Thursday, January 24, 2008

Peter Hain and the DWP

Peter Hain's resignation is a rather sad story, managing to spend enormous sums of money on a startlingly ineffective bid for a non-job, getting into debt and breaking the law in getting his debts paid off, and now being investigated by the police. Over the past five years (at least), Hain has consistently done the exact opposite of what he should have done, starting with his failure to resign from the Cabinet over Iraq (he'd be Deputy Leader now without having had to spend a penny if he'd done that).

But there's a much more interesting story than that of Peter Hain's career here. That's the story of his Department, the Department of Work and Pensions. Peter Hain was the fifth Secretary of State for Work and Pensions since August 2004, and the shift in that department over this time has been quite remarkable.

Between 1999 and 2004, the DWP had a number of considerable achievements. As the economy grew, it was the department responsible for making sure that it wasn't just the rich who benefited. And over these five years, poverty in the UK fell for the longest consecutive period
since records began. Unemployment fell steadily, but it wasn't just people in work who were better off. Child poverty fell by nearly a quarter, and the drop in pensioner poverty was such that for the first time ever the risk of poverty was lower for people over 65 than for the general population. Along with the NHS, all of this was the best example of how Big Government with big spending increases could be both popular and effective. At the 2005 election, support from the people who worked all their lives, and were now better off than they had ever been thanks to the Pension Credit, or who were better off in work and able to give their children a decent start in life thanks to tax credits, were a major part of the coalition which returned Labour to power.

Of course, not all was rosy, and much more needed to be done (and, perhaps, could have been done before 2004). More action was needed to meet the government's own targets in reducing child poverty. Single adults on benefits were worse off in real terms than when Maggie Thatcher was Prime Minister. The tax credits system needed sorting out. The DWP's services didn't always work as effectively as they could in order to help people find work. And so on. But there was a strong record of achievement to build on.

Over the past three and a half years, the story has been rather different. The DWP has seen its budget cut, and large job losses. Child poverty and unemployment has stopped falling. Ministers hired a banker who lost money on the Eurotunnel to advise them on welfare reform, and are now trying to set up a new system to get people to take a job or face sanctions. The basis of this system is that the supply of jobs will continue to grow indefinitely, and it is being introduced just as the world faces a sharp decline in economic growth. A belief in the ability of the people working for the DWP has been replaced with a blind faith in the miraculous ability of the private sector to solve the problems which government feels that it cannot.

Peter Hain and Gordon Brown had a chance to build on what had worked and address three years of failure when they took over their respective new jobs in the summer. Instead, scarce resources which could have transformed the lives of families living in poverty went on inheritance tax cuts and Hain threw his efforts into trying to force lone parents with young children back to work (though, to be fair, he did also make successful efforts on behalf of Remploy workers and people who lost their occupational pensions due to employer insolvency). Much more so than the dodgy funding, this is the real tragedy of Peter Hain's last ministerial job, that for all of his political convictions and lifelong efforts for a more socially just society, he ended up presiding over a gigantic missed opportunity.

I know nothing about James Purnell (all these middle aged Labour 'rising stars' look the same to me - and he's by no means the worst possible choice as a successor, it could have been Frank Field), but if the Prime Minister wants the DWP to stop being a disaster zone and play its part in getting him re-elected as it did for his predecessor, then the current set of policies just won't work.

He could start by increasing Child Tax Credit and Child Benefit. Not only would this put more money in the pockets of families likely to be hard hit by any slowdown in the economy, it would lift a million children out of poverty. And it would be true to the very best traditions of what he achieved back when the DWP was redistributing wealth and the Chancellor was the most popular politican in Britain.

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