks work in the proceeding two years and in some cases it¹s actually slightly longer than that. So I think if you look at what we are doing in the round and remember one of the things, the assumptions that many of our critics make is that things are going to go on as they were under the Tories where people, once they became unemployed, or they became sick they were written off and they simply got their benefit and they were left alone. Under the new single gateway proposals, everybody will be given their own personal advisor to help see what work they can do. And remember there are some people, who are maybe injured or sick at work, who come out of work who can in fact do something, in the past they would have had no help, in the future they will. HUMPHRYS: Will they go back onto the full rate or the means tested rate. Darling: No - if you are covered by the linking rules then your rights are preserved. The new changes that take place are for new claimants, people coming into the system for the first time. HUMPHRYS: And they will therefore go back onto the means tested rate? DARLING: No. A	ll the changes we¹re making whether it¹s incapacity benefit or anything else effect people new into the system. HUMPHRYS: Yeah I understand that. You¹re very keen on means testing these days, the government, aren¹t you. You used to be wholly opposed to it, used to say very nasty things about the last government having put so many people onto means testing one way or another - implied that you were going to stop it. You¹re doing the opposite. DARLING: No we¹ve never implied that. I meanŠ.. now come onŠ.. HUMPHRYS: The road to the manifesto - Œinstitutionalised disincentives to workŠ¹ that¹s how you described means testing. DARLING: If you abolished all elements of means testing and targeting the tax rates would have to go up by (both speaking at once) no-one has ever suggested that. What you have at the moment, within the present system is a mix of contributory benefits, means tested benefits and universal benefits and I believe that in order to insure that you can do more for people who are severely disabled, to do more for people who need help, then you¹ve got to look at how you spend existing resources - that¹s common sense. HUMPHRYS: But that¹s what this is all about really isn¹t it? It¹s about saving seven hundred and fifty million pounds, it¹s treasury lead isn¹t it in effect. That¹s what it is all about? DARLING: We¹ll be spending twenty-five billion pounds a year on benefits for the sick and disabled, it will go up by about a billion pounds during the course of this parliament alone. The changes that I have announcedŠ.. if you look at the Bill overall it actually involves spending more money on the initial yearsŠ.. HUMPHRYS: After ten yes, you¹re going to save seven hundred and fifty million quidŠŠ DARLING: Over a period of course it delivers savings but if you look at the pressures we face in the future, you know the pressures of people living longer, peoples¹ justifiably higher expectations, you¹ve got to plan for the future. What you can¹t do is simply react to more and more demand, ducking the hard decisions, running away from any tough hard choices you¹ve got to make. What you¹ve got to do is to insure that benefit by benefit you insure that your resources are going to those people who need it most, What we¹re doing here is ensuring that the severely disabled get more, we¹re doing more to help people get into work and we¹re bringing the benefits system up to date which is why our proposals are right. HUMPHRYS: Well they may or may not be right but you¹re going to have problems aren¹t you because when it goes to the Lords there¹s a very good chance that the amendment is going to be passed then it¹s going to come back to the Commons and it¹s an entirely different kettle of fish isn¹t it? You won¹t need many extra MPs to vote for that amendment when it comes back from the Lords for you to lose this? DARLING: Well I believe that the important thing is that we¹re doing the right thing in principle because it¹s the right thing to do. HUMPHRYS: But you may lose it mayn¹t you? I mean you¹ve got a real political problem here. DARLING: We don¹t have a majority in the House of Lords. Even if all our people voted with us, we don¹t have a majority in the House of Lords but when you stand back and ask yourself Œis the government doing the right thing?¹ then the answer is yes because we¹re doing more to help people severely disabled, we¹re doing more to help people who can work do so and we¹re bringing the benefits up to date to reflect changed conditions. Now I believe any government has a responsibility to do that and to duck and to run away from that is doing nobody any good at all. HUMPHRYS: Alistair Darling, many thanks for joining us. ...oooOooo...