Claimants could have benefits cut

Millions of long-term sick and disabled people risk losing part of their benefits if they do not take up work or training, the government will propose under forthcoming welfare reforms.

The government will publish a green paper on welfare reform later this month.

John Hutton, the work and pensions secretary, will on Monday signal that all but the most severely disabled of the 2.6m existing claimants of incapacity benefit will face tough conditions in return for extra help in finding a job or a place on a rehabilitation scheme.

In a speech to the Work Foundation, Mr Hutton will say that the “largely voluntary approach” of existing programmes will not be enough to enable the government to reach its goal of getting 1m people back into work.

Although he appears to have rejected more radical reforms to incapacity benefit, such as time-limiting or means-testing payments, Mr Hutton hopes that with more help and hassle hundreds of thousands of people could be lifted off benefits and out of poverty.

Welfare reform has proved a highly divisive issue in the Labour party since 1997. Ministers believe backbenchers can be won over by a balance of carrot and stick in the proposed reforms. But MPs will want reassurance that the government can provide more help to claimants when there is little prospect of extra funding to pay for it.

In his speech, Mr Hutton will give his most detailed assessment of the flaws in the incapacity benefit system, which costs the taxpayer £12bn a year.

He will say that it is too easy to claim, that it creates “perverse incentives” because claimants get paid more the longer they stay on it, and that it gives little encouragement to claimants to find work because, if they do, they prove themselves ineligible for the benefit.

The government is expected to propose tougher medical tests on all new claimants, a flat rate benefit that does not rise over time, and permission for recipients to come back on to the benefit if they take up a job but do not stay in it.

But the centrepiece of the green paper will be a big extension of what experts call “conditionality”, or obligations to seek work or re-skilling in return for state benefits.

Under the flagship Pathways to Work programme, which is being extended to one-third of the country, incapacity benefit claimants are offered extra interviews, advice, training and job searches. If they do not attend interviews they can have their benefits docked by up to £20 a week.

Mr Hutton wants to go further, extending compulsion to rehabilitation, training and job placement. He also wants compulsory work-focused interviews to be used in all parts of the country, not just Pathways areas.

The green paper would mark a return to the original ethos of the welfare state, Mr Hutton will say. “Our predecessors would have been horrified to see how the notion of personal responsibility gradually became obscured over the decades as parts of our welfare system trapped people between the twin vices of benefit dependency and poverty.”

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