Introduction

2005 has seen three Secretaries of State for Work and Pensions – Alan Johnson, David Blunkett and latterly John Hutton. The year also saw a May General Election with the return to office of the Labour Party, albeit with a reduced majority. There has been particular concern over the delivery of the tax credit scheme, leading to both administrative and policy reform announcements within the year. The build-up to the Welfare Reform Green Paper, discussed and delayed through much of 2005 but not actually published until January 2006 (DWP, 2006), has led to much discussion around mechanisms of increasing labour market participation towards an aspiration of an 80% employment rate, focused particularly on lone parents and disabled adults. The staff reduction implications of the Gershon review of efficiency savings have begun to bite both in the Department for Work and Pensions (DWP) and Her Majesty's Revenue and Customs (HMRC), with concomitant fears around the quality of service delivery experienced by claimants. Ongoing concerns over service delivery go wider than the tax credit system, with the Child Support Agency described at the start of a Work and Pensions inquiry into its performance as ‘a failing organisation which is currently in crisis’ (Work and Pensions Select Committee, 2005a, p 3), and concerns over the delivery of some Jobcentre Plus services (covered by a separate Work and Pensions inquiry conducted during 2005) and especially those linked to the implementation of the Customer Management System within it (see Work and Pensions Select Committee, 2005b).

Social security is critical to government partly because it is so costly: in 2003/04 the DWP spent around £112 billion (DWP, 2005a, p 85) and the HMRC spent £15.8 billion on tax credits in 2004/05 (NAO, 2005, table 2). Indeed after eight years in office, Labour seems to have dropped none of its reforming zeal in social security policy. This chapter reflects on recent developments in social security, the background and current developments in 2005. Core to its argument is that there remain several touchstones for New Labour: increasing participation in paid work and poverty reduction, which have driven the agenda forward since 1997, but which have particularly influenced debate in this year with the development of the Welfare Reform Green Paper and, in particular, policy intended to increase labour market participation.