When Iain Duncan Smith was humiliatingly ousted as Conservative leader in 2003, few could have predicted that he would re-emerge as perhaps the boldest reformer in the coalition government. Since his appointment as Secretary for Work and Pensions, he has seized the opportunity for welfare reform provided by the need to reduce the country's £149bn Budget deficit. He and the rest of the coalition are determined not to squander the opportunity provided by a good crisis. With the publication of the new white paper on welfare reform, it is time to take "the quiet man" seriously.

Central to the reforms is the proposed "universal credit", which would amalgamate dozens of existing benefits into one single payment. The virtue of this reform, as Labour acknowledges, is that it would hugely simplify a system under which, last year, over £3.1bn was overpaid because of administrative error (compared to £1.6bn in benefit fraud). Mr Duncan Smith has succeeded in building a cross-party consensus around the principle of a universal credit, and we broadly welcome its introduction.

Understandable, too, are efforts to get those on long-term benefit back into the habit of work. It is an indisputable national tragedy that in the UK there are five million people on out-of-work benefits; 1.9 million children live in homes where no one has a job. However, Mr Duncan Smith's solution to this problem is troubling. There is little evidence that mandatory unpaid work placements for the long-term unemployed - similar in scope to US-style "workfare" - have any lasting benefit. A recent study by the Department for Work and Pensions concluded that they can even reduce employment chances by limiting the time available for job hunting and by failing to provide individuals with the skills and experience valued by employers.

The shortcomings of "workfare" are magnified by high unemployment, the greatest obstacle to welfare reform. The truth is that there are no jobs for many of the unemployed, nor will there be in the years to come. The number of long-term unemployed has more than doubled since 2008, to 797,000, while the number of vacancies has fallen to 467,000 - a jobs deficit of 330,000. As Mr Duncan Smith concedes, this is a "dreadful period" to attempt welfare reform. His vow to make work pay will ring hollow to those for whom there is no work.

Chancellor George Osborne has consistently emphasised those measures that target workless families - an attempt to marginalise Labour as the party of the "undeserving poor". But a TUC study suggests that working households will suffer a loss of £9.4bn, nearly twice the level of losses for non-working households. Little wonder that the word "welfare" seemed to catch in Mr Osborne's throat as he delivered his Spending Review to the House of Commons. He knew that his axe was falling harshly on the "squeezed middle".

Elsewhere, for a party ostensibly committed to the family, an unusual number of measures will hit children hardest. Witness the abolition of baby bonds, the three-year freeze on child benefit, the removal of the Health in Pregnancy Grant and the withdrawal of child tax credits from higher earners.

There is no doubt that Mr Duncan Smith's intentions are good, but to compare him to William Beveridge is ridiculous. The belief that he can establish a new welfare settlement at a time when the economy is haemorrhaging jobs is absurdly optimistic. The coalition's doctrinaire spending cuts, which latest estimates suggest could cost 1.6 million jobs, will undermine welfare reform. Mr Duncan Smith's "universal credit", for all its seductive appeal, offers little but false hope.