ID: What persuaded you to take the cabinet job? It must have been a big decision.

IDS: Yes, it was. I didn't jump in. I needed to figure out whether I'd need to be with Betsy [Iain Duncan Smith's wife] as much as I had been and whether I could cope. She'd just finished the radiotherapy and was still pretty knackered. The energy levels are really appalling. She's had the chemotherapy, the radiotherapy and the operations. I needed to talk to her as she is priority number one.

I also needed to balance in my mind whether what I was trying to do through the Centre for Social Justice (CSJ) was better served by me being in government or whether it was going to be a way of me disappearing and not achieving very much. On balance, there are big things that I want to drive through on welfare and pensions reform. Also, David Cameron wanted me to chair the new social justice cabinet committee which would allow me to talk about the issue in other departments and encourage them on the social justice agenda.

How do you ensure that reform is for the long term and not for short term political headlines?

I don't just want to succeed in the Department for Work and Pensions (DWP), although the welfare reform stuff is enormous. I also want make sure the government sets itself in the right direction from the word go. I'm engaged in a lot of discussions about other things that impact. I've talked to Ken Clarke about his justice reforms, which I initiated via the CSJ. I'm fully behind him and helping him as much as I can. I'm looking at drugs and alcohol policy, across health, home affairs and our area - driving lots of change in the agenda. Education introduced policies that the CSJ wanted. We're very keen to support early years - that's really important to me and a number one priority.

How do you find dealing with other departments? You have to achieve joined-up government if the social justice agenda is to get anywhere.

That's what the new social justice cabinet committee must do. If it's going to be effective, it has to drive new ideas through government. We have to make sure that drugs and alcohol policy doesn't just become a criminal affair, that actually it's hugely locked into health and rehab. It's not going to be easy, because you know what departments are like. They'd love their secretary of state to say: ‘Get away, this is my island and you only come here when I invite your ship in.' We're all engaged with trying to sort that culture out.

Have you come across difficulties so far?

The best quality at this stage is character. You have to negotiate your way through so that people don't get the chance to stand on amour-propre. We see ourselves not as secretaries of state, but as politicians trying to get a job done. We don't let the civil service package us off into silos. It's easier said than done. Some departments are past masters at capturing their ministers and their secretaries of state. Most of my colleagues seem to be aware of the fact.

Interestingly, I was talking to a couple of civil servants and they said what's nice to see is that the cabinet committees are functioning again. The system pretty well died under the last government. Decisions were being made without going through proper procedure.

What's been the reaction in your own department? Is that something you were conscious of, that you needed to provide that firm lead?

I thought I'd have a lot of resistance. In fact, I was astonished that I had none from all the key players. The first thing they said was: "We know what you've been wanting to do. We've been watching it for ages. We agree completely with what you're trying to do. This benefits system is broken. We're sick and tired of trying to pick up the pieces every day, trying to make it work." From the word go I was able to set down the parameters of where we were going to drive. What we needed was universal credit, which of course I hadn't got agreement for at that stage. We've pretty much had our foot to the floor and pressure on everybody to get from A to B.

The vast majority of people in the department I only have praise for. This is exactly how it should work. They've taken their political direction, they've taken - I hope - a sense of urgency and they've pretty well stuck to it. I said: "This is where we're going over the next eight or nine years. Here's the reform and the time schedules. All I want from you is yes - this is how we're going to do it, here are the problems and let's sort them out." And every one of them has done just that. We've found savings. Strong leadership is right, but it's not because you're kicking them. It's strong leadership because you've given them a sense of direction and get them to sign up to that. That's the key.

Pensions minister Steve Webb has traditionally been seen as on the left of the Liberal Democrats? Are there any creative tensions in the department?

None at all! The good thing about it is we just said: "What do we want to achieve?" Proper reforms: re-linking the pension, changing the retirement age. It is a proper pension reform which will knock people's socks off when it comes out. People will always write that his reputation is as you've put it, but what Steve's actually said is: "How often is a Liberal Democrat ever going to get into government? I've been moaning and complaining about the pensions system. This is my one shot of changing it with you." I recognise we have to compromise to do that.

How do you avoid becoming bogged down by the sheer complexity of the whole system and the size of the challenge?

The answer is, don't stand still. If you're running over soft ground, run over it, don't walk. You have to get to the other side. The point is that we just have to keep the pace going. Getting bogged down is when you lose sight of what the far horizon is about. You just get locked into the nitty-gritty. I say to everybody: "Let's keep constantly knowing where that flag is on the horizon. We may meander a bit while we're getting there, but we need to make sure our goal is still there. If, for one moment, we think otherwise then we need to consider what we're doing right now. In all of this we've set the flags out up ahead. Whether it's the work programme, pensions reform or massive universal credit reform. This is where we have to be by the end of this Parliament. Can we make it? That's all I want to know. The rest is detail. We have to get it right. Keeping the process moving along the right track is what I have to do.

