Leak shows review of benefits 'goes deep'

THE all-embracing nature of the Government's root-and- branch review of the pounds 80bn-a- year social security system was confirmed yesterday by a Whitehall paper leaked to Gordon Brown, the shadow Chancellor.

Child benefit, the basic state pension, unemployment benefit, sick pay and industrial injuries were targeted in Review of Social Security: Second Stage, which sets out the terms of reference for working groups to investigate seven strands of the review set in train last year.

In contrast to the more open-ended nature of the other investigations, the document leaves no doubt of the Government's wish to complete the abolition of the scheme to reimburse employers paying statutory sick pay (SSP). At present, small employers with a total National Insurance bill of pounds 20,000 or less are reimbursed after absences of four weeks.

One of the working groups was asked to 'develop a strategy and timetable for preparing the way, in a wider sense, towards ultimately achieving a position whereby none of the costs to employers of the SSP scheme are reimbursed'. It was also asked to consider the scope for transferring the no-fault industrial injuries scheme to employers.

Such moves would provoke fierce opposition from industry, which the Government has repeatedly said should be relieved of 'burdens on business'. The Institute of Directors said: 'It is a step we would do our utmost to get the Government to reverse.'

Calling for publication of the groups' conclusions, Mr Brown insisted their remits went far beyond the kind of examination of the welfare state that was being undertaken by the Labour-sponsored social justice commission. 'They start from biased and prejudiced remits where the aim is in fact privatisation,' he said.

The disclosures come after the controversial remark by Jonathan Aitken, Chief Secretary to the Treasury, that people should not be allowed to become 'too comfortable with benefits', and his suggestion that some housing benefit claimants should move to smaller houses.

A group investigating opting out of contributory benefits was asked to examine 'a progressive move towards voluntary opting out of entitlement to basic state pensions through private provision being made, initially by younger people'. It was also asked to consider a voluntary scheme to make private provision for unemployment, aimed initially at 'good risk' employees and possibly linked with mortgage insurance.

Another group was asked to consider targeting child benefit and examine the case for 'withholding, reducing or otherwise limiting' it for people with incomes or capital over specified amounts.

Maintaining universal child benefit is a current Tory manifesto commitment. The Treasury said: 'It is sensible to make sure that expenditure is used effectively.'

Speaking in Glasgow, Donald Dewar, Labour's social security spokesman, said the evidence of a renewed assault on the welfare state was 'piling up'. The groups were 'there to make the case for the prosecution. They are there to dismantle, to search out the areas of provision from which the Government can withdraw'.