Wisconsin: The U.S. state which paved the way for revolutionary welfare reform for Britain to follow

Under Republican Governor Tommy Thompson the state cut out cash welfare benefits almost entirely in the 1990s.

Instead the money was spent on helping people find jobs with the aid of private companies and the voluntary sector.

The Payback London scheme, where kids who misbehave on buses will have their travel card taken away and will have to do community service to get them back

The scheme - called Wisconsin Works - became the model for changing the culture of benefits as it saw the number of claimants cut by 80 per cent.

If similar changes in Britain achieved only a quarter of this, the annual budget for incapacity benefit claimants would be cut by £1billion and the cost of benefits for lone parents with children over seven by around £300million.

Wisconsin Works allows people to claim benefits for either two years in one stretch or five years across their lifetime.

After that allotment is used, they get nothing and are forced to survive on charity handouts and food parcels.

The system unveiled for Britain yesterday does not impose a time limit, the crucial difference between the two regimes.

Another difference is that claimants here who refuse to do community work and are stripped of their dole will still be entitled to housing benefit and council tax benefit.

In Wisconsin, case managers also closely monitor recipients to ensure that they fulfill their responsibilities.

The stick is coupled with a very big carrot - in the form of help to find people jobs.

Claimants are offered catch-up classes in English and maths, computer courses, seminars on interview techniques and CV writing.

Counsellors and drug workers are also available.

Many job centres also have a creche and there is often a clothes library so claimants can borrow smart clothes for an interview.

The success in Wisconsin has gone much deeper than simply saving money on benefits payments and lowering unemployment levels, however.

It meant it was no longer seen as cruel or mean to cut payments in order to force the work-shy to get a job.

Instead, thinking changed entirely. Prevailing thought shifted to the view that it was cruel to keep someone trapped on handouts.

The only way out of poverty was through work, not bigger, more generous benefits.