How do you avoid being Frank Field Mark II?

I love Frank to bits. He's a good friend and a very good politician. The difference between us is that I set up a structure while I was out of power - the CSJ - that worked in detail on programmes, particularly on the universal credit. We built a model that followed the benefits system. The DWP, unbeknownst to me, was paralleling that work - unbeknownst to the government at the time as well. So when I came in, we knew how we'd achieve it. The real difference is that we've got a real, genuine structured work programme now. Frank hadn't quite reached that point because there was no sign-up at the highest level.

I spent my first four months, as you may have read in some of the papers, getting signup. That process can be robust at times, but it is what I'm a politician for. I know what my bottom line is. And that does mean that some of these engagements will be reasonably robust. But we're all politicians and know what the terms of the deal are. Nobody respects somebody who doesn't know where their bottom line is.

The problem for Frank was that although the prime minister said he was on-side, the PM never squared Gordon Brown. Frank then proceeded as though the PM would intervene, but he didn't, and Gordon Brown won the day. To be fair to Frank, the deal was never on. For me, the deal has always been on from the word go and I've simply said: "Number one, we're not going to repeat this. There's the line. That's where you sign. Once we've all signed on that, the rest is getting it done. I don't say we won't get things wrong - these are huge changes we've been going through. But as long as we have sign-up to the principles of what we're doing and, to a greater extent, the overarching detail, then the rest is a case of managing the process.

The Treasury has always been a great block to reform on this kind of issue because they are always watching the bottom line on a year to year basis. How robust did the exchanges get?

We're all friends, let me just say that. It's what politics is about. In the Thatcher cabinet, people always had engagements, debates, rows and arguments. The trick is can you walk away from it afterwards and say: ‘let's go and have a drink?' The difference between us and the last government is that, strangely, they often agreed on political things, but hated each other personally. With us, these disagreements are only about how to do things, they're not disagreements about the principles. For example, the prime minister and the chancellor signed up for reform, pretty much on the line of what we wanted. The question was how quickly can we deliver it? How much money does it take to deliver it?

Because of that very exhaustive process, we'd both sign up for something because we've been convinced by the arguments, rather than saying I have to do this because I've been bullied by somebody else.

Which of the two of you turned up the volume the most?

It was at a collective calm and reasonable level really. What can I say? Amenable.

How much do your benefits reforms actually rely on there being jobs for people to go in an economic recovery? What if that doesn't happen?

You can't always predict where the economy will go. From the International Monetary Fund (IMF) right through to the Office for Budgetary Responsiblity (OBR) to the Organisation for Economic Co-operation and Development (OECD), they all believe that we're taking the right action. They all predict growth of 2-2.5 per cent. Which is not startling, but it's pretty good for a developed economy at the moment.

That level of growth would deliver a big increase in private sector jobs. I do believe we will see a greater level of jobs. People tend to just look at this period of the recession and say that it's all doom and gloom. No it's not! First of all, there are millions of people still in work and their prospects are good. The second fact is that even now job centres have significant number of vacant jobs. They're not all skilled jobs. I think it's about 450,000. There are jobs available even in the height of the recession. We all know that there are lots of jobs that aren't listed at the job centre and that are outside in the casual workforce. The last point is that even in the last quarter we saw the biggest jump in employment - 280,000 went back to work in one quarter - since 1989, when these figures were first collated.

The important thing to know is that there are jobs being created. Yes, it's not enough, we need more. But the point I make is that these reforms aren't just about there being more jobs. These reforms are about saying that throughout the growth of the last 10 years, between four and five million people of working age didn't do any work at all. We had 20 per cent of all of our households doing no work at all. So that's where our reforms are really aimed - breaking into that resistant, residual unemployed group.

How do you get the work ethic back into people who have been jobless for generations, without being unacceptably brutal in cutting benefits?

We don't have to cut the unemployed benefits as they stand. The key thing is that being in work is positive in financial terms. It's no use lecturing about moral purpose to a family that doesn't really have a lot of work or no work at all. Accepting that we get the finger wagging and lecturing out of the way, we have to look at the nature of the family that we're talking about and ask, why will someone not take a job? And that's really what this reform is all about.

