This paper locates ‘new Labour’s’ welfare reform agenda in the workfarist shift of recent social policy. In this context it explores the aim of ‘new labour’s’ welfare reform programme to reconstitute the reserve army of labour so that it is able to fulfil its role in managing economic stability. The emphasis is upon ensuring that labour is as cheap as possible for capital to employ through various direct and indirect wage subsidies and requiring more benefit dependent groups to compete for paid employment.