Thousands of people could be stripped of their incapacity benefit under Treasury plans to introduce means testing.
Sources within the Treasury have confirmed to The Times that they are seeking to squeeze more from the incapacity benefit budget and estimate that means testing could save up to £2bn a year.
The change could see thousands of people stripped of the benefits if their household income is deemed to be too high.
Incapacity benefit pays between £68 and £98 a week to those that have paid national insurance contributions but are too sick to work.
A Department of Work and Pensions spokesperson said: “We are presently looking at a range of options for welfare reform and any decisions will be made in the context of the spending review.” The review, which reports on 20 October, will set government spending limits for 2011-15.
Yesterday, Chancellor George Osborne claimed a further £4bn could be slashed from the country’s annual welfare bill in addition to the £11bn announced in the budget in June.
He told the BBC: “People who think it is a lifestyle to sit on out-of-work benefits – that lifestyle choice is going to come to an end. The money will not be there.”
The news comes as the Department of Work and Pensions was warned against reassessing incapacity benefit claimants on their fitness to work without reforming the eligibility test.
A group of 37 disabled people’s charities have appealed for changes to be made to the work capability assessment before it is rolled out to assess 1.6 million incapacity benefit claimants over the next three years.
WCA has been used since 2008 to test the employment and support allowance, which has replaced incapacity benefit for new claimants. However, concerns have been raised that it has wrongly found too many people fit for work.
In a letter to an independent review of WCA set up by the DWP, the charities said: “It is concerning that an assessment which we do not believe has demonstrated its ability to place people correctly onto employment and support allowance (ESA) may become the basis of eligibility for a far wider range of benefits.”
The letter said that interview times for the WCA needed to be lengthened to form a more realistic impression of a person’s employability. It called for greater tracking of those assessed by impairment type in order to identify those groups whose needs were not being met.
The charities, which include Mind, RNID and RNIB, also said the assessment was too focused on physical disabilities and should be expanded to assess other barriers to work such as literacy or numeracy problems.
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