When people look at getting back to work we need to recognise that they don't think it pays. If you marginally say that being out of work pays then look at the travel to work costs. Quite a lot of these jobs will be a little distance, so then people assume that it's too expensive. The aim of universal credit is to make work pay. That's critical. Because that's the big bit that says: ‘I'm better off in work.' That starts the process that says: ‘I will look for this job.'

Another issue is to deal with the family that surrounds them. For that, you set out what we call this big work programme. In private and local sector voluntary organisations you tie a work programme around people to change their culture. You get them work ready, you work to get rid of their difficulties, their problems, their addictions, their misunderstandings. You stay with them and mentor them, so they stay in work three, six, nine months a year. The final bit is to ensure you deal with any particular disabilities.

The work programme and the universal credit together allow you to knock out the things that stand in people's way and allow them to progress to work. Once they've been in work for a while they get what I call the work habit. At that point they'll understand the whole idea of ‘the purpose of my life'.

The bit you have to fill in is before that - when we want to break down these workless households. Many of them can't go home and say to mum and dad, ‘I've got a problem at work, what can I do about it?' because their mums and dads have never worked - so what do they say? ‘Why do you bother?' We need to replace that person with a mentor. They can turn to them when they have difficulties in the early period until they're settled. It allows you then to narrow and target in. Our early intervention work then follows, which we're working with Michael Gove on, to start targeting the difficult core families on a much more structured basis.

Frank Field said he would rather see benefits cut for poorer families than see children's centres suffer because he thinks that they are so crucial to the development of kids in the early years. What are you doing to ensure that kids at that age don't suffer from cuts?

There are certain priorities that a government must remember. Early intervention is one of those areas. It's an area I wrote a book on, and it's incorporated into the social justice cabinet committee. I discuss it constantly with Michael Gove and Sarah Teather. We're all passionate about it and heading in the same direction. David Cameron shares that sense, as does Steve Hilton. Early intervention is the big life changer for those difficult families. We will do our level best to make sure that these key high priority issues such as dealing with troublesome families and kids from difficult backgrounds are informed by intervention.

The child benefit announcement dominated the party conference. How did that come about?

I confess I'd had discussions with the chancellor about this going back to when we were first elected, so I know all about the ramifications and permutations of where we find money and how we share the load. I am desperate that the changes taken from the start of the budget process to the end of the spending review are not seen as regressive, but are instead progressive. What does that mean? We take a share of the burden so that it isn't all falling on the shoulders of those who are in the lowest economic deciles.

For me, it's an absolute matter of ‘doability'. In other words, if we can't say that, we'll have difficulty getting these measures through. You're looking to see how to get people higher up on the income scale to make some contribution to this deficit reduction programme? We have a major deficit, we have to take a share of the burden.

On child benefit, Labour says it's all about getting the middle class to buy into it, which is why you give them benefits. That is a complete nonsense which has been concocted by them to justify why they've done nothing to it. The real reason for universal benefits such as child benefit was that it was the only way in the early days of making sure poorer kids got the money, because they didn't get means tested. So every family could legitimately claim and not worry about getting the money.

If the middle class have to buy into benefits by being part of the benefit system then why stop there? Why don't we go everywhere withthis? That is why Labour, with their child tax credits, ended up giving money to people earning more than £50,000. It is long overdue that we look at this and ask ourselves the question: what is child benefit really for? It's for supporting children who come from difficult backgrounds where money is really tight and where that little bit of extra money really makes a disproportionate difference to their lives. To do that sometimes you need to take some tough decisions. Tax changes are relevant when you want to reward people further up the income scale for working hard and for doing the right thing. What you don't do is take money off them, siphon it off two departments and pop a little bit back to them as though this is a little gift you're giving. It's not a gift to take large sums of money and take a little bit back. It's bribery really.

But what about the unfairness of the double income family on £80,000 getting it and a single income parent on £44,000 losing out? A policy that might be right in principle, but actually in implementation wasn't thought through before it was announced.

The biggest problem we've got in the shortterm is the tax system. I don't recall the Labour government once talking about reforming the tax system to make it less unfair. Right now, families with a single earner get taxed at the higher rate, if they go above £43,000. It does not find that two earners who break £43,000 get to the higher rate. Before we get too caught up with the child benefit being unfair, the tax system according to Ed Miliband is deeply unfair, but he never proposed reforming it. He's happy to have unfairness in the system. I believe there are ways that we will get rid of that unfairness later. But my point is we have the system that we inherited. To make any changes, we have to use that system. If Ed Miliband can quietly show me exactly which point in the last 10 years he campaigned to change the tax system so that we could take account of dual incomes and households, I'd be very happy to hear from him.

