Can work? Must work.

Why has Labour's landmark commitment to achieving full employment become translated into a mean spirited attack on the stability of benefits for disabled people?

What should have been an inspiring speech by Work and Pensions Secretary Alistair Darling on July 3rd has turned into a spectacular political row. Requiring all new ICB claimants to be re-tested for eligibility every 3 years represented one shock. But to describe this as "time-limiting" benefits smacked of US style eligibility changes - where a 5 year lifetime maximum has been imposed on all "welfare" recipients - with the striking exception of disabled claimants. Far worse, the Prime Minister's disapproval of the 7 billion annual cost and his description of disabled people "taking money from the State" sounded thoroughly unpleasant. No wonder his backbench MPs scowled with disapproval. Blair's 2nd term Government has got off to a politically inept start - portraying itself as a Government that will frog-march its disabled citizens to full employment.

One particular aspect to this blunder is startling: its similarity to the mess Labour made of its reforms to Lone Parent benefits in its first months of office in 1997. Then, the Government decided to cut the benefits to lone parents arguing that its New Deal programmes would get them into jobs instead. Four years later it could show that 90,000 lone parents had found work with Government help. But about a million lone parents are still non-employed and relying on Income Support - despite half of them clearly wanting to work.

Even though its methods are clumsy, some of the Government's underlying motives are sound. Over the years, Incapacity Benefit (ICB) has become a substitute for Jobseeker's Allowance (JSA). Whilst the number of JSA claimants has declined almost 200% since the early 1990s, the number of claimants receiving ICB - or its equivalent - continued to rise during the last decade despite an overall improvement in the health of the working age population. Many of these were older men, previously employed in the manual, skilled and semi-skilled jobs that have been disappearing consistently year after year - particularly in parts of Britain previously dominated by heavy industry.

Claimants were encouraged to transfer from unemployment related benefits by a previous Government that was not interested in assisting this harder-to-help population. Out of sight. Out of mind. The system just wrote off many hundred thousand people who wanted to work. Latest data from the LFS confirms at least 800,000 - about a third of all those receiving a non-labour-market benefit by virtue of their health or disability condition. This is certainly less than Alistair Darling's presumption that 70% of all ICB recipients are capable of work. But it is also a sizeable number of people - only a little less than the total of JSA claimants at any one time.

At last, the totals receiving these benefits have started to decline marginally in the last 2 years - partly reflecting the way in which Government has started to help this population group get closer to the labour market. This April, the Employment Service replaced the old Supported Employment programme with "Workstep" - a service designed to help about 20,000 people a year. More significantly, the Government's employment Green Paper published in March makes it clear that more of the New Deal will be directed to clients facing multiple barriers to employment - not least being those with health or disability conditions that may limit their work choices.

But the Government has not acknowledged two key problems. Firstly the areas with very large populations on incapacity benefits are communities that have faced industrial re-structuring, large scale lay-offs and mass unemployment. As we show (page 19) the highest rate is Merthyr Tydfil where a quarter of the entire working age population receives one of these benefits - and where only 3% receive unemployment related benefits. The lowest percentages are in the prosperous Home Counties.

Secondly, recognise that the sick and disabled population are not a homogenous group. Many disabled people are not "incapable of work" at all. They may be unable to walk, see or hear - and any one of these attributes will automatically passport them on to Incapacity Benefit indefinitely. Their inability to work is not inherent - it is caused by the failure of businesses to provide accessible or adapted workplaces.

However, the more complicated population group is those who have a work limiting health condition that lasts longer than 6 months but is not necessarily permanent. Indeed, their health condition is often work related - particularly the less tangible conditions caused by stress or work complexity.

So, four key changes are required before the Government makes fundamental changes to benefit eligibility: