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ON THE RECORD
ALISTAIR DARLING INTERVIEW
RECORDED FROM TRANSMISSION: BBC TWO DATE: 16.5.99
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JOHN HUMPHRYS: Good afternoon Mr Darling.
ALISTAIR DARLING: Good afternoon .
HUMPHRYS: Paul Wilenius has a point there doesn�t
he. I mean this is a serious revolt, not just a small handful of the usual suspects. Are you
absolutely certain that you�re going to win the vote first of all in the Commons tomorrow?
DARLING: Yes, because our proposals are right,
they�re right in principle, they�re the right thing to do, and you know I�m 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 I�m
putting forward. And incidentally there�s 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 �.
HUMPHRYS: No, I didn�t say they were.
DARLING: No, but you did, or someone did earlier in
the report suggest that we were cutting benefit rates and we�re not doing that.
HUMPHRYS: Well, let�s come to - a little bit to it - I
mean presumably the reason that you�re not offering any compromise at all is you�re
absolutely certain that you�re 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 we�re 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 can�t work, the severely disabled, and we�re increasing the amount that young
severely disabled people get by about twenty-six pounds a week, we�re extending the help we
give to three and four year olds by about thirty-four pounds a week, we�re extending other
benefits as well. We�re also, unlike the Tory Governments of the past, for the first time we�re
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. We�ve
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 you�ve 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 �a few good things, tempting things in the window� but
once you�ve got them into the shop then you�re going to give them a jolly good thumping� or
words that effect.
DARLING: No,. that�s not right.
HUMPHRYS: Alright. Well let�s go through the bits
where he thinks you�re 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 we�re 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, they�ve been
perfectly good citizens, they expected to reap the benefits of that if they needed to. And now
they�re not going to be able to. That isn�t fair.
DARLING: Well, let me tell you what we are doing
with Incapacity Benefit, and what we�re doing is we�re 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 time�..
HUMPHRYS: But that�s not the point I�m 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 you�ve got to have made some contributions in the two years prior to your
claiming IB, and if you�re on average earnings you can satisfy that condition by paying just
four weeks contributions in any one of the preceding two years. If you�re on the National
Minimum Wage then you can satisfy that condition by having worked for some twelve weeks.
So that�s the first part of what we�re doing. The second thing we�re doing is we�re 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,
you�d have to be - have an early pension of nearly ten thousand pounds a year before you�d
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, that�s 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 you�re penalising.
DARLING: No.
HUMPHRYS: It is a simple question of fairness isn�t it?
DARLING: All governments look at the contributory
conditions and look at the benefits available under them. That�s always been the case - there�s
nothing new in that prospect. You mentioned in your film for example that we�re making
changes to windows� benefits. Now that is a contributory benefit, at the moment it�s only
payable to women who lose their husbands with young children. What we�re 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 there�s an example that we�re actually extending the
benefits available under that contributory benefit. Now looking�.
HUMPHRYS: Now just before �.me that, if I may, I
mean you suggest that everybody�s delighted about that - they�re not, there�s deep disquiet
over it, because you�re means testing those benefits too.
DARLING: No. You see what you will find in all
these changes that I�m making is that the things that people like, they are welcomed and sort
of put in the back pocket, and people say �thank you very much, now we�d like to
concentrate on the things we don�t like�
HUMPHRYS: Well of course�. It goes.
DARLING: I accept that, you know it�s a fact of life.
But what I�m 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 we�re making sure with bereavement benefits
that they go to men that are left alone with young children, look at the amount of extra money
we�re giving to the young severely disabled children who up until now haven�t been helped.
Look at the huge help we�re giving through the welfare system generally to help people who
can work do so. That�s entirely new, you�ve go to look at all these things.
HUMPHRYS: Well I�ve acknowledged that, yes, I have
acknowledged that there are things in the package that people like, but it still doesn�t get
away from the fact that you�re breaking a contract that people thought they had �..
DARLING: What I�m 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 we�re 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 you�re saying to me yes, you know all
that�s going on but just ignore it, because you can never change it,. That seems to be
nonsense.
HUMPHRYS: It�s not a question of ignoring it, it�s a
question of your changing the rules. Let me..
DARLING: I�m 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 shouldn�t. I mean not only they would argue - they are
arguing - not only is it unfair because you�ve changed the rules but it�s also very harsh because
the means testing figure kicks in at a very low level. I mean in case people don�t 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. That�s 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 can�t 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: Let�s 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 who�s
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, he�s been very responsible, he�s 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. That�s 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 can�t 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, it�s only right that they should
make a contribution to it. Now I think that is entirely reasonable. If you don�t, 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 don�t 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 doesn�t discourage people like
Ben from saving responsibly.
DARLING: I don�t 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 can�t 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 it�s kept up to date.
HUMPHRYS: Let�s 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 can�t 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 couldn�t 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 it�s 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 we�re making
whether it�s incapacity benefit or anything else effect people new into the system.
HUMPHRYS: Yeah I understand that. You�re very keen on
means testing these days, the government, aren�t 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. You�re doing the
opposite.
DARLING: No we�ve never implied that. I mean�..
now come on�..
HUMPHRYS: The road to the manifesto - �institutionalised
disincentives to work�� that�s 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 you�ve got to look at how you spend existing resources - that�s common
sense.
HUMPHRYS: But that�s what this is all about really isn�t it?
It�s about saving seven hundred and fifty million pounds, it�s treasury lead isn�t it in effect.
That�s what it is all about?
DARLING: We�ll 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 announced�.. if you look
at the Bill overall it actually involves spending more money on the initial years�..
HUMPHRYS: After ten yes, you�re going to save seven
hundred and fifty million quid��
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, peoples� justifiably higher expectations, you�ve got to plan for the future. What you
can�t do is simply react to more and more demand, ducking the hard decisions, running away
from any tough hard choices you�ve got to make. What you�ve 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 we�re doing here is ensuring that the severely disabled get more, we�re doing more to
help people get into work and we�re bringing the benefits system up to date which is why our
proposals are right.
HUMPHRYS: Well they may or may not be right but you�re
going to have problems aren�t you because when it goes to the Lords there�s a very good
chance that the amendment is going to be passed then it�s going to come back to the
Commons and it�s an entirely different kettle of fish isn�t it? You won�t 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 we�re doing the right thing in principle because it�s the right thing to do.
HUMPHRYS: But you may lose it mayn�t you? I mean you�ve
got a real political problem here.
DARLING: We don�t have a majority in the House of
Lords. Even if all our people voted with us, we don�t have a majority in the House of Lords
but when you stand back and ask yourself �is the government doing the right thing?� then the
answer is yes because we�re doing more to help people severely disabled, we�re doing more to
help people who can work do so and we�re 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.
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