You say you had discussions over many months with George Osborne about the child benefit system, but I understand you didn't know until quite late in the day that this announcement was going to be made.

I, probably most, of all of the cabinet ministers knew all about this announcement. It's not an issue for me. I'm not going to pre-comment about what the others knew or didn't know at the time. But for me, I've always been aware of this and I was prepared for it.

Isn't it strange that it wasn't discussed in cabinet before it was announced? It was a pretty major thing to do.

Yes. It's difficult to know with these things because we have a spending review that is quite complex. Some departments like mine know where others are, because it's the nature of what I do. It's difficult sometimes to get people completely lined up about these things.

You talked a bit about Betsy at the beginning, can you take me through what's happened to her?

I won't go into detail because she doesn't want me to say very much about it. All I will tell you is that in July last year, she discovered out of the blue that she had breast cancer. There will be lots of people who read this whose wives, girlfriends or who themselves have had this same problem. It's shocking. Then you discover that one in eight women in Britain get breast cancer - one of the highest rates in the western world. Betsy went through what lots of women have done. She's had a huge amount of chemo and a whole shed load of radiotherapy. Three operations. We now think she's recovering. It's very slow. The thing is that the treatment takes the stuffing out of you. She's not a huge person so she doesn't have huge reserves of energy. She finds she gets tired very easily. But we're getting there really. It's a slow process. Maybe another operation to come.

And how has that affected you because I know before the election and the years before that you spent a lot of time caring for her. That must have been very difficult.

When she told me, I packed my bags here, went home, and I said: "I'm going to be here." I didn't stop working. I did as much work as I could from home. I came up here to the Commons when I had to, when I was needed for votes. What I didn't do was spend my days here [in Westminster] doing my work. I transported it back home so that I could be close to her and help her. There were times when you needed to be there really, a lot of times. It's a difficult process and I feel sorry for somebody who doesn't have somebody else with them because it's a mental process as much as a physical process.

Betsy took a lot of flack when you were leader, didn't she?

At the end, unfairly too. She was used by some people as a way of getting to me. I'm broad shouldered. I'm a politician. I expect what comes with it. You live in a goldfish bowl, you get attacked. I never used my family so they were always out of bounds, and I didn't really use Betsy either. The fact was, she was wrongly accused of something, which was that she had not been working for me when we were able to show she did. She's an expert in doing what she did for me, and she did it properly. It was all properly above board. Life's too short. But I do say that was unfair. Interestingly, a lot of Labour politicians came up to me and said to me this is not in the rules. We don't take out each other's wives.

This is seven years on from all that. Can you forgive people who did that to her?

Yes. My job is not to sit here with vendettas.

Forgive but not forget, maybe?

Forgetting is a different matter but I just get on. I'm not going to spend my whole time saying I'm going to get even. No point. You learn stuff about yourself when you go through difficulty. It helps, strangely enough. I had an objective. I had promised to focus on social justice. I gave that my word and I tried to stick to it.

Margaret Thatcher said her overthrow was treachery with a smile on its face. How would you describe what happened to you?

Politics is a rough trade. We did some great things as leader of the opposition, many of them still stand. One that no one ever remembers going back is, had I not been elected, we might have actually split on the euro, except we didn't. Little things like that which you can do and influence what happens nationally. You can make mistakes ... sometimes you get things right, sometimes you don't. It's tough like that. But I just don't look back and think about it in any way at all. Some people didn't want me there. Some of it was getting even for the fact that I was quite rebellious in my first Parliament over Maastricht. So there is mixture of stuff, but, hey, I've moved on.

Quick Fire

What is your favourite book?

To Kill a Mockingbird but I also love War and Peace.

Your best friend in politics?

That's a difficult one. I guess the person that I know best and am closest to is Bernard Jenkin.

Favourite film?

It's A Wonderful Life.

Political hero?

I think Robert Peel is probably my main political hero, although I have others. William Wilberforce would be the other. I'll have two if you don't mind.

Is there a quotation that you find particularly inspirational?

The one that I constantly think of is "All that is required for the triumph of evil is that the good men should do nothing."

What makes you cry?

I don't know really. I get soppy over commitment, I suppose. People who commit everything to something makes me emotional.

Which period in history would you most liked to have lived through?

The Second World War.

Which opposition politician do you most respect?

I actually get on quite well with a number of them. Jack Straw. I like Jack. I get on well with him. He's a survivor. And in politics sometimes you have to respect the survivors. He's consummate about it. And he makes people laugh while he survives.

Tags: Iain Duncan Smith, In conversation, Welfare reform